The stock market nightmare is over (SEC stiffens rules on 'naked' short selling)

C

Chapdog

Abreast of the situations
http://www.marketwatch.com/news/sto...9308F-FFD1-40A3-A845-4B99F863CE0C}&dist=msr_1


SEC stiffens rules on 'naked' short selling
Agency had been criticized by top lawmaker for inaction
By Robert Schroeder, MarketWatch
Last update: 11:03 a.m. EDT Sept. 17, 2008
WASHINGTON (MarketWatch) -- The Securities and Exchange Commission issued new rules Wednesday aimed at protecting investors from so-called "naked" short selling of securities as the U.S. financial sector is experiencing one of its biggest shake-ups in history.
The agency required short sellers and their broker-dealers to deliver securities by the close of business on the settlement date, and said broker-dealers who violate the requirement will be prohibited from short sales in the same security unless certain conditions are met. See MarketWatch First Take commentary.
Regulators also made clear that those who lie about their intention or ability to deliver securities in time are breaking the law when they fail to deliver.
"These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short selling," SEC Chairman Christopher Cox said in a statement Wednesday.
A day earlier, Senate Banking Committee Chairman Christopher Dodd publicly criticized Cox for what he said was inadequate action on naked short selling.
"I've been disappointed," Dodd told reporters on Tuesday afternoon. "Where's the chairman of the Securities and Exchange Commission?"
Short selling itself isn't illegal. But "naked" shorting can allow market-manipulators to force prices down much lower than would be possible in a legitimate short sale.
In an abusive naked short sale, according to the SEC, the seller doesn't borrow a stock, as would happen in an ordinary short sale. The seller also fails to deliver the stock to the buyer.
In a regular short sale, the seller borrows a stock and sells it, with the understanding that the loan has to be repaid by buying the stock.
The agency's rules go into effect Thursday morning.
The American Bankers Association applauded the agency's new rules but said they may not go far enough to protect banks from abusive practices. End of Story
 
THis has been crushing a few of my stocks big time recently.. a loophole for people to make money but sends the stocks down.. with no alternative loophole to force stock up in price..

This has major impact.. Watch.
 
Ohh forcing the stock price. sure that should work both ways , of course....

Manipulating the markerts is a noble cause.
 
you have to read more about how it works to get an idea.. but for sure this was killing stocks and the SEC was turning a blind eye. I have always like Dodd. I hope obama gives him a leadership position in his admin.
 
This does make a huge impact for the Banks. Shorts were creating an envronment where banks couldn't really raise capital through stock sales. They drove down prices to a point where selling of shares would amount to practically nothing.
 
Chapdog said:
you have to read more about how it works to get an idea.. but for sure this was killing stocks and the SEC was turning a blind eye. I have always like Dodd. I hope obama gives him a leadership position in his admin.
Click to expand...

I read a long article, I think it was in the NY Times magazine, that was about bear stearns, and how a lot of execs thought this was part of what brought them down, and that it was done purposefully. But, I don't know if that's true or not.
 
Darla said:
I read a long article, I think it was in the NY Times magazine, that was about bear stearns, and how a lot of execs thought this was part of what brought them down, and that it was done purposefully. But, I don't know if that's true or not.
Click to expand...

It is true, and if you watched stocks like MS today, who just beat estimates and made a profit, go down $10 a share, you could tell there was some manipulation of the stock price. If MS did get into a bind, and they needed to sell some shares to raise some capital, they would be diluting the stock price even further and will not get as much capital to get out of that bind.
 
its most definitely true.. the whole naked short thing has been going on for ever but wasn't real bad until they eliminated the uptick short rule back in end of summer 2007.. you know when markets started taking? Hint hint hint..... then it was a free for all allowing the evil of the lot like like lehman and goldman to run stocks to the ground.

Now that we have this rule in place next we have to bring back the uptick rule and the days of market manipulation will be behind us.
 
Day 1 with no more naked short selling..

PS the person responsible for eliminating the uptick rule in july 2007 should be put in prison.
 
Chapdog said:
Day 1 with no more naked short selling..

PS the person responsible for eliminating the uptick rule in july 2007 should be put in prison.
Click to expand...

I've been reading that the DOW should go up this morning, the FED and some banks are all pumping billions into the market so it does not dry up. So maybe they will pull us out of the fire, but I just don't understand what is going to happen over the next several months, and where the heck is all this money going to come from? ARe they going to just print it or something? And if so, how long until the dollar is effectively worthless? The whole situation is crazy.
 
Goes to show you we need regulation. Cant trust libertarian capitalism. To many greedy people.


In terms of AIG the govt had no choice. They are a major insurance company with all the records. If your not familiar with how the business works insurance collects premiums but may not have to pay out on a claim for years.. SO if AIG was to go down who would pay the claims next year for Peter parker who lost his home in a fire?

The good news is its a pretty unfavorable 11.5% loan and temp 80% governance on the company until they can pay back the note.. And Obamas gonna break Willumstad's knees if he doesn't have the money by Friday.


I was always amazed when i worked in the insurance business ( 2 companies for about 3 years) that by law they were only required to keep a relatively small percent of the premium they collected in safe investments. The rest was invested in whatever they wanted to invest in... hence AIG's financial troubles.
 
The worst is yet to come
'No market for old men,' TCW investment strategist warns in gloomy forecast
By Jonathan Burton, MarketWatch
Last update: 9:34 p.m. EDT Sept. 17, 2008

SAN FRANCISCO (MarketWatch) -- An influential investment strategist has a dire forecast for U.S. stocks, credit markets and the continued independence of some of the nation's top financial institutions.
Jeffrey Gundlach, chief investment officer at Los Angeles-based mutual-fund company TCW Group Inc., told clients on a conference call late Wednesday that the crisis in credit and housing may not abate for several years and is actually getting worse.


In the deteriorating climate he sees unfolding, Gundlach said, the Standard & Poor's 500 I
SPX 1,177.04, +20.65, +1.8%) could fall another 30%, giant Citigroup (C:
Citigroup, Inc

C 14.49, +0.46, +3.3%) could become an "AIG-sized debacle," Morgan Stanley (MS:
morgan stanley com new


MS 20.23, -1.52, -7.0%) would merge with a banking company, Wachovia (WB:
Wachovia Corp

WB 10.10, +0.98, +10.7%) won't be able to stand alone, default rates on even prime mortgages could soar, and European banks' woes are just beginning

http://www.marketwatch.com/news/story/worst-yet-come-investment-strategist/story.aspx?guid=%7B55B21789%2D3A26%2D495A%2DB0D3%2D5AF3F6ABDA18%7D&dist=TNMostRead

btw some poor editing there on y part, too many links imbedded in the text.
 
Chapdog said:
Goes to show you we need regulation. Cant trust libertarian capitalism. To many greedy people.


In terms of AIG the govt had no choice. They are a major insurance company with all the records. If your not familiar with how the business works insurance collects premiums but may not have to pay out on a claim for years.. SO if AIG was to go down who would pay the claims next year for Peter parker who lost his home in a fire?

The good news is its a pretty unfavorable 11.5% loan and temp 80% governance on the company until they can pay back the note.. And Obamas gonna break Willumstad's knees if he doesn't have the money by Friday.


I was always amazed when i worked in the insurance business ( 2 companies for about 3 years) that by law they were only required to keep a relatively small percent of the premium they collected in safe investments. The rest was invested in whatever they wanted to invest in... hence AIG's financial troubles.
Click to expand...

"Goes to show you we need regulation. Cant trust libertarian capitalism. To many greedy people."

Definitely agree.
 
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