The World of Naked Shorting:A representative NSS'ed company....Welcome to the consequence-free world of naked shorting and market manipulation. Here's how it goes...
Some hedge funds now have direct floor access and essentially act as market makers or dealer/brokers without SEC oversight or the ordinary checks and balances that previously existed before the foxes were ushered into the henhouse.
The hedgies select a basket of stocks to short, preying on those that look vulnerable or near enough the pink sheets that they can be driven to bankruptcy.
Don't misunderstand their intentions. They fully understand the SEC's lack of enforcement and have gradually pushed the boundaries of exploitation to the current levels. Like a child testing boundaries, they have stepped up their antics without consequences.
Look at the average annual salary of the top hedge fund managers. In 2006, they were about $330 million. $330 million a year to run a hedge fund. That is the average annual income of the top 25 hedge fund managers. How much profit must a hedge fund make to pay it's manager $330 million a year?
In 2007, well into the $billions. Yes, billions. For what? Manufacturing? Employing thousands? Producing food, medicine or technology? Nope. They make billions in personal income by manipulating the markets to take money from retail investors and force companies to fail. They produce nothing and swindle good people out of their hard earned dollars. Hedge funds also make huge returns for their investors so expect a powerful resistance to any attempts at reform or regulation.
I heard alot of belly aching this week about oil companies reporting record earnings of 6, 8, or 10 billion dollars. Those oil companies employ tens of thousands of employees and have vast distribution networks and exploration operations. What if a single person made a couple billion a year by driving good companies into bankrupcy and stealing money from honest investors. Wouldn't we all be OUTRAGED? Shouldn't we be?
A company like ROYL is a great example of how the hedgie plans go poorly and they scramble, and take some risk to squeeze a profit. ROYL, like SGMO is on track to do very well. The hedgies strategy, or perhaps more accurately stated as their tactic, is to naked short the stock, cause a sell off (often helped along by scathing analyst reports and groundless rumors). and cover for nice profits.
If the stock doesn't plummet, they simply naked short more and pummel the stock to new lows. If good news is released they can be patient. After all, making the SEC RegSHO Fail to Deliver list has no consequences. The SEC doesn't enforce the locate and delivery of the shares, nor do they apply any consequences to the offending hedge funds, dealer/brokers and/or market makers. In fact, the SEC doesn't even publish the name of the offenders, only the name of the victim/company, and then only 3 months after the fact.
Folks, this is the perfect crime if it ever existed. The crooks have nearly ZERO risk. They relentlessly short a stock, and naked short a stock and do nothing to cover or locate shares. The SEC does nothing and in the WORST of circumstances, a company like ROYL or SGMO overwhelms their efforts and they cover and move on. Or not.
I love this new forum. Thanks AMG! Now, we need more than a forum. We need to mobilize. What's next?
Chekk