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Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

counterfeitingstock.com

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Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#21

Post by rcMgD2BwE72F »

konschubert wrote: post #12

Shitty companies failing is a necessary and important mechanism of a functioning economy. Look at the Soviet Union for an example of what happens when no companies ever go bankrupt. Short activists expose shitty companies and as such, they play an important role in the economy. Maybe Wirecard's fraud scheme would still be going on if it wasn't for short sellers. Maybe shorting, in particular naked shorting, is not id…

>Shitty companies failing is a necessary and important mechanism of a functioning economy.

True

>Look at the Soviet Union for an example of what happens when no companies ever go bankrupt.

The Soviet Union was not a free market economy.

>Short activists expose shitty companies and as such, they play an important role in the economy.

In free market economies, shitty companies fail by themselves because their competitors offer better good or services. Short activists don't help make better competitors.

Companies in the Soviet Union needed more competition than short selling.

>Maybe Wirecard's fraud scheme would still be going on if it wasn't for short sellers.

Who knows? Tesla wouldn't exist if short sellers had their way either.

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#23

Post by sanxiyn »

woopwoop wrote: post #18

The author seems to be really upset about this, but I don't understand why. Nothing they are describing, if you ignore histrionic language like "counterfeiting", seems especially nefarious. Maybe I am misunderstanding. Basically, a short is when A borrows from B a share of corporation C with the promise to return a share of corporation C at a later time, plus some cash interest. A naked short is where instead B gives…

The second activity is dangerous because A can fail to deliver. I agree there's not much to be outraged by the first activity.

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#24

Post by dandanua »

konschubert wrote: post #12

Shitty companies failing is a necessary and important mechanism of a functioning economy. Look at the Soviet Union for an example of what happens when no companies ever go bankrupt. Short activists expose shitty companies and as such, they play an important role in the economy. Maybe Wirecard's fraud scheme would still be going on if it wasn't for short sellers. Maybe shorting, in particular naked shorting, is not id…

Shitty company will go down in a natural way in a free market economy.

Why do you feel you need to help it to go down?

Why let people make money on someone's fail?

Why let people have incentives to ruin other people lives?

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#25

Post by killerpopiller »

woopwoop wrote: post #18

The author seems to be really upset about this, but I don't understand why. Nothing they are describing, if you ignore histrionic language like "counterfeiting", seems especially nefarious. Maybe I am misunderstanding. Basically, a short is when A borrows from B a share of corporation C with the promise to return a share of corporation C at a later time, plus some cash interest. A naked short is where instead B gives…

in the second scenario, A would trade a share he doesn’t posses and B could trade the same share, no?

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#26

Post by konschubert »

sanxiyn wrote: post #23
woopwoop wrote: post #18

The author seems to be really upset about this, but I don't understand why. Nothing they are describing, if you ignore histrionic language like "counterfeiting", seems especially nefarious. Maybe I am misunderstanding. Basically, a short is when A borrows from B a share of corporation C with the promise to return a share of corporation C at a later time, plus some cash interest. A naked short is where instead B gives…

The second activity is dangerous because A can fail to deliver. I agree there's not much to be outraged by the first activity.

When I take a loan I may also fail to deliver loan payments. I don't think we should make risk illegal, but we should make sure that banks manage tail risks right.

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#27

Post by hlandau »

Question: According to this, all the actual share certificates are held in a vault at DTC. Do people have a right to "cash out" and demand physical share certificates? If so, it seems like if a large number of people suddenly started demanding share certificates, this could cause problems for DTC and show this problem for what it is. Essentially a "run on the bank".

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#28

Post by woopwoop »

sanxiyn wrote: post #23
woopwoop wrote: post #18

The author seems to be really upset about this, but I don't understand why. Nothing they are describing, if you ignore histrionic language like "counterfeiting", seems especially nefarious. Maybe I am misunderstanding. Basically, a short is when A borrows from B a share of corporation C with the promise to return a share of corporation C at a later time, plus some cash interest. A naked short is where instead B gives…

The second activity is dangerous because A can fail to deliver. I agree there's not much to be outraged by the first activity.

A can fail to deliver in the first activity, too. More generally, when you agree to have someone give you something of value at a later time, you take on some risk that they will fail to do so.

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#29

Post by csomar »

This article is quite biased. There are a few problems with it:

1- The stock market should not kill a healthy company. Sure, it can affect its money raising capabilities (and maybe hiring) but it should not drive it out of business.

2- Naked Short-sellers still have to pay interest and dividend on their sold shares. This would create a certain equilibrium. If you nake-shorted a company at x2 its value, you suddenly doubled its profit; and that's being paid by the short-sellers. Profit (dividend) gives a reason to investor to hold on that stock; which brings us to point

3- Naked short-selling is probably done on very short time frames that doesn't extend between quarterly dividend payments. The company is probably going under anyway.

Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

#30

Post by hagy »

rax0m wrote: post #10
SheinhardtWigCo wrote: post #4

Correct title is “Counterfeiting Stock 2.0”. The document doesn’t allege illegal activity; it describes things the author believes should be illegal. Also: > In compiling the information contained in this website, the author relied on sources — both public and private — and, for the most part, accepted the information from the source as reliable. This only works when the piece is written or published by someone willi…

Naked short selling is illegal [1] [1]: https://www.investopedia.com/terms/n/nakedshorting.asp

I believe it's more complicated. Per Wikipedia [0],

> Failing to deliver shares is legal under certain circumstances, and naked short selling is not per se illegal.

There are arguments for why phantom (i.e., counterfeit) shares benefit the market. E.g., providing liquidity. Others contend that this practice is used in the aggressive short selling of companies, which is illegal, and there is insufficient transparency and accountability of this practice.

There's a great story of supposed illegal naked short selling in the Global Links fiasco. [1] In this case, one investor was able to purchase 100% of outstanding shares while trading continued unaffected. This post's website also cover's that story and I don't recall how this mess was ever resolved. Briefly searching through sec.gov that didn't turn up anything relevant.

[0] https://en.wikipedia.org/wiki/Naked_short_selling [1] https://www.forbes.com/2006/08/25/naked-shorts-global-links-...

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