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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

#291

Post by [deleted] »

varispeed wrote: post #201
hagy wrote: post #163

Earlier quoted context omitted.

When person A lends their share to person B, they no longer own a share, they own the right to receive a share from person B sometime in the future, interest payments on the lending, and collateral to ensure the borrower can make good on their obligations. This website seems to mainly be talking about naked short selling, which is selling a stock without first owning or borrowing it. This not necessarily illegal, alt…

Isn't selling something you don't own a fraud or the stock market has an exemption? The instance when A essentially sells the share to B accepting the right to receive the share back as a payment also wouldn't fly in any other environment, as this could just open the door to money laundering. So why is this accepted in the stock market? Or simply the law enforcement doesn't know how to tackle it?

[deleted]

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

#292

Post by dhruvdh »

dcolkitt wrote: post #270
dhruvdh wrote: post #265

Earlier quoted context omitted.

> The point is that the value of AAPL is just the value of its future dividends This is simply not true at all. Like anything that can be bought and sold shares derive their value from supply and demand.

The demand for shares is the demand for its discounted future cash flows. No rational investor buys for any other reason.

Okay, for anyone who agrees with you on this the price of shares are predominantly decided by irrational investors. And in a market where price of shares are predominantly decided by irrational investors, none of your purported benefits apply.

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

#293

Post by [deleted] »

varispeed wrote: post #286
nemo44x wrote: post #260

Earlier quoted context omitted.

Just tell your broker to not loan your shares. If they weren’t bought on margin then they won’t loan them out. Standard broker agreements for margin accounts state that your shares can and will be lent. Sometimes you’ll even share in the profit from loaning them as in-demand assets for shorting often have a borrowing fee. The analogies hold though - people sell things they don’t own all the time. The important thing…

So as long as there is an agreement and plausible explanation then any crime is legal? This is fishy as hell. It seems like we are going round in circles and only argument is that "hey people die all the time, so murder ain't a bad thing if the victim consented".

[deleted]

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

#294

Post by [deleted] »

varispeed wrote: post #244
dcolkitt wrote: post #214

Earlier quoted context omitted.

> Isn't selling something you don't own a fraud or the stock market has an exemption? I call up Dominos and order a pepperoni pizza. They take my order and process my credit card. They’ve just sold me a pizza that doesn’t exist. Is this fraud?

Well that's wrong analogy. The right analogy would be if you borrowed a pizza from your mate and sold it to someone.

[deleted]

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

#295

Post by floor2 »

solotronics wrote: post #276
dcolkitt wrote: post #214

Earlier quoted context omitted.

> Isn't selling something you don't own a fraud or the stock market has an exemption? I call up Dominos and order a pepperoni pizza. They take my order and process my credit card. They’ve just sold me a pizza that doesn’t exist. Is this fraud?

How about if I sell a million pizzas to be delivered next month then put out articles about how Dominos has poison in their pizzas! People will forget or won't want the order and I will pocket the money. These short sellers are a scam.

That's a completely unrelated hypothetical (and also, would be illegal fraud).

There's nothing special about shorting in your imaginary scenario either. You could change your scam to "I own Dominos stock and don't order any pizzas, but I put out articles claiming I ordered a million. People will buy up the stock expecting the profits from the million-pizza-order and I will pocket the money. These long holders are a scam"

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

#296

Post by bo1024 »

rsp1984 wrote: post #185

Wow, it seems like none of the top commenters here have put in at least minimal effort to read and understand this. The author does not complain about short sellers per se or about the fact that more than 100% of a stock's float can be shorted. That is all nice and fine. Instead what the author does complain about is that fact that the (supposedly regulated) mechanisms for shorting a stock are fraught with loopholes…

Yes and thank you for calling it out! I had hoped for much deeper discussion.

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

#297

Post by nmfisher »

JumpCrisscross wrote: post #149
stupidcar wrote: post #147

Earlier quoted context omitted.

What your describing still sounds incredibly dodgy. The price of anything is a result of its some intrinsic value and the volume of supply. So a precious stone is valuable because of its beauty, but also because it's rare. If someone mines a billion such stones, it won't affect their individual beauty, but it will certainly reduce the price someone is willing to pay for one. Now, you seem to be saying that short sell…

> naked short selling at volume will create a self-fulfilling prophecy To be super clear, naked short selling is banned for everyone but market makers [1]. A market maker goes naked short when there is a buying frenzy. Their economic incentive is to then cover the short given they are in a buying frenzy . The NYSE explicitly markets its specialist system to issuers as a stabiliser mechanism. It’s a selling point to l…

Is "market maker" an officially/legally designated status?

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

#298

Post by nmfisher »

varispeed wrote: post #245
growse wrote: post #216

Earlier quoted context omitted.

Fraud requires intent to deceive. Where's the intent to deceive in short selling?

Selling something you don't own.

That is only fraudulent if you never intend on delivering.

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

#299

Post by auntienomen »

thatguy0900 wrote: post #268
eru wrote: post #172

Earlier quoted context omitted.

How does naked (or any) shorting reduce the value of real shares? Shares are worth the present value of their future dividend cash flow. Shorting doesn't change no dividend payment at all ever.

That doesn't make sense. If I have to pay each share 5$, and I have given out 500 shares, but when it's time to pay out dividends 700 shares show up to claim them,then someone has to lose money right? Either I have to give 5$ to 200 shares that I never sold to people to begin with, or the 500 people who actually bought shares from me lose some of their portion to the extra 200. What am I missing if that's not the cas…

The money goes to whoever holds the real share.

A loans a share to B. Now A owns an iou, which doesn't have any voting rights. B agrees to pay A an amount of money equal to a dividend payment if a dividend is paid by the company.

B goes short by selling the share to C.

C owns a share of stock.

When the company pays dividends, C is paid and B pays A.

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

#300

Post by kgwgk »

dcolkitt wrote: post #278
kgwgk wrote: post #261

Earlier quoted context omitted.

> As long as a creditworthy institution guarantees the same stream of dividends, they are identical in value from the investors perspective. No, the stream of dividends doesn't have identical value. There are other relevant corporate actions. Shares can vote, your stream of dividends cannot vote. If the company spins-off a segment it may distribute shares of the new company to shareholders while the owners of that th…

Those are all great points, but IMO not really that difficult to handle. > If the company spins-off a segment A spinoff is just a divided in the form of stock in the new segment. This is easy to handle. The short is now simply short both one share of the original and one share of the spinoff. The long now owns synthetic shares in both. > If someone wants to acquire the company An acquisition is just a one-time termin…

> not really that difficult to handle.

Sure, you can write a contract detailing all the possibilities. Maybe even get those derivatives listed.

But you could be doing that already!

I'm not sure what are you proposing that should replace "the current system".

Do you suggest that when you buy a share of J&J or whatever, and pay the price of a share of J&J, you may find later that what you got is a derivative product issued by "I can't believe it's not stock! Ltd"?

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