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OT: Wonder where your money went?

Discussion in 'The Lounge' started by stoney, May 6, 2008.

  1. stoney

    stoney Part of the unwashed, middle-American horde

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    www.deepcapture.com

    This way off-topic for RM, but I know lots of individuals on the board are active traders and die-hard investors. There is a very large problem with our markets that make the current economic downturn pale in comparison to the potential fallout. It is the non-delivery of Short sales (naked short selling), intentional market manipulation, and the lack of enforcement of the laws designed to prevent it from occuring. The above mentioned is a problem to the tone of $300 Million Dollars/DAY (read $78billion/year), being illegally siphoned from retail investors and shareholders (all of us).

    The article is long (took me three hours to read), but the truth factor is scary. I have discussed the contents with many C-Level executives and they are aware of the problem, but letting Patrick Byrne and Overstock take point on the actions to fix the problem. The research firms and individuals listed are well known within Finance as "sketchy" and few knowlegable investors listen to them, but they are in the minority. Read it, spread the word, pass the link along. Hopefully a grass roots effort to our congressmen can put an end to this and allow us to receive the monies that is rightfully ours.

    *To the people who start commenting on tinfoil hats, read the article. It might be the last great, investigative journalism piece since Watergate.
     
    #1 -   May 6, 2008

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  2. SkaredShtles

    SkaredShtles I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!

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    Ummm..... P&WN forum n00B!
     
    #2 -   May 6, 2008
  3. ire

    ire Turbo Monkey

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    I already have mine on, so I'm good :biggrin: I'll read it in a bit, but I can't guarantee I'll make it to the end since it takes three hours (I have a short attention span)
     
    #3 -   May 6, 2008
  4. blue

    blue boob hater

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    Patrick Byrne is a fvcking moron. I've met him a couple times, he's just as offensive in person.

    That's all I have to add.
     
    #4 -   May 6, 2008
  5. stoney

    stoney Part of the unwashed, middle-American horde

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    Patrick Byrne: Networth >$500million
    Blue: Networth <$100,000

    Yep, he sure is a f'in moron to be able to make $500mm as a self-made multi-millionare...:lighten:
     
    #5 -   May 6, 2008
  6. SkaredShtles

    SkaredShtles I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!

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    You must be.....


    Stoneyd.

    :rolleyes:
     
    #6 -   May 6, 2008
  7. stoney

    stoney Part of the unwashed, middle-American horde

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    It sounds tin-foil, but every person in the market I talk with sees it, and knows about it, but there is not anything they can do about it because the people who can (congress) have no incentive to fix anything. The ground-swell hope is that when enough people know about it, and congress has jobs/bad publicity on the line, it will be acted upon. Until then, we just have to use Cramer as a contrarian indicator.
     
    #7 -   May 6, 2008
  8. N8 v2.0

    N8 v2.0 Not the sharpest tool in the shed

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    blue: Networth <<< $10,000
     
    #8 -   May 6, 2008
  9. blue

    blue boob hater

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    Yees, money is a good yardstick when measuring whether or not a person is a complete thundercunt.
     
    #9 -   May 6, 2008
  10. stoney

    stoney Part of the unwashed, middle-American horde

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    In the numbers we're talking about? Yes.
    Some of the biggest jackasses I have ever met are self-made multi-millionares. And they are also some of the smartest.
    I have worked on a daily basis with individuals with an average net worth of >$100 million dollars for the last 5 years. Many are complete jackasses, most are VERY smart, probably in the upper 99th percentile of the world.
     
  11. N8 v2.0

    N8 v2.0 Not the sharpest tool in the shed

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    not in your case true.
     
  12. jimmydean

    jimmydean The Official Meat of Ridemonkey

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    I know where my money went.

    Hookers and blow.
     
  13. stoney

    stoney Part of the unwashed, middle-American horde

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    I'm resurrecting this as it is a hot button in Congress and in Wall Street right now. The SEC has acknowledged that illegal naked short selling is occurring on a large scale and was a major factor in the collapse of Bear Stearns. This illegal activity is stealing wealth from all of us. If you have money in a 401k, IRA, or in the market in general,illegal naked short selling is illegally funneling your money to the wealthy elite. On top of the fact that they are stealing your money, they don't pay taxes on it. They are doubly robbing us all through a loophole in SEC rules that has not been closed despite massive outpouring of support by American citizens for an amendment closing the loophole.

    This is a trillion dollar theft and it effects up all. Despite Blue's disdain for Patrick Byrne this issue is real.

    I have written a general template letter that you can sent to your Congress people. It's two quick emails and takes 10min max.

    -------

    Dear Senator [name],
    I am sure you are familiar with Naked Short Selling, as it is the current topic of choice in Congress. I beg you to learn more about and press the topic of legal and illegal naked short selling and a lack of enforcement of current laws by the SEC. As it currently stands the only way to illegally naked short shares of a company, is through what is known as &#8220;the market makers exemption&#8221; of rule 203(b)(3)(iii) of Regulation SHO.
    There is currently an amendment, for completely eliminating the close out exemption for option market makers as proposed (not alternative 1 or 2: which are supported by the banks, as it does not close the loophole).
    There are also a few more:
    - an amendment to rule 200(g)(1)which will require a "locate" on short sales securities and proper marking of sales as "long" or "short".
    -amendment to rule 200(g)(1) proposed in the second round in release 34-56213; File No. S7-19-07 because equity investors are being harmed from mismarked sales as "long" when they are NAKED short which counterfeits shares--an illegal activity.
    Commentaries by many members of Congress and SEC chairman Christopher Cox state that there is no problem and &#8220;it is being studied&#8221;. It the time these studies have been taking place, Bear Stearns has collapsed, Lehman Brothers is near collapse, and billions if not trillions of dollars have been illegally siphoned from the assets of American citizens.
    Now Chairman Cox admits to Congress that his SEC has done less than a stellar job of dealing with this issue that now is so large it threatens Fannie Mae, Freddie Mac and major Wall Street firms. He says he wants to protect them from this monster that he has nurtured.
    The SEC is currently not enforcing these laws which were put in place in 1934, as these were causes of the 1929 market collapse that led to the Great Depression. The loopholes noted above have resounding support from the public, but are not supported by the large banks, as it makes it more difficult for them to make money. The reason it is more difficult, is because they actually need to locate shares that can be sold before selling them. These amendments have been resubmitted to the public forum multiple times, and each time the end result is the same, the public wants the loop holes closed. However they have never been closed, the SEC keeps doing studies.
    I bring this up because SEC Chairman Christopher Cox told the Senate Banking committee that he will temporarily prevent naked short selling on nineteen (19) major finance companies starting July 21. This is ironic because that&#8217;s what should have been happening regardless since the law was written in 1934, but I digress. It is important because today while under pressure from the exchanges, he has mentioned that he will try to keep the market maker exemption in effect. By keeping the market maker exemption in effect he is not preventing naked short sales, as the ONLY way to naked short sell is THROUGH the market maker exemption.
    He is pulling the wool over the eyes of congress and the American people while bowing to the will of the individuals illegally stealing the wealth of this nation. Please do not be fooled by his smoke screen. Please prevent this at the source, which is the lack of enforcement by the SEC and the loopholes allowing for the &#8220;market maker exemption.
    I am writing you to insist that Cox needs to stop all legal naked short selling, not just that of Mae and Mac and large firms that have Cox's ear. Naked shorting is illegal per the Securities Act of 1934. Naked shorting is very simply electronic counterfeiting of shares, no matter how the crooks dress it up. The very things that led to the 1929 crash have all been repeated electronically. This is what the Securities Act of 1934 was all about when it established the SEC, yet the present SEC chose to brush it aside and thus our present disasters.
    Cox needs to stop the naked shorting and make the trades all settle now - no more endless "studies", no more extended and re-extended comment periods. There needs to be no exceptions, including the worst yet, the market maker exemption. There is no excuse for trades, which are nearly all electronic to need more than three days to settle. There needs to be no more "grandfathering". There needs to be prosecutions instead.
    If Cox, who has repeatedly acknowledged his monster, is not up to addressing it, then we need someone else running the SEC.
    I realize that hedge funds and other big money interests, for whom naked shorting is an important tool for raping and pillaging small companies and investors, are also big campaign donors, and they are squealing like the stuck pigs that they are. But, they have taken us to the cliff. Enough is enough.
    Please do not write me back about short selling, this is about naked short selling, the counterfeiting of shares.
    More information of this topic can be found at www.deepcapture.com.
    Thank you.
    Sincerely,

    [Name]
    [City, State]
     
  14. jimmydean

    jimmydean The Official Meat of Ridemonkey

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    I still prefer hookers and blow.
     
  15. stoney

    stoney Part of the unwashed, middle-American horde

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    As do I, but this is a bigger issue. There were four primary causes of the 1929 market collapse that led to the Great Depression:
    1. Over extension of credit
    2. Market manipulation by unregulated pools
    3. Lack of an uptick rule (can't sell short unless there is an uptick - prevents bear raids/run on a security)
    4. Selling of non-existent shares

    These four causes can easily be translated to current times:
    1. Credit over extension. Do I really need to elaborate?
    2. Hedge fund market manipulation
    3. The uptick rule put into effect in 1934 to prevent bear raids was removed last year under heavy pressure from the hedge fund industry.
    4. Naked Short Selling

    The pieces are in play. How they are dealt with determines the outcome.
     
  16. jimmydean

    jimmydean The Official Meat of Ridemonkey

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    As long as the current admin makes a buck, nothing will change until next year at the earliest.

    Just when people said "it can't get any worse" it does.
     
  17. stoney

    stoney Part of the unwashed, middle-American horde

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    I agree, but apathy doesn't fix anything. IF you agree it's a problem, write your congress person. Copy/paste and address it accordingly. It takes five(5) minutes and even if it doesn't work, it gets the little birdie into the ear of the congress person. Once enough people mention it, they will eventually listen.
    No matter how much money special interest groups give them, the congress person is elected by their constituents, they will eventually listen or be unemployed.
     
  18. jimmydean

    jimmydean The Official Meat of Ridemonkey

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    Oh, I did. But being in Oregon, I am somewhat lucky in that we have two very solid senators (Gordon H. Smith (R) and Ron Wyden (D)) compared to some other states. They actually work together more than apart on local issues and have done a good job for the state.
     
  19. r464

    r464 Turbo Monkey

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    This is only the tip of the financial iceberg.

    Once you find out what else the hedge funds have been up to, the S&L scandals will look like nothing.
     
  20. stoney

    stoney Part of the unwashed, middle-American horde

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    How about a little bit of Fox news, since CNBC won't report on it. Well, I don't consider Cramer reporting, but it looks like he has seen the writing on the wall...

    http://glickreport.blogs.foxbusiness.com/2008/07/29/the-sec-and-naked-shorting/#comment-2591

    See videos on website for interviews with SEC Commissioner and Patrick Byrne CEO of Overstock.com
    --------------------------

    The SEC and Naked Shorting
    By Alexis Glick

    Yesterday on Money for Breakfast, Paul Atkins, one of the commissioners of the SEC, whose tenure expires this Friday, joined me to discuss the SEC&#8217;s temporary naked short sale progress. By my measure, since the day that the SEC announced the emergency rule change on Tuesday July 15th, the SEC has seen its plan manifest itself in a big move to the upside in the stocks that were given access to the discount window. Take a look at the percentage gains on some of the names on the list since it was announced. Note I did the math the old-fashioned way: on a piece of paper. Hopefully my second grade math is decent. What would we do without calculators?

    FNM up almost 65%
    FRE up almost 60%
    LEH up almost 30%
    BAC up almost 60%
    C up almost 30%
    JPM up almost 27%
    Dow in that same period rose from 10,962 to 11,370 or roughly 3%
    WM up 23 cents according to Friday&#8217;s close or 6% (Not covered under the rule)
    WB up almost 60% (Not covered under the rule)

    There you have it. Now as you and I both know there are a lot more names on the list and almost all of them have fared very well. I didn&#8217;t list performance based on when the rules went into effect because once it was announced the short covering started. Also of note is that some of these companies reported in the past couple of weeks and pure fundamentals have clearly played a role in their performance. Also check out Wachovia Bank which was not on the list but has fared better than one might have expected. Will the SEC take into account the performance of financial institutions not on the list to see if the temporary change needs to be extended to all banks or financial institutions? Absolutely! The decision to extend the naked short selling rule will be decided this evening.

    For whether this rule should extend beyond these nineteen institutions or whether short sales should be reported and disclosed, take a look at the Commissioner&#8217;s response.

    In the second part of my discussion about the SEC&#8217;s progress, Overstock.com CEO Patrick Byrne joined me to discuss what he likes and dislikes about the temporary rule changes. If you don&#8217;t know him or haven&#8217;t seen him interviewed, he has been a big proponent of change at the SEC and DTCC. His number one concern has been the lack of transparency at the DTCC (Depository Trust & Clearing Corporation) and the increase in the failures-to-deliver or FTD&#8217;s, as they&#8217;re commonly referred to. He notes that the number of FTD&#8217;s has increased precipitously and that no one is policing them. That suggests that naked short sellers have been running amuck with no supervision and that no one has been clamping down on the borrowers or institutions that facilitate that borrowing, to deliver stock or get a locate. In essence, people can do phantom trading above the float of the stock. Look at the email that he sent me before our interview.

    I employ a team of economists and database managers outside of Overstock to research the issue of Failures-To-Deliver (FTD&#8217;s). Over the last two years we have spent countless hours on FOIA requests regarding FTD&#8217;s. In recent months, some of the information we seek has been coming out automatically, but one quarter stale.

    In any case, this is what DTCC CNS fails look like up to the end of Q1:
    date_of_max_value max_daily_fails Year avg_daily_fails
    21-Dec-04 $6,560,323,778 2004 $3,418,010,542
    21-Jun-05 $8,439,723,063 2005 $3,076,423,490
    31-Jan-06 $12,425,109,643 2006 $3,473,665,714
    27-Jun-07 $19,477,102,119 2007 $6,650,684,997
    26-Mar-08 * $13,924,518,389 Q1 2008 $7,567,755,627

    * denotes date through March 31

    Take-aways:

    1)So there was a day this year in Q1 when FTD&#8217;s almost reached $14 billion (they ended Q1 at $8.5 billion).

    2) And the average daily FTD&#8217;s has just climbed and climbed for the last few years.

    Some other talking points:

    1) More shocking yet (and I can send the back-up data on this) is that on an average day, 72% of the FTD&#8217;s are in stocks that are on the Reg SHO list. Some protection.

    2) How bad a problem is this?

    a.You understand that $1 million of toxic waste does not cost $1 million to clean up: it may cost much more. Similarly, a broker holding a 10 million share FTD in a $1 stock may carry it as a $10 million liability, but if he has to clean up his fail, and buy-in 10 million shares in a stock trading 50,000 shares/day&#8230; it may cost him $10 million, but it could just as easily cost $100 million.

    b. Put that together with the $8.5 billion number above. Cleaning it up will not cost $8.5 billion. It could cost $18.5 billion, or $80 billion&#8230; No one has any idea.

    c. The CNS failures are just one part of the equation. There is also broker-level &#8220;pre-netting&#8221;, fails resolved by the DTCC Stock Borrow Program, ex-clearing, and failures coming in from off-shore clearing systems. Everybody who will talk from within the system says that collectively, these are a far bigger (the estimates from within the system are $30 - $190 billion, depending upon who is speaking).

    Patrick Byrne has been talking about naked short selling for years and is not opposed to short selling as a whole but feels that his company and others have been unfairly penalized.
     
  21. stoney

    stoney Part of the unwashed, middle-American horde

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  22. I Are Baboon

    I Are Baboon Run, Forrest, Run!

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    I know exactly where my money went: My wife.
     
  23. splat

    splat Nam I am

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    Lets Just Hope its not too little too Late
     
  24. stoney

    stoney Part of the unwashed, middle-American horde

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    She only got half of what was left. It's the extra that's missing. Did you own Bear? Yeah, all of that. Lehman? Yeah, that too. AIG? That's a hat trick.
    Plus all of the small companies and biotech firms with novel treatments to disease that were never given the chance to complete their research because they were forced out of business.
    But it's cool, I don't want my grandfather to have access to an immunotherapy (read cure/vaccine for the uninformed) for Prostate Cancer. It's not that important to me...
     
  25. stoney

    stoney Part of the unwashed, middle-American horde

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    Start watchin companies listed on the Reg SHO list. They should start to gain over the next few weeks as shares are bought on the open market to cover.
     
  26. jimmydean

    jimmydean The Official Meat of Ridemonkey

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    :stupid:
     
  27. DRB

    DRB unemployed bum

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    It's always something that's going to be the next end of capitalism and the American way.
     
  28. SkaredShtles

    SkaredShtles I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!

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    I know where my money went...

    In my mattress. :monkey: :rofl: