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Why Are These Vultures Allowed To Get Away With It?

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Just heard on the news that Morgan Stanley, who were one of the investment banks underwriting the HBOS rights issue, took a big short position on Friday.

Notwithstanding whether they knew the rights issue was undersubscribed, whether they knew the shares would fall, you or I would not do this for fear of being accused of insider trading.

Why aren't they? Are these people immune from the law?

Recently the financial authorities have announced new regs to make people shorting shares declare their position ... in an attempt to stop people manipulating the markets.

Why bother? The big investment banks are above the law.

Edited by Lets' get it right

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Guest DissipatedYouthIsValuable
Just heard on the news that Morgan Stanley, who were one of the investment banks underwriting the HBOS rights issue, took a big short position on Friday.

Notwithstanding whether they knew the rights issue was undersubscribed, whether they knew the shares would fall, you or I would not do this for fear of being accused of insider trading.

Why aren't they? Are these people immune from the law?

Recently the financial authorities have announced new regs to make people shorting shares declare their position ... in an attempt to stop people manipulating the markets.

Why bother? The big investment banks are above the law.

I've got an idea.

It involves a couple of planes and a few pairs of scissors.

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SHurely, if you take a short position, somebody else needs to be on the other side!. That somebody would need to beleive they were on a winner..... or a government dept of some sort.

Have NR bought into any positions recently I wonder?

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SHurely, if you take a short position, somebody else needs to be on the other side!. That somebody would need to beleive they were on a winner..... or a government dept of some sort.

Yes but it's a bit like knowing you've doped the horse. The guys betting on it to win don't have the full facts. In the real world that's seen as illegal.

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I've got an idea.

It involves a couple of planes and a few pairs of scissors.

They still have not traced who place the shorts the day before the towers fell down.

You try placing such a bet in a way that the money can not be traced back to you and let me know who you get on.

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Just heard on the news that Morgan Stanley, who were one of the investment banks underwriting the HBOS rights issue, took a big short position on Friday.

Notwithstanding whether they knew the rights issue was undersubscribed, whether they knew the shares would fall, you or I would not do this for fear of being accused of insider trading.

Why aren't they? Are these people immune from the law?

Recently the financial authorities have announced new regs to make people shorting shares declare their position ... in an attempt to stop people manipulating the markets.

Why bother? The big investment banks are above the law.

Gordon's policy has been, for quite some time, to go soflty softly where the City is concerned. A turning of the blind eye. Ask no questions tell no lies. What you dopn't know won't hurt you. You know the sort of thing. Its all part of what made the miracle economy possible. Lies, decit and confidence trickery. Gorodn has returned our country to a nation made up of cut-purses and blaggards.

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Guest DissipatedYouthIsValuable
They still have not traced who place the shorts the day before the towers fell down.

You try placing such a bet in a way that the money can not be traced back to you and let me know who you get on.

But I'm not a government sponsored shady organisation.

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Gorodn has returned our country to a nation made up of cut-purses and blaggards.

Arrr! Pieces of eight forra whore'dflap blackguard knave!

I really like the allusion of Gordon Brown to a pirate. Looking forward to him walking the plank, provided that Peter Mandelson isn't stood behind him, vigourously waving his cutlass around in the air...

Edited by THEBIGMAN

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Just heard on the news that Morgan Stanley, who were one of the investment banks underwriting the HBOS rights issue, took a big short position on Friday.

Notwithstanding whether they knew the rights issue was undersubscribed, whether they knew the shares would fall, you or I would not do this for fear of being accused of insider trading.

Why aren't they? Are these people immune from the law?

Recently the financial authorities have announced new regs to make people shorting shares declare their position ... in an attempt to stop people manipulating the markets.

Why bother? The big investment banks are above the law.

The way I heard it was, they sold short in the full knowledge that they would end up having to buy the shares after the failed rights issue, which in effect cancels it out. So they were kind of hedging their position so they wouldn't get stuck with the shares afterwards. Morality and legailty aside, it's quite clever, whoever thought of it.

However, as you say, the problem is it was insider knowledge that was used to do this deal. If any of us had got the nod that the rights issue was failing, and we shorted on friday we would get investigated. There definately seems to be one rule for one and one for the others.

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One does wonder who the counterparties were? Surely the dogs in the street knew that the rights issue would be massively undersubscribed. Weren't the shares trading at £2 fifty something last Tuesday?

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Just heard on the news that Morgan Stanley, who were one of the investment banks underwriting the HBOS rights issue, took a big short position on Friday.

Notwithstanding whether they knew the rights issue was undersubscribed, whether they knew the shares would fall, you or I would not do this for fear of being accused of insider trading.

Why aren't they? Are these people immune from the law?

Recently the financial authorities have announced new regs to make people shorting shares declare their position ... in an attempt to stop people manipulating the markets.

Why bother? The big investment banks are above the law.

Jeez there is a lot ignorance around here. Is a bank not allowed to hedge an exposure now as far as you guys are concerned?

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Guest sillybear2
The way I heard it was, they sold short in the full knowledge that they would end up having to buy the shares after the failed rights issue, which in effect cancels it out. So they were kind of hedging their position so they wouldn't get stuck with the shares afterwards. Morality and legailty aside, it's quite clever, whoever thought of it.

It's a one way bet, short the stock and then cover at the rights issue price. Provided you shorted above the issue price obviously you're in the clear (well, in terms of profit, if not the law).

Insider trading? God no! Delta hedging!

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Guest DissipatedYouthIsValuable
Jeez there is a lot ignorance around here. Is a bank not allowed to hedge an exposure now as far as you guys are concerned?

I think we're being too hard on the bankers.

They need hugs too.

C'm'ere Extradry....

Edited by DissipatedYouthIsValuable

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Jeez there is a lot ignorance around here. Is a bank not allowed to hedge an exposure now as far as you guys are concerned?

Sorry? Is it legal to use inside information to buy or sell shares?

If someone in the know had rung me up on Friday and said 'The HBOS rights issue is massively under-subscribed' - and I shorted the shares to make a profit - that would be illegal. Wouldn't it?

But because the underwriters are not 'making a profit' but are acting to offset losses - that makes it legal?

Whoever was on the other side of the short did not have the knowledge the underwriters had. Sounds like insider trading to me.

Edited by Lets' get it right

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People were closing after the midday rights issue close it went up over 7%, I said on the Thursday before I would purchase on Thursday, Sell on Friday for a profit after midday and then would be buying back on Monday when the rights issue was revealed and the share price fell.

Only part changed is buying today at 255 instead of Monday, but as I had sold the shares it was an open chioce.

http://www.lse.co.uk/tools/shares/GetGraph...mp;t=2&comp=

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People were closing after the midday rights issue close it went up over 7%, I said on the Thursday before I would purchase on Thursday, Sell on Friday for a profit after midday and then would be buying back on Monday when the rights issue was revealed and the share price fell.

Only part changed is buying today at 255 instead of Monday, but as I had sold the shares it was an open chioce.

http://www.lse.co.uk/tools/shares/GetGraph...mp;t=2&comp=

I was trying to follow your trades last week, but I didn't work out what you meant until it was too late. You did call it right though.

This is all a bit messy, but it now appears that while other shorters were buying on friday to close their positions (which if I understand it right they had to close), MS were selling them the shares they didn't yet own but had borrowed and then MS bought the new shares yesterday/today, because they were forced to, which closed their position. You couldn't make it up could you.

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Guest DissipatedYouthIsValuable
I was trying to follow your trades last week, but I didn't work out what you meant until it was too late. You did call it right though.

This is all a bit messy, but it now appears that while other shorters were buying on friday to close their positions (which if I understand it right they had to close), MS were selling them the shares they didn't yet own but had borrowed and then MS bought the new shares yesterday/today, because they were forced to, which closed their position. You couldn't make it up could you.

Will someone please illustrate how this works using the example of donkeys and donkey merchants?

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Sorry? Is it legal to use inside information to buy or sell shares?

If someone in the know had rung me up on Friday and said 'The HBOS rights issue is massively under-subscribed' - and I shorted the shares to make a profit - that would be illegal. Wouldn't it?

But because the underwriters are not 'making a profit' but are acting to offset losses - that makes it legal?

Whoever was on the other side of the short did not have the knowledge the underwriters had. Sounds like insider trading to me.

My goodness, you really are completely clueless on the subject, aren’t you? I suggest you look up what inside information is, because that ain’t it…

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Will someone please illustrate how this works using the example of donkeys and donkey merchants?

A farmer owns a field, and rents it out as donkey space to individuals (mainly doctors). However he can't make enough money renting the plots as his costs are too high and he lost some money recently on exotic donkey products. So he decides to buy more donkeys in and sell them to people who will then rent donkey space from him. A mate of his agrees, for a small fee, that if the farmer can't sell all the donkeys then he will buy them and pay the man rent until he finds buyers. As the sale gets underway, the farmer is struggling to sell the new donkeys infact he reckons only about 7% will go. The farmer gives his mate a nod of what is going on and his mate has a plan.... Several other donkey investors have been selling in advance, donkeys they didn't own but had borrowed off the existing donkey owners, in order to rebuy some of the new ones, thinking the price is sure to drop when the supply of donkeys floods the market. On the day before the donkeys are delivered, the farmers mate approaches these investors and offers to sell them donkeys, which the investors accept (having made a little profit) and they can now give a donkey back to the original owners. The farmers mate is now short donkey, but he knows that the next day there is more donkeys arriving that he must buy, which are at a lower rate than the ones he sold to the donkey investors. Everyones a winner, apart from any member of the public who has recently bought a donkey at an inflated price from the donkey investors.

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My goodness, you really are completely clueless on the subject, aren't you? I suggest you look up what inside information is, because that ain't it…

Well I didn't need to look it up but here it is anyway.

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

Examples of insider trading cases that have been brought by the SEC are cases against:

  • Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;

  • Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information;

  • Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded;

Now let's say an investment bank is asked to underwrite a rights issue. Now, they are in position to know something that other people in the market don't. That the rights issue they are underwriting is heavily under-subscribed. They short said shares and make money from someone who does not have the inside knowledge they have.

Please explain, instead of your patronising little comments, why this is not 'insider dealing'.

Edited by Lets' get it right

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A farmer owns a field, and rents it out as donkey space to individuals (mainly doctors). However he can't make enough money renting the plots as his costs are too high and he lost some money recently on exotic donkey products. So he decides to buy more donkeys in and sell them to people who will then rent donkey space from him. A mate of his agrees, for a small fee, that if the farmer can't sell all the donkeys then he will buy them and pay the man rent until he finds buyers. As the sale gets underway, the farmer is struggling to sell the new donkeys infact he reckons only about 7% will go. The farmer gives his mate a nod of what is going on and his mate has a plan.... Several other donkey investors have been selling in advance, donkeys they didn't own but had borrowed off the existing donkey owners, in order to rebuy some of the new ones, thinking the price is sure to drop when the supply of donkeys floods the market. On the day before the donkeys are delivered, the farmers mate approaches these investors and offers to sell them donkeys, which the investors accept (having made a little profit) and they can now give a donkey back to the original owners. The farmers mate is now short donkey, but he knows that the next day there is more donkeys arriving that he must buy, which are at a lower rate than the ones he sold to the donkey investors. Everyones a winner, apart from any member of the public who has recently bought a donkey at an inflated price from the donkey investors.

Does that mean that any member of the public who has recently bought a donkey at an inflated price from the donkey investors is an a$$?

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Well I didn't need to look it up but here it is anyway.

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

Examples of insider trading cases that have been brought by the SEC are cases against:

  • Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;

  • Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information;

  • Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded;

Now let's say an investment bank is asked to underwrite a rights issue. Now, they are in position to know something that other people in the market don't. That the rights issue they are underwriting is heavily under-subscribed. They short said shares and make money from someone who does not have the inside knowledge they have.

Please explain, instead of your patronising little comments, why this is not 'insider dealing'.

The team that shorted the shares would (most likely) not have had access to any inside information. The team would have been seperate from the team that did have inside information. As such, the team that shorted the shares would not be considered to have executed an insider trade.

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Guest DissipatedYouthIsValuable
A farmer owns a field, and rents it out as donkey space to individuals (mainly doctors). However he can't make enough money renting the plots as his costs are too high and he lost some money recently on exotic donkey products. So he decides to buy more donkeys in and sell them to people who will then rent donkey space from him. A mate of his agrees, for a small fee, that if the farmer can't sell all the donkeys then he will buy them and pay the man rent until he finds buyers. As the sale gets underway, the farmer is struggling to sell the new donkeys infact he reckons only about 7% will go. The farmer gives his mate a nod of what is going on and his mate has a plan.... Several other donkey investors have been selling in advance, donkeys they didn't own but had borrowed off the existing donkey owners, in order to rebuy some of the new ones, thinking the price is sure to drop when the supply of donkeys floods the market. On the day before the donkeys are delivered, the farmers mate approaches these investors and offers to sell them donkeys, which the investors accept (having made a little profit) and they can now give a donkey back to the original owners. The farmers mate is now short donkey, but he knows that the next day there is more donkeys arriving that he must buy, which are at a lower rate than the ones he sold to the donkey investors. Everyones a winner, apart from any member of the public who has recently bought a donkey at an inflated price from the donkey investors.

And all the time, these donkeys can just sit in a field minding their own business and eating carrots?

While the fabric of the financial universe unfolds around them and a few gullibles get stiffed?

I'm finding the World increasingly odd.

I think I'd rather be a donkey.

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The team that shorted the shares would (most likely) not have had access to any inside information. The team would have been seperate from the team that did have inside information. As such, the team that shorted the shares would not be considered to have executed an insider trade.

This would make it less of a hedge as much as a straighforward gamble then. But very naive to assume that big news like a failing rights issue is not common knowledge throughout the bank. As is always the case, the big boys never get caught for insider trading as tehy can just argue that it was in the normal course of buiness as tehy often put rhough large volumes. Its only the small people that get caught because the insider trades are not buried amongst a load of others.

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  • 401 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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