Some would have us believe that naked shorting does not happen. But this example reveals a situation where there were 36% more shares in the market than the company had on its books as issued and outstanding. If it can be 36% then it can be 360% or more.
From: Fixing the Stock Market's Clogged Toilet
By Matthew Leising...
Investors sued (Dole) company founder and CEO David Murdock in Delaware, accusing him of shortchanging shareholders in his acquisition of the portion of the fresh-food producer he didn’t already own. Murdock agreed to pay $148 million plus interest to settle the suit after Delaware Chancery Court Judge Travis Laster concluded the billionaire improperly drove down the value of the company’s stock to acquire it on the cheap.
When it came time to divvy up the nearly $170 million recovery in the Dole case, however, shareholders’ lawyers were left scratching their heads. Dole investors proffered more than 49 million shares as qualifying for settlement payments even though the company only had 36 million authorized shares.
... The Dole case and other similarly nightmarish legal sagas apparently left Laster at the end of his tether. Speaking in September 2016 at a meeting of the Council of Institutional Investors in Chicago, Laster compared the (DTCC) Cede & Co.-based stock ownership system to a clogged toilet.
“You need to fix the proxy plumbing,” Laster said. “The current system works poorly and harms stockholders. But the current plumbers -- financial intermediaries -- do not have an incentive to fix it.” He said one solution would be intervention by the SEC, but said top down change is hard to accomplish and takes a lot of time.
“Someone is going to do this. If a judge can see it, the opportunity is pretty obvious,” Laster said. “The good news is that you have a plunger that you can use to clean up the plumbing. That plunger is distributed ledger technologies.”
From: Fixing the Stock Market's Clogged Toilet
By Matthew Leising...
Investors sued (Dole) company founder and CEO David Murdock in Delaware, accusing him of shortchanging shareholders in his acquisition of the portion of the fresh-food producer he didn’t already own. Murdock agreed to pay $148 million plus interest to settle the suit after Delaware Chancery Court Judge Travis Laster concluded the billionaire improperly drove down the value of the company’s stock to acquire it on the cheap.
When it came time to divvy up the nearly $170 million recovery in the Dole case, however, shareholders’ lawyers were left scratching their heads. Dole investors proffered more than 49 million shares as qualifying for settlement payments even though the company only had 36 million authorized shares.
... The Dole case and other similarly nightmarish legal sagas apparently left Laster at the end of his tether. Speaking in September 2016 at a meeting of the Council of Institutional Investors in Chicago, Laster compared the (DTCC) Cede & Co.-based stock ownership system to a clogged toilet.
“You need to fix the proxy plumbing,” Laster said. “The current system works poorly and harms stockholders. But the current plumbers -- financial intermediaries -- do not have an incentive to fix it.” He said one solution would be intervention by the SEC, but said top down change is hard to accomplish and takes a lot of time.
“Someone is going to do this. If a judge can see it, the opportunity is pretty obvious,” Laster said. “The good news is that you have a plunger that you can use to clean up the plumbing. That plunger is distributed ledger technologies.”
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