12:42:00 AM Aug 25, 2005 (financialwire.net via COMTEX) --
August 25, 2005 (FinancialWire) With JPMorgan Chase & Co. (NYSE: JPM), Deutsche Bank AG (NYSE: DB), Goldman Sachs Group Inc., Morgan Stanley (NYSE: WMD) and Merrill Lynch & Co. (NYSE: MER), who dominate the credit-derivatives market, reportedly among 14 banks being called on the carpet by the NY Fed over "unconfirmed trades," and a super task force of regulators reportedly auditing the top brokerages over allegations of illegal naked short selling, it could soon be "SHO and tell" time.
Regulators are smarting over allegations that they gave super hedge funds a free pass because "fails to deliver" were just too massive to reconcile in the "grandfather clause" in Regulation SHO after the FTDs couldn't be cleaned up even with a six months notice, and there is growing evidence that the U.S. Securities and Exchange Commission, the NASD and the New York Stock Exchange are not about to let some state regulator do another "Spitzer" on them.
The North American Securities Administrators Association, representing state regulators, was sharply critical of the Depository Trust and Clearing Corp., co-owned by the NYSE and NASDAQ, during the comment period over Regulation SHO, and FinancialWire has been aware for some time that some state regulators have been looking into why the DTCC has fails to deliver amounting to $6 billion a day.
NASDAQ may soon pull out of the DTCC and form its own clearing group, according to Traders Magazine. A break-up of the DTCC has been editorially endorsed by Investrend Information, publishers of FinancialWire.
A growing chorus has also risen from Congress to "make Regulation SHO effective," rather than what critics say it has been so far, a showcase of illegal manipulation.
TheStreet.com's (NASDAQ: TSCM) RealMoney said that the market "dived" Wednesday over the Fed letter, saying the market may be concerned this is "another Long term Capital type event in the making."
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