HSBC Holdings Ord Shs HBCYF

HBC CAUGHT NAKED SHORTING EEE

[no1coalking]

HSBC HAS A HUGE PROBLEM FROM NAKED SHORTING EEE 11/4/2007 4:57:11 PM HSBC wasn't able to get $2MM worth of EEE shares (6 Ratings) 4-Nov-07 10:10 am Here is a good reason to feel better about your EEE holdings. Take a hard look at this reverse convertible note offering from HSBC: https://www.secinfo.com/d12TC3.u1Zxt.htm Notice that EEE is one of the reference assets: Interest rate per annum: 20% Initial price: $6.09 Barrier price: $4.263 (70% of the initial price) Final Valuation date: September 24, 2007 If you boil it all down, HSBC had tremendous incentive to drive this stock down below the barrier price of $4.263. That could explain a lot of the motivation behind all the short selling during the past year. It does however look like HSBC ran into some bad luck with their strategy, and just recently. Let's go back a few weeks: - On September 24th, HSBC's final valuation date, EEE closed at $5.27, far above the barrier price of $4.263. This was primarily due to Evergreen's announcement of the Bechtel and China deal on 9/20 and 9/21, respectively. - However, as late as 9/17, EEE closed at $4.14, just below that magic "barrier price" at which HSBC gets rich. - HSBC would have had tremendous incentive to short the daylights out of EEE when the Bechtel and China news came out, trying to keep the stock price down. Perhaps that is where much (or all) the new short interest came from, and now they're simply stuck with it. - In the last two weeks of September, the SEC reported that short interest in EEE jumped 3.2 million shares. Was that HSBC trying a last ditch effort to keep the stock down, so they could profit more from their revertible? Wouldn't it be funny if HSBC was really caught in a jam with a huge short position in EEE which they don't want, and their cowboy behind this last-ditch shorting scheme is now saying "Oh %^&*#, we shouldn't have done that.... Now how do we rope all those little doggies that we left out of the pen??? They're not ours, we only borrowed them!!!!" This whole reverse convertible note issue causes me to wonder if there should be a law against revertible issuers from shorting reference stocks. After all, investors are buying these things with the expectation of obtaining high interest rates, and they shouldn't have to worry if their issuer may be secretly trying to pull the rug out from underneath them. If HSBC was shorting EEE, that sure doesn't seem like an ethical business practice to me. (I bet HSBC revertible clients, their shareholders, and the SEC would enjoy hearing this story.) The bottom line for EEE investors is HSBC may be holding a large short position in EEE, and they really need to get out of it. Regardless of who shorted this stock, having roughly a quarter of the float shorted will provide LOTS of fuel for a short squeeze when Evergreen announces a viable plan for expanding their K-fuel production capacity. You have rated https://finance.google.com/group/google.finance.659263/browse_thread/thread/c2fd36c241d67360/27b77ffb4e00200e#27b77ffb4e00200e