This article would be more substantive with a lot more examples of the mechanism of the coordinated fraud.
What fraud? There's no fraud involved in shorting.
Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
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Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#32Shitty 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?
> Why let people have incentives to ruin other people lives?
We should build safety cushions for people, not companies.
> Why do you feel you need to help it to go down?
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#33The 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…
That's only half of what's happening, and the objection is directed at the other half.
First scenario, B sells the share they have to X.
Second scenario, B sells the share they don't currently have to X.
And there's a third scenario where B has not even ordered a share, but still sells a share they don't have to X.
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#34The 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?
Are you concerned that B could sell his contractual right to have A deliver a share to someone else, so that when A is obliged to deliver a share that actually gets delivered to a third party? Why is that bad?
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#35I always thought that shorting was a disgusting practice, and wondered, “who buys a share, and lends it out so someone can manipulate it and lower its value, and profit from it”? It never occurred to me the majority of the “lending” did not actually happen.
If you own stock and it's at a broker, mutual fund, in an ETF, a retirement fund... then you have probably lent out your shares to shorters.
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#36My initial thought after reading this is if all $GME shares sold by RobinHood actually exist, or if they're counterfeit copies of someone else's shares.
I kind of doubt it considering all the regulation scrutiny recently.
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#37FYI, Naked Shorting has been made illegal since 08-09' [0]
In the author's case because DTC is a blackhole system, these naked shorts can continue to exist. They also can continue to exist in self-contained as well as loop-holed systems.
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#38I find articles like this fascinating because to me they are indicative of just how substantial the magnitude is of the "bounty of capitalism" in the public markets.
On the one hand you have returns available to anyone prepared to invest consistently in the stock market across the last 30 years that are both well documented and very substantial. People like Warren Buffet & boggleheads make data-backed arguments about how well you could have done if you put money in even just broad index-tracking funds.
And yet on the other hand there are two massively powerful groups with materially more leverage and informational "edge" within the system compared to all the people with a 401K. These are the executives who actually run the public corporations (and can choose their own compensation as a class via board/exec rotation & internal influence) and the financial firms that are embedded both in the firms' operation and also essentially setting/playing the rules of the meta-game as evidenced by articles like this.
It feels like the fact that there are any returns left for a retail investor in public stock market investing speaks more to the quantities of wealth creation taking place than the absence of this sort of outrageous market rule capture.
Two disclaimers: 1.) the slider for wealth "creation" on the public markets in the US seems fairly obviously to be being dragged from innovation to ZIRP... whole separate matter. 2.) at a whole-society level obviously the availability of public market returns is limited to a tiny sliver of the population with the means to invest, so when I say "bounty of capitalism" above I'm more referring just to the sum of financial profits as a result of the system.
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#39Question: 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".
> it seems like if a large number of people suddenly started demanding share certificates, this could cause problems for DTC
No it wouldn’t. You would be delivered shares within two days as is required. Lots of institutions don’t hold their shares “in street name,” i.e. they hold them in their own. And some people still demand physical certification. (Not every issuer supports this, largely due to exchange rules.)
Re: Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
#40Earlier quoted context omitted.
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?
> Why let people have incentives to ruin other people lives? We should build safety cushions for people, not companies. > Why do you feel you need to help it to go down? https://en.wikipedia.org/wiki/Wirecard_scandal
Fraudulent company is not a general case. Such companies must be closed by regulators, not short sellers.
Do you think it is a good idea to help Intel go bankrupt because it's shitty right now in comparison to AMD?