Post by jannikki on Mar 13, 2007 19:32:53 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
When there are too many Bears in the Forest can the Campers Survive - March 13, 2007
David Patch
'I hear the sub primes are in trouble. If you want to take advantage of the trouble you should be shorting all stocks closely related to the sub prime lenders.'
That appears to be the water cooler conversations taking place on Wall Street as one by one the sector stocks are collapsing. Novastar (NFI) began the slide but was quickly overtaken by such lenders as New Century (NEW), Fremont General (FMT), and Accredited Home Lending (LEND).
The first real business casualty, beyond tumbling securities valuations is New Century who on Tuesday was delisted from the New York Stock Exchange amidst concerns of bankruptcy and investigations of fraud by the SEC and US Attorney's office. Oh to be on the inside track to such a collapse.
But who is to say that people, or particular investment vehicles, were not on that inside track, something federal authorities are considering as part of the investigation into NEW was trading irregularities they apparently saw in the market.
Consider for a second that leading into each of the major collapses, all but Fremont General was listed on the SEC's Regulation SHO threshold list publication as having excessive settlement failures in the market. NFI has been longstanding participant frequenting the list for nearly 90% of the total time since the list was first published in January 2005. The other securities have been more opportunistic admissions to the list.
NEW first became a threshold security on March 8, 2007. Factoring in for normal trade settlement periods and for the 5-day waiting period before first being published on a threshold security list, the last trading day that put NEW into the qualification phase would have been February 26, 2007. The stock, at that time was trading at $15 - $16.00/share and was only days from making the public announcement that a federal investigation was underway in the company, News of that investigation taking $10.00 off the stock. What a financial opportunity for those sellers.
Or how about LEND who, as happenstance would have it, was listed on the NASD's threshold publication just one day after NEW was listed on the NYSE's version of the endangered shares listing. LEND was trading at $22.00/share at the time of the trades that resulted in the excess fails and is now trading at $4.57 at the time of this writing.
For the long shareholders of LEND there was help getting this beast down as on March 7 Jim Cramer was chronicling on his blog that rumors were planted into the market that the executive offices of LEND were raided by the FBI. Cramer identified these rumors as "planted lies" but the news still generated nearly seven times the normal trading volume as the bears took a quick $3.00/share out of the stock before buying back some on profits.
As coincidence would have it, this was the very same day in which the fails generated only 3-days prior would qualify the stock for SHO. March 7 was cover day on the fails. Or at least cover some of the fails and it just so happened false rumors knocked the stock down 20% to make those covers more profitable.
These bear investors have to be the luckiest investors on earth. Even when they run out of enough food to satisfy their appetites (legal shares to trade) they still seem capable of satisfying their hunger anyway (selling what does not exist). These bears even find the desert cart hidden away (well timed lies to help raid the market).
This pattern of divergence between stock level declines and settlement failure increases is certainly not new to our markets. In fact it is as regular as the sun shining in southern Florida and has only become exposed as the regulation SHO short selling reform created the failure transparency of the threshold security list. Last September for example Bloomberg columnist Bob Drummond documented three such cases where apparent "bear raids" coincided with the sudden increase in settlement failures and the sudden position of the firms on to the regulation SHO list.
In addition to Drummonds article, I had gone on CNBC in 2005 and predicted that Refco would be falling on the threshold security list as the stock plummeted from near $30.00 to $1.00 in a matter of a weeks worth of trading days. I was not to be disappointed and the evidence later gathered under a FOIA request planted the initiation of such fails squarely on the start of the raid.
And like the sub prime sector now under attack, so our Airline markets have been since 9/11. Those who observe the threshold list publications will make note that UAL Corp, US Air, Northwest, Delta Airlines, Midway, and Continental have all spent considerable time on the threshold security list. In fact, Delta is being asked to pay rent they have persisted for so long. UAL, after living there as well, apparently stopped paying the rent and was summarily evicted for non-payment.
For the airlines, from terrorist attacks that drove passengers away to bad weather conditions to increases in fuel prices a negative event was all it would take to bring the bears to camp and the settlement failures that generally accompanied them.
With this transparency we now have, the threshold security list, we can only surmise what was transpiring back in 1999 - 2001 when the markets were crashing. Would this list be magnitudes larger than it is today and would the high tech stocks we witnessed collapsing 30%, 40%, or 50% on any given day be suddenly showing up on a list 7 - 8 days later if the threshold system was in place during that window of time?
Regulators should be concerned that a market with too many bears is an unstable market creating excessive levels of victims. Treasury Secretary Hank Paulson and corporate executives are today (literally) looking for ways to reduce regulations and investor lawsuits to firm up the US capital markets. Hank and his team must understand that it is difficult to reduce lawsuits when the levels of victims are oversized due to the excessive sale of securities that do not presently exist in the markets.
Dear Chairman Cox, to save the camper the bears must be held in check despite the commission's opinion otherwise.
For more on this issue please visit the Host site at www.investigatethesec.com
Copyright 2007 (posted with permission)
An online newspaper reporting the issues of Securities Fraud
When there are too many Bears in the Forest can the Campers Survive - March 13, 2007
David Patch
'I hear the sub primes are in trouble. If you want to take advantage of the trouble you should be shorting all stocks closely related to the sub prime lenders.'
That appears to be the water cooler conversations taking place on Wall Street as one by one the sector stocks are collapsing. Novastar (NFI) began the slide but was quickly overtaken by such lenders as New Century (NEW), Fremont General (FMT), and Accredited Home Lending (LEND).
The first real business casualty, beyond tumbling securities valuations is New Century who on Tuesday was delisted from the New York Stock Exchange amidst concerns of bankruptcy and investigations of fraud by the SEC and US Attorney's office. Oh to be on the inside track to such a collapse.
But who is to say that people, or particular investment vehicles, were not on that inside track, something federal authorities are considering as part of the investigation into NEW was trading irregularities they apparently saw in the market.
Consider for a second that leading into each of the major collapses, all but Fremont General was listed on the SEC's Regulation SHO threshold list publication as having excessive settlement failures in the market. NFI has been longstanding participant frequenting the list for nearly 90% of the total time since the list was first published in January 2005. The other securities have been more opportunistic admissions to the list.
NEW first became a threshold security on March 8, 2007. Factoring in for normal trade settlement periods and for the 5-day waiting period before first being published on a threshold security list, the last trading day that put NEW into the qualification phase would have been February 26, 2007. The stock, at that time was trading at $15 - $16.00/share and was only days from making the public announcement that a federal investigation was underway in the company, News of that investigation taking $10.00 off the stock. What a financial opportunity for those sellers.
Or how about LEND who, as happenstance would have it, was listed on the NASD's threshold publication just one day after NEW was listed on the NYSE's version of the endangered shares listing. LEND was trading at $22.00/share at the time of the trades that resulted in the excess fails and is now trading at $4.57 at the time of this writing.
For the long shareholders of LEND there was help getting this beast down as on March 7 Jim Cramer was chronicling on his blog that rumors were planted into the market that the executive offices of LEND were raided by the FBI. Cramer identified these rumors as "planted lies" but the news still generated nearly seven times the normal trading volume as the bears took a quick $3.00/share out of the stock before buying back some on profits.
As coincidence would have it, this was the very same day in which the fails generated only 3-days prior would qualify the stock for SHO. March 7 was cover day on the fails. Or at least cover some of the fails and it just so happened false rumors knocked the stock down 20% to make those covers more profitable.
These bear investors have to be the luckiest investors on earth. Even when they run out of enough food to satisfy their appetites (legal shares to trade) they still seem capable of satisfying their hunger anyway (selling what does not exist). These bears even find the desert cart hidden away (well timed lies to help raid the market).
This pattern of divergence between stock level declines and settlement failure increases is certainly not new to our markets. In fact it is as regular as the sun shining in southern Florida and has only become exposed as the regulation SHO short selling reform created the failure transparency of the threshold security list. Last September for example Bloomberg columnist Bob Drummond documented three such cases where apparent "bear raids" coincided with the sudden increase in settlement failures and the sudden position of the firms on to the regulation SHO list.
In addition to Drummonds article, I had gone on CNBC in 2005 and predicted that Refco would be falling on the threshold security list as the stock plummeted from near $30.00 to $1.00 in a matter of a weeks worth of trading days. I was not to be disappointed and the evidence later gathered under a FOIA request planted the initiation of such fails squarely on the start of the raid.
And like the sub prime sector now under attack, so our Airline markets have been since 9/11. Those who observe the threshold list publications will make note that UAL Corp, US Air, Northwest, Delta Airlines, Midway, and Continental have all spent considerable time on the threshold security list. In fact, Delta is being asked to pay rent they have persisted for so long. UAL, after living there as well, apparently stopped paying the rent and was summarily evicted for non-payment.
For the airlines, from terrorist attacks that drove passengers away to bad weather conditions to increases in fuel prices a negative event was all it would take to bring the bears to camp and the settlement failures that generally accompanied them.
With this transparency we now have, the threshold security list, we can only surmise what was transpiring back in 1999 - 2001 when the markets were crashing. Would this list be magnitudes larger than it is today and would the high tech stocks we witnessed collapsing 30%, 40%, or 50% on any given day be suddenly showing up on a list 7 - 8 days later if the threshold system was in place during that window of time?
Regulators should be concerned that a market with too many bears is an unstable market creating excessive levels of victims. Treasury Secretary Hank Paulson and corporate executives are today (literally) looking for ways to reduce regulations and investor lawsuits to firm up the US capital markets. Hank and his team must understand that it is difficult to reduce lawsuits when the levels of victims are oversized due to the excessive sale of securities that do not presently exist in the markets.
Dear Chairman Cox, to save the camper the bears must be held in check despite the commission's opinion otherwise.
For more on this issue please visit the Host site at www.investigatethesec.com
Copyright 2007 (posted with permission)