March 14, 2007
When are you gonna stop the stall tactic Mr Cox. Your the public servant time to due your job. You took an oath to protect the constitution and protect the small investor. Not your friends the rich
Time to decide if your gonna eliminate the grandfather clause or continue to protect the rich and wealthy. Your time is running out with the release of the bloomberg segment on naked shorting. Were watching you Cox
Christoper Cox these are your words
"The serious problem of abusive Naked Short sales which can be used as a tool to drive down a companies stock price to the detriment of all of its investors"
Wait till the likes of John O'quinn comes after you. Get your paycheck out
"You have more chances of being treated fairly in a casino in Vegas than in the stock Market"
"There continues to be a number of threshold securities with substantial and persistant fail to deliver positions that are not being closed out under existing settlement and delivery guidlines"
"Alot of the companies are gone.Alot of them died.This was a fatal attack.Some of them were weak when they were attacked some would have failed anyway and others wouldnt have. Again its not up to the Naked Short sellers to decide Its up to the investors who play by the rules"
Patrick Byrne: "People are going to go to prison and Im not gonna stop"
Bloomberg Special on NSS A Must-Watch. Outstanding Program.
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 3/13/2007 5:31 AM
Everyone, go watch the Bloomberg TV special on NSS.
You can see it at a mirror site here.
This is a landmark program, as it tells most of the story in a manner that the average person can understand.
What's particularly sad about this is that the DTCC and the brokers were all offered the opportunity to testify...er...speak, and defend themselves, and reassure everyone as to how small a problem this is...and they wouldn't do it. Wouldn't say a word. Nobody wants to talk. The best they could get is Chanos, refusing to look into the camera, claiming "he" has never naked shorted, and telling everyone that it isn't a big deal. Of course, he doesn't actually know how big a deal it is, anymore than you or I do, but he is just sure it can't be all that bad. Even the DTCC claims it doesn't know how big the problem is, but Chanos does.
I suppose he hasn't looked at the FOIA data or the SIA's spreadsheet showing a deci-billion dollar problem, or more. No, why discuss the actual naked short selling when you can blame the victim company, ignore the hard data, and proclaim it all as a "Red Herring?" That seems to be the prevailing way Wall Street handles the issue. First, there's no problem. Then, it's a non-issue if there is a problem. Then, it isn't me doing it, it's someone else. Classic lying guys lying about their lies. Really good stuff. No explanation is furnished explaining all the data showing a massive counterfeiting problem - it's all those bad CEOs trying to take the heat off their failure to perform.
I'm not sure whether we should call that doing a Chanos, or pulling a Nocera. I'm open to suggestions.
There are some great moments in the program. The comparison to "The Producers" is really funny.
Byrne, from the show: "Maybe if you ran a better liquor store, they would stop robbing it." Classic.
The show tells the story in the best terms I've ever seen.
Put simply, brokers are taking buyers' money, and then refusing to deliver the shares they were paid for, preferring to pocket the money and incur no expense for buying and delivering the shares.
Because the system treats electronic IOUs generated by the brokers the same as legitimate shares, they can do this for years in targeted stocks, and nothing will stop them. It is stealing, and fraud. Simple.
My only problem with the special is that it didn't explain that the $6 billion per day of fails to deliver and receive were AFTER CNS netting nets 96% of the trades in the system - sells against shares held long. That means that the $6 billion per day is after all the shares the brokers own on behalf of their clients are netted against sales for the day, and only after 100% of those shares are used up, then, the first delivery failure is registered. So on a typical day, where $100 billion of stock is traded, after all the netting takes care of $96 billion of sales with no delivery as well as genuine sales with delivery, there is still a cumulative $6 billion undelivered. It is estimated that about $2 billion is new fails for the day, with $1 billion of that being handled by the DTCC's stock borrow program, which is really a stock lending program. So CNS netting "handles" 96% of all trades, effectively masking or hiding the number of fails, and of the 4% remaining un-handled, half fail. 50%. You are reading this correctly. One half of all un-netted trades fail per day. Which would lead a thinking person to believe that as many as one half of all trades fail per day, but CNS netting masks 96% of those by offsetting the undelivered trades with shares held long for other customers, "netting" the long shares (+ signs) against the sales - REGARDLESS OF DELIVERY - (- signs), and "handling" 96% of the trades in that way. But even after all shares held long are used up to offset the minuses, there are still FTDs.
And the SIA's own spreadsheet tells the whole story of the number before netting masks it - $63 billion on the last day of Q2, 2006. Which is about 50% of $120 billion, and right in line with the above equation. You can view that spreadsheet on this site's home page, where it is linked, in red.
That is massively scary, and a completely different picture than the one Wall Street tries to spin. They figure that netting is so obscure nobody will ever understand it, so they can come out with a benign number that sounds small, and claim it is technically true.
Other than that, this is the biggest thing to hit the NSS story for years. It is what Dateline should have been.
Send it to every paper and elected official on the planet. Every radio talk show. Every blog.
No wonder Nocera ran a hatchet job on Byrne over the weekend. Wall Street heard this was coming. So they had to take one last swipe at trying to smear him, as well as prominent folks in the NSS battle.
It didn't work.
Send this to everyone. It's time.
Copyright 2007 Bob O'Brien