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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (44086)	12/19/2008 12:51:06 AM
From: Hawkmoon	2 Recommendations Read Replies (2) \| Respond to of 217671

TJ, The most insidious aspect related to the Madoff ponzi scheme was his involvement in naked short selling via his fraudulent market making activities. He wasn't just doing it to maintain "liquidity" in those markets. He was engaged in a deliberate attempt to manipulate those markets. He complained to the SEC about eliminating the grandfather clause and mmkr exemptions: In fact, in response to the Commissions consideration to eliminating the grandfather clause, market makers responded with concern stating "This [eliminating grandfather clause] is going to have a serious impact on our ability to make markets," Mark Madoff, co-director of trading at the family-owned Bernard L. Madoff Investment Securities Madoffs comments imply that market makers rely on the leverage gained by naked short selling, and the delays in the settlement process that comes with such trades, to turn profits and minimize risk. Providing further leverage beyond settlement delivery by allowing the short selling (naked or otherwise) to take place into a declining market and into a down tick will be a recipe for disaster. groups.google.com And now we have discovered that those market making activities he was involved in were just part and parcel to his Ponzi scheme. What we should REALLY FEAR is that Madoff's activities are only the tip of the iceberg regarding the illegal counterfeiting of stock shares that are the basis of naked short selling. This realization alone should result in the SEC taking a SERIOUS look at the use of naked short selling by mmkrs of all types and whether they have been engaged in ponzi schemes of their own. Because when a mmkr defaults on an obligation to deliver stock against their short positions, it is the SIPC that has to pick up the tab. Hawk