May 19, 2008
How many years has the SEC been trying to "fix" the NSS problem now? 5-10? First the SEC says NSS isn't a problem and it doesn't exist. Then when grilled by Congress the SEC comes up with Reg Sho list(that didn't fix anything) that leaves an unknown amount of grandfathered FTD's in the system because listing them would cause to big a problem for the markets and might lead to a short squeeze. Heaven forbid a brokerage has to buy back the counterfit shares they have sold to the public to bring the companies share structure back to what it should be. The SEC doesn't seem to want to lift a finger when Broker-dealers,hedge fund managers bend/break the rules to make their money, but if they get caught with their hands in the cookie jar the SEC does everything they can to protect them from the public's wrath Yet when it happens to one of their own like Bear Stearns then there is investigations and uproar at the evil shorters and their manipulation. And of course a FED created taxpayer funded bailout cause their ponzi scheme like practices fell apart. Gotta protect their own ya know.
I would like to thank the SEC for finaly putting up the FTD data on your website. I only had to wait a year for my request on the FTD data on a company. It was of course denied. I only had to wait a couple more months after that for the info to be put on the website. I guess that is about par for our governmental beauracrats. By using that information we have found that there are what seem to me to be a scandalous amount of FTD's per day in certain companies. When 20-40,50,60,85,100% and more of the trades during a day fail to be delivered.. what is the excuse? And how can there be more Ftd's created than there are shares traded?
For example: a company with the ticker AIS:
Notice on 5/2/06 there was an increase of 418,417 FTD's created that were reported on 5/5/06. How is that even possible when the volume for that day was only 226,600??? I would love for someone at the SEC, DTCC, NSCC to explain that one. And it isn't an isolated phenomenon. There are a bunch of examples of similar increases in FTD's in just the handful of companies we have done so far.
DATE T+3 = FTD reported Price Volume Daily increase in FTD % of vol FTD SEC FTD DATA T+3 Increase in FTD T+3
5/5/2006 T+3 FTD 1.4899 410,700 27809 6.8% 938549 938549-520132= 418417
5/4/2006 T+2 1.5 340,900 18439 5.4% 520132
5/3/2006 T+1 1.55 207,100 58035 28.0% 464608
5/2/2006 Trade 1.62 226,600 418417 184.7% 386533
AIS:
DATE Price Volume Daily increase in FTD % of vol FTD SEC FTD DATA T+3
5/25/2006 1.28 203,400 88037 43.3% 865608
5/24/2006 1.21 160,900 0.0% 834115
5/23/2006 1.22 381,400 0.0% 443147
5/22/2006 1.3 751,300 31493 4.2% 692962
5/19/2006 1.32 775,400 390968 50.4% 1044296
5/18/2006 1.45 77,500 0.0% 1041149
5/17/2006 1.45 205,500 0.0% 1070454
5/16/2006 1.46 114,300 3147 2.8% 1056200
5/15/2006 1.47 156,600 14254 9.1% 964974
5/11/2006 1.5 250,800 21686 8.6% 891832
5/10/2006 1.5 187,200 69540 37.1% 1042832
5/9/2006 1.56 325,000 73142 22.5% 1015023
5/8/2006 1.51 294,600 0.0% 996584
5/5/2006 1.48 410,700 27809 6.8% 938549
5/4/2006 1.5 340,900 18439 5.4% 520132
5/3/2006 1.55 207,100 58035 28.0% 464608
5/2/2006 1.62 226,600 418417 184.7% 386533
5/1/2006 1.61 194,700 55524 28.5% 335350
4/28/2006 1.71 407,200 78075 19.2% 307507
4/27/2006 1.6 412,100 51183 12.4% 279923
4/26/2006 1.58 228,500 27843 12.2% 223082
4/25/2006 1.6 205,100 27584 13.4% 185610
4/24/2006 1.65 155,300 56841 36.6% 112778
4/21/2006 1.67 382,200 37472 9.8% 64699
4/20/2006 1.68 226,100 72832 32.2% 104414
4/19/2006 1.67 246,600 48079 19.5% 195279
4/18/2006 1.69 410,300 0.0% 85016
4/17/2006 1.59 300,300 0.0% 253617
4/13/2006 1.59 503,400 110263 21.9% 244032
OSTK:
8/23/2007 22.15 180,895 0.0% 650145
8/22/2007 22.71 563,254 0.0% 772815
8/21/2007 21.4 545,453 0.0% 517389
8/20/2007 20.5 165,141 0.0% 740930
8/17/2007 20.42 168,503 255426 151.6% 767072
8/16/2007 20 670,034 0.0% 822183
In a months time the FTD's go from 191,621 to over 900,000. An increase of 469% No wonder companies are up in arms about the constant FTD's The increase in the FTD's equal more than the average trading volume. It would seem to negate any upward pressure on the pps. Why even have any rules at all when the ones on the books are ignored by the enforcers and they have so many loopholes in them they are useless.
5/2/2007 17.88 165,033 0.0% 904982
5/1/2007 18.23 204,141 7453 3.7% 869015
4/30/2007 17.95 244,644 0.0% 733660
4/27/2007 19.1 497,014 35967 7.2% 714301
4/26/2007 19.24 766,633 135355 17.7% 619990
4/25/2007 17.64 676,791 19359 2.9% 577347
4/24/2007 17.04 774,461 94311 12.2% 369356
4/23/2007 17.58 268,283 42643 15.9% 380707
4/20/2007 17.58 318,116 207991 65.4% 286078
4/19/2007 17.18 207,285 0.0% 164482
4/18/2007 17.42 276,410 94629 34.2% 159548
4/17/2007 16.88 240,030 121596 50.7% 206234
4/16/2007 16.81 173,020 4934 2.9% 195713
4/13/2007 16.09 142,769 0.0% 218262
4/12/2007 16.39 228,992 10521 4.6% 245236
4/11/2007 16.2 315,547 0.0% 229031
4/10/2007 16.75 61,922 0.0% 207075
4/9/2007 16.82 73,910 16205 21.9% 191621
Now why is this allowed to go on? How is this not manipulation? Chairman Cox said himself that FTD's not settled in 3 days can be manipulation. What does he think of FTD's that keep increasing over a months time? What is being done to those responsible for creating them? Are trading records being pulled to get to the bottom of WHO is creating the FTD's and who else is involved with them?? This is just a couple examples and there are hundreds of companies with similar data. I don't think this rule will do much to correct these problems. Unless the SEC gets more transparency going, like publishing the FTD data (thank you), start pulling trading records to investgate companies with alot of FTD's, I think the crooks will cotinue to lead te SEC in circles.. Although if you watch the Darkside of the Looking Glass video below, it makes you wonder how accurate that FTD information is. I wonder if you started publishing the names of the broker-dealers/ traders responsible for creating the FTD's that are not settled in 3 days if that would help solve the problem. Maybe add a few fines for trades that dont get settled on time might help them follow the rules. Although with all the loopholes created in our rules, they may get confused.
As another part of the FTD epedemic, I think the SEC really needs to make a strong effort to do a thorough investigation as to who is creating these ftd's, what news articles are being created and if there is any relation between the journalist and the sellers. A trader,broker-dealer, hedge fund manager getting a financial news journalist to write negative articles on companies so he can make a few bucks while dumping huge ammounts of shares they don't have seems to me to be nothing but manipulation. Also if a company is involved in a PIPE deal there is a big inventive to drive the pps down so the company issueing the PIPE deal can get more shares from the convertable notes. The lower the price the more shares they get. and if they keep dumping shares they can eventually drive struggling companies into bankrupty where they never have to worry about covering their short positions. When the entire float of a company trades within a couple days.. shouldn't that raise a red flag that someone is doing something illegal manipulative?
Reguardless of who is creating them and why, it is abundantly clear that IF all these FTD's are not from manipulation but from paperwork problems with borrowing, sending in certs or whatever, then there is a BIG problem with allowing people to sell shares without sending in their cert and having their shares processed BEFORE allowing them to sell them. And when the SEC starts saying that all that companies stock I just bought is only an IOU for real shares.. something is really, really wrong The system is FUBARed and should be overhauled to make sure that if a person buys stock that they OWN it, period. Not some IOU that allows the brokerages to increase the Outstanding Shares of a companies stock by as much as they please with no consequences and a screw the real shareholders and company attitude. Allowing the problem to continue with small pretty bandaids that still allow the blood to flow freely hurts the public investors, hurts the companies who are having their shares counterfited, hurts the confidence in the US markets, and ultimatly will hurt the SEC for allowing it to continue. I don't understand why the US is the one that seems to have this FTD problem while other countries don't. Maybe they are just covering up better than the US is now. Although God help any company that has its shares mysteriously listed on the Berlin Stock Exchange without their consent, because the SEC doesn't seem to give a rip about who is messing with companies stocks and the companies themselves have a heck of a time getting their shares delisted from it.
Although when the senior counsel of the SEC's enforcement division retire and start defending criminals, it makes you wonder if they were mearly racking up contacts and iou's in their few short years of service to make tons more money defending crooks later. I am all for innocent till proven guilty. But when found guilty.. there had better be some justice envoked in the punishment. Not letting them slip through one of the holes in our swiss cheese regulation system and getting a slap on the wrist for stealing hundeds of thousands-millions $$ from the public. I guess doing their time and learning the loopholes in the system is worth it when they get out and start making some real money from people who get caught messing with our markets. If the guy had stole a car or robbed a bank they would get more jail time than alot of these "white collar" crooks get. ... but I degress..
I think it's time for the SEC to come clean and deal with the folks who are gaming the markets at the expense of the public. It is crystal clear that allowing FTD's to continue for weeks, months, years on end is a travesty of justice and a deriliction of duty on the SEC's part. The only ones who benefit are the greedy folks who could care less about the law, the companies, and the legal investors. The SEC needs to step up to the plate and take thier licks for/from the American taxpayer and the investors of all these companies who have been harmed by manipulative practices of a few greedy Broker-dealers,traders, hedge fund managers and clean up the markets with a pressure washer, bleach, and elbow grease. This proposed rule seems like a waste of time. Enforce the ones you already have and eliminate some of the loopholes instead of trying to add more If not, this problem will not have changed one iota 2 years from now, and we will be right back here responding to yet another bandaid proposal.
Below is a few links that will give more information the SEC, and other readers of this reply, should look at and investigate further.
1. http://www.businessjive.com/ This hour long movie explains how FTD's are created, how they hurt investors and the effect it has on companies.
2. Jim Cramer talks about how he fed information to financial analysts to move stock prices the way he wanted them to go. http://www.thestreet.com/video/cramermarketupdates/10329438.html#10329438
3. www.deepcapture.com Several very interesting articles that should be forwarded to the SEC investigators or perhaps the FBI for further inqueries. The article by Mr. Mitchell is long but an excellent look at how our financial system is being toyed with.
4. http://www.deepcapturethemovie.com/ Another video explaining the problems of NSS and the links with financial reporters. Slide 41 is interesting. Did the SEC ever do anything about that?
5. http://www.sec.gov/foia/docs/failsdata.htm SEC Fail Data