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Here is link to NASD site-Naked Shorting dead? Proves it existed for all those doubters. Feb 20th deadline. Canadien brokers in shock. Expect some OTCBB heavy short covering. http://www.nasdr.com/pdf-text/0403ntm.pdf
AND NEWS ON IT:
NASD Tightens Short Selling/Delivery Rule DJN: =DJ IN THE MONEY: NASD Tightens Short Selling/Delivery Rule
By Carol S. Remond A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Taking most market participants by surprise, the National Associations of Securities Dealers has drastically tightened one of its rules governing short selling. Known as affirmative determination, the NASD rule stipulates that brokers and dealers engaged in a short sale transaction must make sure that shares can be delivered by settlement time, three days later. "We closed a loophole," said Steve Luparello, executive vice president of Market Regulation at NASD. Until now, non-NASD members, like specialists, option markets and foreign brokers, weren't covered under the affirmative determination rule. That means that non-NASD members didn't have to represent to the NASD broker through which they conducted a short sale order that they would be able to deliver the stock by settlement date. A short seller typically borrows stock from a broker to sell it into the market, betting that the share price will fall so that he can buy the stock back at a lower price and pocket the difference. The amended NASD affirmative determination rule, which was recently approved by the Securities and Exchange Commission, will particularly affect short sales conducted through foreign brokers, most specifically Canadian brokers which have often been used by investors to sell short the stock of small U.S. companies trading on the Over-the-counter Bulletin Board or OTCBB. Because it's often impossible to borrow the shares of companies trading on the OTCBB, investors and hedge funds looking to take negative bets on these often-overvalued development-stage companies have traditionally been trading through Canada where it's not required to borrow stock before selling it short. The practice is known as naked shorting. That trading avenue has now been effectively closed. The new NASD rule doesn't cover Canadian brokers, since most are not members of the association, instead it makes it the responsibility of U.S. brokers trading with non-members to make sure that their counterparts will be able to settle a transaction before completing a short sale. "It's part of (a broker's) supervisory responsibilities," NASD's Luparello said, adding that a non-member's previous failures to deliver should be a good indication of whether or not it will in fact be able to complete the transaction by the settlement date. Market makers engaged in bone fide market making activities will continue to be exempt from affirmative determination. Luparello said that, unlike a parallel SEC initiative to tighten short selling rules on the small-cap markets, the new NASD rules did not originate from worries over mounting failures to deliver stock into the national clearing system. But Luparello said the amended NASD rule fits nicely with the new short selling regulations now under consideration by the SEC. "I think it addresses a gap and (shows) that we, like the SEC, are looking at a variety of things in this area," Luparello said. The NASD proposal was first submitted to the SEC in November 2001, well before alleged abuses of naked shorting became the focal point of a campaign lead by some OTCBB companies in the U.S that say they have been victimized by the practice. While some investors argue that short sellers provide a needed service to the markets, others have called for the complete abolition of short selling because of the undue pressure its puts on the shares of companies. While market participants in the U.S. and abroad are well aware of the new short selling regulations being put forward by the SEC, known as Regulation SHO, most said they knew nothing of the NASD's plan before it became final. "It's taken us by surprise," said Richard Thomas, head of compliance at Canadian brokerage firm Pacific International. Although separate from it, the amended NASD rule fits tightly within the SEC's SHO which is now under review by the SEC staff after a period during which market participants were invited to comment on it. As it stands, the new SEC short selling rules will make it easier to short large-cap stocks since they would do away with the "uptick" rule, which bans short selling on a stock when the price is falling. But it when it comes to the small-cap markets, where it's often impossible to borrow stock, the impact of SHO will be the opposite, making it harder to short sale stock. The new SEC rule sets a predetermined level of so-called clearing fails - cases in which a broker or investor cannot deliver stock within two days after settlement - which will trigger a 90-day blackout whereby the customer will not be allowed to short sell that security. That 90-day exemption would affect trading of U.S. securities in and outside the U.S. The new NASD affirmative determination rule will take effect on Feb. 20.
(Carol S. Remond is one of four "In The Money" columnists who take a sophisticated look at the value of companies and their securities and explores unique trading strategies.)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074; carol.remond@dowjones.com
I just advised readers to watch for one of my hysterical rants on a new NASD rule.
Rip that rule apart, read it with care, each single sentence. Come to understand what that rule really does and upon whom it relies for enforcement.
Like almost all responses I receive from the SEC, it is a whitewash. It is a political ploy to draw attention away from corrupt and criminal Market Makers, headtraders, brokers, SEC, John Does 1 through 1,000.
In time, I will present my hysterical rant on this rule and how the big boys over on Wall Street, this includes NASD and the SEC, constantly provide new rules which only enhance and protect unlawful and unethical by the big boys of Wall Street, including the corrupt paid off SEC.
For now, who is in charge of NASD and the SEC? Those in charge, are they drawn from the American public, or are they well noted long time big boys of Wall Street with past favors to pay?
Hmm, what was the severance package pay of the recently retired SEC head crook?
Sorry. I become very agitated when discussing the big boys of Wall Street and the SEC.
They anger me. They are doing everything possible to keep all money concentrated within Wall Street. Your money, my money, they are trying to and do steal all of it they can.
They also anger me by making a presumption all private investors are clueless gits worthy only of contempt, in a Leona Helmsly fashion. Hogwash! Mule Manure!
Just thought it was some good Saturday reading.....We all know that we live in a world of manipulation that is painfully obvious...but as long as you realize that then you adjust and play the game to your advantage....I know that everytime I put my money in a stock there is somebody that has control of my interest...I do not have the home field advantage so I play accordingly. In my opinion there is the same chance you take with every stock no matter how much research you do unless you are sittimg on that board you have no control of what is to happen on Monday morning.You cannot control the big boys but if they let you play in their world then you must learn how to take advantage of it.In my world of investing there are very few bad stocks just ones that I may have paid too much for but when you buy them right and sell them right that to me is a good stock...I have no faith in any of them doing the right thing by their shareholders so I do not fall in love with any of them nor do I believe they are their for my benefit.
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Oh heck, steal my thunder anytime. Just don't touch my lightning bolts!
Yes, your posted article is good reading and all are prudent to keep up on news of this type. Many won't, so it is good of you to bring news, here. You are doing a good deed for all.
I think of the stock market as a one big "Fraud Game" which is about all it is.
Problem I have is all these new rules which are designed and aimed at harming private investors to maintain Wall Street advantage, in the deceitful name of protecting private investors.
Brokers, the SEC, Wall Street, they are all just a bunch of unethical crooks taking care of their own personal greed, at our cost.
Have a look at VASO stock. Investors lost millions on this to Market Makers. This is what happened. News is released, which is dishonest in nature, hyping up investors. Before the bell, Market Makers jack prices up to well over two bucks a share.
Bell rings, investors start buying like crazy because they think a price break out is in the makings. It isn't. Maker Markets, working together, a RICO violation, ran prices up before the bell, a time when private investors cannot trade.
At market close, prices dropped to well less than two dollars a share. Instant loss for investors. Next day or two, a bad 10Q comes out, lots of money loss.
I warned people about this over on the "Free For All" board before these events took place. Hopefully some avoided being ripped off by Wall Street.
There you are, another "rule" which gives clear advantage to brokers and to Wall Street, a rule which allows Wall Street to continue ripping people off; no trading before the morning bell for average private investors.
Who is responsible for aiding and abetting Wall Street in these crimes? The SEC.