Comments on: Banks Ask to Join SEC Protection Racket

By: Reino Ruusu

Reino Ruusu — Tue, 22 Jul 2008 12:47:00 +0000

I don’t get it. Doesn’t a low stock price make getting new equity easier, because it means more dilution for existing shareholders and thus more value, ie. a greater portion of any future profits, for the new equity?

By: Anonymous

Anonymous — Sun, 20 Jul 2008 23:25:00 +0000

Follow up to anon @ 9:37am- “How is naked shorting any different than when you write checks before you control the cash and why should it be treated any differently?

Oh… I got it now. It’s wrong when we try to get a free ride with the institution’s money(writing and issuing checks before we have the cash) -but- but it’s a shrewd investment strategy when the bank does the same thing with the public’s funds (let’s pretend the broker has the shares, so they can sell them, sit on the cash for free).

Is this how to make a market or Ponzi scheme?

By: Steve

Steve — Sun, 20 Jul 2008 22:55:00 +0000

> The short-selling prohibition should have no effect on options trading, or shorting synthetically.

It will impact some prop desk strategies and program trades.

While the SEC's goal is to avoid piling on, I suspect that short interest in these names will actually rise -- anticipating that longs will start unloading their positions prior to the expiration of the new rule.

By: Huff Puff

Huff Puff — Sun, 20 Jul 2008 22:20:00 +0000

Blatant hypocrisy. Many of these protected banks are the worst short sellers, naked or otherwise. Then instead of equality before the law, we give privileges to the offenders? This rule is like giving criminals the exclusive right to bear arms.

By: Too Short

Too Short — Sun, 20 Jul 2008 21:13:00 +0000

The short-selling prohibition should have no effect on options trading, or shorting synthetically. Don’t see how this really anything but a nuisance.

By: Anonymous

Anonymous — Sun, 20 Jul 2008 19:22:00 +0000

Hello. Basically anyone can still short stock. Its just the naked shorting that is against the law. Nothing wrong with shorting, naked shorting on the other hand is complete horseshit.

By: Francois

Francois — Sun, 20 Jul 2008 15:37:00 +0000

“How is naked shorting any different than when you write checks before you control the cash and why should it be treated any differently?”

Because we are ONLY individuals and any contribution one may make to the political establishment does not matter. (unless really loaded)

But banks…IBs,…broker-dealers…man! They can wine, dine and give mucho dimes to anyone that matters in DC.

By: Anonymous

Anonymous — Sun, 20 Jul 2008 13:37:00 +0000

My understanding is that the new rules are designed to prevent naked shorting by forcing the short seller to have control of the shares he is selling already locked in, at the time of execution of the short sale, rather than just being able to sell shares before gaining control of the shares. The new rule is actually a good thing.
The problem is that the refs again are showing selective bias by only protecting the special 19. By their actions, the refs are implying there is a critical market operating deficiency with regard short sales. What should be done is that these new rules should be applied not just to these 19, nor limited to the banking industry as a whole. Rather, the new rules should be applied and strongly enforced across entire markets. Naked shorting is an unfair technique that allows a select few to artificially manipulate the market. This practice should be strongly punished.
The reason you won’t see anything close to this taking place is because the Security Industry will fight this tooth and nail. They will tell you with a straight face that this practice provides market liquidity. Yeah right. Phony market liquidity is what it’s really all about.
Look at Check Clearing for the 21st Century Act (or Check 21 Act) as an analogy. One of the reasons that the banking industry pushed for this was that it increased the speed with which checks can clear. Banks could then more quickly and act upon bad checks to reduce losses. So if I repeatedly write checks on my account before the cash is there (even if my intention was to have the cash in place by the time it cleared), and the checks continually bounce, I go to jail. But wait aren’t I just increasing market liquidity?
How is naked shorting any different than when you write checks before you control the cash and why should it be treated any differently?

By: Anonymous

Anonymous — Sun, 20 Jul 2008 13:24:00 +0000

The list of the companies looks very odd. Allianz SE for instance is mainly an Insurance company based in Germany.

They guys there didn't ask for it and didn't know why they were included. The trading volume in the US for Alilanz shares is minimal.

In my opinion, this list is a smoke screen for the few companies which really need this kind of "help".

By: Anonymous

Anonymous — Sun, 20 Jul 2008 05:59:00 +0000

Shedlock does not see this as a non-event but a sign of desperation, see

http://globaleconomicanalysis.blogspot.com/2008/07/panic-by-fed-anatomy-of-short-squeeze.html