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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: rrm_bcnu who wrote (1833)	9/28/2006 8:26:19 AM
From: rrufff	Read Replies (1) \| Respond to of 5034

RRM - excellent summary. I put it into the IBox. I think it may be a bit outdated as Canada has been replaced by Europe and the Caribbean for the NSScammers.

To: rrm_bcnu who wrote (1833)	9/28/2006 10:21:08 PM
From: rrufff	Respond to of 5034

FORBES__Beating Fails Liz Moyer, 09.28.06, 1:00 PM ET More data sooner could help put a stake through the heart of stock manipulators. The National Securities Clearing Corporation has told federal regulators that it would be willing to back the release of more data earlier on trade settlement failures in the interest of promoting a greater understanding of the somewhat murky back office world of trade clearing and settlement. Until now, NSCC, the division of the Depository Trust & Clearing Corporation that handles the daily settlement of stock, bond and other trades, has jealously guarded information on trades that "fail to deliver," calling it proprietary to its member firms (and owners), Wall Street brokerages. It sees part of its mission as protecting the integrity of the markets by preventing the disclosure of confidential data that could be used to manipulate trading. But in a letter Wednesday to the U.S. Securities and Exchange Commission, DTCC General Counsel Larry Thompson appeared to soften his stance on the disclosure issue. "We believe it would be appropriate for the Commission to authorize greater disclosure of aggregated information" on trade settlement failures, Thompson wrote. The DTCC submitted the comments on behalf of the NSCC. The letter was submitted as part of the SEC's comment period on proposed amendments to short-selling rules that are supposed to curb manipulative trading tactics. A range of academics, regulators, elected politicians and corporate executives have called for more data on trade fails to be released sooner, saying transparency would reduce the potential for fraud. "Lack of transparency and oversight contributes to the danger that hedge funds may engage in possible use of naked short selling," wrote Richard Blumenthal, the attorney general for Connecticut, home to many of the biggest hedge funds. Some want the data to be published each day, saying there's no reason why it can't be. But banks have commented that the SEC should take care not to impose new rules that would damage the liquidity of the markets by clamping down on trading, put burdensome processes in place and force the disclosure of sensitive information. "We oppose any requirement that firms publicly disclose their fail positions," wrote Gerard Citera, the executive director of U.S. equities at UBS Securities, in his letter on Sept. 22. "This information is proprietary to the firm and its customers and could result in disclosure of confidential information such as trading strategies." NSCC is not proposing that; rather, it is supporting the disclosure of aggregated data. Thompson left it up to the SEC to set a new timeframe and didn't hint at which way he was leaning: disclosure after one day, five days or one month and 29 days. NSCC reports trade settlement failures daily to the SEC and the national stock exchanges. These reports show when a stock purchase has been made but shares have not been delivered to the buyer by the three-day settlement deadline. Both the SEC and the exchanges use the data to determine whether a stock has high enough and persistent enough trade settlement failures to warrant including it on a list of similar securities for which special trading restrictions are supposed to kick in. The SEC will provide the trade failure data, but only on request and only after a two month lag. NSCC and others defend the delay by saying earlier disclosure of specific stock failures could jeopardize proprietary strategies. "Such an outcome would discourage legitimate short sellers from expressing their views," Thompson said. But, he said, providing aggregated information and not disclosing specific information about failed trades by individual firm, "may help alleviate some of these concerns." The data already publicly available through the SEC does not disclose specific firms or trading positions, just aggregate fails by day. Thompson's letter declined to address trading practices that could lead to high levels of settlement failures, including the controversial practice of naked short selling, because its mission does not include monitoring trading at the "front-end."