Baltbear on Finance markets are like marshmallows

Over and over, most recently from matt taiibi in rolling stone, and from countless others on internet stock boards, there is a resurgence of the fiction of “illegal naked shorting.”
First off, things regarding the mkts are regulated by the sec, which is a division of the federal reserve, which occasionally thru its chair reports to congress, which passes laws.
but, until e-bay starts reworking the constitution, (after meg whitman goes from california governor to ceo of usa inc,) and a constitutional convention is done through google buzz, “legal” and “illegal” have nothing to do with shorting of any kind. “scummy” “duplicitous” “screwing with walres law with the logical result”…yes. and? “well it oughta be” and other forms of jousting at windmills have but one answer: “go buy your own congressmen and get ‘er done.”
in addition, exchanges pass rules concerning their members and traffic that may be tighter than the actual regulations set by the sec.

example? sally is a secretary for greengobble partners, which is busy doing a long slow take under (at shareholder expense… ok..that’s so “well, duh” it shouldn’t be stated) of buymetimesickles, inc. while running the copyer, she notices that buymetime is putting out an 8k, restating the 4th quarter of 09, as if the 4th 1/4 was a  a separate event from the 4th 1/4 discussed in a 10k filed 3 weeks earlier, and announcing 1st 1/4 results for 2010 19 days before the 1/4 is over–unless buymetime has changed its calendar–which of course it has done before. further, the 8k states that a previously announced discount on warrant execution hasn’t really, well, yaknow…happened. cuase somebody “forgot” or something, to register it, after filing an 8k stating it was a done deal, cause buymetime wants to siphon corporate funds into an inhouse shell corp, one of 2 it has created.
sally tells this to bob, the limo driver for larry the lion. bob mentions it to larry while on the way to a brothel on the upper east side run by a dutch immigrant, who will later call her broker and tell him to short the puppy if it spikes. oddly, the open will have a 10% upsurge, 5 - 5 1/2, possibly because greengerbils llc on lasalle st in chicago (run by the son of greengobbles sr partner) is doing a placement to his private clients of some buymetime treasury stock issued in april, and approved by the shareholders in october. since the chart shows 5 1/2 as the shorts’ reasonable nibbling point, and any kind of f/a shows a reasonable price <2, and hitting 5 1/2 and covering 5ish is an easy 3/8 - 1/2 in less than a month, thereby yeilding >100% apr, being troubled with a “locate” is not really an issue. especially if the clearing house also is the owner of a million or so wts.
insider trading? yup. becuase sally has a “fiduciary duty” not to mention this to bob until the “press release” stating that the 8k will be filed some time later is “issued” by having somebody at buymetime inc, hit the internet for “free press releases” and place a few.
illegal? if it could evvver be hunted down (and fans of spiro agnew or raymond donovan will recall that it can be hunted down) there’s a 50/50 chance someby will call it illegal to keep the profit, if it came from using tax payers money (as fans of spiro agnew and raymond donovan will recall). if >sally< traded it, her action is a violation of sec rules. if she >lied< about it, that’s a felony (as fans of martha stuart will recall).
now, if somebody at phonypressrelease’r'us.com has a  server side script set (based on past results) such that whenever buymetime, inc opens their account to prime the pump his skype account starts dialling his broker in frankfort, then you would have an exchange violation on nasdaq. (on amex, it probably gets u offered a job as a floor runner.)     however, by sec rules, it’s >not< insider trading.
“regulations” do not make things  legal or illegal…. the idea of “illegal naked shorting” is a head game played by stock promoters.
was i referring to any given “real” ticker in the above examples? regular visitors to this corner will hear the bell ringing.

a day or 2 ago a number of distressed financial stocks rallyed hard on the rumour—which the sec promptly denied, but nobody cared—that there was gonnna be a rule stopping all this blahblahblah…
i often find it uttterly amasing and laffable that people won’t bet $5 on a rugby game becuase they don’t know the rules, teams, etc…but will bet their family’s wealth on a sport where they are equallly ignorant of the rules, teams, players, etc…for no other reason than when the players suit up they are wearing uniforms by allen flusser.
i am occasionallly totallly non-plussed when a matt taibbi (who can explain a default credit swap) pretends to not know what a “put” is, or tries to argue that gs’ effort to bail out housing with trading profits from oil, and bail out the fed res’ ability to bail out banks by buying notes that are so derivative as to be intangibles is seen as some “evil plot”.
i am occasionally totally disgruntled when stock board posters, hypers, bucket shops, and the running dogs of the greengobble partners of this world tell people to keep buying becuase all the chicanery is “going to be investigated any day now.”
that will of course happen the day after they start serving high tea on the playing field whenever a rugby player hits the dirt.

Posted under business

The prudent speculator will generally listen to what management states as goals.
Somwhere in the s3 there will be something about “we intend to make widgets. there are already widgets out there, and so we may not succeed. we expect to succeed because we have a new way to make widgets.”

Under sec law, random people may attempt to raise a $million under a 504, which functionally only needs to state the goals of raising a mil for some purpose to be later identified.

Generally, people become medical doctors to practice medicine, and people get nasdaq licenses in order to move stock on the nasdaq.

Interestingly enough, as part of the cloning/stemcell/corpsicle, infuse groundgog genes into the brain thinking of the collateral group around dr west of biotime, there is another hybrid:

:”One of the main goals this year for West is to get BioTime traded on either the American or Nasdaq stock exchange.”

http://www.insidebayarea.com/business/ci_12211685

The prudent speculator might think the main goals of a deeply in the hole biotec would be to develop product and revenue stream. That’s one of those antique ben graham ideas that the modern trader knows to avoid. the goal of a development stage biotech is to sell stock, even if it’s been a development stage company for 17 years; actually, especially then.

The prudent speculator might think that a ceo who doesn’t clarify for the press that a “purchase” of shares recorded in a 14d was actually the registration of shares granted as a penalty for failure to meet loan covenants, and as a result as at a basis of 0.

The prudent speculator might think that when the ceo, dr. west, states that
“We’re optimistic that we’re going to be handsomely profitable in a short while,” and is talking about a company that was required to tell the sec in a 10k that if it didn’t refinance debt and obtain further on april 15, it would not be able to continue operations, and told the sec in an 8k on april 17th that its net credit lines had not fundamentally changed, and had had to issue free stock as a penalty, that the “handsome profits” come from selling stock, not from doing biotech product development, especially if said cmpany had once before had a board member (ron barkin, former attorney) publicly state earnings estimates based on a mix if sheer fantasy (instant full market acceptance for off label use) that would be priced in violation of fda guidelines concerning pricing equivalent product.
barkin was gone shortly after that.
how much longer will dr. west and his secrets of immortiality be hanging aorund alameda?

Posted under business