This is the first part of a must read article...
"Naked Short Selling - The Truth Is Much Worse Than You Have Been Told
Written by James Stafford of OilPrice.com
There is a massive threat to our capital markets, the free market in general, and fair dealings overall. And no, it’s not China. It’s a homegrown threat that everyone has been afraid to talk about. Until now.
Hordes of new retail investors are banding together to take on Wall Street. They are not willing to sit back and watch naked short sellers, funded by big banks, manipulate stocks, harm companies, and fleece shareholders.
The battle that launched this week over GameStop between retail investors and Wall Street-backed naked short sellers is the beginning of a war that could change everything.
It’s a global problem, but it poses the greatest threat to Canadian capital markets, where naked short selling—the process of selling shares you don’t own, thereby creating counterfeit or ‘phantom’ shares—survives and remains under the regulatory radar because Broker-Dealers do not have to report failing trades until they exceed 10 days.
This is an egregious act against capital markets, and it’s caused billions of dollars in damage.
Make no mistake about the enormity of this threat: Both foreign and domestic schemers have attacked Canada in an effort to bring down the stock prices of its publicly listed companies.
In Canada alone, hundreds of billions of dollars have been vaporized from pension funds and regular, everyday Canadians because of this, according to Texas-based lawyer James W. Christian. Christian and his firm are heavy hitters in litigation related to stock manipulation and have prosecuted over 20 cases involving naked short selling and spoofing in the last 20 years.
“Hundreds of billions have been stolen from everyday Canadians and Americans and pension funds alike, and this has jeopardized the integrity of Canada’s capital markets and the integral process of capital creation for entrepreneurs and job creation for the economy,” Christian told Oilprice.com.
The Dangerous Naked Short-Selling MO
In order to [legally] sell a stock short, traders must first locate and secure a borrow against the shares they intend to sell. A broker who enters such a trade must have assurance that his client will make settlement.
While “long” sales mean the seller owns the stock, short sales can be either "covered" or "naked." A covered short means that the short seller has already “borrowed” or has located or arranged to borrow the shares when the short sale is made. Whereas, a naked short means the short seller is selling shares it doesn’t own and has made no arrangements to buy. The seller cannot cover or “settle” in this instance, which means they are selling “ghost” or “phantom” shares that simply do not exist without their action.
When you have the ability to sell an unlimited number of non-existent phantom shares in a publicly-traded company, you then have the power to destroy and manipulate the share price at your own will.
And big banks and financial institutions are turning a blind eye to some of the accounts that routinely participate in these illegal transactions because of the large fees they collect from them. These institutions are actively facilitating the destruction of shareholder value in return for short term windfalls in the form of trading fees. They are a major part of the problem and are complicit in aiding these accounts to create counterfeit shares.
The funds behind this are hyper sophisticated and know all the rules and tricks needed to exploit the regulators to buy themselves time to cover their short positions. According to multiple accounts from traders, lawyers, and businesses who have become victims of the worst of the worst in this game, short-sellers sometimes manage to stay naked for months on end, in clear violation of even the most relaxed securities laws.
The short-sellers and funds who participate in this manipulation almost always finance undisclosed “short reports” which they research & prepare in advance, before paying well-known short-selling groups to publish and market their reports (often without any form of disclosure) to broad audiences in order to further push the stock down artificially. There’s no doubt that these reports are intended to create maximum fear amongst retail investors and to push them to sell their shares as quickly as possible.
That is market manipulation. Plain and simple."
... continued at link:
https://oilprice.com/Energy/Energy-General/Naked-Short-Selling-The-Truth-Is-Much-Worse-Than-You-Have-Been-Told.html |
