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Goldman divulges key naked short-selling info
By PeraclesPlease on Sun, 06/10/2012 - 3:25pm |One of Goldman's lawyers accidentally released a cache of internal documents related to their suspected illegal naked short selling along with Merrill/BoA - material that had been jealously guarded for some time. While the plaintiff, Overstock.com, has earned few friends in its pursuit of short-selling charges, the documents speak for themselves.
Whether "too big to fail" continues to mean "too big to investigate" still remains to be seen, but with the Economist, Rolling Stone, Bloomberg & NY Times waiting for this material, some media pressure may just occur. Will the DoJ notice?
URL:
http://www.rollingstone.com/politics/blogs/taibblog/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-20120515#ixzz1v0HLbfvH
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Same story from Bloomberg, less sensationalized.
Goldman, Merrill E-Mails Show Naked Shorting, Filing Says »
by EmmaZahn on Sun, 06/10/2012 - 3:53pm
Not sure how "sensationalized" - the 4 media companies have been trying to get this info for some time, and it is pretty sensational - Goldman cops to intentional naked short selling - trying to make the trades fail even, plus giving key info to big hedge funds that it doesn't give to smaller traders?
Economist: Short-selling litigation: An enlightening mistake
by PeraclesPlease on Sun, 06/10/2012 - 4:01pm
Just compare the headlines:
Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling' | Matt Taibbi | Rolling Stone
Goldman, Merrill E-Mails Show Naked Shorting, Filing Says - Bloomberg:
Short-selling litigation: An enlightening mistake | The Economist:
by EmmaZahn on Sun, 06/10/2012 - 4:30pm
Uh, I posted this piece - are *you* stalking *me*?
Bloomberg's the most conservative, & likely the closest ties to Goldman & Merrill.
by PeraclesPlease on Sun, 06/10/2012 - 4:34pm
Well, you may have noticed most people here generally ignore me which is why I asked.
by EmmaZahn on Sun, 06/10/2012 - 4:40pm
You may have noticed I'm oblivious to most people... now, about those Spider drones...
by PeraclesPlease on Sun, 06/10/2012 - 4:47pm
Yeah...the problem with these kinds of secrets is there's always somebody who is a blabber mouth.
by cmaukonen on Sun, 06/10/2012 - 4:00pm
I dunno.
I think too often of barren naked ladies, I guess.
by Richard Day on Sun, 06/10/2012 - 4:42pm
by cmaukonen on Sun, 06/10/2012 - 5:06pm
hahahahahahahahahaahahahahhza
by Richard Day on Sun, 06/10/2012 - 5:34pm
It's an interesting story and I'll be especially curious to see if the banks that admitted to aiding and abetting naked shorts are punished for it. In, ahem... Goldman's defense, though... Byrne is a zealot and the Overstock.com shorts were making legitimate investment decisions, based on Overstock's poor governance and financial performance. The company has not been the victim of a conspiracy.
by Michael Maiello on Mon, 06/11/2012 - 12:27pm
Well, no, naked short selling is not a "legitimate investment decision" as there's no investment happening, no stock that can be found to buy. It's creating a rumor and watching the hanging party.
Byrne may be a zealot, but he made a profit 2009 & 2010, and would have 2011 if he hadn't screwed up with the "o.co" domain fiasco.
Contrast this with a company like Goldman Sachs that needed billions of dollars in bailouts to survive those years. (yes, different industries, but still, who's throwing stones? why shouldn't we go short on Goldman and get to see her ride all the way to the bottom? oh yes, too big to fail).
In any case, the internal documents show Goldman wasn't making legitimate investment decisions, that they wanted the buys to fail.
I'm not sure where you get "The company has not been the victim of a conspiracy." when that's the conclusion at least 2 of the magazines drew from the mistakenly included internal memos.
There were certainly valid reasons for shorting Overstock, Byrne can be a loudmouth nutcase, and shorting with stock available is perfectly legal and logical. But that's not what this case is about
by PeraclesPlease on Mon, 06/11/2012 - 12:58pm
Programmed trading has made a nightmare of reconciling trades. I saw something a couple of weeks ago about a proposed new rule to restrict changing an open order to only once per second. Sheesh. Am I ever glad to be out of there now.
by EmmaZahn on Mon, 06/11/2012 - 1:22pm
Nevertheless, the memos showed these were overt, premeditated actions, not just the result of programmed trading.
by PeraclesPlease on Mon, 06/11/2012 - 2:24pm
What exactly do you think programmed trades are?
They are just algorithms written to enter or cancel orders if and when some market condition happens. How much more premeditated can an action be. Now how overt these were is the question.
Routinely short sales are identified as such on an order so stock can borrowed and estimated margin arranged. 'Naked' short sales are not permitted. But that is for regular traders.
Market makers in a security are permitted 'naked' shorts to maintain a an orderly market. Whether or not the market maker abused that privilege seems to be what Patrick Byrne is claiming based on the very few articles I just read on the story. They may not have. They could have been gamed as well by individuals working for them and other Street firms. There is just not enough public information available to say yet.
by EmmaZahn on Mon, 06/11/2012 - 3:19pm
by PeraclesPlease on Mon, 06/11/2012 - 4:46pm
I remember reading about this stuff going on, on Naked Capitalism a number of years ago. Totally ignored by most at the time.
by cmaukonen on Mon, 06/11/2012 - 4:49pm
Well, yes, fails have to be fixed.
If someone sells a security, it must to be delivered to the buyer. When that does not happen, the trade is said to 'fail to settle'. The seller's brokerage has to make good on it even if its customer stiffs them. That is fixing or cleaning up the fail. The customer may or may not be charged for the fix depending on its cost and their clout.
The quotes in the first paragraph are too limited, too selective to tell the whole story. 'Make 369 market makers fail' sounds awful but could just mean how to get them to agree to a fix.
I can understand the compliance people freaking out over the whole thing. They are the firms' internal police and are in a constant struggle with its power brokers and traders.
I would have to read much more to continue this discussion. I am not sure I want to.
by EmmaZahn on Mon, 06/11/2012 - 5:22pm
Reading up on it was easier than I thought it would be.
by EmmaZahn on Mon, 06/11/2012 - 5:36pm
I am taking door #3
by EmmaZahn on Mon, 06/11/2012 - 5:41pm
I'm afraid there's no actual Door #3.... but we CAN offer you a Mystery Box.
Mmmmmmmm.... A delightful and mysterious Mystery Box.
by quinn esq on Mon, 06/11/2012 - 7:36pm
Mmmmmmmm....
You aren't going to leave that by my door and set fire to it, are you?
by EmmaZahn on Mon, 06/11/2012 - 7:42pm
Still want door number 3 ?
by cmaukonen on Mon, 06/11/2012 - 9:20pm
The moose? the datsun?
by EmmaZahn on Mon, 06/11/2012 - 10:21pm
Nope....buzzzzz.....Milton Berle.
by cmaukonen on Mon, 06/11/2012 - 10:50pm
Awwww, it's a bb gun.
Très bon.
by EmmaZahn on Mon, 06/11/2012 - 10:16pm
Close
It's a new Dewalt Nail Gun
It can drive a 16-D nail through a 2x4 at 200 yards.
This makes construction a breeze, you can sit in your lawn chair and build a fence
Hundred round magazine.
NAIL GUNS! AND, you don't even have to REGISTER them or have LICENSES for them!
AND, you don't have to worry about them being CONCEALED!
by Resistance on Tue, 06/12/2012 - 12:34am
And if you can make a version that tumbles, or penetrates Kevlar....
by PeraclesPlease on Tue, 06/12/2012 - 12:42am
by jollyroger on Tue, 06/12/2012 - 1:02am
Sen. Ted Kaufmann did a number of hearings into this - unfortunately only 1 person.
Yes, of course the street will fall back on "Byrne's crazy" and other personal attacks. The fact is that Byrne brought Overstock back to profitability, so whatever you say, it wasn't that big of a dog to be attacked like that.
And he said there were lots of fails to deliver, and it was on purpose. The memos bear him out.
At this point, with its history, presumption of who's correct *in this case* should tilt towards Byrne.
But it's amazing how well the personal attacks work, despite Goldman Sachs known manipulation with TARP, toxic assets, mortgage robo-signing & theft, the Greek bailout hidden accounts, dropping favored info to its hedge fund partners....
Goldman is as much about shearing Aunt Millie as Enron was. But even on this blog, people (not just you) reflexively side with Goldman's stance first. Good PR team I suppose.
by PeraclesPlease on Tue, 06/12/2012 - 12:41am