October 8, 2009
On Rolling Stone, Penson Financial, the Mafia, and Naked Short Selling
Posted on 07 October 2009 by Mark Mitchell
As should be clear from the contents of Deep Capture, the world of illegal naked short selling is a weird one, populated by sociopathic billionaires, slick lobbyists, famous felons, bent regulators, crooked law firms, corporate spies, message board maniacs, sinister banks, shifty private investigators, mendacious professors, professional dissemblers, propagandists, grifters, thugs, liars, and the Mafia.
Things become all the more weird when you consider that regulators and law enforcement do almost nothing to stop naked short selling, even though a growing number of prominent people – everyone from U.S. Senators to George Soros – insist that criminal naked short sellers helped take down Bear Stearns, Lehman Brothers, and the American financial system. Then theres the weird fact that anybody who tries to shed light on this weird state of affairs is quickly subjected to smear campaigns that areweird.
Anyway, message to Matt Taibbi: Welcome to our world.
Taibbi, as many people know, is the star reporter who published a major expose about naked short selling in the most recent issue of Rolling Stone magazine. In addition, he has published a few blogs providing more evidence to support his claim that illegal naked short selling is a big deal and its pretty hilarious, as he puts it, that the government hasnt prosecuted the people who might have helped crash the financial system.
In one of his blogs (which you can read here), Taibbi posts a video that seems to show a day trader conducting a short sale of stock in an unnamed big bank through a brokerage called Penson Financial. The SEC says that short sellers have to have reasonable grounds that they can locate actual stock to deliver to their buyers. As Taibbi rightly points out, this is a very funny piece of regulatory policy – asking greedy ass financial companies to determine what to them is a reasonable effort to follow the rules.
At any rate, if you believe what you see in Taibbis video, Penson Financial gave that day trader a phony locate on quite a few of the unnamed big banks shares. In fact, the video seems to show Penson Financial confirming that it had located many billions of the unnamed big banks shares – altogether, five times as many shares as were then in circulation. In other words, it seems that if this trader had had the inclination and the funds, Penson would have accepted a massive naked short sale, helping the trader flood the market with billions upon billions of shares that simply did not exist.
This is rather important, because Deep Capture has reviewed evidence showing that little Penson Financial and one other relatively unknown firm were by far the biggest traders in financial stocks in the first nine months of last year, handling more than 80 percent of volume. To repeat, Penson Financial, a little firm in Dallas, Texas, and one other relatively small firm handled by far the biggest volume of trading in the stock of all those big banks that collapsed last year, leading to the worst financial crisis since the Great Depression. When it came to clearing trades in financial stocks, Penson was bigger than Goldman, bigger than Merrill, bigger than every major brokerage on Wall Street.
more here .....