Interesting posts from the Mark Cuban blog. Lots of excerpts published elsewhere basically proclaiming, "trust me, don't even think about naked shorting as a problem."
Here's some contrary thought from the same blog.
12. Posted Apr 18, 2005, 5:03 AM ET by mfv
It really is ashame that people take the SEC and DTCC "FAQ" on it's face value and not dive into the meat of it all; Something I'm sure the SEC & DTCC are really happy to hear about. Mark, did you actually read any of it? Did you skip the part where the SEC said that pardoning the prior naked shorts was done to avoid extreme volatility in the market? How about the part where they said revealing the true Fail To Deliver numbers would traumatize the trading strategies of those that employ it (And let me remind you Naked Short Selling is still ILLEGAL for the majority of people trading). I suspect not as you probably weren't on the can that long to read the whole thing. Pity.
BTW- If you can't add an ignore feature on here, how about just banning Tony Ryals. Can we at least all agree on that?
13. Posted Apr 18, 2005, 1:49 PM ET by mfv
From the SEC mouths to your ears (Mark's Link). I can't believe people are standing for this!
F. Grandfathering Under Regulation SHO
The requirement to close-out fail to deliver positions in threshold securities that remain for 13 consecutive settlement days does not apply to positions that were established prior to the security becoming a threshold security. This is known as "grandfathering." For example, open fail positions in securities that existed prior to the effective date of Regulation SHO on January 3, 2005 are not required to be closed out under Regulation SHO.
The grandfathering provisions of Regulation SHO were adopted because the Commission was concerned about creating volatility where there were large pre-existing open positions. The Commission will continue to monitor whether grandfathered open fail positions are being cleaned up under existing delivery and settlement guidelines or whether further action is warranted.
********* Oh BOO HOO!
It is important to note that the "grandfathering" clause of the Regulation does not affect the Commission's ability to prosecute violations of law that may involve such securities or violations that may have occurred before the adoption of Regulation SHO or that occurred before the security became a threshold security.
7. Does grandfathering permit illegal activity to go unaddressed?
Regulation SHO does not require close-outs of "grandfathered" fails. As noted above, "grandfathered" status applies where the fail position was established prior to the security becoming a threshold security. However, any new fails in a security on the threshold list are subject to the mandatory close-out provisions.
Any grandfathered position that resulted from illegal activity, such as manipulation, continues to be fully subject to redress by the Commission.34 The Commission will continue to monitor whether grandfathered open fail positions are being cleaned up under existing delivery and settlement guidelines or whether further action is warranted.
********* I think you would scare them more if you just snuck up on them and said BOO!
11. Can I obtain fails information?
Currently, threshold lists include the name and ticker symbol of securities that meet the threshold level on a particular settlement date. Some investors have requested that the SROs provide more detailed information for each threshold security, including the total number of fails, the total short interest position, the name of the broker-dealer firm responsible for the fails, and the names of the customers of responsible brokers and dealers responsible for the short sales. The fails statistics of individual firms and customers is proprietary information and may reflect firms' trading strategies. The release of this information could be used to engage in unlawful upward manipulation of the price of the securities in order to "squeeze" the firms improperly.
******* So it's OK to illegally short something but we certainly don't want to cause a "squeeze". |
