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Sec To Fight Short Selling Of Financials

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http://www.ft.com/cms/s/d28fc66a-52a9-11dd...;nclick_check=1

US regulators will take emergency action to stop abusive short-selling of stock in financial institutions such as mortgage financiers Fannie Mae and Freddie Mac and investment bank Lehman Brothers.

Christopher Cox, Securities and Exchange Commission chairman, told legislators on Tuesday that the agency would issue an emergency rule to stop so-called “naked” short-selling of shares in significant financial entities. The SEC will also consider new rules to extend those trading limits to the rest of the market.

Next will come the smoot hawley tarrif act, no?

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Guest DissipatedYouthIsValuable

I applaud the bravery of the players of capitalism.

All this Commie legislation must really be ******ing up the Land of the Free.

Edited by DissipatedYouthIsValuable

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rather than trying to prevent short selling, why dont they just make these guys PROFITABLE FFS

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Naked short selling has been going on for ages.

It has allowed to carry on becuase, largely, the "financials" were in on the game and making a lot of money that way by crucifying, mainly, small companies who couldn't retaliate. Let me tell you, faced with a wall of selling (potenitally an infiniite number of shares) even good companies have no way of righting the boat.

Should look up naked short-selling, it is quite a bit different to normal short-sellling, it will show you how bent, corrupt, destructive and piss-poor the US financial system is. Whilst the big boys were gaining the regulators (in the US and elsewhere) were quite willing to pay little other than lip-service to preventing it. Now that it is being used against companies that really are shit but too big to fail they are worried.

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Ask yourself this question:

Would there be any complaints by US regulators if large numbers of speculators started short selling oil futures to drive the oil price down to say $50 per barrel? No, I thought not!

I know very well these have been one or two examples of short selling in smaller companies where the short sellers have sold so much stock the short positions were greater than the entire number of shares in circulation. Now it is being used against financial institutions all of a sudden it is illegal. No one seemed to care when the hedge funds that were all sponsored by investment bansk were short selling a few years back.

It really is quite pathetic this bleating. It is also futile - if a company is worthless then its share price will fall to zero anyway - unless they stop people selling all together.

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Shares should be traded on a simple buy / sell basis and all other forms of share trading should be banned. Also there should be a minimum holding period for a share of, say, 7 days.

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It really is quite pathetic this bleating. It is also futile - if a company is worthless then its share price will fall to zero anyway - unless they stop people selling all together.

Well yes they can do that or have you not seen how many times stock has been suspended ?

FSA/SEC then rings the short sellers and threatens to peanalise them and thats the end of the problom.

It's been legal to talk stock up based on a load of lies and yet you can not talk it down based on what is often the truth.

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Well yes they can do that or have you not seen how many times stock has been suspended ?

FSA/SEC then rings the short sellers and threatens to peanalise them and thats the end of the problom.

It's been legal to talk stock up based on a load of lies and yet you can not talk it down based on what is often the truth.

That's not really the point if you are discussing Naked short selling - it is not just a question of semantics.

Regulators in the US and elsewhere have allowed this practice becuase it benefited the big boys who have used it to destroy functioning businesses. THEY DID NEXT TO SWEET FA.

I don't think you realize quite how crooked and dysfunctional some of these markets are and how complicit the regulators have been in maintaining the status quo.

Edited by OnlyMe

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Shares should be traded on a simple buy / sell basis and all other forms of share trading should be banned. Also there should be a minimum holding period for a share of, say, 7 days.

Why? If you enter into a financial contract and you are wrong then you lose money. The banks getting hammered by short sellers are not being done so on a malicious basis. Their balance sheets are screwed and are effectively insolvent. It's a double edged sword. Without many of the mark to model "profits" the banks are still declaring, SIV's and options, many would already have gone under and the share price wouldn't matter. The only reason they are crying to the authorities is they are getting their gun turned on themselves. If they opened up their books entirely and honestly and they were ok, the short sellers would get carried out. Ever wondered why they don't do this?

A simpler solutions would be to have ALL liabilities on balance sheet. This is, of course, will happen eventually so the recession is unavoidable.

With Paulson and Bernanke bailing out their Wall St chums whilst condemning the world to inflation and recession, this will come back to haunt the US. 20 years ago they could get away with it but now the world economy can survive just fine without them. As Peter Schiff says " once the world ditches the millstone of America it will see it's better off without having to give it pocket money." (or words to that effect)

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Every tom dick and harry on the internet knows that *naked* short selling is illegal or is claimed to be and yet nothing is done. I never worked out quite what it is because how do you short a stock in the first place, unless you agree with a broker that you will buy this stock at that lower price and he takes the opposite trade that it will go up and you lose *if* that happens and *he* owns the shares or knows somebody who does? And naked short selling nobody you know has the stock so what exactly is the difference from your point of view? Somebody has to take the risk you are going to cream it big time! All incomprehensible to me but anyway its supposedly illegal and outragious etc etc. :-)

Now that the credit worthiness of the USA is questionable and that is reflected by action in the bond markets they *have* to be seen to be doing something.

What is needed is prison time for those who are involved in illegal activities. Then and only then will foreigners have faith in the creditworthiness of the USA.

But naked short selling seem to be a technicality to me and therefore it is more or less no action at all to say they will stamp it out.

You should in a free market be able to make any agreement you want with anybody you want. If they have access now to the shares seems a minor point to me.

But then i am mostly entirely ignorant of these things.

What is needed here is some kind of action along the lines of getting rid of corruption where foreigners or taxpayers pay for the losses and the insiders get fat fees and bonuses with no intent to create productive wealth.

F and F have been used i think to generate big bonuses since their ability to steer the market has been so massive and the 'regulators' are all part of the same shindig.

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Every tom dick and harry on the internet knows that *naked* short selling is illegal or is claimed to be and yet nothing is done. I never worked out quite what it is because how do you short a stock in the first place, unless you agree with a broker that you will buy this stock at that lower price and he takes the opposite trade that it will go up and you lose *if* that happens and *he* owns the shares or knows somebody who does? And naked short selling nobody you know has the stock so what exactly is the difference from your point of view? Somebody has to take the risk you are going to cream it big time! All incomprehensible to me but anyway its supposedly illegal and outragious etc etc. :-)

Now that the credit worthiness of the USA is questionable and that is reflected by action in the bond markets they *have* to be seen to be doing something.

What is needed is prison time for those who are involved in illegal activities. Then and only then will foreigners have faith in the creditworthiness of the USA.

But naked short selling seem to be a technicality to me and therefore it is more or less no action at all to say they will stamp it out.

You should in a free market be able to make any agreement you want with anybody you want. If they have access now to the shares seems a minor point to me.

But then i am mostly entirely ignorant of these things.

What is needed here is some kind of action along the lines of getting rid of corruption where foreigners or taxpayers pay for the losses and the insiders get fat fees and bonuses with no intent to create productive wealth.

F and F have been used i think to generate big bonuses since their ability to steer the market has been so massive and the 'regulators' are all part of the same shindig.

say i own a million stock of Microsoft, i like the company and plan to hold it for many many many years. from that i can get dividends and potentially capital gains. if i want to make more money on the stock i can lend it to people and charge interest. i dont care what they do with it so long as it get it back at the end of the period plus my interest.

so i lend you my stock and ask for a % return for this, you agree. you then go on to sell the stock and hope prices go down. if they go down you buy the same amount of stock back and pocket the difference. you hand me the stock back plus the agreed %. i am happy as i have made some money on the lending (and dont care about the stocks price now as i intend to hold it for years and year and years) and you are happy because you have made money on the short position

naked short selling is when you don’t borrow it from someone and you don’t pay any interest on this. you could potentially short sell more stock than in existence and there are some stories of companies being shorted with more shares than exist.

it is actually very similar to the banking system whom can create money but must destroy it later. the nakid short sellers are creating shares out of nothing and destroying it later.

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These guys have no cochones.

They should just ban selling. Full stop. Problem solved.

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Guest DissipatedYouthIsValuable

If these ***** risked losing their dinner occasionally it might make them think a bit harder.

Globalisation guys, you wanted it. Now let's all play race to the bottom.

Edited by DissipatedYouthIsValuable

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naked short selling is when you don’t borrow it from someone and you don’t pay any interest on this. you could potentially short sell more stock than in existence and there are some stories of companies being shorted with more shares than exist.

it is actually very similar to the banking system whom can create money but must destroy it later. the nakid short sellers are creating shares out of nothing and destroying it later.

I still dont think you have this part correct thought the first part seems ok to me:-)

Based on what you said in the first part I think the issue is that if i go to you as broker and you dont have the shares then i pay you interest on what you dont have which is a bit fraudulent perhaps, and I agree to pay you the increased price of the shares if i dont profit. Meanwhile you have done this because you are believing they are likely to go down so you get the interest for your winning bet but could lose if the shares recover. plus you could be a seller too for your bet. But since my short sell is an illusion so what?

But if you dont have shares you cant sell them. Surely? Instead it is a contractual arrangement based on current prices and future prices?

So why is naked short selling a problem? You cant possibly sell more shares than exist. All you can do is claim to have sold more shares than exist?

Just thinking out aloud here.

Edited by aliveandkicking

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Shares should be traded on a simple buy / sell basis and all other forms of share trading should be banned. Also there should be a minimum holding period for a share of, say, 7 days.

You must work in compliance.

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  • 401 Brexit, House prices and Summer 2020

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