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Featured Column: Faulking Opinions - Jul 16, 2008
- Five Years Late and a Trillion Dollars Short
by Mark Faulk
On Tuesday, the SEC issued an emergency rule in an attempt to curb naked short selling in 19 major financial institutions, including Goldman Sachs, Morgan Stanley, Citigroup, and JP Morgan Chase and Company. SEC Chairman Christopher Cox heralded the new rules: "The SEC's mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been. Today's Commission action aims to stop unlawful manipulation through 'naked' short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets."
Are you faulking kidding me? After years of efforts to bring attention to the rampant corruption in our financial system by advocates for stock market reform, now this is an emergency? Five years ago we were voices in the wildness, wild-eyed conspiracy theorists who were first ignored, and then reviled by the SEC, Congress, and the major media.
In its most fundamental form, naked short selling is simply stock counterfeiting. In legal short selling, a trader (usually from secretive and barely regulated hedge funds, whose investors were traditionally multi-millionaires) “borrows” shares of stock from shareholders of a company and then sells it, betting that the price will go down. The original concept was that short sellers would help to balance the market by preventing stocks from becoming overvalued. Instead, hedge funds have grown over the past decade at an exponential rate, with total assets of over $3 trillion and growth of nearly $500 billion last year alone. Hedge fund managers become instant millionaires, with the top five managers earning over one billion dollars each in 2007.
Rather than wait for stocks to fall based on fundamentals or evaluation, they found ways to actually manipulate the prices of stocks, using either loopholes that allowed them to sell shares without ever borrowing them, or simply relying on the SEC’s lax enforcement to get away with blatant violations of existing rules. Throw in a steady stream of often unsubstantiated rumors leaked to financial “journalists” who dutifully reported them as news, and a company’s stock could be either manipulated to unrealistic highs, or driven down to almost nothing. In many cases, companies were actually forced into bankruptcy, costing America jobs, tax revenue, and destroying... more
Featured Column:
(Mark Faulk is the author of a just-released book detailing the incredible story of CMKX. The Naked Truth: Investing in the Stock Play of a Lifetime is available at www.thenakedtruthbook.com ) |
Featured Column:
When I was first diagnosed with Multiple Sclerosis, I carefully considered my options and decided to be an idiot. I talked it over with my late wife, pondered, meditated, prayed, and then settled on the stupidest possible course of action, short of bee sting therapy. (Yes, there are people who believe that allowing bees to sting you is an effective treatment for MS. - No, I'm not kidding.) |
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Commentary - Jul 8, 2008 Exercising Ghosts by Robin Buckallew This has been quite a year for ghosts. Not ghosts of long past, that wander through hallways in buildings where they died and their soul is doomed to wander; ghosts from my past, that refuse to die, even though at times I think I’ve successfully... more |
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Global Warning - Jun 16, 2008 For the Benefit of Mr. Kite by Robin Buckallew For the last couple of years, ever since Al Gore’s movie was released, I have been witness to an endless array of dog-and-pony shows in cities and towns around the nation, each one designed to bewitch, bother, and bewilder... more |
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Investing 101 - Jul 10, 2008 From the ashes: CMKM Diamonds refuses to "just go away" by Mark Faulk Originally hyped as a diamond and gold mining company (with promises and/or rumors of uranium, zinc, platinum, and an ancient Chinese collection thrown in for effect), 50,000 CMKX shareholders were instead defrauded of over $250 million by company... more |
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Blogfest 2005 - Jun 30, 2008 This is me in fragments...enter at your own risk by Mark Faulk This morning, they delivered the first actual, physical, hold-it-my-hand copy of my book to me. It could have…should have…been one of the finest moments of my life, the culmination of years of work, of (to plummet into the abyss of tired clichés)... more |
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This guy walks into a bar and says... - Jun 25, 2008 Just Keep Your Mouth Shut by Ken Shade When I was first diagnosed with Multiple Sclerosis, I carefully considered my options and decided to be an idiot. I talked it over with my late wife, pondered, meditated, prayed, and then settled on the stupidest possible course of action, short of... more |