Sublimierte Marktmanipulation - Programtrading
Zu den gesetzlichen Erleichterung der Marktmanipulation durch Institutionelle kommen noch die Gefahren computergesteuerten Handelns größerer Häuser. Davon hat Kostolany schon gesprochen, als die technischen Möglichkeiten noch weniger ausgefeilt waren.
Der folgende Artikel aus dem Forbes Magazin läßt ahnen, wie chancenlos Kleinanleger im Aktienmarkt geworden sind.
In den globalisierten Aktienmärkten scheinen die Risiken für den "breiten Markt" unverhältnismäßig weit höher zu liegen, als die möglichen Chancen.
http://www.forbes.com/2008/02/06/...oped-cz_rl_0207croesus_print.html
- Yes, Mr.President, they're holding the line!
- Ok Condi! - Sam? Hi Sam, this is George speaking. Could you do me a favour, Sam?...
(of the U.S. Government)
in Financial Markets
by Robert Bell
April 3, 2005
Summary: The U.S. government is manipulating all major U.S. financial markets—stocks, treasuries, currencies. This article shows how it is possible and how it is done, why it is done, who specifically is doing it, when they do it, and where they get the money to do it.
http://www.financialsense.com/editorials/reality/2005/0403.html
by Greg Palast
http://globalresearch.ca/index.php?context=va&aid=8336
Subprime-lending an sozial schwache Angehörige von Minderheiten wurde offensichtlich eingeführt unter der Bush-Regierung als lukratives Geschäftsfeld für Bushs Wahlkampf-Unterstützer.
Wer das laut ausspricht oder sich gar dagegen verwehrt wird fertiggemacht - schließlich hat jeder Mensch eine Schwäche ...
Die uptick-rule konnte als eine Sicherungsmaßnahme bei fallenden Märkten oder auch Einzelaktien gelten, denn sie hielt die Geschwindigkeit des Abverkaufs einigermaßen in Grenzen. Durch die Verzögerung hatten Investoren also wenigstens eine Chance zu reagieren.
Man mag zu Cramer stehen, wie man will, aber in diesem Fall sind seine Befürchtungen sicher berechtigt.
Reaction to SEC's Elimination
On the March 20, 2008 episode of Mad Money, Jim Cramer launched his campaign to reinstate the Uptick Rule. Citing the wild swings of the market since its elimination, Cramer pointed out that the SEC eliminated the rule during a bull market, when liquidity was not a problem. Cramer believes that, without the Uptick Rule in place, short sellers are devaluing perfectly solid stocks. As a former hedge fund manager, Cramer admitted to making millions short selling with the Uptick Rule in place. Without an impediment such as the Uptick Rule to slow down the pace of short sellers, Cramer believes it puts the market at risk for the very problems that lead to the Great Depression.
Offensichtlich wollte die jetzige Regierung ihren Wahlfinanzierern einen letzten Dienst erweisen, und die Volatilität in den Märkten bis zum Anschlag erhöhen. Die subprime-Krise, die ebenfalls erst durch Neuregelungen, diesmal bei der Hypothekenvergabe
entstanden ist, bildet den dazu passenden Hintergrund. Die Hysterie der Privatmedien verstärkt den Effekt.
Massives Naked-shorting, also Leerverkauf ohne vorheriges Borgen der darunterliegenden Aktie bleibt verboten, jedoch völlig unkontrolliert. Solche Verbote ähneln eher moralischen Appellen - darüber lacht die Finanzwelt herzlich.
Verflechtungen von Politik und Finanz sind ja nicht so neu. Aber Fahrlässigkeit und kriminelle Energie scheinen langsam neue Dimensionen anzunehmen, wenn die Absicherung gegen seit Jahrzehnten bekannte Risiken sozusagen unauffällig verschwindet.
Man kann wohl davon ausgehen, daß die Bush/Cheney Regierung ihre Ämter nicht mit einem verlorenen Krieg, einer Rezession und einem Kollaps der Finanzmärkte verlassen wird. Bin wirklich gespannt, mit welchen Tricks sie den Markt wieder hochziehen werden.
Thursday, 20 Mar 2008
Blame the Bear Raids
The damage the market’s suffered since the U.S. Securities and Exchange Commission repealed the uptick rule last summer is undeniable, Cramer said during Thursday’s Mad Money, and regulators need to admit their mistake.
Cramer’s not blaming the Dow’s decline to 12,361 from 13,577 solely on the SEC’s decision, but the size, severity and even savageness of the declines we’ve seen since July are without question the product of this new open season for short-selling, he said.
So what is this uptick rule? After the short-selling bear raids that caused the crash of 1929 and the endless knockdown of stocks that followed, regulators required that there be a buyer willing to pay more for a stock than the last sale, known as an uptick, before that stock could be sold short. Basically, a stock had to go up a bit before it could be brought down.
That rule stayed in effect for almost 80 years until July, 6, 2007, when the SEC got rid of it. Hedge funds lobbied for a repeal, and the feds conceded after a test proved life without the uptick would be just fine. Of course, that test took place during a bull market, where a bear raid would never happen, and not an environment like the one we have now where raids are rampant.
No wonder the SEC didn’t think the sharp declines caused by bear raids could happen in today’s market. They claimed smaller spreads, higher liquidity and greater transparency would prevent such drastic downturns. But spreads don’t matter, Cramer said, and that liquidity, courtesy of a brokerage credit crisis, has disappeared.
The SEC also said that “regulatory surveillance” will “reduce the risk of undetected manipulation.” But, as Cramer pointed out, it’s too late by the time regulators get involved. Bear raids destroy confidence, taking the stock even lower, then the self-fulfilling nature of the declines gets reinforced when investors assume the company’s going out of business, causing a run, much like what happened to Bear Stearns
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So the SEC’s “recreated exactly what happened in the 1930s in this country,” Cramer said. “The cause and effect is real.”
So he called for a return to the uptick rule, for the sake of individual investors everywhere. After all, when a multibillion-dollar hedge fund is selling short 500,000 shares of a stock, shareholders are helpless.
“We will not have peace in the markets until [the uptick rule] is restored,” Cramer said.
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website?
© 2008 CNBC, Inc. All Rights Reserved
The new part is the hedge funds and the changing of Wall Street from a financing entity to a market manipulation entity. The new part is hedge funds with (supposedly) $1.5 trillion in capital, immense hedge funds within banks and investment banks. The new part is that they have so much money and so much selling power that they can do what capitalists really want and love to do: to make money not by betting on the markets, but by controlling the markets, by putting so much sell side (and occasionally buy side) firepower in play that they know they will move the markets. This takes all that annoying uncertainty out of it.
The task of the hedge funds is to find a weak spot in the market, and to put so much pressure on it that they can move it down, scare other players into selling (with the endless help of guileless journalists), wreak havoc with the markets’ indexes and then create that much more selling. Once the process starts rolling, it’s shooting fish in a barrel.
Just think of what the short sellers did to Bear Stearns. It’s true that Bear Stearns’s fabled risk management was not up to par in its portfolio. But it’s also true that without the hedge fund heavies of great wealth and great gossip beating them to the ground, Bear would surely have “shlepped it through,” as we say.
...
This is important for two reasons. One, if market manipulators terrify the banks, lending will slow, and the economy will really falter. It won’t be rumor. It will happen.
Second, as the hedge funds change the stock market into a chamber of horrors, the retirement hopes of tens of millions of Americans will be dashed, and the stock market as a place for sensible Americans to place their money for long-term growth will be destroyed. The stock market will be just a place for the sharks to eat one another, instead of eating us little fish, as they have been doing lately. (To be fair, they also eat one another when they can, and do not always act in concert by any means — but when they do, look out below.)
WHAT to do? Laws requiring far more transparency in hedge fund trading are needed. They need to be enforced. And, second, there are laws against schemes and artifices to defraud. The current Securities and Exchange Commission basically ignores them.
It just might be time to use them. Careful and prudent investigation of market manipulation would calm the waters. At present, we have basically turned over the securities markets to the Crips and the Bloods. It’s time to reclaim them for semi-decent people.
http://www.nytimes.com/2008/03/23/business/...oref=slogin&oref=slogin
May 28, 2008
ATLANTA, May 28 /PRNewswire/ -- Today the legal consortium of The O'Quinn Law Firm and Christian Smith & Jewell, both of Houston, Texas and Bondurant, Mixson & Elmore, LLP of Atlanta, Georgia filed a Complaint in the State Court of Fulton County, Georgia on behalf of certain shareholders of TASER International Inc. ("TASER") against eight of the largest Wall Street firms, including Bank of America Securities LLC, Bear Stearns Securities Corp., Credit Suisse USA Inc., Deutsche Bank Securities, Inc., Goldman Sachs Group, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley & Co. Inc., UBS Securities LLC. The Complaint accuses the defendant firms of engaging in a conspiracy to manipulate the market for TASER stock through naked short selling resulting in the creation, loan and sale of counterfeit TASER shares. (Naked short selling involves the practice of selling stock short without borrowing or otherwise obtaining shares of that stock. When a defendant firm short sells shares of TASER stock it does not possess or intend to obtain, that sale can result in the creation of counterfeit shares because the short seller is in effect introducing additional shares into the market rather than engaging in a transaction using existing shares).
According to the seventy-page Complaint, the defendants' illegal naked short selling of TASER stock flooded the market with counterfeit TASER shares. For example, although in 2005 TASER had authorized and issued only approximately 60 million shares of common stock, more than 80 million votes were cast at the company's annual meeting.
The Complaint accuses the defendant firms of violating Georgia's Racketeer Influenced and Corrupt Organization (RICO) Act. "These are not isolated incidents: we believe the trading data evidences an ongoing and coordinated effort to violate securities and other laws," stated Attorney Wes Christian.
The Complaint describes the various means the defendant's have allegedly employed in an effort to conceal their unlawful conduct, including citing instances where the defendant firms have marked short sales as long positions, submitted inaccurate short interest reports and inaccurately netted short interest positions against longs. The Complaint also identifies specific instances in which defendant firms have been fined by securities regulators for this very conduct.
According to the Complaint, by creating, loaning and selling counterfeit shares, the defendant firms have diluted TASER stock and artificially depressed its value, harming TASER shareholders. Attorney Christian promised: "We will work tirelessly to redress the wrongs that our clients have suffered."
SOURCE Christian Smith & Jewell; Bondurant, Mixson & Elmore, LLP
By JON NAJARIAN
Profiting from rumormongering needs to be addressed.
Editor's Note: Steven Sears, the regular writer of Striking Price Daily, is on vacation. Today's guest columnist is Jon Najarian, co-founder of optionMonster.com.
MANY OF YOU MAY be familiar with what Wall Street calls the old "pump and dump," whereby someone buys a stock, call option or future and then gets a rumor started about either a takeover, or scarcity of some commodity due to war, act of God, etc. In the pump phase the buyer accumulates a long position in that stock, index, future and then as the rumor circulates, the dump comes as the rumormonger exits his or her longs, selling into the feeding frenzy of the gullible followers.
One fundamental component of the pump and dump is that the rumor must be believable. The follow-along buyers need to believe the rumored buyer of Company A or a missile test by Israel could indeed be the catalyst for the bulls. The other components are central to the basics of trading activity since the beginning of time: Fear and Greed. In the case of the pump and dump, the party starting the rumor is counting on Greed, but the flip side of that is an even more nefarious and dangerous practice that is driving volumes today and that's Fear.
The Fear Factor version of the pump and dump is the polar opposite of the plain-vanilla buy calls, spread rumor, take profits. The Fear Factor version is accomplished when the rumormonger buys put options, which convey the right to sell the stock or index, then they spread the rumor through texting by IM and in chat rooms through their minions. When the market reacts, they sell out the puts, which jump dramatically in value as volatility surges and shares tumble.
Just this week we have two prime examples of the Fear Factor, as Freddie Mac (ticker: FRE) and Lehman Brothers Holdings (LEH) were targeted by the bears. In the case of Freddie the rumor was that a block of 25 million shares was "being shopped" to institutional investors. Since the three-month average daily turnover of Freddie shares was 13.6 million, a block of this size would clearly overwhelm the market. The rumor planter profited mightily as shares collapsed from $13 to $9.88 on Wednesday. The July 10 puts for Freddie (FRESB) traded from 20 cents to $4.00 in less than 24 hours, a staggering 20-fold return! The feeding frenzy for those puts was staggering, as over 72,000 contracts changed hands against a 30-day average trade of just 11,300 contracts.
The very next session (today) the rumormongers ran the Fear Factor on one of their favorite targets: Lehman. Step 1: In the first hour of trading the bears bought some 90,000 puts in Lehman, with the stock trading at $20. Step 2: The message boards start buzzing about Pimco, the world's largest bond fund, and how it was pulling business from Lehman. Step 3: The perpetrators liquidate (sell) their puts, and leave the follow-along traders holding the bag.
As we watched this transpire, we blogged, "Today we're hearing, perhaps started by the same hedge-fund group (that ran the Freddie rumor), that Pimco is pulling money from Lehman. That would create a run on Lehman and while the firm is obviously battered, but I seriously doubt that Bill Gross (Pimco founder) would issue a death sentence for Lehman, which a liquidity crisis would clearly do to the investment house. Tread carefully here folks, as a denial from Gross or Pimco co-CEOs William Thompson, or Mohamed El-Erain would result in a very fast bounce-back rally for Lehman."
As if we had written the script, a Pimco spokesman denied the rumor and shares of Lehman rallied from $15.98 to $18.20 over the next 15 minutes. The put trading also reversed, flipping from those 90,000 puts being bought on the offer, to another 100,000 puts sold on the bid! The July 12.50 puts (LYHSV) ran from 19 cents to $1.00, a fivefold return in one hour! The July 15 puts (LYHSC) ran from 39 cents to $1.82, a gain of 466%!
Last week in an interview with Charlie Rose, JPMorgan Chase (JPM) CEO Jamie Dimon addressed the fearmongering that contributed to the downfall of Bear Stearns when he said, "If I was the SEC, I'd find out who made the money (on the Bear Stearns meltdown) and I'd investigate like they do when they come after us all the time: e-mails, phone records -- you name it, and I'd find out."
I would echo what Mr. Dimon said, and if I am right and there are indeed people out there who are buying puts, rumormongering to get a panic started, and then stuffing their pockets with ill-gotten gains, those individuals should be prosecuted. A scan of the large buyers of puts on days when these rumors pummel stocks would very likely yield the firm or individual that started the very damaging and dangerous wheel in motion.
To those who say this is curtailing free speech, I say -- give me a break. If you have legitimate disagreement with financial statements a la Greenlight Capital's David Einhorn, then talk yourself silly. On the other hand if you are not expressing your doubts about the financial health of a company, but instead knowingly spreading a lie to profit from a market meltup or meltdown, then the SEC needs to do its job.
Aus einem US-board
On July 11, 2008, pingdave posted the following:
So every rumor today was false again.
Rumor: The US Government is going to take over FNM and FRE making the stock worthless!
Fact: Paulson came out said the government wants to support them in their current form, and currently sees no need to do anything now. He and other officials said yesterday that both FNM and FRE were fully capitalized.
Rumor: Israel was flying planes into Iraq air space on test flights.
Fact: Denied that completely in Israeli paper. Not flying at all into Iraq air space. No flights happened.
Yet, here we are. The result of this false rumormongering crap: Oil is up, markets at lows.
And what is the real news today?
1. GE didn’t miss, as many had expected like last time, instead, it reported in line.
2. Trade balance was better than expected, US exports were strong.
3. Michigan consumer sentiment came in better than expected.
If the government wants to stop this and restore some sanity to the public markets, they need to:
* Rescind the ability to trade on margin on oil futures.
* Reinstate the uptick rule.
* Halt trading on FNM, FRE and LEH for 4 weeks while the investigate the trading in these companies, and demand records of all transactions of options for the last month.
* Then find and prosecute the people doing this crap.
A Scandal Unfolds, and the Media Mob Scampers
July 11th, 2008 by Mark Mitchell
Three years ago, Deep Capture reporter and Overstock CEO Patrick Byrne gave a famous conference call that he titled, “The Miscreant’s Ball.” His thesis was simple: Some short-selling hedge funds collude to destroy public companies by spreading misinformation, orchestrating government witch hunts, filing bogus class-action lawsuits, and, most egregiously, selling billions of dollars worth of phantom stock.
In the months that followed “The Miscreants Ball” presentation, a clique of journalists with close ties to short-selling hedge funds and CNBC’s Jim Cramer (himself a former hedge fund manager), set out to sully the reputations of Patrick and everyone else who sought to expose short-seller crimes.
Cramer pal Joe Nocera, who is the New York Times’ top business columnist, wrote that Patrick’s crusade against hedge funds that sell phantom stock was “loony beyond belief.” CNBC contributor and Marketwatch columnist Herb Greenberg, formerly an editor with Cramer’s web publication, TheStreet.com, labeled Patrick the “worst CEO in America” for taking on the shorts (ie., the same shorts who are now paying Herb for “independent” financial research). Fortune magazine’s Bethany McLean, who has yet to write a story that was not sourced from a small group of short-sellers connected to Jim Cramer, suggested in an article titled “Phantom Menace” that Patrick should be fired from Overstock for speaking out against the problem of phantom stock.
At the time, I was the editor of the Columbia Journalism Review’s online critique of business journalism. The attack on Patrick was like nothing I’d seen before, so I decided to write a story about the media’s coverage of short-sellers and phantom stock. When Herb Greenberg and Joe Nocera got word of this, they both called my editor demanding that he kill the story. Cramer sent a public relations goon to delay the story. Then a short-selling hedge fund, Kingsford Capital, appeared in my offices and offered to pay my salary.
My successor at the Columbia Journalism Review is now called “The Kingsford Capital Fellow.” One of Kingsford Capital’s managers was a founding editor of Cramer’s website, TheStreet.com. I do not believe that Kingsford’s interest in the Columbia Journalism Review is philanthropic. And I do not believe that the Columbia Journalism Review, “the nation’s premier media monitor” is capable of objectively monitoring the financial media so long as it’s chief writer on the subject is paid directly by this very controversial, Cramer-connected, short-selling hedge fund.
Perhaps facing similar pressures, or perhaps because they are unwilling to contradict Cramer’s influential Media Mob, or maybe because they’re just plain lazy, other journalists have shied away from covering the problem of illegal short-selling. Instead, reporters have incessantly repeated the party line that “short selling is good for the market. Only bad CEOs complain about short-sellers.”
In March, short-sellers destroyed Bear Stearns by spreading false information and selling millions of phantom shares. And now the shorts are going after another major investment bank. In a week of high drama, hedge funds have been circulating blatantly false and hugely damaging rumors that big institutions are pulling their money out of Lehman Brothers. If March SEC data is any indication, the shorts are also selling millions of dollars worth of phantom Lehman stock.
One of the nation’s most important investment banks is down, and another is on the brink. The American financial system wobbles.
And, suddenly, Cramer’s Media Mob is silent. Gone is all of the talk about Patrick Byrne being crazy. Nocera says nothing about the attacks on Lehman and Bear. Bethany McLean recently wrote a favorable review of a book written by David Einhorn, the most prominent short-seller of Bear Stearns and Lehman, but she dares not mention the current market predations.
Herb Greenberg, who used to sing the praises of short-sellers almost weekly, was last heard defending his hedge fund friends in April. CNBC seems to have taken him off that beat. (The network recently dispatched Herb to the San Diego County Fair, where he interviewed a vendor of deep-fried Twinkies).
But Jim Cramer is talking. No doubt to distance himself from the growing scandal, he went on CNBC today and said precisely what Patrick Byrne said three years ago. Noting that short-sellers are colluding to take down Lehman, he said the problem is “the need to be able to get a borrow and see if you can find stock….. no one is even calling to see if they can get a borrow. [In other words, hedge funds are selling stock they don’t have -- phantom stock]. It’s kind of like, well listen, let’s just knock it down. It’s very similar to what Joe Kennedy would have done in 1929 [leading to Black Monday and the Great Depression] which is get a couple of cronies together and let’s take it down…”
Too late, Jim. For three years, you, CNBC, and a clique of journalists very close to you have ignored this crime because your short-selling hedge fund cronies claimed that phantom stock is not a problem. Meanwhile, hundreds of companies have been affected. Billions of dollars of value have been wiped out. And lives have been destroyed.
It is one of the most ignominious episodes in the history of American journalism
SEC Moves to Curb Short-Selling
By KARA SCANNELL and JENNY STRASBURG
July 16, 2008; Page A1
WASHINGTON -- The Securities and Exchange Commission took unprecedented action against short sellers on Tuesday, acting on a widespread concern that negative bets against bank and brokerage stocks might be exacerbating the financial sector's woes.
[Chart]
In a dramatic emergency order, the SEC said it would immediately move to curb improper short selling in the stocks of struggling mortgage giants Fannie Mae and Freddie Mac, as well as those of 17 financial firms, including Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Morgan Stanley and Merrill Lynch & Co.
The plan, which is expected to go into effect on Monday, will expire in 30 days. But the SEC will also begin considering whether to extend the new requirements to all stocks traded in the U.S. The actions represent one of the most extensive attempts by a government agency in recent years to control short selling.
It's far from clear whether the move, which sparked a barrage of criticism, will curb the activity of short sellers. While its aim is to curb abuses, it also would add an additional layer of bureaucracy to legitimate transactions.
Some critics say the move is simply an attempt by the SEC to show that it is taking action when it is under pressure for not doing enough to police markets. SEC Chairman Christopher Cox, in particular, has come under fire for not being a more visible figure at a volatile time.
Short selling is a legitimate trading strategy in which traders aim to profit from falling stock prices. Shorting can act as a corrective force at times of rampant bullishness in markets, its defenders say. But it has long been controversial because it pits investors, notably hedge funds, against companies that are eager to see their share prices high.
[Christopher cox]
Richard Baker, the former Louisiana congressman who is now president of the Managed Funds Association in Washington, the biggest hedge-fund industry group, said the SEC's emergency action "is aberrant, it's unusual, and it may be without precedent. I was a little surprised by the scope of this, the speed with which the decision was made, and the potential consequences to market functioning." The MFA will seek meetings with regulators to discuss their reasoning, he said.
The regulatory action is of great symbolic importance to Wall Street, which has complained long and hard about what they suspect is manipulative trading in their stocks, which have been pummeled this year. Bear Stearns Cos. imploded in March and now is part of J.P. Morgan Chase & Co.; Lehman's shares have plunged this year. The financial firms placed under the SEC's protective umbrella have been some of the hardest hit in recent trading.
The chief executives at Lehman and Bear Stearns have made private calls in recent months to, among others, Goldman Sachs Group Inc. CEO Lloyd Blankfein to raise questions about whether Goldman was helping to fuel, even indirectly, pressure on their firms' shares, according to people familiar with the matter. Short interest, or the amount of short positions outstanding, is at an all-time high, at 18 billion shares, for NYSE Euronext listed stocks.
The battle between regulators and short sellers has a long history -- dating back at least to the South Sea Bubble of the early 18th century -- and short sellers have usually won. It's hard to prove that short sellers manipulate markets or that they perpetuate false rumors that pummel stocks.
In a short sale, a trader borrows stock and then sells it, in hopes it will later fall in price. If it does, the short seller then buys the stock in the open market at the lower price, returns what was borrowed, and pockets the difference.
The SEC said Tuesday's move aims to stop "unlawful manipulation through 'naked' short selling." Naked shorting refers to the practice of selling stock short without taking steps to borrow it.
Critics say short sellers band together and sell shares of a company all at once, overwhelming the market and driving its stock price down. That can set off a chain reaction, with shareholders getting nervous and selling. Critics say the short sellers then close out their bets at tidy profits. In practice, this is extremely difficult to do with big companies whose stocks are heavily traded, although smaller companies are more vulnerable.
Under current rules, a short seller must first locate shares to borrow, but does not have to enter into a contract with the share lender. Often, more than one trader is able to borrow the same shares, creating a multiplier effect in the size of the total short position.
Under the emergency order, a short seller would be required to have an actual agreement to borrow the shares. The new move would effectively take shares out of the market for borrowing, which could reduce the amount of stock available for selling short.
The SEC has started clamping down on short selling, indicating it is worried about the impact such trades are having on the financial system. It's investigating whether traders used a combination of false rumors and short selling to drive down shares of Bear Stearns earlier this year. Lehman is engaged in a public fight with certain short sellers, which has also prompted an SEC investigation.
On Sunday, the SEC said it would crack down on firms or individuals that illegally spread false rumors. In its various short-selling investigations, the SEC has sent subpoenas to more than 50 hedge funds, some as recently as Monday.
Critics of the SEC's move Tuesday asked why certain financial firms were being protected -- but not the broader market -- especially when many of those firms are also active short sellers.
"For heaven's sakes, they're the very ones we believe have been doing this...to thousands of public companies," said James "Wes" Christian, a lawyer with Texas law firm Christian, Smith & Jewell, who represents companies who have filed lawsuits relating to short selling.
An SEC official said the agency focused on financial firms that were of a significant size. "Drastic falls [in stock prices] can end up destroying confidence in the firm altogether, which is not true for bricks-and-mortar industrial companies," the official said.
Evading Restrictions
It's unclear to what extent the emergency action will reduce short selling in the stipulated stocks. The financial companies have large "public floats," meaning many shares are available in the market for short sellers to borrow. James Angel, an associate finance professor at Georgetown University, said that if the rules were extended to other stocks, the biggest impact would be on thinly traded stocks that are hardest to borrow.
Charles M. Jones, a finance professor at New York's Columbia University, says there are numerous ways to evade restrictions on short selling. Traders are free to short U.S. stocks in overseas markets, unhindered by U.S. securities rules.
New York hedge-fund manager Whitney Tilson called the proposals a "desperation move" that could end up silencing investors who are among the first to point out problems at troubled companies.
"What do I think is really going on here?" he asked. "I think that regulators are very, very concerned about the collapse of the stocks of major U.S. financial institutions and are grasping at straws as to what to do about it." Mr. Tilson's hedge fund has had short positions on banks and brokerage firms, including Lehman, Washington Mutual Inc. and Wachovia Corp., as well as big bond insurers.
Some market observers say the SEC's elimination of the so-called up-tick rule in 2007 has contributed to the current market volatility, and they want the agency to reinstate that rule instead of taking the emergency action.
The up-tick rule barred short sellers from selling unless the stock price was rising, which had the effect of cushioning the market impact of such selling. It was a symbolic barrier against the kind of short selling that could cause stocks to fall precipitously.
Mr. Cox said the SEC was open to implementing some kind of similar price test, but he didn't elaborate.
For nearly as long as stock markets have existed, authorities have tried to restrict short selling. And for as long as they have tried, they have failed. In 1733, in the aftermath of the South Sea Bubble, the British House of Commons banned what today would be called naked short selling. The law remained in force for more than 150 years, even though, as financial historian Charles Duguid noted in 1901, "it was at no time seriously operative."
On Apr. 10, 1792, the New York state legislature banned short selling. Five weeks later, two dozen stockbrokers banded together to sign the Buttonwood Agreement, which created what became the New York Stock Exchange, where short selling occurred with abandon. Last month, Pakistan banned short selling on the Karachi Stock Exchange for a month, after declines. In the 1990s, Hong Kong temporarily banned short sales, and the Malaysian finance ministry proposed that anyone caught short selling should be punished by caning. Neither measure prevented those markets from falling during or after the 1998 Asian crisis.
Efforts to restrict short selling are "silly but harmless," says short-selling expert Owen Lamont, formerly a finance professor at Yale and now a money manager at DKR Fusion in Boston. Mr. Lamont adds that the SEC initiative "might have some impact on investors' faith in the system. But I don't see how it could possibly stabilize the markets in a fundamental way."
Minimal Impact
Other legal experts predicted the new SEC program would have minimal impact. "In the near term, short sellers may see some marginal increase in their cost of borrowing, as brokers adjust their operations," said Laurel FitzPatrick, a partner at the law firm Ropes & Gray LLP, who advises hedge funds on trading and other regulatory issues. "Ultimately, neither this rule, nor the SEC's indications that they are looking to bring enforcement cases against sellers spreading rumors, will reduce short selling if sellers believe a stock is overvalued."
The SEC announcement didn't bolster shares of Fannie Mae or Freddie Mac, which fell 27% and 26%, respectively, on Tuesday.
Short sellers have been targeting Fannie and Freddie more aggressively than they were a year ago. At the end of June, there were 138.7 million shares shorted of Fannie, compared with 17.2 million for June 2007. For Freddie, the figures were 82.8 million shares, versus 12.5 million a year ago.
http://www.sec.gov/spotlight/keyregshoissues.htm 1. Is all naked short selling abusive or illegal? When considering naked short selling, it is important to know which activity is the focus of discussion. * Selling stock short without having located stock for delivery at settlement. This activity would violate Regulation SHO, except for short sales by market makers engaged in bona fide market making. Market makers do not have to locate stock before selling short, because they need to be able to provide liquidity. However, market makers are not excepted from Regulation SHO's close-out and pre-borrow requirements. * Selling stock short and failing to deliver shares at the time of settlement. This activity doesn't necessarily violate any rules. There are legitimate reasons why a seller may fail to deliver on the scheduled settlement date. * Selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security's price. This manipulative activity, in general, would violate various securities laws, including Rule 10b-5 under the Exchange Act. Regulation SHO does not address this issue. ............... There also may be instances where a company insider or paid promoter provides false and misleading excuses for why a company's stock price has recently decreased. For instance, these individuals may claim that the price decrease is a temporary condition resulting from the activities of naked short sellers. The insiders or promoters may hope to use this misinformation to move the price back up so they can dump their own stock at higher prices. Often, the price decrease is a result of the company's poor financial situation rather than the reasons provided by the insiders or promoters. Naked short selling, however, can have negative effects on the market. Fraudsters may use naked short selling as a tool to manipulate the market. Market manipulation is illegal.29 The SEC has toughened its rules and is vigilant about taking actions against wrongdoers.30 Fails to deliver that persist for an extended period of time may result in a significantly large unfulfilled delivery obligation at the clearing agency where trades are settled. Regulation SHO is intended to address these effects by reducing the number of potential failures to deliver, and by limiting the time in which a broker can permit a fail to deliver to persist. For instance, as explained above, Regulation SHO requires brokers and dealers to close-out the open fail-to-deliver positions in "threshold securities" (i.e., securities that have experienced a substantial number of extended delivery failures) that have persisted for 13 consecutive settlement days.
markiert, hakt es eben immer wieder. Es ist auch keinefalls so, daß der Wert nach 13 Tagen, wie vorgeschrieben, von der RegShoListe (http://www.buyins.net/tools/short_list.php?dys=%3E12) verschwindet, sondern einige Unternehmen sind darauf faktisch Jahre lang zu finden. Eines der bekanntesten Beispiele ist Overstock OSTK. Dessen CEO Patrick Byrne ist mehrfach öffentlich gegen diese Praxis aufgetreten, die zwar verboten ist, von den zuständigen Stellen aber kaum verfolgt wird.
Wichtiger in diesem Zusammenhang ist das Streuen und die Verbreitung von Gerüchten zur Kursmanipulation - durch bezahlte "Promoter" in message Boards oder willige Medienarbeiter. Das ist illegal und gilt als "wrongdoing", wogegen sich Goldman ja heute so treuherzig verwahrt hat. Die unmittelbare Nähe von Analyse und Investmentabteilungen bei großen Banken bleibt dabei ein heikler Punkt.
Es paßt ins Bild, daß ausgerechnet diejenigen, die diese Praktiken wohl am besten kennen, die großen Investmenthäuser wie Bear Sterns und Lehman, sich jetzt von short-sellern, Insiderhändlern und Gerüchteköchen verfolgt fühlen und nach der SEC schreien.
Aber sei's drum. Mich persönlich sollte es freuen, wenn durch konsequentere Anwendung bestehender Gesetze oder wenigstens der Drohung damit wenigstens etwas Vertrauen in diesen deregulierten laissez-faire Markt gebracht wird, den die Bush-Regierung durch die Abschaffung sinnvoller Strukturen in eine Spielhölle verwandelt hat.
Broker-dealers engaged in bona-fide market making are excepted from having to borrow or arrange to borrow shares due to their potential need to facilitate customer orders in fast-moving markets without possible delays associated with complying with Regulation SHO. For instance, as explained above, they may be required by their market making obligations to sell short in situations where it may be difficult to quickly locate and borrow securities.
However, this exception is limited. For example, bona-fide market making does not include activity that is related to speculative selling strategies or investment purposes of the broker-dealer or that is disproportionate to the usual market making patterns or practices of the broker-dealer in that security.
Further, bona-fide market making does not include transactions whereby a market maker enters into an arrangement with another broker-dealer or customer in an attempt to use the market maker's exception for the purpose of avoiding compliance with Regulation SHO by the other broker-dealer or customer.
Company Ticker Symbol(s)
BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM
http://www.sec.gov/news/press/2008/2008-143.htm
Moderation
Zeitpunkt: 18.07.08 04:23
Aktion: Löschung des Beitrages
Kommentar: Regelverstoß - Doppelposting
Zeitpunkt: 18.07.08 04:23
Aktion: Löschung des Beitrages
Kommentar: Regelverstoß - Doppelposting
Ist ja vorsichtig formuliert,... Trotzdem fragt man sich manchmal schon, wer derartige Artikel wohl lanciert.
Es wäre ja auch schon grotesk, wenn man offiziell die SEC um eine Ausnahmegenehmigung bitten würde, damit man als großer Hedge Fund seelenruhig weiter kriminelle Handlungen wie illegales naked short selling begehen könnte. Also wird in dem Artikel der vermeintliche Schutz anderer vorgeschoben (US Exchanges), es wird indirekt mit steigenden Kosten gedroht, um normale Anleger zu schrecken. Und dann wird versucht zu suggerieren. die Liquidität der Märkte könne beeinträchtigt werden! Aha, man höre und staune, es gibt also in den USA ein Liquiditätsproblem!
Und warum das Geweine, die implizierten Drohungen und Verdrehungen? Weil sich Hedge Funds u.ä. für dreißig Tage (und bald hoffentlich für immer) an geltendes Recht halten sollen und ihre Manipulationen, mit denen sie das Finanzsystem ins Schleudern bringen, verzichten sollen.
Das ist schon kraß!
U.S. Exchanges May Seek Exemption to SEC `Naked Short Sale' Ban
http://www.bloomberg.com/apps/...20601087&sid=aWbkDUiKUgp4&refer=home
http://search.everyzing.com/...&dedupe=1&y=0&channel=41&x=0&e=7909995
Hier die wohl wichtigste Passage:
Because naked short selling is not considered to be widespread, hedge fund managers and the Managed Funds Association, one of the $2 trillion industry's trade lobby groups, called the move unnecessary as well as confusing.
Immerhin ist es offensichtlich seit Jahren so weitverbreitet, daß amtliche Stellen um das gesamte Finanzsystem fürchten.
Bemerkenswert auch, daß hier frech und dreist dreist eine Befreiung vom Gesetz, das für alle anderen gilt, eingefordert wird, und das gerichtet ausgerechnet an die Behörde, die diese Verstöße aufzuklären hat.
Aber die Aussichten auf Erfolg sind nicht ganz so hundertprozentig wie sonst, denn die Wahl steht vor der Tür.
UPDATE 2-SEC to grant market makers leniency on short sales
Fri Jul 18, 2008 2:49am BST
(Recasts, adds SEC statement and comments from hedge fund lobby group's head)
By Svea Herbst-Bayliss and Rachelle Younglai
BOSTON/WASHINGTON, July 17 (Reuters) - U.S. regulators said they would grant some leniency to certain market makers who sell stocks short, responding to pressure from fund managers and brokerages to clarify how new restrictions on the practice would work.
The guidance came from the Securities and Exchange Commission late on Thursday after it stunned financial markets by announcing unprecedented restrictions on short-selling two days before.
The rule, which takes effect on Monday and is expected to last at least 30 days, is designed to restrict improper short selling of shares in 19 financial firms, including recently battered Fannie Mae (FNM.N: Quote, Profile, Research), Freddie Mac (FRE.N: Quote, Profile, Research) and Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research).
"The staff is recommending exceptions to the short sale order for market makers of the 19 stocks and their derivatives from arranging to borrow in advance for short sales in their marketmaking and related hedging activities, to avoid constraining the market makers' provision of liquidity," SEC spokesman John Nester said by e-mail.
Separately, the SEC announced plans to crack down on people who may be spreading rumors to manipulate stock prices and dozens of hedge funds and brokerages received requests to turn over e-mails to regulators as they probe the collapse of Bear Stearns and a sharp decline in Lehman's share price.
More than 50 hedge funds and brokerages began receiving subpoenas in recent days, managers and their lawyers said.
Loosely regulated hedge fund managers, who often rely on selling stocks short to make money, complained that the rule would make their work more difficult and expensive.
"This ties both hands behind their backs," Perrie Weiner, co-chairman of the securities group at law firm DLA Piper, said of the new measure. "It has caused an uproar because the government is telling you that an otherwise legal practice is being restrained. It is Big Brother looking over your shoulder."
Short selling occurs when investors borrow securities and then sell them in the hopes their price will drop so they can repay the loan for less later and pocket the difference.
Corporate executives and politicians have blamed short sellers for recent sharp drops in financial stocks and many hedge fund managers now view the SEC's move as a last-ditch effort to try to stabilize financial stocks since the United States is already grappling with record-high energy prices, job losses and sluggish economic growth.
From Monday, regulators will be cracking down on so-called naked short selling where investors do not actually have the shares before selling them. Now people will have to make arrangements to have the shares in hand before selling them.
Because naked short selling is not considered to be widespread, hedge fund managers and the Managed Funds Association, one of the $2 trillion industry's trade lobby groups, called the move unnecessary as well as confusing.
SEC staff met with representatives from the MFA on Wednesday to discuss the logistics, said Richard Baker, a former congressman and the group's new chairman and CEO.
"Short selling is a legitimate and valuable trading strategy as well as a vital component of providing price discovery and promoting efficient markets," Baker said by e-mail, adding that since regulations already stipulate a three-day settlement, "it is not clear why this extreme measure is warranted."
The group expects the SEC to release a response to frequently asked questions by the end of the week, Baker said. (Editing by Tim Dobbyn and Braden Reddall)
http://uk.reuters.com/article/fundsNews2/idUKN1749299320080718?sp=true