Libertà è anche muoversi sul mercato globale senza lasciarsi irretire dai trucchi delle vendite
illegali allo scoperto e dalla manipolazione delle azioni. Ecco un manuale per districarsi fra i segreti del mondo azionario e uscirne vivi. Con una raccomandazione: in presenza di una situazione non chiara, non lasciarsi guidare dall’emozione, considerare ogni aspetto con calma e regolarsi di conseguenza
di Mikko Myyryläinen
WALL STREET’S HIDDEN SECRETS:
ILLEGAL NAKED SHORTING AND STOCK MANIPULATION
What we don’t talk, what we don’t see, it does not mean it is not out there. The same goes for hidden
secrects of Wall Street. The decisions are made behind closed doors and usually the only thing
people see is the stockprice going down. We talk about ’market forces’, supply and demand,
bid and ask (spread); but not at all about illegal naked shorting and stockmarket manipulation.
Usually the problem related to this type of action is that the real sufferers are normal
people and unfortunately usually ’those who just bought in’— the normal guys not using
complicated algorithms and with least connections, least access to insider information, least of money
and least of everything.Why should they win with least of everything? How and most importantly
why is illegal naked shorting and stockmarket manipulation even possible?
Let us then introduce the main caracters of thisgame: Hedge funds, the primebrokers and
the Depository Trust Clearing Corp which we for the rest of the article call the DTCC.
Hedge Funds are unregulate dinvestment pools, mainly targeted for rich investors and
some big Institutional Investors; Prime Brokers are big stockbrokers who clear their
own transactions and move transacted shares between (and back and forth to) their customers directly
or with the help of DTC (small brokers will do this via so called
’clearing house’, ’cleaner’or more officially broker’s broker); DTCC is a privately held company owned
by the prime brokers and it clears transactions – and holds the majority of stock in this particular country –
through its subsidiaries including National Securities Clearing Corporation (NSCC) and Fixed Income
Clearing Corporation (FICC) where as DTCC Settlement and Asset Services are offered through its other
subsidiary including the Depository Trust Company (DTC). Short Selling means selling a stock (that seller does not own)
in a way to make a profit while the stockprice declines and where the situation is just the opposite
if the stock price rises. Naked Shorting is a (highly organized) system to create counterfeit shares,
or in other words a system where ’artificiallycreated’ shares that temporarily increase the number issued
by the company and have the power to manipulate the shareprice. Those artificially created shares affect sales volume
and manipulate the stockprice. Naked shorting disrupts effective markets
to become lesse ffective. Naked vshorting is illegal, but it is hard to prove as it is highly organized.
”NAKED SHORTING ARTIFICIALLY INCREASES THE NUMBER OF SHARES ISSUED BY THE COMPANY AND DISTORTS SALES VOLUMES, AFFECTS BID AND ASK AND AS A RESULT OF THAT THE STOCK PRICE. NAKED SHORTING DISRUPTS EFFECTIVE MARKET TO BECOME LESS EFFECTIVE.”
The players who by using the same methods are able to make unjustifiable profits
while the ordinary investor suffers, at least if one looks at the stockmarket from
the Zero Sum Game’s perspective: System where each participant’sloss (or gain) of utility is exactly
balanced by the gains (or losses) of the utility of the other participant(s). If the total gains
of the participants are added up and the total losses are subtracted, they will
sum up to zero. From this perspective one winner equals to one loser. In this case the winners are
the Hedge Funds, the Prime Brokers and the Depository Trust Clearing Corp (DTCC), with most
of everything; where as the losers are usually ordinary individual investors with least of everything.
So, if markets are far from perfect, how can ordinary individual investors
succeed to make any profit other wise than by beginners luck? That is the question especially
with illegal naked shorting and stock manipulation. The more systematic the ’scam’ is
the harder it is for ordinary individual investor to make any profit. It is simply much easier to make
money by manipulating companies down than building a successful business concepts
and compeating against other business concepts. While stock manipulation is illegal
the problem in detecting this kind of fraud is that because shorts hide their true identity by hiding behind primebrokers and/or high bank secrecy countries and the money is circled through tax heavens
and offshore bank accounts back to its ultimate destination.
Players in the naked shorting fraud make naked shorts invisible to the system by preventing
any fails-to-deliver stocks to lender from occuring. This means naked shorting also stays invisible
in the eyes of SEC because fails-to-deliver number is the only thing SEC tracks. The thing is that it does
happen, because the well organized system protects each player from ’daylight’. Each settlement
resets the figurative timer again by preventing naked positions from becoming fail-to-deliver
to SHO threshold list, in other words, publicly available info. So in the eye of ’public’ market forces
have just been doing their ’tricks’ and ordinary individual investor has probably lost his /her money
by selling at loss for fearing the price to drop even more. The deeper ordinary investors think
theyare in the game and the more frequently they trade, the less they actually see
and the less they actually follow their own investment strategy, but rather play in the bigger players corner
and with their rules.
Best way is to take a stepback, calm down situation and look
again. What do you see now? Do you see market forces or your selfstanding in the middle of bigger
game that may also involve your shares without you knowing it? What naked shorting
and illegal market manipulation really do, it transforms effective markets
into less effective. It manipulates shareprice into the wanted direction.
”LOOK MORE CLOSELY, BUT FROM DISTANT ENOUGH, THE CLOSER YOU THINK YOU ARE THE LESS YOU SEE: THE DEEPER NORMAL INVESTORS THINK THEY ARE IN THE GAME AND THE MORE FREQUENTLY THEY TRADE, THE LESS THEY ACTUALLY SEE AND THE LESS THEY ACTUALLY FOLLOW THEIR OWN STRATEGY, BUT RATHER PLAY IN THE BIGGER PLAYERS’ CORNER AND WITH THEIR RULES.”
What we don’t talk, what we don’t see, it doe snot mean it is not out there… we simply cannot see it because we may lose the control of our own game and stop following our strategy. That is when we lose. It is all about psychology, at least most of the time.What we don’t see we don’t easilly want to believe in, we want to believe in the most logical looking explanation…but is that oure xplanation or part of someone else’s strategy? Is it us who really control the game? Winners follow their own strategy, losers follow those of others’. The only way to beat the market is to think outside the box, look things distant enough in order to see the big picture
and most importantly ’what is my role in that game: to be the hunte ror the prey?’ and ’Is my current role
in accordance with the selected investment strategy?’
Mikko Myyryläinen
Sources of inspiration:
http://www.dtcc.com/~/media/Files/Downloads/About/DTCC_Capabilities.pdf
http://counterfeitingstock.com/CounterfeitingStock.html
