Author: Kirk Discussion: Stockgate - Naked Shorting Scandal Date: March 29, 2005 7:37 AM Subject: Dateline to Air Stockgate Segment April 10th . Mar 28, 2005 - FINALLY! - Dateline to Air Stockgate Segment April 10th by Mark Faulk http://www.faulkingtruth.com/Articles/Investing101/1022.html
After over a year of promises, postponements, and delays, <b>Dateline finally confirmed today that they will air their report on the stock market scandal on Sunday, April 10th, at 7 pm ET.</b> The segment, dealing with the scandal dubbed "Stockgate", has long been anticipated by advocates pushing for reform in the stock market, and was first confirmed by The Faulking Truth last June. This is an excerpt from that article:
"It's been called the biggest financial scandal in the history of the world, with incurred losses estimated by some experts at well over $1 trillion dollars. It's a scandal that involves over 1,200 offshore hedge funds, over 150 US brokers, and has already bankrupted over 7,000 US companies in the past six years. According to many of the lawsuits filed to date, the crooks include terrorist groups and organized crime syndicates. Sources say that this scandal, which involves an intricate system of selling electronic counterfeit shares of stock in an effort to destroy the market value of small publically traded companies by utilizing a method known as "naked short selling", will eventually implicate almost every major broker in America, all of the governing bodies that oversee trading, and will extend into Canada and Europe."
Sources at the time told us that the Dateline story contained information that would "blow the roof off of this scandal", and that Dateline had already filmed over 100 hours of explosive footage, with interviews from class action attorneys John O'Quinn (of the Houston law firm of O’Quinn, Laminack and Pirtle), and Wes Christian (of Christian, Smith, Wukoson and Jewell), who along with the law firm of Heard, Robins, Cloud, Lubel & Greenwood, who are representing clients in dozens of lawsuits filed against the SEC, the DTCC, and several of the country's largest brokerage firms.
<b>"What's Up With The SEC?"
Since that time, we have learned that officials from both the SEC and DTCC have been interviewed by Dateline, and numerous other recent developments have (at long last) triggered a frenzy of media coverage over the past few weeks. In addition to that, ads have been taken out in several major newspapers, and the roles of hedge funds, who specialize in shorting stocks, have been brought into question in other fraudulent schemes as well. In fact, in an ad in today's op-ed section of the New York Times (March 28, 2005), in an editorial entitled "What's Up With The SEC?" the conservative Washington Legal Foundation ( http://www.wlf.org/ ), blasts the SEC for "sitting on several complaints of misconduct filed by the Washington Legal Foundation, and supported by the U.S. Chamber of Commerce, detailing examples of questionable stock manipulation by short sellers and class action attorneys". According to WLF Chairman Daniel J. Popeo, in one case, information about a class action lawsuit was leaked to short sellers who, in turn, made a huge profit by shorting the stock before the information was made public. Popeo also claims that "in other cases, short sellers and trial lawyers dish dirt about a targeted company to financial reporters, analysts, and regulators, and the damaging news sends the stock price plummeting, thereby forcing the company to settle. Short sellers then reap the profit when the stock drops."</b>
"If I Only Had a Hedge Fund"
In a related development today, the New York Times online edition ran an article about the incredible proliferation of hedge funds today entitled "If I Only Had a Hedge Fund", in which they said that the number of hedge funds created since 1999 has increased by 209%, with 1,406 new hedge funds introduced in 2004 alone. A recent study released by Credit Suisse Boston said that hedge funds now account for half of all stock market activity, and that they now manage a staggering $1 trillion in funds. Why are managers tripping over each other to start new hedge funds? Because instead of the small fixed percentage that they get by managing traditional funds (sometimes as low as 1%), they instead 1% plus 20% of any profit the hedge fund generates, which has made many of the hedge fund managers instant multi-millionaires. In fact, according to a survey in Institutional Investor magazine, the 25 highest paid hedge fund managers earned an average of $250 million in 2003. To read the New York Times article, go to: http://www.nytimes.com/2005/03/27/business/yourmoney/27hedge.html?
With those kinds of profits to be made, it is any wonder that the SEC, the DTCC, brokers, and hedge fund managers have begun to circle the wagons? Every time a share trades hands, every one of them gets a piece of the action. Even legitimate hedge funds, those who don't engage in naked short selling, profit when their corrupt counterparts drive down the price of stocks through illegal naked short selling. And the SEC, NASD, and DTCC take their cut for every share that is bought and sold, whether that share is real or counterfeit.
If the SEC needs a smoking gun, they need only to take a close look at Global Links Corp (OTCBB: GLKCE), where one investor recently bought 100% of the issued stock AND another investor bought 15% of the same stock, only to watch hundreds of millions of phantom shares continue to be bought and sold. While the SEC has ignored this curious case, Congress hasn't. Senator Robert Bennett cited the Global Links story (as first reported by Financial Wire) on March 9th when he grilled SEC Chairman William Donaldson about the naked short selling scandal, "this article just last Friday in a national publication indicates that people are still selling short shares that they don't have and clearly are never gonna acquire." This stock is merely a microcosm of the larger problem that pervades the stock market system, and serves to illustrate how pervasive the fraud really is.
It is vitally important that the Dateline story gets the attention it deserves. We can only hope that their report tells the real story of this scandal, and that Congress and the major media will join us in our mission to, at long last, restore trust and credibility to our stock markets, so that honest investors can once again invest their hard-earned money and have a chance to achieve the American Dream.
I want to thank you for this great post. I also want to encourage everyone on AS to contact the appropriate Senate Members listed at the bottom of this post. In addition please sign the petition provided.
I hear complaints all day everyday about MM's and the power they wield over all of our investments. Please step up and make your voice heard.
Posts: 2660 | From: Pennyland USA | Registered: Jun 2004
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I agree but what will it really do to change things. The people watching this will be those that already knew the problem is here and the ones that didn't are going to just think they needs to stay away from small caps. The big wigs that can make a difference already know of the problem. But I really think there is a bigger problem out there that people in this market ignore.
A lot of these companies that gag the TA and hide there o/s then blame all there problems on NSS and work up there members with no proof of it, is also the problem. Like cmkx which claimed NSS for over 2 years while diluting shares to the sum of an amazing 703 billion shares. Ripping off there own investors while putting the blame on Naked Short Selling.
The investor gets a crouch to lean on while the company sticks it to them, yet when faced with the truth they refuse to see it. It all to common anymore. Companies running up huge o/s and blaming pps on every other problem out there except for its true origin. That its the companies fault. Yet investor have convinced themselves that 20, 30, 50, 703 billion shares is not the problem. Once you are over 20 billion in shares your stock price is dead. No matter how the company got to that ridiculous sum of shares the stock price is not doing anything except going down.
Blame it on the MM's, they are holding it down. Its in no way the fact that the float is so huge it can never be bought up fully. Supply and Demand drives price and if the supply is dried up, price will rise with demand. No MM can manipulate that. Yes MM's can manipulate in small amounts when there is no market pressure but if the pressure is really there then they don't want to hold it back. They make money on the spread so the higher the volume the more they make.
Blame it on daytraders. Daytraders make the market. Groups and daytraders do cause runs and when they leave the stock price will fall and it will fall. No use to blame them for that. They caused the run in the first place and did help your stock get recognized by many others. Learn to play the run yourself. Make money by selling high and buying back when it drops. Don't blame them, make money with them.
Then there is the NSS problem. Is it a problem? Yes for sure. But there lies the next problem. When a company is in trouble blame it on NSS. The investor will never know since we hide company records from them. Blame it on NSS. Yes NSS is a huge problem and we need to address it. Will it change anytime soon, I don't think so. But by exposing the problem it at least lets the powers that be know that we know. But learn to play the market. If there is a NSS problem in your stock get out and go to another one. If people don't play a stock that is shorted to death then there's no need to short it. Investors buy these short shares.
There is money to be made if you invest wisely. If a company refuses to give out basic information on its shares and finances then run, don't invest more in it. Companies that hide information help NSS survive. When you have to make excuses for a companies pps then its shouldn't be a company you want your money in.
Ric
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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I agree Ric. I also think that at least in the short term broker and hedge funds getting hammered by the sec is going to hurt us. When confedence in the market drops people will stop buying stocks and start taking money out of funds causeing them to sell which will cause pps to drop which will make more people try to sell ect ect ect. On the other hand Yesterday was 1 year from the time that the sec was supposed to stop the naked shorting by putting in new laws and I've not seen a big difference it what is going on so it may still just be a bunch of smoke and mirrors. JMHO
-------------------- You never really grow up you just learn how to act in public. Posts: 1169 | From: Pollock Pines Ca | Registered: Feb 2004
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I think they should take a look at those mysterious mirror trades , or round trip trades that are so common with pennies , it's only used to jack up the total volume traded . I understand what you're saying Ric , ultimately it's the individual investors rsponsability to safeguard their investments , but also the avarge shmoe can't possibilty do anything about phantom shares , and a little help would be appreciated .
Not everyone has the time or resources or the the desire to daytrade . They want to long term invest , and if this is true this Naked short selling thing is affecting some people's investments , even when they have done the research and felt they have bought in to a legitimate company with long term potential , these manipulated stocks get hammered by phantom shares . Their should be some type of accountability and safeguards , because some things are out of the average investors hands , and since we're paying taxes on the profits we make , why shouldn't the gov use some of those proceeds to go after some of these sheisters , scam artists , and market manipulators , they will be performing a public service for which they were paid .
I wouldn't think daytraders care too much , they just run a stock and leave it for dead , it doesn't matter to them if a stock or company is good or bad , they are neutral in that regard , as long as they get their 30 per or higher , it's all good , but like i said not all people are daytrading , and running up a good company only helps in the short term , ultimately it will effect the longs , at least like it seems it does when someone holding long sees a big spike then an even bigger drop they most likely will bail . But , freak it , that's the way it goes , get in and get out , nothing else matters except that profit at the end of the day , that's what i would do . There is one thing though , most of these people utilizing the naked shorts are prob daytrading , so they do have something to do with it , i would imagine .
I think one good thing can come from this , some people may get spooked and bail out of pennies altogether or other investments , so for some time it will drive the price down , an excellent buying opportunity until the " smoke " clears and everything goes back to normal .
Oh yeah , you don't think the MMs have anything to do with it , yeah right , that's why you can see a ton of buying pressure and the ask still never moves , then a couple of measly sells and they lower it , if it were the supply and demand rule this would never happen . These guys def have way too much power . They pretty much do whatever they want and very rarely answer to anyone , and you know they are helping their friends and associates out whenever possible at the detriment to the " outside " investor . It's prob like the wild west on the floor , they have less and less fear with the things they are getting away with , it's time to kick them in the arse a bit .
Posts: 734 | From: Nassau County | Registered: Jan 2005
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Your right. But it is part of the game at this level. And if you know the game then what difference does it make. I know the volume is doubled in the penny market because I do the research. If you don't know how the market works at this level and still play it then really why do DD at all. If you play pennies you should know that it is risky. That volume is based on sells plus buys not real volume. That MM's do have some limited say in stock price. That illegal shorting does happen. Yet you still play it. Why because its a longshot. Is there true investments at this level. Yes but very little. Your playing the lottery here thats all. If you know that its being manipulated and your still playing it, then is it really an investment or a gamble. I mean when I lived in California near the horse track. I played the longshot. Was that an investment, no. Investments are knowing the company. Knowing what market they are in. Understanding the risk. Then putting your money in it. If you don't know that in this market of penny stocks the risk includes the possibilities of NSS and MM influence then you didn't do your DD.
But as I said this MM and NSS is pushed so hard that too many people don't look were the problem is. NSS is the companies problem not investors. As with any company, whatever the reason for drop in pps, you sell a stock declining in price. Holding a falling stock no matter what caused it is not a wise choice. And if you really believe that the MM's have that much control then why play there game and stay in it. Get out and move on to the big boards. Supply and Demand still rules no matter what if the pressure is truely there. The problem is dilution sometimes is confuse with buying. Just because a lot of investors are buying and not selling yet the price doesn't move or falls is a very good sign of dilution. JMHO
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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Another huge problem is the fact that people here believe what the CEO says. He trustworhty. He is for the investor. I hear this and laugh. Look at MLON. The people followed Pino like he was a god. He would never lie to us. It is NSS. It had nothing to do with him scamming investors. Look at PRRM with 58 billion in o/s but somehow have convinced investors its not that bad and the evil MM's are keeping us down. ICAN, with its over valuation and many other problems. It can't be that investors see problems with the company and not jumping on the bandwagon. It's the MM's holding the pps down while the TA is gagged. CMKX, must be NSS, can't be the fact that dilution of 703 billion shares out there. And so on and so on. Pennies are in dilution over drive but lets blame it on every other problem so we can't see the real problems.
Ric
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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Yep , one of the biggest problems is that there are way , way too many shares out there , the " phantom ' ones and the real ones , it's too easy for some guy in his basement to incorporate himself and sell shares , but i still think the MMs do have a bit of a hand in the till and if they knew something they wouldn't say anything because there is money to be made . This thing is working at various levels , and everyone is doing something a bit devious , but again , there are too many shares out there , should be some sort of limit , but that couldn't work .
I'm pretty much giving up on pinkies , way too volatile for me , at least the OTC issues have to feign accordance with regulation and there is a modicum of structure , some 4th grader could issue pinks and sucker a bunch of people if he knew how , and it prob wouldn't be too hard , and it's prob already happened .
Mlon , that one is a classic , but don't think for a second he won't be back for the sequel , Kiwi .
I still get a good laugh everytime i think about all the hype that surrounded that one .
No matter though , i do want to invest , and maybe one of these times i will find an actual company on the OTC , could be Cnes , could be Gtel , but until i know for sure , swinging singles is the order of the day , but if you are going to swing , please use protection , and playing with pinks as opposed to playing with OTC is like screwing around with streetwalkers as opposed to messing with women who work in brothels , for the most part .
Posts: 734 | From: Nassau County | Registered: Jan 2005
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I agree with the share limit. I think it may be the only way to stop this. And once the limit is hit and the company feels it has to dilute more require a r/s. That will give a kick in the butt that this company makes money on selling shares. People seem not to have a problem with a huge o/s but 4 r/s in a year they get the message. And then NSS would b hard to hide.
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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This a penny problem? I think not “StockGate” by FinancialWire just over a year ago, has touched investors at companies ranging from Global Links (OTC: GLKCE) to Delta Airlines (NYSE: DAL), Martha Stewart Living Omnimedia (NYSE: MSO) and Krispy Kreme Doughnuts (NYSE: KKD), lambasted regulators for letting what it called “71-year-old laws” against naked short selling go unenforced. They need to put some of these scum bags in prison and then maybe most of the rest will start playing by the rules. I think some MASIVE fines against some of the MMs involved could pay the salaries of the extra investigaters needed to clean up someof this trash.
Posts: 218 | From: MD Baltimore | Registered: Jan 2005
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Foxtrot... Nice post...I agree that jail time is in order. It's funny to me how some folks who posted decided to deflect from the issue and downplay it's importance. Wonder why that is? What's that about?
Thanks Redadair for bringing this to everyone's attention. Please read his post and try to decide if you think that issue is important to you. He has given sites to go to and be heard.
Posts: 2660 | From: Pennyland USA | Registered: Jun 2004
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I didn't say NSS wasn't a problem just that its gets blamed for all the problems in the penny market. You don't want good advice don't take it. Us that have played pennies a long time know how to play the market. No intensions here and if you ask you will find out that you don't need to ask about my integrety. Believe what you want and hold these pennies long. There needs to be some to help fill the gap while the rest make money. I have been on this board for a long time now. And in the penny market for a long time. The truth hurts. Yes NSS is bad and needs to be fixed but the penny market in general has a lot of problems that need fixed. But those of us who have played this market know this and play the market to our benefit.
Ric
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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quote:Originally posted by Ric: I didn't say NSS wasn't a problem just that its gets blamed for all the problems in the penny market. You don't want good advice don't take it. Us that have played pennies a long time know how to play the market. No intensions here and if you ask you will find out that you don't need to ask about my integrety. Believe what you want and hold these pennies long. There needs to be some to help fill the gap while the rest make money. I have been on this board for a long time now. And in the penny market for a long time. The truth hurts. Yes NSS is bad and needs to be fixed but the penny market in general has a lot of problems that need fixed. But those of us who have played this market know this and play the market to our benefit.
Ric
Rick... I didn't mean to piss you or anyone else off. I did not single you out. This post was specific in asking folks to watch Date Line and get involved in this issue and appropriate attachments were provided to do that. I was hoping it would stay that way. Your understanding of your truth doesn't hurt and I wasn't looking for advice after my post from you or anyone else. I was asking folks not to deflect and bring in other issues. To also support what Redadair was bringing to the table. I questioned the reasons why people would deflect when this thread and issue were specific in what it was about. That question holds now without you or anyone else taking it personal.
If it was stated in a way that offended you then I'm sorry. It was not meant to. It was stated that way to ask why the heck folks are getting off this important issue. If you want to discuss all the problems we encounter in trading then start another discussion. I have opinions on many areas that I'm concerned with and would probably share those on that thread, but not here.
I did not say anything about your integrity or anything else about you. Have no idea what your qualifications are or your personal integrity as you also don't know me or mine. I have been trading a long time also and know how to play the market. Those experiences are not exclusive to you and other people you know. The market has many players. Because of that experience I consider this an important thread. I encourage everyone to get involved and to share your concerns for THIS ISSUE with the links that Redadair provided to you. He took a lot of time and energy to get this information to all of us. We then decide to get involved or not. So get invloved or don't. I'm choosing to get involved.
Posts: 2660 | From: Pennyland USA | Registered: Jun 2004
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I just looked. You have already started a thread for your agenda. You called it the "Blame Game"..I think that's a very appropriate place for folks to vent.
Have at it but please don't let this thread lose site of what this issue is.
Posts: 2660 | From: Pennyland USA | Registered: Jun 2004
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quote:Originally posted by Bearclaw: Have at it but please don't let this thread lose site of what this issue is.
:thumbsup:
6848 people and 48 companies have signed. Need more people then THAT! And it closes April 10th. Posts: 115 | From: Honolulu, HI | Registered: Feb 2005
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After much research on this NSS problem I have concluded this hypothesize...People on Wall Street should not be allowed to run around naked selling shorts to people!!!!!!
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