Re: 4/19/05 - Mark Cuban comments on Shapiro letters and (once again) spars with "Bob O'Brien"
15. Posted Apr 19, 2005, 3:49 PM ET by Bob O'Brien
Hey Mark. Thought you might have some fun with this - it's Robert Shapiro's response to the DTCC's Mr. Thompson.
Shapiro is the former U.S. Under Secretary of Commerce for Economic Affairs from the Clinton Administration, a Harvard Ph.D, and an expert on the capital markets.
In it, he basically calls Thompson a liar, and further clearly articulates that your take on this is desperately, completely and totally flawed - and that's the charitable explanation. Perhaps you can take the time to respond to this letter bringing your amazing powers of engagement to bear? Because you seem to enjoy branding those of us who use reason and logic as kooks - so let's see how you do with Shapiro.
Here's the letter:
[edit]
So knock yourself out, Mark, with the "those wild eyed crazy naked short selling conspiracy theorists are at it again" shuck and jive. I suspect it won't go over quite so well now.
Enjoy.
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16. Posted Apr 19, 2005, 7:01 PM ET by mark
Of course you dont come out and say that the law firms that hire him as an "advisor" are the ones who stand to gain the most in fees by pushing his misuse of data.
He does fit in well with your group Bob. Dismissing FTDs as "mostly naked shorts", without knowing whether or not its "mostly long sales that werent delivered"
There are certainly FTDs.
There are certainly a variety of reasons for them.
They certainly are the result of both long and short transactions.
We just dont know details on any of this.
But paying off someone with all the degrees and the resume is certainly a better approach than paying off a Senator.
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17. Posted Apr 19, 2005, 7:09 PM ET by mark
1 more thing Bob O. This isnt a new crusade for Mr Shapiro.
Its one he has been on for a long time.
So in reality, his letter is just a rehash of what he wrote 2 years ago
sec.gov
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18. Posted Apr 19, 2005, 8:08 PM ET by Bob O'Brien
So help me understand.
You don't know anything about whether the FTD's are naked shorts or "long shares that didn't deliver." Just don't know. Are actually unable to articulate what the difference is between the two - certainly none when it comes to the end result - a fail - or the depressive effect of engaging in a selling transaction and not having a share to make good on a sale, regardless of what you choose to call it.
But quick to dismiss a guy with the highest possible accolades and credentials.
Because, presumably, you know better. But you admit that you don't actually know anything. None of us do. Because the system is opaque.
That's a good old fashioned conundrum.
We do know that 82% of the fails aren't settled through the borrow program. So what happens with those?
Nobody knows. I've sent countless emails to the DTCC to clarify, and they aren't telling. Presumably you feel that's a good way to handle requests for information - stonewall, and mock. Well, why don't you have a go at it and tell us how you like it?
Here's my theory of what happens. Feel free to punch holes in it.
82% of the time, the NSCC issues an IOU to the broker when he comes up to the window, or, alternatively, the broker just issues an IOU to the buying customer's account and never tells him what has happened.
Here's how I believe it might work:
I buy 1000 shares of NFI through Aneritrader. My account is debited today - bye bye cash. Tomorrow morning my account says I "own" 1000 shares of NFI. Except that's not really 100% correct. T+3 Aneritrade goes to the window at the NSCC to get the shares and they are told that 820 of the shares are not available, even through the borrow program, but here's an IOU for them from the NSCC - hell, we're good for it. Or, alternatively, they are just told so solly, no shares today, come back maybe next week, bye bye.
Either way, my account is out the cash, and aneritrade has a conflict. What to do? They certainly aren't going to represent to me that they took my money and delivered, well, nothing so far, or maybe only 180 of the 1000. So what they do is either stick the NSCC IOU in the system representing the shares I will get at some point, AND JUST TREAT IT THE SAME AS REAL SHARES, REPRESENTING THEM TO ME AS REAL SHARES AS WELL, or they create an IOU themselves, and do the same thing. That's where the fraud comes in - when the broker represents to me that my hard dollars bought me shares, when in fact I have an IOU being represented as something it isn't - shares.
But now it gets better - this is the ex-clearing level counterfeiting/fraud.
I decide to sell my 1000 shares of NFI next month, Click sell, and poof, they are sold. The buyer, a customer at Smith Blarney, buys them. Only there's 180 real shares, and an IOU he just bought. At the end of the day, the trading desk at aneritrade calls Smith Blarney and tells them so solly, we only have an IOU, but it's ours/the NSCC's and you know that we/they are good for it. SB, who was just about to make the same difficult call to aneritrade on 1000 shares of TASR, understands completely - it's an imperfect world. So they swap the IOU's, make some ledger entries, and everything is fine.
Except that the new buyer has also been defrauded by having the IOU represented to him as something it isn't (that's the counterfeiting part/fraud) in order to get him to pay his cash today. And in the meantime 2000 or 3000 shares worth of transactions have impacted the marketplace and depressed the stock price as though 3000 real shares had been dumped.
You see the problem?
You also see why no transparency is not a solution?
If that's what is going on, then it's an industry wide problem that is huge in proportion - how huge? You don't know. Neither do I. But I can guess.
Big enough to make the SEC want to just pardon all the fails rather than having to deal with the fallout - by their own admission. Words like large are used, and volatile.
Tell me why this isn't an issue again? And tell me why I haven't just described an industry wide fraud scheme? Where did I get that wrong, and how is the creation of these IOU's not counterfeiting, given that they are being represented as genuine to the buyers?
Help me figure this out. Take off the adversary hat for a second, and just help me understand.
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19. Posted Apr 19, 2005, 8:23 PM ET by mark
You dont get it Bob O. If you want to go on a crusade about transparency from the DTCC. Great do it.
Paying some guy (by the way, thats the entire business of Precision Econ, to be paid to take a position) to play chicken little for you and make it seem like because there are naked shorts and because we dont have the level of transparency from the DTCC that you want, that everyone must be hiding something nefarious, is your typical faulty logic.
Actually, the worst thing that could happen to you is that the DTCC was completely transparent.
Then you would have nothing to hide behind.
Just curious. We started this months ago. Who are the newest and latest victims of Naked Shorting ?
Given the percentages your economist sites, there should be companies who are being abused by Naked Shorts showing up every day. We should be hearing from their CEOs. From their Shareholders.
Who are the newest victims Bob ?
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20. Posted Apr 19, 2005, 9:34 PM ET by Bob O'Brien
Mark: Thanks for the non-response. You still don't get it, or you are deliberately being obtuse. You aren't stupid, therefore I can only conclude that you have an agenda.
And FYI, new to the SHO lists over the last 14 days:
[SHO list edited out]
blogmaverick.com
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Note: "Bob", as usual, fumbled when asked to produce a real-life victim to support his theories. |
