Posted on 08/12/2010 11:54:10 AM PDT by glorgau
As the Obama administration helps our largest banks tread water in an ocean they themselves created, a tidal wave has been spotted just over the horizon.
A new, stock clearing house will open in the U.S. in March that will right many of the wrongs perpetrated by the market makers, brokers, and hedge funds conducting business on the NASDAQ and OTC markets. The NASDAQ OMX has been approved to start the clearing of stocks next month. Currently, 92% of all stocks in the U.S. markets are cleared by the DTC, which is an arm of the Federal Reserve.
The problem for the market makers, brokers, and hedge funds, is all of their NSS (naked short selling) will have to be covered when companies jump to the No Nonsense NASDAQ OMX from the DTC, that for years looked the other way when this practice occurred.
A naked short sell is perpetrated when a buy order is placed by an individual for a stock and a market maker pulls those stocks out of thin air and puts the imaginary stocks into the individuals broker account. This practice has bankrupted countless marginal companies in the last 8 years. Many, if not most market makers are owned by the large banks and brokers on Wall street.
This practice of naked short selling artificially deluded the outstanding shares, making each share worth less causing a death spiral. At this point the brokers and hedge funds sell short, betting that the stock would further decline, which was a no brainer of course.
Almost all of these affected companies did not survive, at least in their original form. However, the companies that did survive this savage market manipulation will soon leave the DTC and join the new clearing house of the NASDAQ OMX. I know of one CEO that spent over 750K of his own money to save his shell OTC company from this type of manipulation and will most likely have a very healthy profit for his troubles.
When this transpires in March, ALL OF THOSE AIR SHARES MUST BE COVERED by the brokers or market makers AND all those hedge fund short sells MUST BE COVERED AS WELL.
This will put the nail in the coffin of dozens of hedge funds, markets makers, and brokers throughout the U.S. The chickens are finally coming home to roost and they've grown to the size of an Emu.
The greed imbeded in our stock market will be proved to have been unprecedented in human history.
Beau Hermes is a 46 year old Rancher, Energy Producer and part-time Philosopher from Texas.
So THIS is how “short-selling” actually works? I’m still not clear what a “market-maker” is?
I always assumed only the company in question can issue stock in itself?
Will this be the end of George Soros and his Quantum Fund?
I don’t know if this guy is right or not, but it is hard to take him seriously when he doesn’t know the difference between “deluded” and “diluted.”
The market-maker is a kind od match-maker/minister, matching someone wantng to sell (asking) with someone wanting to buy (bidding) at the same price and finalizing the marriage/deal st the same time.
od = of
When this transpires in March,
When WHAT happens in March. Says this starts Next Month - September.
I know of one CEO that spent over 750K of his own money to save his shell OTC company from this type of manipulation and will most likely have a very healthy profit for his troubles.
I can’t make heads nor tail of this. How is he making a profit? What does he mean by a “shell” company?
phonie news?
psychotic news.
I think you’ve been hoaxed bub.
This is “phonienews” FAKE ..
A naked short sale is not as described here ... lets say you’re at a trading desk at Goldman and you put in an order to sell 500,000 shares of Kelloggs ,, the people in charge of clearing and approving trades must check their records to see if they have 500,000 “borrowable” shares to sell (meaning in a margin account with certificates held in “street name”)...
The same thing goes if you are at home with your Schwab or eTrade account ,, you put in a sell order for shares you do not own ,,, that is a short sale ... The trading desk must verify that somewhere in the eTrade customer accounts there are shares that can be borrowed.
A naked short sale is when no verification of available shares is done and they just let the sell go through, that is what makes it so dangerous ,,, lets say you sell McDonalds short ,,, and so do 10,000 other people ,, and no verification is done ... you could have a selling wave that never ends ... selling more shares than actually exist,,, crashing the stock.
I’m still not clear what a “market-maker” is?
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A market maker is basically a “GOD” for a particular stock .. people with seats on the exchange have areas of responsibility and the biggest is to maintain an orderly market ,, the men in the coats on the floor are given nearly inexhaustible credit/margin and their job is to keep the orders flowing ... These people have been nearly extinguished by Goldman Sachs and others that are illegally frontrunning electronic order entries scalping them for a penny here or there and only letting the money losing (from the market makers perspective) trades go through to the floor.
When your buy or sell order goes to the stock exchange, the market maker is the one in charge of matching buy and sell orders. If there is a buy with no immediate seller, he may fill the order out of his inventory, and if there's a sell with no buy, he may put it into his inventory. If there's a buy and his inventory is momentarily empty, he may choose to fill the order anyway with a short-term naked short sell.
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