SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: basserdan who wrote (4083)12/19/2008 5:20:53 AM
From: rrufff1 Recommendation   of 5034
 
Highlights - make a lot of sense

a) The automatic breaking of all failed trades and returning all purchase money to the
original buyers promptly and automatically, and

b) The revocation of securities licenses of habitual violators of 15c6-1 who cause fails.

This way, the Commission could ensure compliance with 15c6-1 with very few resources as it would be self enforcing and those who repeatedly breach the public trust and disregard
the law would be removed from the securities industry.

Problems with 204T

While we are happy that the Commission is adopting more restrictive rules, it is not near enough
as this is yet another layer of rules without enforcement.

Something is better than nothing. But:

1. It is yet another layer of rules trying to deal with habitual rule violators of 15c6-1 and others.

2. It allows the “close out” of fails to deliver by borrowing stock, rather than by buying stock.
This pushes the liability of possibly not receiving stock on demand onto the lender of securities. The failing party still is liable to deliver the stock to the lender. It only moves the fail around.

3. It treats market makers differently with exemptions only for them, violating Section 6(b)(5)

4. It does not force anyone to close out fails nor does it stop new fails, as the only “penalty” is a
mandatory pre-borrow applied only to those who have open fails.

5. REG SHO has shown that more regulation does not affect fails. Only enforcement does.

Conclusion

The securities markets in the U.S. have become a house of cards shaking precariously due to the persistent fail obligations and price manipulations of individual securities via fails. Prompt and accurate settlement of trades is the most basic function in any market. This is not something
investors or issuers should have to beg for. Deliberately not enforcing settlement as required by federal statute makes the Commission look like securities industry lap dogs.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News