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Must Read letter to SEC in Reg SHO comment section

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Posted by:   bobo 4/17/2007 8:09 AM

This comment letter to the SEC is an absolute must read. It clearly, concisely, and logically lays out how exactly all the naked short selling takes place, at all the various levels of the system.

It also explains why a failure to receive is a different animal than a failure to deliver. Fascinating.

Which gives additional clarity to the SIA's spreadsheet, which shows $82 billion for NYSE member firms in failure to delivers, and receives.

Who knows how many fails are concealed from view by repo agreements? You know, where you don't call it a fail because you have a repo agreement to buy the shares back at some future date? That is a mechanism to sell many millions of shares naked with absolutely no failures appearing in the system. While many of the repos are likely bonds, it is unknown how many are FTDs being masked. Nobody knows. And if you look at the spreadsheet, the number of dollars involved is trillions.

Read this letter. You start to really understand why no sane person would have a dime in the market.

Copyright ©2007 Bob O'Brien
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Comments (19)
Re: Must Read letter to SEC in Reg SHO comment section By obo on 4/17/2007 10:58 AM
As this letter states, companies can get information on how many shares each brokerage, clearing brokerage actually own.

Why can't companies get information on how many shares investors think they own? Wouldn't it be valuable to compare those two numbers?

There is a loophole where if a shareholder objects to having the position known, they don't have to disclose it. This is called an "objecting beneficial owner". They also don't have to disclose it if the company is located outside of America.

They use those two loopholes to make sure that in most cases, the disclosed NOBO data (non objecting beneficial shareholder) exactly equals the DTC numbers.

There is no reason for this other than to intentionally obfuscate the true state of affairs.
Re: Must Read letter to SEC in Reg SHO comment section By canada on 4/17/2007 11:28 AM
Are you aware that most Canadian brokerages won't accept the deposit of an OTC share certificate? Shareholders are told that if they request a share certificate, it will be equivalent to toilet paper as the Canadian industry won't accept it for redeposit. Shareholders that insist that they be given their property are yelled at and told they are stupid.
Re: Must Read letter to SEC in Reg SHO comment section By obo on 4/17/2007 11:45 AM
These too quotes tell us what we need to do:


"If this knowledge did become commonplace, then at least one of the main two prerequisites, that of not registering and demanding delivery of shares, might be eradicated."

"It is relatively easy to empty out the pool at the DTCC. If a company has 70 million shares at the DTCC and a naked short position of 500 million shares, then all the company has to do is create a situation that withdraws 70 of 570 million shares available to be withdrawn. As was stated earlier, all of the brokerage firms represented along the chain of events of one buy order are HIGHLY incentivised not to demand the correction of those Failures to receive and deliver. In order for this to occur, the shareholder and the issuer must be educated as to how this game is played"
Re: Must Read letter to SEC in Reg SHO comment section By lenofus on 4/17/2007 2:56 PM
Why is it that, if the Attorney General breaks wind, the entire opposing party calls for his immediate resignation.

Why, when there is something this significant, hasn't any pollitician called for Cox, and his entire board of "Commissioners", to resign? I guess they really just don't care. And I don't care for any of them, either.
Re: Must Read letter to SEC in Reg SHO comment section By old duffer on 4/19/2007 8:53 AM
You hit it square on the head Bobo. Why do any of us have any money in the US markets?

God help me and I soon won't.
Re: Must Read letter to SEC in Reg SHO comment section By oldfeller on 4/19/2007 8:53 AM
The potential for short squeezes of unprecedented size is obviously the reason the NASD has recently been granted authority to halt trading in any stock that trades in a "disruptive" fashion. "Disruptive" meaning money going from the crook`s pocket to the investor`s pocket.

http://www.pinksheets.com/about/pr_041207b.jsp
Re: Must Read letter to SEC in Reg SHO comment section By ginger on 4/19/2007 8:54 AM

This is a good one too...

http://www.sec.gov/comments/s7-12-06/gsmith4258.htm
Re: Must Read letter to SEC in Reg SHO comment section By selene on 4/19/2007 8:55 AM
I suggest you get someone to teach you the method of couples.

Selene
Re: Must Read letter to SEC in Reg SHO comment section By Mr. Wiggle on 4/19/2007 8:55 AM
I keep asking the question and nobody gives me a legitimate answer.

With this information (NSS) coming to a forefront in the conscience of the average investor what position do you take as an investor?

Bobpo - you have stated you and your friends are out of the market sitting on the sidelines waiting for the market waters to be "fair" or out completely never to return.

Does that still hold?

With the apprehension of the shti hitting the fan like the .com crash wouldn't you want to take a short position? If you take a short position and the market crashes will you not be able to (buy in) cash in?

What is the melt down senario here?

If the brokerages naked short the market have to buy in the market goes up, right?

If investors give up and leave the market the market goes down,right? What happens if I'm short the market when they do? Don't I make money?

Now give me some of that message board smoke and mirrors, baby.



Re: Must Read letter to SEC in Reg SHO comment section By rtway on 4/19/2007 8:56 AM
Well written and explained in every detail. Now the trick is to get someone at a office that puts bad buys and girls in jail to read it and then fu

Very well written and even better explained, but I would like to see charts for impact purposes. Now if we can only get someone who has the gonads and authority to put bad people away to do some fu(*&*%ng thing about it. I believe the government and media are too far compromised to do anything unless their is a total boycott or rebellion.
Re: Must Read letter to SEC in Reg SHO comment section By tommytoyz on 4/19/2007 8:57 AM
It is important to keep in mind that this REG SHO comment letter is old as it goes on and on about Rule 10 (a)-1, The Short Sale Rule. However, this rule has been replaced by REG SHO. Rule 10 (a)-1, The Short Sale Rule, does not apply anymore.
Re: Must Read letter to SEC in Reg SHO comment section By mhatmccane on 4/18/2007 7:25 PM
"Why, when there is something this significant, hasn't any pollitician called for Cox, and his entire board of "Commissioners", to resign? I guess they really just don't care. And I don't care for any of them, either."

Everyone who can have an impact is well paid (or will be) to ignore this "significant" and EXTREMELY COMPLICATED issue. (imho).
The other headline issues ( Atty Gen'l, who is the father of some dead lady's baby, the shootings at a VA college, which candidate has raised how much money, etc.,etc) are the modern day version of the old Roman Forum circus specials designed to keep the masses occupied.
Re: Must Read letter to SEC in Reg SHO comment section By bbhindyou on 4/19/2007 8:57 AM
mhatmccane ..
You are exactly precisely right.
Now look at what happened when the money for the bread and circuses failed.
Who survived?
Who didn't?
What is always good for a laugh is to look up what happened to those who tried to warn or save the masses.
Here we go again.
What song was that .. and the fool on the hill see's the world spinning round...
No one has ever listened no one ever will.
Same football held by Lucy and we as Charlie Brown can do nothing else.
Theres nothing we can do about it.
Re: Must Read letter to SEC in Reg SHO comment section By bobo on 4/19/2007 9:19 AM
Selene: Gee, would couples be where there is a big difference between FTDs and FTRs? Tell me, given that you are so knowledgeable, what would be the best way to find out how many billions of the trillions in dollars of repo agreements are being used to mask delivery failures by theoretically having a buyback provision?

Wiggles: The problem is that for the last 5 years nobody has had to buy back. The reason is twofold: The SEC is bought and paid for and is ignoring the 1934 Act and the requirements for linkage between clearance and settlement, and further ignoring prohibitions against trading in unregistered securities (which is what security entitlements that lack an underlying genuine share, as well as any of the rights of a genuine registered security, really are, per the 1933 Act). And the problem is now that all the biggest brokers on Wall Street are doing this - evey prime broker is naked shorting and failing at massive levels, and those banks own the financial system, thus will always have more money to keep selling, and keep buying regulators and politiicians, so you can't win by expecting them to be made to buy in. They are too big to fail, and too big to buy in, just as the US is too big to force to abide by international law, and the Geneva convention.

If you want to take the opposite bet from the one taken by the owners of the US financial system, have at it. My hunch, now that I clearly get just how large this is, and how pervasive, and how entrenched in the system the players are, is you have less than zero chance. The game is rigged by an entire industry that is printing shares at will, in unlimited and unknown quantities, unrestricted by any regulation or sense of risk or consequence. We both know that is the true lay of the land.

So why again would you want a dime in the market, when it is completely rigged by those that run it? And the cops are holding the door of the getaway car for the robbers? The fact is that if you choose to play in a system where those with "juice" can do what they like, you are a dolt. I figured it out a little late, but not too late.

Oligarchies are run for the benefit of a few. They require more rubes to put money into the system so it can be taken. They will typically hold out false promise and hope to keep the money flowing in. Your false hope that the markets will correct, and an uncorrectable, out-of-control problem propagated by the banks who run the financial and political system will be reined it due to legal or opinion concerns, is a specious and empty one. We are more likely that the budget will be accounted for honestly, or that our currency will return to a gold standard, then the banks that own the system will correct their evil ways. Again, they can create something you are willing to pay for, that costs them nothing, and they pocket your cash. Nobody will ever make them buy in, as their legal teams have myriad ways to call a fail something else, or back it with a repo agreement so it doesn't have to be bought in, or argue to their complicit elected choagies that they are too important to the country to be allowed to fail (which is what would happen if the fails actually had to be bought in). Ain't ever going to happen. Life isn't fair.

I will repeat. I would advise anyone in the market to get out. I would further advise that if you don't, you are the food the predators prey upon, and have been warned.

The special type of conceit that is the propaganda advanced by a system that is in collapse is sad once you understand it. A society with a larger population in prison than any other, a larger crime problem than most civilized society, a tax burden that has its average joes working for the government 8 months or more per year (property, sales, energy, state, federal, tobacco, alcohol, etc. tax), an average wait in an emergency room of hours rather than minutes, an out of control cost for that sub-par service, sub-par amenities, and a government busily going about the business of whatever is best for Haliburton and Standard Oil and the like while it can't manage hurricane damage effectively....guess what? Everyone still believes, at least here, that this is the best place in the world to live. Why? How is it better than any other first world country? Better food? Please. Safer? Not. Better health care? Please. More value for the buck? Not a chance. Better educational system? Ha. Better chance of the rule of law prevailing? Tell that to Eagletech.

Compared to war zones or third world countries, this is pretty good, but as those voting with their wallets and feet are demonstrating, the US market system is a goner, and the certitude that we are superior in every way is demonstrably false at virtually every level.
Re: Must Read letter to SEC in Reg SHO comment section By what secrets? on 4/19/2007 4:41 PM
http://www.msnbc.msn.com/id/18183698
U.S. Rep. John Doolittle's Northern Virginia home was raided by the FBI in recent days, NBC News has learned. The California Republican and his wife have been linked to convicted lobbyist Jack Abramoff.

http://www.msnbc.msn.com/id/18185752/
The Justice Department is investigating a much-criticized Coast Guard contract managed by Lockheed Martin and Northrop Grumman over design flaws in cutters that are central to the $24 billion (euro17.68 billion) modernization project, a member of Congress and a representative for the companies said Wednesday.
Re: Must Read letter to SEC in Reg SHO comment section By look who is commenting. on 4/19/2007 4:43 PM
Subject: File No. S7-12-06
From: Noga RosenthalApril 19, 2007
Although I understand the conceptual "unfairness" in naked short selling, I would think that any price difference resulting from naked short selling is not only limited, but short-term. Regulations should be based on hard data, which is available in this case. Until we see that data, any argument for or against naked short selling based on its effects are mere speculation.
Regards,
Noga Rosenthal



U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20053 / March 23, 2007
SEC v. Aragon Capital Management LLC, Aragon Partners LP, Zvi Rosenthal, Amir Rosenthal, Ayal Rosenthal, Oren Rosenthal, Noga Delshad, David Heyman, Heyman & Son Investment Partnership LP, Young Kim, and Bahram Delshad, 07 CV 00919 (KMK) (S.D.N.Y.)
SEC Amends Charges to Include Noga Delshad
The Securities and Exchange Commission today announced the filing of an amended complaint in this matter to add Noga Delshad as a defendant, alleging that she violated the antifraud provisions of the federal securities laws by trading on material, nonpublic information about Taro Pharmaceuticals Industries, Ltd. ("Taro") that she obtained from her father-in-law, Zvi Rosenthal ("Zvi"), or her husband, Amir Rosenthal ("Amir").

In its initial complaint, the Commission alleged that the other defendants violated the antifraud provisions of the federal securities laws by trading in Taro securities while in possession of material nonpublic information that originated from Zvi, a former vice president at Taro. As alleged in the amended complaint, the insider trading ring generated more than $4 million in profits for the defendants.

In addition to the civil case against them, on February 8, 2007, four of the defendants in this matter, Zvi, Amir, Ayal Rosenthal, and David Heyman, each pled guilty to conspiracy to commit securities fraud in the U.S. District Court for the Eastern District of New York.

For further information, see Litigation Release No. 19995A (February 13, 2007).



http://www.sec.gov/litigation/litreleases/2007/lr20053.htm



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Home | Previous Page Modified: 03/23/2007
Re: Must Read letter to SEC in Reg SHO comment section By mhatmccane on 4/19/2007 11:08 AM
The NCANS letter, just posted today, on the SEC site is a truly "MUST READ". Very well done and I cannot help but think that Bobo had a hand in it.
Re: Must Read letter to SEC in Reg SHO comment section By The United States of Enron on 4/19/2007 4:43 PM
After reading all the comments, I think the safest thing to do is buy the Brokers. As long as the standard bearers for the truth are so predictable the Brokers will reign...
Re: Must Read letter to SEC in Reg SHO comment section By depository stock fraud? on 4/20/2007 9:20 AM
The public is starting to figure out the massive fraud that is wallstreet.

http://financial.seekingalpha.com/article/32910

Unusually High Institutional Ownership Stocks
Posted on Apr 20th, 2007 with stocks: AVID, JTX, Q, SGR, Y

Stockerblog submits: I was doing some research on something totally unrelated, tax stocks, when I discovered that institutions and mutual funds own 98% of the float and 98% of the shares of Jackson Hewitt Tax Service (JTX).

I thought that was an extremely high percentage. Do individual investors own only 2% of the JTX shares?

I decided to do some further research and found some other very high percentage ownerships. For example, Qwest Communications International (Q) has 90% of the shares owned by institutions, including mutual funds, and 107% of the float owned by institutions. Alleghany Corp. (Y) has 65% of its shares and 103% of the float owned by institutions. Look at Shaw Group (SGR). Institutions own 97% of the shares and 118% of the float.

Now for the most amazing ownership percentages. Avid Technology Inc. (AVID) has 112% of the float owned by institutions and 104% of the total shares owned by institutions. How is this possible? How can institutions own over 100% of the shares? Other than a calculation error, there seems to me to be only a couple ways this could happen. If there is no double counting involved, then either some of the institutions own shares on margin and/or there are naked short sellers that are shorting shares that don't exist. I am tracking these shares on stockpickr.com to see if there is any effect of the high institutional ownership on the stock price.

If you are aware of any other very high institutional ownership stocks, please post in the comments.

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