Wednesday, September 26, 2001 12:55:42 PM
Stop Using Other People’s Property As Collateral for Selling Short
by Gary Swancey and David Weed
First I would like to say, I applaud anyone who stands up for this Nation and its people. Not many men have the courage to speak out about the true evil and wrong that directly affects the people of this country. Calling for the SEC to temporarily halt short selling gets my vote. However, I would like to voice a few concerns even though a temporary halt of short selling will make the market a market of the people, by the people and for the people for at least a little while.
This composition concerns and focuses on Short Selling, the art of borrowing (legally stealing) people's hard-earned property for profit and gain to pre-sell the rightful owners property, thus manipulate a downward market and decline the value of the rightful owner's property.
The basis for this composition is simple; I bought a security and delivered the certificate to a broker. The broker instantly loaned out my property that I bought and paid for with my own money, to a larger brokerage house. Something went wrong and when I called for my certificate I discovered that my broker could not deliver back to me a certificate for the property. After almost a year of trying to get my certificate, I received a "certificate of deposit" because there were no certificates available to be issued by the transfer agent. That meant the short position at the larger brokerage house needed my certificate of ownership as collateral to protect the short position. Thus my property (shares) could only be transferred within the brokerages of my brokerage firm's clearing house.
The bottom line is my brokerage firm's clearing house printed me a nice "certificate of deposit" but it does not bear the corporate seal or any identification from the company except that it shows I do own the property. I just can't get title of ownership. That belongs to the short position, which has my title of ownership for my property as collateral for a loan made by my broker thus selling my property. I can't vote the stock because the certificate of ownership is elsewhere as collateral. I can't get the money that the loaner and borrower made on selling my property nor any interest nor any thing but a deposit acknowledgment of that I do own the property. What it boils down to is a Short Seller has taken control of my property and thus my investment. Without any compensation to the property owner, this short seller has the certificate and the broker can not force the short seller to cover and release the certificate to its rightful owner. Mainly, this is the case because the certificates are locked-up covering short positions.
The Commodities market does not use other people’s property as the collateral. I can not believe that short selling using some one else’s property as collateral is allowed in America. Many reasons or rather excuses are given for allowing short selling. As you will see, none of them make much sense and most are against the law under any other circumstance.
Excuse #1 - Short-selling merely makes the market liquid.
That is true but at what cost. Only because short shares are added to the available outstanding shares, thus massive dilution by the market not the company. Normally the company stock structure is set in the by-laws of the company. The outstanding share count increases with each short selling position that is performed. In some cases, the stock is shorted 100%, doubling the amount of stock available in the market. In other words, the company does not have any control over the amount stock out in the market, the short selling traders/investors do. It makes no difference what the legal corporate document's state. Shorting can easily double whatever figure was given in the Articles of Incorporation. Liquid? Yes. Good for long investors? I don't think so.
Excuse #2 - Short selling balances the inflationary effect of securities margin trading, thus contributing to price stability.
Even if short selling were performed only on marginal securities this statement would still lack merit. But when you consider that on the Margin Buy side, the individual or firm has to put up their own money and or collateral that they rightfully own in order to purchase shares. Whereas on the short sell side, they do not have to put anything that they own, they borrow (steal) from someone else for the upcoming short selling collateral basis to create false premise of a decline market.
Simply, short sellers go out and borrow (steal) from another person's long position to use as collateral to sell the stock value down. Thus making a false market taking out the concept of supply and demand. This false selling drives the market down, which is the exactly opposite of why the long-term investor (the real owner of the collateral) bought the security. The long investor has been robbed in accordance to the "theft by taking" laws. Plus the long investor has no rights or options or choices and gains NOTHING from this strategy (plain and simple thievery).
Example: You go into a casino and buy chips (shares) and take a place at the crap table (market). I walk up and buy chips and place my bets on the pass (call) and then to hedge I place a bet (a buy in the market) on say the 8 (second highest combination of numbers with 7 being the highest combination). I decide to hedge my bet further so I ask the casino guy if I can take some of your money as collateral because I do not want to use my money. He replies, "I do not care." So I very sneakily reach over into your chips without you knowing and take a few or all thus placing them on the "No Pass" (put). I begin making money on my legitimate bets. Finally, a "seven" rolls before the roller makes his mark. I loose all my money in my legitimate bets BUT I have winnings from what I won on my legitimate bets Plus the "No Pass." I collect my winnings from the "No Pass" and then sneakily return your chips to you and pocket the profit. No Harm done!
Immediately, I would be charged with "theft by taking" and I would be instantly arrested and hauled off to jail. My winnings would go back to the house or to you (if you knew about it) because it was your money that I used as collateral to make the gain. I would not have made a gain if I had not borrowed (stolen) your chips as collateral to make the hedge bet for profit and protection of my money.
Now say that the casino guy went over to your position at the table. Sneakily, he took your chips and loaned them to me. Then that is a fraud and a conspiracy to rob you by a couple of con men. The casino guy (broker) and myself (short) would be hauled off to jail. But you would get the winnings just the same. And if the hedge that your chips (stock) were used as collateral happen to have been lost, you could get back your property because one of the con men worked for the casino (market) that committed the crime.
Excuse #3 - No Harm, No Foul. Also known as "the Rightful Owner was not harmed" in any way.
This is very similar to a car thief arguing that since he stole the car and returned it while the owner was away on vacation...he only borrowed it and it wasn't stealing!
As any good prosecutor would have quickly reminded the car thief, even if he didn't damage the car during the "borrowing," the car had more mileage on it that the owner didn't put there. And the resulting "wear and tear" constitutes sufficient "damages".
In the case of our "borrowed" stock, the damages are even more glaring. Especially when our long investor bought his property at $20. Due to massive short selling the stock dropped to $6. There our intrepid short seller covers and "returns" the long investor's property minus $14 in value. Clearly the long investor has $14 per share in damages. The car thief gets 3-5 in state housing and the professional SHORT gets a new Mercedes while the rightful long term owner is out his investment dollars that he had no control over whatsoever?
Excuse #4 - Shorts provide a floor and they support the stock at the lows when they cover.
The whole concept is nonsense and has no merit. Once the Short Sellers have successfully destroyed the value and have capitulation, then they cover. Thus after taking someone else's property to destroy the property's value thus robbing the rightful owner they see it as a good thing because they support the market at the low. One the floor is where the short selling decides to no longer drive the price down. Second after capitulation they are now the good guys. That's like saying that the doctor that sneaks up behind you steals your wallet, beats the starch out of you is really your friend because he is tending to your wounds. (Doctor comparison is Marty Lewis’)
Surrender of right to control over the property owned by the rightful owners.
Obviously, the professionals on Wall Street don't want to go to jail so they invented the following:
When you deposit your property with a brokerage, you have to sign a surrender of right to ownership agreement and thus the broker has the right to loan out your holdings as per his own "Best Interest" not the client.
If a casino made you sign an agreement that your chips could be loaned to someone else before you could gamble then that would make it legal? Even if it did would you ever play there? Yes because if you want to gamble you have to sign. The real point to this is that you have no options, choices or rights on property you own! If you wish to gamble (invest) you have to sign this agreement that basically gives the broker the right to loan (steal) your property to sell and profit from it. Now where does the agreement say you will be informed what is being done with your property or that you will receive anything for the loaning of your property or that the broker will perform their representations in your best interest. Would this agreement be considered a one-sided contract?
Best Interest
The brokers that an investor goes to and places their holdings with, not to mention represents the investor's trades in the market, are supposed to be working in the investor's best interest. Every professional that a fee is paid to in hard-earned money is supposed to do what is in the best interest for the client. However by forcing a client to sign away their rights, the investor is basically paying this professional to rob the client blind and profit from it in all aspects. It is beyond my ability to understand how the following is in the best interest of the rightful owner:
A professional loaning out his clients long position property as collateral to someone else whom has not paid the owner for the property for the purpose of manipulating the short-term, and mostly likely the long-term, value of the property down, which basically hurts the client's investment value.
Is this strategy in the long investor's best interest when the sole point of short selling to manipulate the market down and affect the value of the rightful owner? Especially since the rightful owner of the property gets nothing for his hard-earned money that was paid to own the property.
Rightful Owner Protection
Consider this, under the protection of the FDIC not one depositor has lost a penny since 1934! Since we are forced to deposit into a brokerage house (financial institution) that issues checkbooks and can LOAN out our property to those who would use that property to decline the value without our knowledge, are we protected by the FDIC? Again, especially when the financial institution then loans our property to individuals or firms whose intent is to harm the value of our investment! Does the FDIC cover the loss of my property value when it is loaned because my property was used to harm my investment value? What ever happen to the 5th Amendment in the Bill of Rights that forbids the taking of private property for public use without just compensation?
Full Disclosure and Right to Know.
This applies to both the real owner and the potential buyer of the borrowed (stolen) collateral. The owner of the property has the right to full disclosure. He has a right to know when his property has been loaned. Of course, the person buying the loaned (stolen) property has a right to know also they are not buying the property from the real rightful owner. Since the Broker is basically a "fence", the broker should inform the potential buyer of the property that the seller is offering for sell is not the rightful owner but has borrowed (stolen) the property without the rightful owner's knowledge. Which brings up the point of the legal laws of buying stolen property. At least the buyer would then know the property was stolen and thus could lose all their money because what they are buying will not be rightfully theirs until the real owner decides to sell his ownership.
If someone borrows someone else's property as collateral this is fraud by existing laws of America. No where else does the law allow this to happen. People go to jail for this nonsense or for even trying it.
Short selling is the practice of distorting and creating a false market.
Short selling is an opportunists (criminals) way of manipulating (driving) the market down by the unadulterated weight of long-term holder's positions being sold into the market. For the sole purpose to drive the stock price (property value) on a downward path (false representation) so short sellers can make a turn between the price at which they sold someone's property for and the price which they bought it back to return to the rightful owner, without having to ever physically having to purchase the property or disclose anything to anyone.
Most investors make the assumption the market is one of integrity and that both the buyer and seller own the stock they witness in the trading. If the trading is not the rightful owners trading their position the market is absolutely false. Especially because the trading is represented in such a way to can give the impression there is more issued stock in a company than there really is. That is a total falsehood and thus a fraud or fraudulent market controlled by forces that do not really own anything.
Short sellers relentlessly distort any information so they can to justify the downward pressure they are creating.
There is a point to distorting the market trading and the information on a company, and that is the whole strategy is to become a self-fulfilling prophecy. That is the point at which short sellers tout themselves for a job well done, while the long term investor loses value through false pretenses. The negative criticism along with the negative movement in the stock price does have a very solid certain logic, capitulation so they can cover because those who sell at this point are really the investors who are the rightful owners of the stock (property) that was put up as collateral to sell the market down and crush property value.
Short Selling Potential Ponzi or Pyramid Scheme
Potential Pyramid Scheme is a fraudulent system of making money, which requires an endless stream of recruits (buyers) for success. Thus a short seller borrows some one's long position and sells it to someone else. That long position of the new buyer is now on the broker’s clearing house books and thus available for another short to borrow that position and sell it to yet another buyer and so forth and so on.
Potential Ponzi Scheme, is a fraudulent system of making money whereas a short seller borrows from one long position and sells it to someone. Then the short seller needs to cover so the short seller merely borrows from another long position to cover the first position the short borrowed against. The Short Seller never really covers or settles and so forth and so on. This is just one account. Imagine several or numerous.
Checks, Balances, & Regulation
Of course, once all this is presented, the short seller quickly change their excuse to the fact that there are no adequate checks and balances. They continue on with this logic that without regulation, short selling can be subject to abuse by market manipulators and detrimental to the market. However, one point the short sellers do not want is reporting because it is strictly voluntary. In other words, short sellers in the market whether regulated or not, listed or not, nobody really knows the extent of short positions in any one stock at any one time, and they do not want it to be known. Total transparency (public paper trail) is not an option for a short seller. But at all costs the short seller does not want to give up the ability to continue borrowing (free-riding or stealing) long-term positions that they can use as collateral to make a profit on. Short sellers do not want to hear anything about having to buy their collateral and then use it to short sell against. That would be absurd because that basically puts the whole concept back to supply and demand and the downward movement could nail them on the long side. This concept to short sellers this is totally unfair and criminal to no longer allows them to leverage against another investor's property.
I guess when the laws were being created that robbing banks, or fraudulently making representations to steal people's money or any of the theft by taking of other's property type tactics could be made acceptable by regulating this thievery. However these tactics are criminal activity by our existing laws in other circumstances.
Not just listed stocks OTCBB Market Maker Manipulation
Market Maker Manipulation is the practices of intentionally short selling a security to suppress the price (Value) of a security driving it downward regardless of increased demand. Should the market maker get caught short, the trading loses it volatility and eventually almost stops trading due to the Market Makers tactics, especially concerning OTCBB such as:
- spreading the gap between the bid and ask (20% or higher)
- locking the bid and ask at the same value
- boxing the bid and ask whereas the same market maker is on both
- not filling or executing orders
- Painting the paint (executing buys and sells to which ever side the Market Maker needs to show weakness)
- Rolling the tape (repeated small trades on the bid tanking the security price value)
- Etc.
However, these tactics are performed to stop buying interest and thus kill the public's confidence. Since Market Makers are suppose to be the only market influence that can short sell unmarginable securities, would not a short seller need a market maker? Short Sellers and the OTCBB Market Makers have no regulations to prevent them from viciously manipulating the trading. It is completely up to the short sellers and the market maker's best interest as to whether the price of a security goes up or go down. However, a declining share price is the preferred because they buy on the "Bid¨ and sell on the "Ask¨ in the OTC negotiated market. Thus the lower the price the market makers make that much more profit from small time investors.
The US market's Listed stocks have been shorted to incredible lows.
However, our off-shore elements (friendly, neutral or terrorist) are using this criminal strategy to crush the very foundation of our financial market. Further, the greedy within this country are right in there with those who would cripple America. This hedging strategy is the very vessel being used by our enemies to destroy the financial strength of America and at the same time finance their agenda's. The time for action is now. How far does out financial backbone get broke? When our market is at ZERO!
Short selling is actually criminal activity and punishable by the existing laws of this great nation
We must eliminate short selling or put into place extreme new restrictions on short sellers. The simplest being to require at least the same amount of collateral value at the time the short seller wishes to short sell some one's property. Disclose to the rightful owner his property is needed for shorting and thus give the owner the right to refuse loaning out his property for someone to sell. If the owner somehow does agree to his property being loaned out then the short seller should have to justly compensate the rightful owner for use of his property as collateral. Short Sellers should have to put up their own proper collateral and not that of someone else as is required when purchasing stocks.
This is America and the existing laws basically state, I have the right to sell what is mine. It states further than I can not sell what is not mine to sell, or use my neighbor's property as collateral. Following the existing laws of America, would requiring notification of the shareholder of his shares being "borrowed" (stolen) and notifying the buyer of the "borrowed" (stolen) nature of the shares he is purchasing would be a logical and just addition. Of course the preference is to put this practice in the category where it belongs...First Degree Felony. And place its practitioners where they belong...PRISON!
Proud To Be An American Against Terrorism & Its Propaganda!
:=) Gary Swancey
by Gary Swancey and David Weed
First I would like to say, I applaud anyone who stands up for this Nation and its people. Not many men have the courage to speak out about the true evil and wrong that directly affects the people of this country. Calling for the SEC to temporarily halt short selling gets my vote. However, I would like to voice a few concerns even though a temporary halt of short selling will make the market a market of the people, by the people and for the people for at least a little while.
This composition concerns and focuses on Short Selling, the art of borrowing (legally stealing) people's hard-earned property for profit and gain to pre-sell the rightful owners property, thus manipulate a downward market and decline the value of the rightful owner's property.
The basis for this composition is simple; I bought a security and delivered the certificate to a broker. The broker instantly loaned out my property that I bought and paid for with my own money, to a larger brokerage house. Something went wrong and when I called for my certificate I discovered that my broker could not deliver back to me a certificate for the property. After almost a year of trying to get my certificate, I received a "certificate of deposit" because there were no certificates available to be issued by the transfer agent. That meant the short position at the larger brokerage house needed my certificate of ownership as collateral to protect the short position. Thus my property (shares) could only be transferred within the brokerages of my brokerage firm's clearing house.
The bottom line is my brokerage firm's clearing house printed me a nice "certificate of deposit" but it does not bear the corporate seal or any identification from the company except that it shows I do own the property. I just can't get title of ownership. That belongs to the short position, which has my title of ownership for my property as collateral for a loan made by my broker thus selling my property. I can't vote the stock because the certificate of ownership is elsewhere as collateral. I can't get the money that the loaner and borrower made on selling my property nor any interest nor any thing but a deposit acknowledgment of that I do own the property. What it boils down to is a Short Seller has taken control of my property and thus my investment. Without any compensation to the property owner, this short seller has the certificate and the broker can not force the short seller to cover and release the certificate to its rightful owner. Mainly, this is the case because the certificates are locked-up covering short positions.
The Commodities market does not use other people’s property as the collateral. I can not believe that short selling using some one else’s property as collateral is allowed in America. Many reasons or rather excuses are given for allowing short selling. As you will see, none of them make much sense and most are against the law under any other circumstance.
Excuse #1 - Short-selling merely makes the market liquid.
That is true but at what cost. Only because short shares are added to the available outstanding shares, thus massive dilution by the market not the company. Normally the company stock structure is set in the by-laws of the company. The outstanding share count increases with each short selling position that is performed. In some cases, the stock is shorted 100%, doubling the amount of stock available in the market. In other words, the company does not have any control over the amount stock out in the market, the short selling traders/investors do. It makes no difference what the legal corporate document's state. Shorting can easily double whatever figure was given in the Articles of Incorporation. Liquid? Yes. Good for long investors? I don't think so.
Excuse #2 - Short selling balances the inflationary effect of securities margin trading, thus contributing to price stability.
Even if short selling were performed only on marginal securities this statement would still lack merit. But when you consider that on the Margin Buy side, the individual or firm has to put up their own money and or collateral that they rightfully own in order to purchase shares. Whereas on the short sell side, they do not have to put anything that they own, they borrow (steal) from someone else for the upcoming short selling collateral basis to create false premise of a decline market.
Simply, short sellers go out and borrow (steal) from another person's long position to use as collateral to sell the stock value down. Thus making a false market taking out the concept of supply and demand. This false selling drives the market down, which is the exactly opposite of why the long-term investor (the real owner of the collateral) bought the security. The long investor has been robbed in accordance to the "theft by taking" laws. Plus the long investor has no rights or options or choices and gains NOTHING from this strategy (plain and simple thievery).
Example: You go into a casino and buy chips (shares) and take a place at the crap table (market). I walk up and buy chips and place my bets on the pass (call) and then to hedge I place a bet (a buy in the market) on say the 8 (second highest combination of numbers with 7 being the highest combination). I decide to hedge my bet further so I ask the casino guy if I can take some of your money as collateral because I do not want to use my money. He replies, "I do not care." So I very sneakily reach over into your chips without you knowing and take a few or all thus placing them on the "No Pass" (put). I begin making money on my legitimate bets. Finally, a "seven" rolls before the roller makes his mark. I loose all my money in my legitimate bets BUT I have winnings from what I won on my legitimate bets Plus the "No Pass." I collect my winnings from the "No Pass" and then sneakily return your chips to you and pocket the profit. No Harm done!
Immediately, I would be charged with "theft by taking" and I would be instantly arrested and hauled off to jail. My winnings would go back to the house or to you (if you knew about it) because it was your money that I used as collateral to make the gain. I would not have made a gain if I had not borrowed (stolen) your chips as collateral to make the hedge bet for profit and protection of my money.
Now say that the casino guy went over to your position at the table. Sneakily, he took your chips and loaned them to me. Then that is a fraud and a conspiracy to rob you by a couple of con men. The casino guy (broker) and myself (short) would be hauled off to jail. But you would get the winnings just the same. And if the hedge that your chips (stock) were used as collateral happen to have been lost, you could get back your property because one of the con men worked for the casino (market) that committed the crime.
Excuse #3 - No Harm, No Foul. Also known as "the Rightful Owner was not harmed" in any way.
This is very similar to a car thief arguing that since he stole the car and returned it while the owner was away on vacation...he only borrowed it and it wasn't stealing!
As any good prosecutor would have quickly reminded the car thief, even if he didn't damage the car during the "borrowing," the car had more mileage on it that the owner didn't put there. And the resulting "wear and tear" constitutes sufficient "damages".
In the case of our "borrowed" stock, the damages are even more glaring. Especially when our long investor bought his property at $20. Due to massive short selling the stock dropped to $6. There our intrepid short seller covers and "returns" the long investor's property minus $14 in value. Clearly the long investor has $14 per share in damages. The car thief gets 3-5 in state housing and the professional SHORT gets a new Mercedes while the rightful long term owner is out his investment dollars that he had no control over whatsoever?
Excuse #4 - Shorts provide a floor and they support the stock at the lows when they cover.
The whole concept is nonsense and has no merit. Once the Short Sellers have successfully destroyed the value and have capitulation, then they cover. Thus after taking someone else's property to destroy the property's value thus robbing the rightful owner they see it as a good thing because they support the market at the low. One the floor is where the short selling decides to no longer drive the price down. Second after capitulation they are now the good guys. That's like saying that the doctor that sneaks up behind you steals your wallet, beats the starch out of you is really your friend because he is tending to your wounds. (Doctor comparison is Marty Lewis’)
Surrender of right to control over the property owned by the rightful owners.
Obviously, the professionals on Wall Street don't want to go to jail so they invented the following:
When you deposit your property with a brokerage, you have to sign a surrender of right to ownership agreement and thus the broker has the right to loan out your holdings as per his own "Best Interest" not the client.
If a casino made you sign an agreement that your chips could be loaned to someone else before you could gamble then that would make it legal? Even if it did would you ever play there? Yes because if you want to gamble you have to sign. The real point to this is that you have no options, choices or rights on property you own! If you wish to gamble (invest) you have to sign this agreement that basically gives the broker the right to loan (steal) your property to sell and profit from it. Now where does the agreement say you will be informed what is being done with your property or that you will receive anything for the loaning of your property or that the broker will perform their representations in your best interest. Would this agreement be considered a one-sided contract?
Best Interest
The brokers that an investor goes to and places their holdings with, not to mention represents the investor's trades in the market, are supposed to be working in the investor's best interest. Every professional that a fee is paid to in hard-earned money is supposed to do what is in the best interest for the client. However by forcing a client to sign away their rights, the investor is basically paying this professional to rob the client blind and profit from it in all aspects. It is beyond my ability to understand how the following is in the best interest of the rightful owner:
A professional loaning out his clients long position property as collateral to someone else whom has not paid the owner for the property for the purpose of manipulating the short-term, and mostly likely the long-term, value of the property down, which basically hurts the client's investment value.
Is this strategy in the long investor's best interest when the sole point of short selling to manipulate the market down and affect the value of the rightful owner? Especially since the rightful owner of the property gets nothing for his hard-earned money that was paid to own the property.
Rightful Owner Protection
Consider this, under the protection of the FDIC not one depositor has lost a penny since 1934! Since we are forced to deposit into a brokerage house (financial institution) that issues checkbooks and can LOAN out our property to those who would use that property to decline the value without our knowledge, are we protected by the FDIC? Again, especially when the financial institution then loans our property to individuals or firms whose intent is to harm the value of our investment! Does the FDIC cover the loss of my property value when it is loaned because my property was used to harm my investment value? What ever happen to the 5th Amendment in the Bill of Rights that forbids the taking of private property for public use without just compensation?
Full Disclosure and Right to Know.
This applies to both the real owner and the potential buyer of the borrowed (stolen) collateral. The owner of the property has the right to full disclosure. He has a right to know when his property has been loaned. Of course, the person buying the loaned (stolen) property has a right to know also they are not buying the property from the real rightful owner. Since the Broker is basically a "fence", the broker should inform the potential buyer of the property that the seller is offering for sell is not the rightful owner but has borrowed (stolen) the property without the rightful owner's knowledge. Which brings up the point of the legal laws of buying stolen property. At least the buyer would then know the property was stolen and thus could lose all their money because what they are buying will not be rightfully theirs until the real owner decides to sell his ownership.
If someone borrows someone else's property as collateral this is fraud by existing laws of America. No where else does the law allow this to happen. People go to jail for this nonsense or for even trying it.
Short selling is the practice of distorting and creating a false market.
Short selling is an opportunists (criminals) way of manipulating (driving) the market down by the unadulterated weight of long-term holder's positions being sold into the market. For the sole purpose to drive the stock price (property value) on a downward path (false representation) so short sellers can make a turn between the price at which they sold someone's property for and the price which they bought it back to return to the rightful owner, without having to ever physically having to purchase the property or disclose anything to anyone.
Most investors make the assumption the market is one of integrity and that both the buyer and seller own the stock they witness in the trading. If the trading is not the rightful owners trading their position the market is absolutely false. Especially because the trading is represented in such a way to can give the impression there is more issued stock in a company than there really is. That is a total falsehood and thus a fraud or fraudulent market controlled by forces that do not really own anything.
Short sellers relentlessly distort any information so they can to justify the downward pressure they are creating.
There is a point to distorting the market trading and the information on a company, and that is the whole strategy is to become a self-fulfilling prophecy. That is the point at which short sellers tout themselves for a job well done, while the long term investor loses value through false pretenses. The negative criticism along with the negative movement in the stock price does have a very solid certain logic, capitulation so they can cover because those who sell at this point are really the investors who are the rightful owners of the stock (property) that was put up as collateral to sell the market down and crush property value.
Short Selling Potential Ponzi or Pyramid Scheme
Potential Pyramid Scheme is a fraudulent system of making money, which requires an endless stream of recruits (buyers) for success. Thus a short seller borrows some one's long position and sells it to someone else. That long position of the new buyer is now on the broker’s clearing house books and thus available for another short to borrow that position and sell it to yet another buyer and so forth and so on.
Potential Ponzi Scheme, is a fraudulent system of making money whereas a short seller borrows from one long position and sells it to someone. Then the short seller needs to cover so the short seller merely borrows from another long position to cover the first position the short borrowed against. The Short Seller never really covers or settles and so forth and so on. This is just one account. Imagine several or numerous.
Checks, Balances, & Regulation
Of course, once all this is presented, the short seller quickly change their excuse to the fact that there are no adequate checks and balances. They continue on with this logic that without regulation, short selling can be subject to abuse by market manipulators and detrimental to the market. However, one point the short sellers do not want is reporting because it is strictly voluntary. In other words, short sellers in the market whether regulated or not, listed or not, nobody really knows the extent of short positions in any one stock at any one time, and they do not want it to be known. Total transparency (public paper trail) is not an option for a short seller. But at all costs the short seller does not want to give up the ability to continue borrowing (free-riding or stealing) long-term positions that they can use as collateral to make a profit on. Short sellers do not want to hear anything about having to buy their collateral and then use it to short sell against. That would be absurd because that basically puts the whole concept back to supply and demand and the downward movement could nail them on the long side. This concept to short sellers this is totally unfair and criminal to no longer allows them to leverage against another investor's property.
I guess when the laws were being created that robbing banks, or fraudulently making representations to steal people's money or any of the theft by taking of other's property type tactics could be made acceptable by regulating this thievery. However these tactics are criminal activity by our existing laws in other circumstances.
Not just listed stocks OTCBB Market Maker Manipulation
Market Maker Manipulation is the practices of intentionally short selling a security to suppress the price (Value) of a security driving it downward regardless of increased demand. Should the market maker get caught short, the trading loses it volatility and eventually almost stops trading due to the Market Makers tactics, especially concerning OTCBB such as:
- spreading the gap between the bid and ask (20% or higher)
- locking the bid and ask at the same value
- boxing the bid and ask whereas the same market maker is on both
- not filling or executing orders
- Painting the paint (executing buys and sells to which ever side the Market Maker needs to show weakness)
- Rolling the tape (repeated small trades on the bid tanking the security price value)
- Etc.
However, these tactics are performed to stop buying interest and thus kill the public's confidence. Since Market Makers are suppose to be the only market influence that can short sell unmarginable securities, would not a short seller need a market maker? Short Sellers and the OTCBB Market Makers have no regulations to prevent them from viciously manipulating the trading. It is completely up to the short sellers and the market maker's best interest as to whether the price of a security goes up or go down. However, a declining share price is the preferred because they buy on the "Bid¨ and sell on the "Ask¨ in the OTC negotiated market. Thus the lower the price the market makers make that much more profit from small time investors.
The US market's Listed stocks have been shorted to incredible lows.
However, our off-shore elements (friendly, neutral or terrorist) are using this criminal strategy to crush the very foundation of our financial market. Further, the greedy within this country are right in there with those who would cripple America. This hedging strategy is the very vessel being used by our enemies to destroy the financial strength of America and at the same time finance their agenda's. The time for action is now. How far does out financial backbone get broke? When our market is at ZERO!
Short selling is actually criminal activity and punishable by the existing laws of this great nation
We must eliminate short selling or put into place extreme new restrictions on short sellers. The simplest being to require at least the same amount of collateral value at the time the short seller wishes to short sell some one's property. Disclose to the rightful owner his property is needed for shorting and thus give the owner the right to refuse loaning out his property for someone to sell. If the owner somehow does agree to his property being loaned out then the short seller should have to justly compensate the rightful owner for use of his property as collateral. Short Sellers should have to put up their own proper collateral and not that of someone else as is required when purchasing stocks.
This is America and the existing laws basically state, I have the right to sell what is mine. It states further than I can not sell what is not mine to sell, or use my neighbor's property as collateral. Following the existing laws of America, would requiring notification of the shareholder of his shares being "borrowed" (stolen) and notifying the buyer of the "borrowed" (stolen) nature of the shares he is purchasing would be a logical and just addition. Of course the preference is to put this practice in the category where it belongs...First Degree Felony. And place its practitioners where they belong...PRISON!
Proud To Be An American Against Terrorism & Its Propaganda!
:=) Gary Swancey
:=) Gary Swancey
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