Thx - doing some more BG research In Pursuit of

Thx - doing some more BG research

In Pursuit of the Naked Short (2009)
http://www.nyujlb.org/wp-content/uploads/JLBv5n1_3.pdf
- Very comprehensive
- See pg 10, fn 51 -- OTC / BB stocked manipulated most

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NYT COMMENTARY

http://economix.blogs.nytimes.com/2009/05/05/...and-longs/

http://economix.blogs.nytimes.com//2009/04/30...ting-gone/

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"Whistleblowing: Naked Short Selling"

http://aguirrelawapc.com/lawyer/Whistleblowin...cp7460.htm

EXCERPT
Until the fall of 2008, the SEC and the media had been skeptical of claims by public companies that naked short sales had caused sharp drops in their stock prices. The skepticism seemed reasonable, since public companies—other than prime brokerage firms—rarely had access to the trading records necessary to prove their claims.

The SEC’s skepticism quickly faded in the fall of 2008 when ***the CEOs of Goldman Sachs and Morgan Stanley complained to the SEC that naked short selling was causing the collapse of their stock prices and thus deepening the financial crisis.*** [HOW CONVENIENT] Unlike other public companies, ***these investment banks had access to trading records and were likely aware of the mechanisms used by sophisticated traders to conceal naked short sales.*** [TAKES ONE TO KNOW ONE]

The SEC’s response included the issuance of a rule (Rule 204T), which was supposed to close the regulatory gaps that concealed the naked short selling. Eleven months later, the SEC filed the first of nine cases alleging naked short selling and other violations of Regulation SHO against brokers, hedge funds, and their executives. ***Uncovering the naked short sales in most of these cases was not easy: they were cleverly concealed by complicated options strategies.***

Rule 204T has only been partially successful. Naked short sales continue to ravage stock prices. A recent settlement between FINRA and UBS tells how UBS continued to violate Regulation SHO for 27 months after Rule 204T went into effect. Trading records often demonstrate scenarios that imply naked short selling, but provide no clues of the identity of the perpetrators.

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SEC VERBIAGE

http://www.sec.gov/investor/pubs/regsho.htm

EXCERPT

Naked short selling

“Naked” short selling, however, can have negative effects on the market. Fraudsters may use “naked” short selling as a tool to manipulate the market. Market manipulation is illegal.[14] The SEC has toughened its rules including through the adoption of Rule 10b-21 in 2008, referred to as the “naked” short selling antifraud rule, and is vigilant about taking actions against alleged wrongdoers.[15]

Footnotes
[14] The Commission brought an enforcement action against certain parties, alleging manipulative “naked” short selling, in a scheme sometimes termed as a “death spiral.” See Rhino Advisors, Inc. and Thomas Badian, Lit. Rel. No. 18003 (February 27, 2003) at http://www.sec.gov/litigation/litreleases/lr18003.htm

[15] See In the Matter of Gonul Colak and Milen K. Kostov, Exchange Act Release No. 71461 (Jan. 31, 2014) (settled administrative proceeding), available at http://www.sec.gov/litigation/admin/2014/33-9522.pdf; In the Matter of optionsXpress, et al., Admin. Proc. File No. 3-14848 (June 7, 2013), available at http://www.sec.gov/alj/aljdec/2013/id490bpm.pdf; In the Matter of Jeffrey Wolfson, et al., Exchange Act Release No. 67450 (July 17, 2012) (settled administrative proceeding) available at http://www.sec.gov/litigation/admin/2012/34-67450.pdf; In the Matter of Jeffrey Wolfson, et al., Exchange Act Rel. No. 67451 (July 17, 2012) (settled administrative proceeding) available at http://www.sec.gov/litigation/admin/2012/34-67451.pdf; In the Matter of Gary S. Bell, Exchange Act Release No. 65941 (Dec. 13, 2011) (settled administrative proceeding), available at http://sec.gov/litigation/admin/2011/34-65941.pdf; In the Matter of Rhino Trading, LLC, Fat Squirrel Trading Group, LLC, Damon Rein, and Steven Peter, Exchange Act Release No. 60941 (Nov. 4, 2009) (settled administrative proceeding), available at http://www.sec.gov/litigation/admin/2009/34-60941.pdf; In the Matter of Hazan Capital Management, LLC and Steven M. Hazan, Exchange Act Release No. 60441 (Aug. 5, 2009) (settled administrative proceeding) available at http://www.sec.gov/litigation/admin/2009/34-60441.pdf; In the Matter of TJM Proprietary Trading, LLC, et al., Exchange Act Release No. 60440 (Aug. 5, 2009) (settled administrative proceeding) available at http://www.sec.gov/litigation/admin/2009/34-60440.pdf.

http://www.sec.gov/investor/pubs/regsho.htm