If you can keep selling, and dry up all the buy orders WITHOUT REGARD TO WHETHER OR NOT YOUR BROKER HAS THE SHARES TO LEND, OR IF INDEED THEY REALLY EXIST, you see the market drop 700 points today.
I traded stocks for 5 yrs, mostly shorting. I couldn’t tell you how many times I pushed that button and was told....no shares available. If the broker doesn’t have the shares to lend you don’t get them! sheesh
“I traded stocks for 5 yrs, mostly shorting. I couldn’t tell you how many times I pushed that button and was told....no shares available. If the broker doesn’t have the shares to lend you don’t get them! sheesh”
With all due respect for your 5 years of trading, I must tell you that you are wrong. Sheesh!
I have posted many times about naked short selling and recommended visiting the site www.DeepCapture.com, by Patrick Byrne, CEO of Overstock.com, a company that was victimized by a naked short sale attack.
Read and understand. Naked short selling is an attack on our economy, no less dangerous than a terrorist attack on Wall Street.
Here’s his latest missive:
Overstock CEO Patrick Byrne Comments on SEC’s New Rules Against Naked Short Selling
‘Still no penalties for financial rapists’ declares Byrne
SALT LAKE CITY, Sept 17, 2008 /PRNewswire-FirstCall via COMTEX/ —
Overstock.com, Inc. (OSTK) chairman and CEO Patrick M. Byrne comments on the SEC’s September 17, 2008 press release (see ) that purports to protect investors against naked short selling.
Dr. Byrne commented, “At the core of the SEC announcement is a decision that if a hedge fund naked shorts a stock, its broker isn’t supposed to let them naked short again. But guess what: they were not supposed to naked short in the first place. Instead of giving the buyer who receives the fail to deliver the right to put it back to the naked short selling participant, the SEC once again opts for no penalties for financial rapists.
“If the SEC were anything but a hedge fund bootlick,” continued Byrne, “it would not have taken the half-measure of a pre-borrow requirement applied only as a penalty for those failing to deliver within T+3, but would have instituted a market-wide pre-borrow requirement (as it did in its July 15, 2008 Emergency Order protecting Upper Caste financial firms), and mandatory buy-ins at T+3.
“Some questions for the SEC:
1. How will the SEC determine whether an institution is in compliance with this rule? The only way to determine compliance is through an SEC audit, something that could only occur months after the fact. In the case of a bear raid, that will be too late.
2. Where is the ‘buy-in’ requirement? Under the new SEC rules a crooked hedge fund can still naked short sell without settlement and keep that short open indefinitely. It appears that only future naked short sales will require a pre-borrow and that there is still no closeout requirement for failed trades.
3. What of manipulative day trading? Chairman Cox has admitted that the financial stocks did not have a significant level of naked shorts, but rather collapsed under day trading activities. The new rule fails to address this, the very activity that generated the need for the July 15, 2008 emergency order. The manipulative day trading short seller never has a position open for three days. However, under the new rules, he can still use a single locate multiple times to create the best leverage possible to drive natural investors out of the market.
4. Where are the penalties? Without meaningful penalties, these rules have no bite. The SEC needs to make sure that the rules are strictly and aggressively enforced — both for failures to deliver that occur within the CNS system and outside the CNS system in ex-clearing trades, where, I suspect, there is naked shorting that makes the object of current SEC concerns look like small potatoes.
“Rule 10b-21, the short selling anti-fraud rule, is a carefully contrived joke. It moves from a low-penalty too-vague-to-enforce rule, to a high-penalty too-vague-to-enforce rule. Without strict and aggressive SEC enforcement (for which the SEC has zero demonstrated record) it will be just more lines of meaningless pabulum in the Federal Register.
“On the bright side, the SEC has eliminated a major loophole in Regulation SHO, the options market maker exception. There was never a good reason why options market makers should have been allowed to naked short and fail to deliver in perpetuity. For taking this long overdue action, I applaud the SEC.
“What is needed is a Congressional investigation into the abortion that is our nation’s stock settlement system, focusing especially on the DTCC. A healthy next step would be to unplug the SEC and move its functions into the DOJ.”