February 23, 2012
Copyrighted material redacted. Author cites:
Recommendations for ETFs :: TabbFORUM - Where Capital Markets Speak
i did not write this. but this essay speaks for me.
borrowing securities is not the solution for shortselling. the dealers DO NOT own the securities.
marketmakers should have to abide by the same rules as investors.
force clearing. the clearing firms cannot assume all the risk, as dealers want. brokers are BROKE. quit letting them fly under the radar. the shortselling is owed to the potential investors and investors. it is not just a debt between brokers or at the clearinghouse.
if i buy a car at a dealership, and finance it, the finance company cannot just decide to rent my car out, force me to pick up so-and-so and take them to work, force me to sell it, write me a letter and say "so sorry, we lost your car because the borrower's trade went badly" or take my car and put it in another country.
further, the finance companies cannot decide i paid too high of a price, take a position that the price will soon be lower, and sell fleets of cars to get the price down.
and they cannot decide that my car should lose value because the price of oil is too high. the finance company should not decide that they should increase the price of oil so that the value of my car should fall, the US go into a recession and why worry anyway, because the brokers will have my $ and other people's $ while the public and investors suffer with a recession.
why just slap the brokers' hands? why charge them low fines? it is not deterring cheating in the market.
worse, why are SEC rules written to satisfy the financial firms? the public votes. the public has a stake in this. frequently rulemakers IGNORE the public's interest.
if brokers don't want to be brokers, then they should not be brokers. if they want to be hedge funds, then let them be hedge funds. but i don't want brokers to use my $ to be secret hedge funds, conspiracies of shortsellers or financial criminals.
why are the accountants going along with the brokers? if people don't know how to do an audit, then the SEC/CFTC/FINRA should start auditing brokers and show the PCAOB how to do an audit.
the SEC should charge/arrest compliance officers, department heads, CEO's of brokerages for the shenanigans. the brokers have had enough warning. fines are ineffective. brokers think it's like paying for advertising that "we cheat". why let the brokers make up processes around the rules? why let the brokers short from a proprietary desk? they are trading against their customers. why do the brokers accept correspondent brokers and use their margin? correspondent brokers are just customers and should not use traders portals. in fact, there should be no dark pools or traders portals to effect trades without visibility, reporting, borrowing stock before shortselling that counts against the shortseller's equity and dealer equity.
so goes the stock market, so goes the economy, so goes the world economy. if you want us to be under another government, keep it up. let the counterfeit shares and the imaginary shares stay in the market. let the brokers cheat. we will have a new government, the government of the shortsellers. and they don't need the SEC or any other regulatory body. brokers do what the shortsellers want because the shortsellers/high frequency traders pay them more than an investor possibly could.
the market is for investors, not traders. traders are parasitic on the stock market. but the traders have taken over. this is why there is low volume: because high frequency traders, marketmakers and shortsellers want to be on the same side of the trade and investors are waiting for good signs in the market because they are tired of the traders and brokers taking their $. investors are neither buying in nor selling and shortsellers are not covering their position. we need to see the regulators stand up for the investors and force the brokers to follow market rules.
MF global had 34 entities? WHY. someone had better figure that one out, because these brokers have done the very same thing. which bankruptcy chapter was used for MF global's bankruptcy? financial firms cannot go back into business after investors are wiped out, customers and creditors accept cents on the dollar. their subsidiaries should also be liquidated and assets sold to the highest bidder, if there are any bidders. if there are no bidders, the subsidiaries should be closed.
if you think MF global is complicated, just let the market crash to the upside (because of shortselling and the debts to the market). then you will have to straighten out all of the bankrupt brokers at once. frankly, you have no idea what a nightmare that would be. you will find that they all owe each other for the shortselling AGAINST their customer's interest, that market deadlines meant nothing. they think they are smarter than the regulators, smarter than the investors, and entitled to the public's $. they removed the risk from their activities and shifted it to governments, investors and the public.
we may be at the tipping point, when the brokers cannot afford to fund shortselling. we will see. if this is the upside crash, then the nightmare for the regulators has already started. we will see. investors are waiting. the public is waiting. and the world is waiting. we need broker audits.
suzanne hamlet shatto
cc: senator kay hagan