Re: 7/29/05 - Reuters: Opponents of 'naked' short selling picket DTCC
Opponents of 'naked' short selling picket DTCC
NEW YORK, July 29 (Reuters) - Shareholders of several small-cap companies demonstrated outside the Manhattan offices of the Depositary Trust & Clearing Corp. on Friday to complain about the practice of "naked" short selling.
"Naked" short selling occurs when a trader sells shares that he or she does not own. U.S. securities rules allow this if the shares are finally delivered to the buyer, but it becomes illegal when the trade can't be settled, or is done to drive the stock's price down.
"I'm in the car business," said George Boomer, of Heathrow, Florida, one of the more than dozen picketers. "If I sold you a car and I failed to produce the title of the car, you'd march to the attorney general's office to complain."
Several of the protesters claimed the practice had taken a toll on the shares of CMKM Diamonds Inc. , a minerals exploration company that trades on the Pink Sheets. Its shares were unchanged Friday at 0.01 cents.
In recent months, the group has also targeted the offices of the U.S. Securities and Exchange Commission and the Nasdaq with demonstrations.
The Depositary Trust & Clearing Corp., which is jointly owned by major Wall Street investment banks, operates as a clearing house, overseeing the post-trade delivery of securities and cash to buyers and sellers.
Barry Shipes, an investor, said the loosely organized group was taking on the DTCC because it had not stepped up to interfere in the practice of "naked" shorting.
"The DTCC makes a fractional profit out of every share that trades in the U.S. market," said Shipes, a security guard from Beacon, New York. "Why would they stop it? The money is going into their accounts."
For its part, the DTCC noted that it is not charged by the SEC or its shareholders with enforcement duties.
"We are neither a contributor to any of these trading activities or a factor in any of the allegations that these folks are making," said Stuart Z. Goldstein, a managing director at the DTCC. "These folks are wrong in their assumptions and wrong in their facts."
Short selling is a way of profiting from a stock's decline in value. A short seller borrows shares and sells them, hoping to buy them back later at a lower price, pocketing the difference. In "naked" short selling, the seller does not borrow the shares prior to selling them.
asia.news.yahoo.com |
