Bare truth about naked shorting

A letter from Mary Helburn, USA

Dear JUST Response and Joel Hirschhorn,

Re: Economic corruption US style

Wall Street depends on volatility, and volatility is a function of news. Reuters owns Instinet. We should be able to invest in a company without worrying that its capitalization is going to be withdrawn by short-sellers. We should be able to invest in a company without worrying about the DTCC watering down our investment with counterfeit shares. Bob O'Brien is a real person. I admire him so much for what he is doing and because of him I was willing to put my real name on this.

The rules have changed to suit the foxes. This one is the most subtle and lies at the heart of the fraud. A broker hires someone to locate a share to borrow. This gives him "reasonable expectation of delivery". When the shares are not located and becomes an FTD, the system kicks in and the DTCC prints up a new counterfeit shares borrowed from the pool they control. Wham, bam, thank you, Mam! He  games the system by transferring the legitimate responsiblity to someone who is in place simply to help execute the fraud. The DTCC has committed fraud by lending shares rather than having the broker buy-in the open market as the law requires. We have a sell-side bias then that allows the price to be manipulated down.

I think George Bush earnestly believes in this privatization and I also believe that Charles Schwab is behind it. Schwab was behind the tax cuts and consults with the President.

The whole system is pretty complex. People's eyes glaze over when you start talking about naked shorting. Two per cent doesn't sound like much to start, but it is a huge amount to be administered by the banks and brokers. It is 2% more than the banks and brokers currently have. They are fighting for market share with decreased commissions and that is why the market is becoming so nasty. There are going to be take-overs. The NYSE will probably go public and be owned by the seats. It will eliminate the specialists and compete in the pre/after hours.

I would like to ax everyone at the SEC since they have failed. I would like a prosecutor-type to come in with a scythe and cut off heads. In Japan, this kind of failure would call for suicide. Is there anyone that has the integrity to pull this off?

Your article was so good and so deep! Thank you.

Thanks again for taking a lead role in exposing a huge and important issue.

Mary Helburn

Executive Director

National Coalition Against Shorting

Cleveland, Ohio - USA

Note: This letter was published by JUST Response on February 27 2005.

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