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:eek: da haetten wir noch etwas bezueglich naked short selling ........:eek: :rolleyes:


Naked Short Sales Hint Fraud in Bringing Down Lehman After Bear

By Gary Matsumoto
March 19 (Bloomberg) -- The biggest bankruptcy in history
might have been avoided if Wall Street had been prevented from
practicing one of its darkest arts.
As Lehman Brothers Holdings Inc. struggled to survive last
year, 124.9 million shares in the company were sold and not
delivered to buyers on time, according to data compiled by the
Securities and Exchange Commission and Bloomberg. It was a more
than 12-fold increase over the 10.2 million failed trades in
Lehman Brothers in 2007.
The SEC has linked such so-called fails-to-deliver to naked
short selling, a strategy that can be used to manipulate
markets. A fail-to-deliver is a trade that doesn’t settle within
three days.
“We had another word for this in Brooklyn,” said Harvey
Pitt, a former SEC chairman. “The word was ‘fraud.’”
While the commission’s Enforcement Complaint Center
received about 5,000 complaints about naked short-selling from
January 2007 to June 2008, none led to enforcement actions,
according to a report filed yesterday by David Kotz, the
agency’s inspector general.
The way the SEC processes complaints hinders its ability to
respond, the report said.
Twice last year, hundreds of thousands of failed trades
coincided with widespread rumors about Lehman Brothers.
Speculation that the company was being acquired at a discount
and later that it was losing two trading partners both proved
untrue.
After the 158-year-old investment bank collapsed in
bankruptcy on Sept. 15, listing $613 billion in debt, former
Chief Executive Officer Richard Fuld told a congressional panel
on Oct. 6 that naked short sellers had midwifed his firm’s
demise.

Gasoline on Fire

Members of the House Committee on Government Oversight and
Reform weren’t buying that explanation.
“If you haven’t discovered your role, you’re the villain
today,” U.S. Representative John Mica, a Florida Republican,
told Fuld.
Yet the trading pattern that emerges from 2008 SEC data
shows naked shorts contributed to the fall of both Lehman
Brothers and Bear Stearns Cos., which was acquired by JPMorgan
Chase & Co. in May.
“Abusive short selling amounts to gasoline on the fire for
distressed stocks and distressed markets,” said U.S. Senator
Ted Kaufman, a Delaware Democrat and one of the sponsors of a
bill that would make the SEC restore the uptick rule. The
regulation required traders to wait for a price increase in the
stock they wanted to bet against; it prevented so-called bear
raids, in which successive short sales forced prices down.

Driving Down Prices

Reinstating the rule would end the pattern of fails-to-
deliver revealed in the SEC data, Kaufman said.
“These stories are deeply disturbing and make a compelling
case that the SEC must act now to end abusive short selling --
which is exactly what our bill, if enacted, would do,” the
senator said in an e-mailed statement.
Short sellers arrange to borrow shares, then dispose of
them in anticipation that they will fall. They later buy shares
to replace those they borrowed, profiting if the price has
dropped. Naked short sellers don’t borrow before trading -- a
practice that becomes evident once the stock isn’t delivered.
Such trades can generate unlimited sell orders, overwhelming
buyers and driving down prices, said Susanne Trimbath, a trade-
settlement expert and president of STP Advisory Services, an
Omaha, Nebraska-based consulting firm.
The SEC last year started a probe into what it called
“possible market manipulation” and banned short sales in
financial stocks as the number of fails-to-deliver climbed.

‘Unsubstantiated Rumors’

The daily average value of fails-to-deliver surged to $7.4
billion in 2007 from $838.5 million in 1995, according to a
study by Trimbath, who examined data from the annual reports of
the National Securities Clearing Corp., a subsidiary of the
Depository Trust & Clearing Corp.
Trade failures rose for Bear Stearns as well last year. The
company had 8.8 million shares fail to deliver through March 17,
the day after JPMorgan announced it would buy Bear Stearns for
$2 a share. The number in the first quarter of 2008 alone was
more than double the figure in 2007.
Fuld said naked short selling -- coupled with
“unsubstantiated rumors” -- played a role in the demise of
both his bank and Bear Stearns.
“The naked shorts and rumor mongers succeeded in bringing
down Bear Stearns,” Fuld said in prepared testimony to Congress
in October. “And I believe that unsubstantiated rumors in the
marketplace caused significant harm to Lehman Brothers.”

Devaluing Stock

Failed trades correlate with drops in share value -- enough
to account for 30 to 70 percent of the declines in Bear Stearns,
Lehman and other stocks last year, Trimbath said.
While the correlation doesn’t prove that naked shorting
caused the lower prices, it’s “a good first indicator of a
statistical relationship between two variables,” she said.
Failing to deliver is like “issuing new stock in a company
without its permission,” Trimbath said. “You increase the
number of shares circulating in the market, and that devalues a
stock. The same thing happens to a currency when a government
prints more of it.”

Trimbath attributes the almost ninefold growth in the value
of failed trades from 1995 to 2007 to a rise in naked short
sales.
“You can’t have millions of shares fail to deliver and
say, ‘Oops, my dog ate my certificates,’” she said.

Explanation Required

On its Web site, the Federal Reserve Bank of New York lists
several reasons for fails-to-deliver in securities trading
besides naked shorting. They include misunderstandings between
traders over details of transactions; computer glitches; and
chain reactions, in which one failure to settle prevents
delivery in a second trade.
Failed trades in stocks that were easy to borrow, such as
Lehman Brothers, constitute a “red flag,” said Richard H.
Baker, the president and CEO of the Washington-based Managed
Funds Association, the hedge fund industry’s biggest lobbying
group.
“Suffice it to say that in a readily available stock that
is traded frequently, there has to be an explanation to the
appropriate regulator as to the circumstances surrounding the
fail-to-deliver,” said Baker, who served in the U.S. House of
Representatives as a Republican from Louisiana from 1986 to
February 2008.
“If it’s a pattern and a practice, there are laws and
regulations to deal with it,” he said.

Fines and Penalties

Lehman Brothers had 687.5 million shares in its float, the
amount available for public trading. In float size, the
investment bank ranked 131 out of 6,873 public companies -- or
in the top 1.9 percent, according to data compiled by Bloomberg.
While naked short sales resulting from errors aren’t
illegal, using them to boost profits or manipulate share prices
breaks exchange and SEC rules and violators are subject to
penalties. If investigators determine that traders engaged in
the practice to try to influence markets, the Department of
Justice can file criminal charges.
Market makers, who serve as go-betweens for buyers and
sellers, are allowed to short stock without borrowing it first
to maintain a constant flow of trading.
Since July 2006, the regulatory arm of the New York Stock
Exchange has fined at least four exchange members for naked
shorting and violating other securities regulations. J.P. Morgan
Securities Inc. paid the highest penalty, $400,000, as part of
an agreement in which the firm neither admitted nor denied
guilt, according to NYSE Regulation Inc.

Enforcement ‘Reluctant’

In July 2007, the former American Stock Exchange, now NYSE
Alternext, fined members Scott and Brian Arenstein and their
companies $3.6 million and $1.2 million, respectively, for naked
short selling. Amex ordered them to disgorge a combined $3.2
million in trading profits and suspended both from the exchange
for five years. The brothers agreed to the fines and the
suspension without admitting or denying liability, according a
release from the exchange.
Of about 5,000 e-mailed tips related to naked short-selling
received by the SEC from January 2007 to June 2008, 123 were
forwarded for further investigation, according to the report
released yesterday by Kotz, the agency’s internal watchdog. None
led to enforcement actions, the report said.
Kotz, the commission’s inspector general, said the
enforcement division “is reluctant to expend additional
resources to investigate” complaints. He recommended in his
report yesterday that the division step up analysis of tips,
designating an office or person to provide oversight of
complaints.

Schapiro’s Plans

The enforcement division, in a response included in the
report, said “a large number of the complaints provide no
support for the allegations” and concurred with only one of the
inspector general’s 11 recommendations.
SEC Chairman Mary Schapiro, who took office in January, has
vowed to reinvigorate the enforcement unit after it drew fire
from lawmakers and investors for failing to follow up on tips
that New York money manager Bernard Madoff’s business was a
Ponzi scheme. She has “initiated a process that will help us
more effectively identify valuable leads for potential
enforcement action,” John Nester, a commission spokesman, said
in response to the Kotz report.
Last September, the agency instituted the temporary ban on
short sales of financial stock. It also has announced an
investigation into “possible market manipulation in the
securities of certain financial institutions.”


No Effective Action

Christopher Cox, who was SEC chairman last year; Erik
Sirri, the commission’s director for market regulation; and
James Brigagliano, its deputy director for trading and markets,
didn’t respond to requests for interviews. John Heine, a
spokesman, said the commission declined to comment for this
story.
“It has always puzzled me that the SEC didn’t take
effective action to eliminate naked shorting and the fails-to-
deliver associated with it,” Pitt, who chaired the commission
from August 2001 to February 2003, said in an e-mail. The agency
began collecting data on failed trades that exceed 10,000 shares
a day in 2004.
“All the SEC need do is state that at the time of the
short sale, the short seller must have (and must maintain
through settlement) a legally enforceable right to deliver the
stock at settlement,” Pitt wrote. He is now the CEO of Kalorama
Partners LLC, a Washington-based consulting firm. In August, he
and some partners started RegSHO.com, a Web-based service that
locates stock to help sellers comply with short-selling rules.

Postponed ‘Indefinitely’

Pitt began his legal career as an SEC staff attorney in
1968, and eventually became the commission’s general counsel. In
1978, he joined Fried Frank Harris Shriver & Jacobson LLP, where
as a senior corporate partner he represented such clients as
Bear Stearns and the New York Stock Exchange.. President George
W. Bush appointed him SEC chairman in 2001.
The flip side of an uncompleted transaction resulting from
undelivered stock is called a “fail-to-receive.” SEC
regulations state that brokers who haven’t received stock 13
days after purchase can execute a so-called buy-in. The broker
on the selling side of the transaction must buy an equivalent
number of shares and deliver them on behalf of the customer who
didn’t.
A 1986 study done by Irving Pollack, the SEC’s first
director of enforcement in the 1970s, found the buy-in rules
ineffective with regard to Nasdaq securities. The rules permit
brokers to postpone deliveries “indefinitely,” the study
found.
The effect on the market can be extreme, according to Cox,
who left office on Jan. 20. He warned about it in a July article
posted on the commission’s Web site.

Turbocharged Distortion

When coupled with the propagation of rumors about the
targeted company, selling shares without borrowing “can allow
manipulators to force prices down far lower than would be
possible in legitimate short-selling conditions,” he said in
the article.
“‘Naked’ short selling can turbocharge these ‘distort-and-
short’ schemes,” Cox wrote.
“When traders spread false rumors and then take advantage
of those rumors by short selling, there’s no question that it’s
fraud,” Pollack said in an interview.. “It doesn’t matter
whether the short sales are legal.”
On at least two occasions in 2008, fails-to-deliver for
Lehman Brothers shares spiked just before speculation about the
bank began circulating among traders, according to SEC data that
Bloomberg analyzed.
On June 30, someone started a rumor that Barclays Plc was
ready to buy Lehman for 25 percent less than the day’s share
price. The purchase didn’t materialize.

‘Green Cheese’

On the previous trading day, June 27, the number of shares
sold without delivery jumped to 705,103 from 30,690 on June 26,
a 23-fold increase. The day of the rumor, the amount reached
814,870 -- more than four times the daily average for 2008 to
that point. The stock slumped 11 percent and, by the close of
trading, was down 70 percent for the calendar year.
“This rumor ranks up there with the moon is made of green
cheese in terms of its validity,” Richard Bove, who was then a
Ladenburg Thalmann & Co. analyst, said in a July 1 report.
Bove, now vice president and equity research analyst with
Rochdale Securities in Lutz, Florida, said in an interview this
month that the speculation reflected “an unrealistic view of
Lehman’s portfolio value.” The company’s assets had value, he
said.

‘Obscene’ Leverage

During the first six days following the Barclays hearsay,
the failed trades averaged 1.4 million. Then, on July 10, came
rumors that SAC Capital Advisors LLC, a Stamford, Connecticut-
based hedge fund, and Pacific Investment Management Co. of
Newport Beach, California, had stopped trading with Lehman
Brothers..
Pimco and SAC denied the speculation. The bank’s share
price dropped 27 percent over July 10-11.
Banks and insurers wrote down $969.3 billion last year --
and that gave legitimate traders plenty of reason to short their
stocks, said William Fleckenstein, founder and president of
Seattle-based Fleckenstein Capital, a short-only hedge fund. He
closed the fund in December, saying he would open a new one that
would buy equities too.
“Financial stocks imploded because of the drunkenness with
which executives buying questionable securities levered-up in
obscene fashion,” said Fleckenstein, who said his firm has
always borrowed stock before selling it short. “Short sellers
didn’t do this. The banks were reckless and they held bad
assets.. That’s the story.”

‘Market Distress’

On May 21, David Einhorn, a hedge fund manager and chairman
of New York-based Greenlight Capital Inc., announced he was
shorting stock in Lehman Brothers and said he had “good reason
to question the bank’s fair value calculations” for its
mortgage securities and other rarely traded assets.
Einhorn declined to comment for this story. Monica Everett,
a spokeswoman who works for the Abernathy Macgregor Group, said
Greenlight properly borrows shares before shorting them.
Even when they’re legitimate, short sales can depress share
values in times of market crisis -- in effect turning the
traders’ negative bets into self-fulfilling prophecies, says
Pollack, the former SEC enforcement chief who is now a
securities litigator with Fulbright & Jaworski in Washington.
The SEC has been concerned about the issue since at least
1963, when Pollack and others at the commission wrote a study
for Congress that recommended the “temporary banning of short
selling, in all stocks or in a particular stock” during “times
of general market distress.”

Airport Runway

On Sept. 17, two days after Lehman Brothers filed for
Chapter 11 bankruptcy, the number of failed trades climbed to
49.7 million, 23 percent of overall volume in the stock.
The next day, the SEC announced its ban on shorting
financial companies in 2008. The number of protected stocks
ultimately grew to about 1,000. On Sept. 19, the commission
announced “a sweeping expansion” of its investigation into
possible market manipulation.
The ban, which lasted through Oct. 17, didn’t eliminate
shorting, according to data from the SEC, the NYSE Arca exchange
and Bloomberg. Throughout the period, short sales averaged 24.7
percent of the overall trading in Morgan Stanley, Merrill Lynch
& Co. and Goldman Sachs Group Inc. on NYSE Arca. In 2008, short
sales averaged 37.5 percent of the overall trading on the
exchange in the three companies.
To date, the commission hasn’t announced any findings of
its investigation.
Pollack, the former SEC regulator, wonders why.
“This isn’t a trail of breadcrumbs; this audit trail is
lit up like an airport runway,” he said. “You can see it a
mile off. Subpoena e-mails. Find out who spread false rumors and
also shorted the stock and you’ve got your manipulators.”

http://www.bloomberg.com/apps/news?pid=20601109&sid=aB1jlqmF…
Antwort auf Beitrag Nr.: 36.804.960 von Dorfrichter am 19.03.09 17:25:05nur womit sollen die Chinesen die Amis denn beschäftigen? Der Chinese kann noch nicht in dem Umfang konsumieren, wie es die Amis gemacht haben. Die Infrastruktur der USA? So toll ist die auch nicht. Technologie-Know-How? Hat China bereits. Rohstoffe? Hat China selbst bzw. schon längst für die nächsten Jahre gekauft.

Die einzige Lösung wäre eine riesige Müllkippe, auf der die Chinesen ihren gesamten Dreck abladen.

Und wenn die Amis den Dollar gegen die Wand fahren lassen, sind die Papiere der Chinesen auch nix mehr wert.
Antwort auf Beitrag Nr.: 36.804.238 von Dorfrichter am 19.03.09 16:27:20ein mutiger sagt seine meinung; ja!


doch die macht haben andere, NOCH
Antwort auf Beitrag Nr.: 36.810.513 von F 50 am 20.03.09 12:02:39doch die Macht haben andere, NOCH
Ich schreibe weiter...

....und sie werden Sie behalten, das ist so sicher wie das Amen in der Kirche.
Antwort auf Beitrag Nr.: 36.810.420 von Tobias79 am 20.03.09 11:55:10Und wenn die Amis den Dollar gegen die Wand fahren lassen, sind die Papiere der Chinesen auch nix mehr wert.

Absolut falsch!

Mit den Staatsanleihen werden nämlich Eigentumsrechte übertragen. Diese Eigentumsrechte machen CHINA zum künftigen Gläubiger gegenüber den USA.

Staatsanleihen werden zwar abgewertet bei einem Dollarcrash, müssen hernach aber trotzdem bedient werden.
Antwort auf Beitrag Nr.: 36.810.420 von Tobias79 am 20.03.09 11:55:10Mit dieser "Gelddruckaktion" hat die FED nun die Welt am Haken. Ein neues (altbekanntes) Kapitel wurde nun aufgeschlagen.

Die Qualität diese Aktion ist einzigartig und genial zugleich. Sie macht die Nationen zu Trittbrettfahrern, denen über kurz oder lang nichts anderes übrig bleiben wird, als nachzuziehen. Die ganz große Masse verarmt, die echten Werte aber sammeln sich jetzt in den Händen ganz Weniger, deren Macht nun geradezu explodiert.

Nun werden die Nationen zusammengetrieben die Herdentiere(G 20). Nun werden Konzepte ausgearbeitet für eine Weltwährung, denn die Not ist groß.

2-3 solche Aktionen (Gelddrucken) und dann sehen wir mal, was passieren wird mit den BILLIONEN, die zurückgelegt wurden bei den Sparern dieser Welt. Eines ist jetzt schon sicher....sie werden immer weniger wert- und das nun in ganz rasantem Tempo!

Meine Meinung: 2-3 Jahre noch und dann ist Schluß mit diesem Hütchenspiel.
Antwort auf Beitrag Nr.: 36.810.513 von F 50 am 20.03.09 12:02:39Meine Meinung: 2-3 Jahre noch und dann ist Schluß mit diesem Hütchenspiel

Da bist Du aber Optimist, solange wird`s nicht mehr dauern.
Wir sind bereits sind exponentiellen Bereich "on the road to Weimar". Wird vermutlich schneller gehen.
Antwort auf Beitrag Nr.: 36.813.284 von Looe am 20.03.09 16:14:33Wir müssen uns einstellen auf magere Zeiten. Systeme überholen sich nach einer gewissen Zeit halt immer wieder selbst.
Antwort auf Beitrag Nr.: 36.810.637 von Dorfrichter am 20.03.09 12:15:12Mit den Staatsanleihen werden nämlich Eigentumsrechte übertragen. Diese Eigentumsrechte machen CHINA zum künftigen Gläubiger gegenüber den USA.

Juristisch völlig korrekt, was Du da sagst. De facto aber nicht zu realisieren, also wertlos. Es sei denn, Du willst mit Amerika Krieg und kommst mit `ner Infantrie von 20 Mill. Soldaten in das Land, um den Anspruch auch durchzusetzen. Dürfte schwierig werden. :D
Antwort auf Beitrag Nr.: 36.813.956 von Looe am 20.03.09 17:24:14Wenn die FED die amerikanische Demokratie aufrecht erhalten möchte, wird sie sich an die von ihr gemachten Spielregeln schon halten müssen.
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