Investing 101 - May 10, 2007 - Printable Version
- The SEC Official Party Line to Stock Market Fraud
by Mark Faulk Over the past three plus years since I started covering the issue of stock market fraud, I’ve watched as the SEC and their media minions have covered for Wall Street by spinning the issue to fit their own agenda, and in response to the latest evidence of serious problems in our financial markets. Sometimes it’s hard to know which excuse is the Official Party Line for the month, which, as you can imagine, causes some confusion amongst the troops whose job it is to twist the truth to fit the crime. So, just for the fun of it, I’ve put together this handy numbered list of Official Party Lines, along with the time periods when they first gained popularity. Obviously, this list isn’t all-inclusive, so feel free to add your own favs to the bottom.
1. Naked short selling doesn't exist, and anyone who says it does is a tin-foil hat conspiracy nut (from the beginning of recorded time up until around mid-2004)
2. Naked short selling exists, but it’s not pervasive enough to be a problem. Besides, most of those companies suck, and they deserve it anyway. (mid-2004 until the end of 2004)
3. Naked short selling exists, but we're taking care of the problem with Reg SHO. (pre-Reg SHO until shortly after implementation)
along with:
3A. Naked short selling is so widespread that unless we grandfather in prior fraud, it could collapse the entire stock market or at the very least, as the SEC states on their own website create “volatility where there were large pre-existing open positions.” (Dec. 2004 through early 2005)
4. Reg SHO isn't working, but the hedge funds don't want us to regulate them. We TRIED to regulate them, but they have lots of lawyers with big guns, and we only have slingshots. (March 2005 - mid 2005)
5. Naked short selling (and hedge funds) is a problem, but we can't seem to do anything, but Congress will deal with it. (mid 2005 - 2006)
6. Congress isn't doing anything, but we think that the SEC can handle it, because they promised to really do something to fix it this time. No seriously, trust us. (mid 2006)
7. Okay, so the SEC STILL isn't doing anything, but maybe the states can legislate it. (mid to late 2006)
8. The states can't do anything....because the Securities Industry keeps threatening to sue them. I mean, we’re TRYING, really we are, but they’ve just too damn strong, and now, they have all the money too. (2007)
9. Now....Sure it's a problem (just ask Jim Cramer), but we're taking care of it with out new secret weapon....TADA!!!! Reg SHO....with the grandfather clause (maybe) eliminated. And we’re not regulating the hedge funds, because they’ve promised to be good boys and regulate themselves. Trust us (again).
10. With reporter Gary Weiss’s latest tirades (“reporter” Gary Weiss…whew, sometimes I crack myself up), it seems we’ve come full-circle right back to #1, with a dash of #2 added for good measure: Naked short selling doesn't exist, and anyone who says it does is a tin-foil hat conspiracy nut, but if it did exist…I’m not saying it does…but IF it did exist…those companies suck anyway, so they deserve it.
So there you have it. I would recommend that this list be placed on the walls of every reporter that covers the stock market (there’s that word again…”reporter”…man, this is killing me), and on the walls of every office in the SEC and in Congress, and at all the hedge funds, brokerages, banks…and it wouldn’t hurt to plaster it on every pole up and down Wall Street while you’re at it. That way, when the Official Party Line changes, a simple and hard to trace text message or email could coordinate the entire shift in paradigm:
*9*
*9*
*9*
(Dammit! Will someone tell Weiss to turn his cell phone on or check his email? He still thinks we’re doing the 1-2 Combo.)
And that is the one and only Faulking Truth.
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Investing 101 Archives:
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