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Faulking Opinions - Nov 14, 2005 - Printable Version
- A "Viral" Email To Distribute About Stock Counterfeiting
by Bob O'Brien
I have been asked to create a "viral" email which can be used to raise awareness of the Naked Short Selling/Fail To Deliver crisis. A poster on the NFI message boards created a good model. I have taken the spirit of his email and used it to create my own. The art is in offering enough information to be credible and provide a basis for concern, but not overwhelm the reader. Hopefully I have struck the right balance. After reading some comments, I've created two revs - the short version and the longer version. Please send this to every person you know, and ask them to do the same: Short Version:
Please immediately forward this email to everyone you know.
As you may have seen in this week's Time Magazine, Wall Street has been ripping off investors by selling them counterfeit shares of stock - and I'm mad as hell that it's been kept secret until now, and that the average shareholder has never heard of the practice.
Here's a link to Time's expose:
http://www.time.com/time/insidebiz/article/0,9171,1126706,00.html
You and I are being robbed daily by a well coordinated fraud, perpetrated by hedge funds and brokers, called naked short selling, or "failing to deliver". It's stolen hundreds of billions from investors, and is Wall Street's biggest dirty secret.
It's important that you forward this email NOW, so that we can get the word out, as much of the financial press won't cover this story. You can learn more at:
http://www.ncans.net
http://www.faulkingtruth.com/
http://www.buyins.net/stockgate10-27-05.pdf
http://www.unm.edu/~boni/RPAWP/FailsPaperJun25.pdf
http://bobosrevenge.blogspot.com
http://www.Investigatethesec.com
And the long version:
This week, Time Magazine ran an expose on a practice that I am very concerned about, which represents the theft of hundreds of billions of dollars of America's savings and retirement dollars by unscrupulous Wall Street operators. To view this landmark article, enter the following URL into your browser:
http://www.time.com/time/insidebiz/article/0,9171,1126706,00.html
The practice, known as Naked Short Selling, or Failing to Deliver, occurs when brokers process trades for sellers, who subsequently fail to deliver the stock they sold. Because of the way Wall Street compensates itself, all involved gets paid before any stock is delivered - leaving actual delivery of the goods as an afterthought, and the buyer holding a brokerage statement that is a fiction - oftentimes it represents IOUs for shares, rather than the genuine article.
In any other business this is called fraud.
On Wall Street it is business as usual.
Obviously, if you can sell as many shares as you like without having to deliver them, you can drive stock prices down in targeted companies, reaping huge profits on short sales.
A legal short sale occurs when a short seller borrows a share before he makes the sale transaction, delivering to the new buyer the share he borrowed - the short seller hopes to buy it back in the market at a lower price in the future, when he returns it to the lender, with his profit being the difference between the sale price and the later purchase price - sell high, buy low - a legal bet on a price decline.
A naked short sale is identical in that the short seller hopes to profit from the price decline, only he never bothers to borrow or deliver the stock - his broker just Fails to Deliver, and the buyer's broker accepts an IOU without ever telling the buyer. The naked short seller's profit comes when he has run the stock into the ground, and he buys shares for pennies and finally delivers, months or years later. This practice has the effect of creating counterfeit shares of stock (by allowing the IOU/markers to trade like genuine stock), which results in an unlimited supply of shares, inevitably depressing prices (fixed demand meets unlimited selling = price drop, and eventually disgusted investors will sell and move on).
There have been laws against Naked Short Selling/Failing To Deliver since 1934, when the SEC was formed. The reason it is rampant now is that the SEC has not enforced rules barring the practice, which creates a dangerous situation for investors, as well as for victimized companies. Billions of transactions have been processed, depressing the prices of hundreds of companies, and no shares have been delivered to the investors who bought the "stock". Investors like me, and like you, who naively believe we got what we paid for.
There is no way of knowing whether the shares you think you own, that are represented as yours on your brokerage statement, are genuine and have been delivered, or are IOUs, falsely represented to you as being real. You are left having to take your broker's word for it.
The same broker who may be misrepresenting the shares as being in your account in the first place.
Naked short selling represents the single largest threat to the American financial system in our lifetime - bigger than the S&L crisis, bigger than the mutual fund or analyst scandals. Until recently, the financial press has ignored it, hoping that the average investor will remain ignorant of the scope of the problem. Wall Street and the financial press have a lot to lose by the average person understanding this deliberate fraud - a public demand for justice could upset Wall Street's very lucrative apple cart, and that could cost the big players much of the money they have stolen from investors using this fraudulent practice over the last decade. The SEC refuses to divulge the total size of the problem, and won't disuss the number of failed deliveries - the information is a closely held secret, which should alarm even the most cynical observer.
I am writing this email to request that you do several simple, effective things:
First, read the referenced Time Magazine article - this is not some crackpot notion or conspiracy theory, it is very, very real.
Second, go to:
http://www.ncans.net/intro%20to%20naked%20short%20selling.htm
Read the primer there, which offers a good overview of the crisis
Third, please send a copy of this message to every person you know, and encourage them to spread the word about this damaging and illegal practice.
As Naked Short Selling/Failure to Deliver becomes better understood by the investing public, Wall Street and Washington will have a difficult time pretending that it doesn't exist, or isn't a big problem. My goal in sending this message to you is one of attempting to educate as many people as I can to an insidious threat that could well result in another 1929-level crash, and ensuing meltdown. The only thing standing between that catastrophic scenario and our retirement savings is you and I, and our ability to interest others in understanding what is being perpetrated on our nation by a thin sliver of New York, with assistance from co-opted politicians, and compromised regulators in Washington.
I have not worked my entire life to watch it all disappear into the pockets of Wall Street, nor to watch our children's' futures jeopardized by the greed and larceny of a financial system run amok. Knowledge is power, and if enough people understand the extent of the problem, the outcry will force a solution before it is too late.
Once you have read the Time article and NCANS Primer, here are some suggestions as to what you can do:
1) Educate yourself. Take a look at the list of links below and browse at your leisure. If you should become as concerned as I am, then;
2) Educate others. Send this email to friends, contacts who you think might become interested or have a reason to care.
3) Turn up the heat. Complain to those in charge of keeping the system honest: Follow some of the links below for lists of regulators, legislators, and agencies.
4) Donate to, or volunteer for those fighting this fight on your behalf.
www.ncans.net
www.faulkingtruth.com/
www.buyins.net/stockgate10-27-05.pdf
www.unm.edu/~boni/RPAWP/FailsPaperJun25.pdf
http://bobosrevenge.blogspot.com
www.Investigatethesec.com
Please take the few minutes to replicate this email and send it to everyone you know. The Web creates phenomenal power to inform and to communicate - this is your chance to use it for positive change.
Thank you for your time, and please, distribute this to your email list. Individuals can make a difference. You can make a difference.
Please do.
Editor's note. Thanks to Bob O'Brien at http://bobosrevenge.blogspot.com/ for putting this together. I would like to ask everyone....EVERYONE....to begin by sending this, or something in your own words, to Senator Richard Shelby, who sold us down the river when he cancelled a pending Senate Banking Subcommittee hearing on naked short selling and stock counterfeiting.
Call Senator Shelby at (202) 224-5744, or email him at senator@shelby.senate.gov
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