SEC Spares Market Makers From `Naked-Short’ Sales Ban
July 18 (Bloomberg) — The U.S. Securities and Exchange Commission exempted market makers in stocks from the emergency rule aimed at preventing manipulation in shares of Fannie Mae, Freddie Mac and 17 Wall Street firms.
The SEC granted relief for equity and option traders responsible for pairing off orders from a rule that seeks to bar the use of abusive tactics when betting on a drop in share prices. Exchange officials said limits on “naked-short” sales would inhibit the flow of transactions and raise costs for investors.
“The purpose of this accommodation is to permit market makers to facilitate customer orders in a fast-moving market,” the SEC said in the amendment.
Excuse me? I thought, and many others along with me, that naked short selling is illegal when it is used to drive down share prices. Here we have the SEC allowing some ‘market makers’ – the elite “Masters of the Universe” [The_Bonfire_of_the_Vanities] to continue their illegal activities while those in these selected stocks are protected.
Investopedia obviously thinks naked short selling is illegal:
The illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. But due to various loopholes in the rules and discrepancies between paper and electronic trading systems, naked shorting continues to happen.
While no exact system of measurement exists, most point to the level of trades that fail to deliver from the seller to the buyer within the mandatory three-day stock settlement period as evidence of naked shorting. Naked shorts may represent a major portion of these failed trades.
Here we’re told why naked short selling is illegal:
…….because it allows manipulators a chance to force stock prices down without regard for normal stock supply/demand patterns.
I hate to quote from Wikipedia, but its verdict is succinct:
Naked short selling, or naked shorting, is the practice of selling a stock short without first borrowing the shares or ensuring that the shares can be borrowed. Naked shorting is not necessarily a violation of the federal securities laws, and can contribute to market liquidity, but is illegal when it drives down stock prices. In 2004, the Securities and Exchange Commission (SEC) issued “Regulation SHO” seeking to curb abusive naked shorting.
In 2004, the Securities and Exchange Commission (SEC) issued “Regulation SHO” seeking to curb abusive naked shorting.
Here we read that the SEC knew of the dangers of naked short selling driving down the price of a stock and took steps to curb the practice for specific companies. Obviously, the practice must be widespread, as we saw evidence of its effects in the take down of Bear Sterns, which was brought back from the bring of bankruptcy with taxpayer monies. And again with IndyMac, [FBI Investigates IndyMac for Possible Fraud] and this illegal activity almost brought down Freddie Mac and Fannie Mae. But in the case of Freddie Mac and Fannie Mae and 17 other stocks worthy of protection from illegal activities, more of Bernanke’s and Paulson’s buddies on Wall Street, they are to be specifically included in the temporary ban on this [mostly] illegal activity.
As Darryl Schoon put it:
“The emergency rule applies [only] to 19 financial firms including Lehman Brothers, Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase & Co and Citigroup Inc. The SEC said that a loss of confidence in markets can lead to panic selling, which may be further exacerbated by certain types of short selling.”
This begs several questions: If naked short selling is illegal and it’s been practiced, by those shorting Freddie Mac and Fannie Mae and Bear Sterns, who is doing the naked short selling and why haven’t they been prosecuted? And why haven’t these “various loopholes in the rules and discrepancies between paper and electronic trading systems” been closed? That is the job of the SEC, this is your job, isn’t it Mr. Cox?
And why is it only the 19 Jewish financial investment banks get protection? What do the rest of us get? The bill?
And one last question, if the practice of naked short selling as it is being practiced in this situation isn’t illegal, why are you making a legal practice illegal to protect a select few? Why can’t us goy short these greedy criminal Jewish Wall Street firms and make a profit for once on their greed?
Instead of the SEC doing its mandated job, along with the bill to bail out these criminals, we get this:
“Boys, boys, you’ve gone too far in your greed and criminality. Things are getting serious now. You’re starting to damage all of us. You’re starting to draw the attention of the goy and some of these goy, like Senator Jim Bunning and Jim Rogers,
“They’re ruining what has been one of the greatest economies in the world, [Bernanke and Paulson] are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.”
are pissed. Let’s lay off the illegal activities until we can sort this all out and things settle back down to some semblance of normalcy. Then you can go back to stealing and raking in billions at goy expense. Then you can go back to being Masters of the Universe.”