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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

#391

Post by darawk »

dragonwriter wrote: post #316
darawk wrote: post #139

This is mostly nonsense. There is nothing wrong with there being more shares short than shares outstanding. It just seems problematic, until you think it through. Person A has 1 share of company Y. Person B borrows 1 share of company Y from person A, and then sells it into the market. This is called a short sale. But person B just sold their borrowed share. Now that share is owned by person C. Person C can now lend i…

> Shorting behaves the same way that fractional reserve banking does, It works the way lending in general works. “Fractional reserve banking” is a very specific, restricted mechanism of lending, and I'm not sure what the equivalent of “depository institutions” with centrally-mandated common “reserve requirements” based on their “deposit liabilities” are in shorting.

I'm just using that term because it's one in which people are familiar with the multiplication effect, but yes you're right.

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

#392

Post by pbhjpbhj »

growse wrote: post #246
varispeed wrote: post #245

Earlier quoted context omitted.

Selling something you don't own.

Is a future contract fraudulent then? If I sell you an August-settled coffee future, that's a promise to deliver you coffee in August. Is it fraudulent if I don't have the coffee right now? After all, I've sold you something I don't own. Of course it isn't. What matters is that the contract is fulfilled, and for equity sales in the US, the contract states that a share will be delivered to the buyer 2 days after the t…

Capitalism only optimises with freely available information. As long as I know you don't have a share, and the market as a whole knows you don't have a share, then yes, it's not fraud. The fraud is you decide (with your cabal) to appear to have shares, you don't announce to the market "I'm selling 5% of STONKS but I don't own any STONKS [yet]". When I buy from you there's no shares that I bought.

It's not fraudulent if you don't have the coffee, as long as you make public that you don't, "I do not own any coffee, but will sell you a delivery of coffee for August".

Now, if you're selling share in ownership of a company, IMO it's right to disallow - by law - representations of ownership of companies that are not backed by numbered shares. It's not coffee, you can only own shares in the company itself, you can't get those shares from other origins it's not a commodity.

You make a post-harvest offer to sell me coffee from a particular plantation, then you arrange for the media to report that plantation's coffee is really inferior, maybe not even drinkable - something you had arranged in advance, of course. Tell me, why is this good for society? Now, you advertise, with your friends, lots of coffee available at low prices (after all the media said it's inferior coffee), only thing is you're offering more coffee for sale at low prices than there is coffee from that plantation ... that's driving the price down, there being lots of coffee noone wants ... only it's a lie, a trick, a fraud, just so you can manipulate the price. And now, oh look that plantation has gone out of business and you managed to buy them coffee I ordered for essentially nothing. Wow, you added so much value to the World by destroying the livelihood of that coffee plantation's workers.

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

#393

Post by clktmr »

Specie33 wrote: post #336

I believe this whole GME and AMC deal was perpetrated by the owners of those companies debt and pushed through by people who owned a mouthpiece on WSB and other platforms. Way too many coincidences. Everyone left that has been trading stocks for 2 days will be holding the bag on this and will be left with nothing as Blackrock and Burry and others have already liquidated their positions. Two basically bankrupt compani…

Not what is happening at all.

GME was trading below net cash last year, which is insane. E-commerce is growing 300% YoY and Ryan Cohen, former founder and CEO of Chew, just made a major move as an activist investor. If GME was valued by VC measures, it would be trading at $420. Most of the people on WSB believe in the value of the company and have faith in a successful turnaround.

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

#394

Post by eru »

kgwgk wrote: post #389
eru wrote: post #155

Earlier quoted context omitted.

Though arguably, naked short selling should be allowed as well. (With certain safe guards and sufficient margin requirements.) After all, we allow something similar to naked short selling when people write options or trade futures. And those markets work just fine.

Physical settlement is relativement rare in those markets. The main purpose of the transactions there is not to get physical delivery at expiration, let alone two days after the transaction. Many contracts are cash settled and if not you can always close positions right before expiration (and maybe roll them over). When someone buys a stock very often the purpose is to "physically" have it as soon as possible.

Yes, people do often take delivery of stocks.

Though funny enough, stocks are already a virtual thing and exist in computers only. Whereas oil or onions are physical goods, and there are real consumer who absolutely need real physical onions.

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

#395

Post by im3w1l »

eru wrote: post #386
im3w1l wrote: post #277

Earlier quoted context omitted.

As an investor I would rather an actual share, than a promise. They are not fungible to me. Even disregarding the risks, an actual share comes with voting rights.

When you buy a share, no matter whether from a short seller or anyone else, all you get immediately is a promise. The actual share gets delivered 2 days later, and it doesn't matter whether who you bought from, short-seller or otherwise. Your voting rights are exactly the same. You are right that replicated shares with options and other derivatives usually does not come with voting rights. That's true. The market pri…

I read you as saying that (indefinite) naked short selling should be allowed, meaning that the buyer doesn't get a share after 2 days, or ever.

I wonder what the value of short term naked short selling would even be? In that timeframe borrowing should not be very costly anyway? The GME shorts have been short way longer than 2 days.

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

#397

Post by z_notes »

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…

The creation date of the CounterfeitingStock20Full.pdf file is Aug. 28, 2008. Going to the SEC site, it seems like there has been further regulation since then. How much of the document's discussion is still current is not clear. Would also like to know who the author is to understand their interest in the issue.

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

#398

Post by jb775 »

bouncycastle wrote: post #53
jb775 wrote: post #19

Earlier quoted context omitted.

The author likely used the term "counterfeit" since they're essentially copying the shares and redistributing them as if they represent the same value as the original, just like counterfeit money.

The author likely used the term "counterfeit" to stir up a controversy. It's more like if I started lending you some rocks, and told you that each rock is always 1 Tesla share. You can always come to me and cash in that rock for whatever a Tesla share is. I'm not lending you counterfeit Tesla shares, but rocks. There's no counterfeiting going on.

The salient aspect here is what they're using them for: to drive the price down or up.

If I place a bet on the direction of the price pegged to a given type of rock, then borrow millions of those rocks from you, then trade those rocks back and forth with my buddies to create the illusion of demand momentum (linked to an artificial price pattern going down or up)...I can swing the price pegged to that rock. So the rock could still be cashed in for whatever price it's pegged to, but that doesn't mean I didn't mess with that price. (would take massive amounts of capital obviously)

I'm also not sure if there's any way to tell if it's only being lent out once. Since futures contracts are even more abstract than stock ownership (i.e. have the option to possibly purchase blocks of shares in the future or just scrap the contract altogether), there's probably ways to create value by taking on risk in the form of overextending the appearance that you have access to a security at a certain price.

This video explains everything going on: https://www.youtube.com/watch?v=gMShFx5rThI

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

#399

Post by eru »

im3w1l wrote: post #395
eru wrote: post #386

Earlier quoted context omitted.

When you buy a share, no matter whether from a short seller or anyone else, all you get immediately is a promise. The actual share gets delivered 2 days later, and it doesn't matter whether who you bought from, short-seller or otherwise. Your voting rights are exactly the same. You are right that replicated shares with options and other derivatives usually does not come with voting rights. That's true. The market pri…

I read you as saying that (indefinite) naked short selling should be allowed, meaning that the buyer doesn't get a share after 2 days, or ever. I wonder what the value of short term naked short selling would even be? In that timeframe borrowing should not be very costly anyway? The GME shorts have been short way longer than 2 days.

> I wonder what the value of short term naked short selling would even be?

First, to put everyone on the same footing as the market makers.

Second, just to make short selling easier in general. Short sellers are massively important to spots bubbles and other asset mispricings, but they never get any love.

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

#400

Post by StreamBright »

eru wrote: post #175
StreamBright wrote: post #127

Earlier quoted context omitted.

>> I don't understand why I'm supposed to be outraged by either You shouldn't. When the economy collapses because of the aforementioned practices and you family loses their jobs, housing etc, you should not be upset either.

Why would the economy collapse? If anything, it's very good to have short sellers, because they are the only market participants who have an incentive to expose bubbles. And expose them early.

Who knows?

https://www.history.com/news/2008-financial-crisis-causes

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