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Mary Schapiro, Clueless and Pointless at the SEC

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April 08, 2009 – Comments (14)

With all the real problems the SEC has failed to stop, it's concentrating on window-dressing once again. Short selling restrictions? That's what they think the trouble is? Short selling?

Morons.

Mary Schapiro is clearly on the way to failure. Obama should have considered going outside the finance world's corrupt, self-regulatory network when making his pick for market reform.

14 Comments – Post Your Own

#1) On April 08, 2009 at 11:05 AM, outoffocus (23.09) wrote:

Your name should be TMFBlunt. Just kidding. I see what you're saying though.

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#2) On April 08, 2009 at 12:09 PM, camistocks (< 20) wrote:

You are talking about the SEC led by Cristopher Cox, who is a Republican. He was one of the worst heads of the SEC, but hey, he was loyal to the former president. It was under his rule that the banks were allowed to leverage their assets by 30:1 instead of 12:1. And he abolished the uptick rule which led to extreme volatility.

I fully support the reintroduction of the uptick rule! Schapiro rules! The main reason: it will bring back stability and confidence. Nobody who is serious will be against it! Think about pension funds etc.

Note: I am an investor and not a trader or short seller.

And even George Soros, who is an infamous short seller himself, supports it. Qouting from your article:

"Billionaire investor George Soros said on Monday that he favored a reintroduction of some kind of rule to restrict short selling. "You do need to provide some protection against effectively the bear raids," Soros told Reuters Financial Television in an interview."

So, bring back the uptick rule and even more! After all the stock market is not supposed to be a casino. And I think I will have to write a blog on this subject...

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#3) On April 08, 2009 at 1:02 PM, TMFBent (99.81) wrote:

I fully support the reintroduction of the uptick rule! Schapiro rules! The main reason: it will bring back stability and confidence. Nobody who is serious will be against it! Think about pension funds etc.

Please. They already tried restricting short sales -- remember how well that went? It brought neither stability nor confidence. The big banks went under while short sale restrictions were on. There's no evidence whatsoever that restricting short selling helps the markets. On the contrary, there's evidence it's hurt them.

What it does do is placate people who don't understand why price discovery is important, and who think shorting is somehow unamerican.

Short-selling has been the go-to bogeyman during every major economic meltdown, because its an easy target for policy makers and a public that would prefer to find easy scapegoats rather than face the hard facts.

Sj

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#4) On April 08, 2009 at 1:30 PM, excaliburmini (< 20) wrote:

 

I also fully support the uptick rule...I was on mad money once, and had the opportunity to thank Mr. Cramer for his support of reintroducing the uptick rule. I look forward to your blog camistocks. Go back to 1938, when the uptick rule was established.  Let the shorts wait...we really need to get back to investing and not trading for market to truly function properly.  Correct me if I am wrong, but hasn't this economy sent some stock valuations back in time to the thirties?  Remember in the thirties and before, information moved at a slow pace...I will write something in the future about slowing down everything, especially the analysts and maybe the quarterly reports. 

 

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#5) On April 08, 2009 at 1:41 PM, TMFHelical (98.85) wrote:

I see no reason to restrict shorting.  The uptick rule is really only a practical issue, as it limits only the speed with which short sales accummulate.  Speed is an issue though with companies that seek liquidity.

What I would not mind seeing naked shorts reigned in.  Once a % of float (and I don't know what number that should be) is undeliverable, trading should halt and the major responsible party(s), identified, fined, and forced to cover over a reasonable period when trading resumes.  However, it does question how real time the SECs information is, and I think that by current practice it will always be 3 days out of date.

TMFHelical

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#6) On April 08, 2009 at 1:42 PM, camistocks (< 20) wrote:

Just bring back the uptick rule. The uptick rule was introduced by Joseph Kennedy, who was an infamous short seller himself. So I would think that he knew what was the right thing to do.

And finally, the term of "price discovery" has been introduced by short sellers. Anyway, most of them will disapear in the coming bull market.

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#7) On April 08, 2009 at 3:16 PM, TMFBent (99.81) wrote:

Naked shorting... Show me the evidence that it's a problem, Ralph. Even Cox said it wasn't a problem -- the week he introduced restrictions on it -- though it was already illegal.

"Naked short selling" is the war-cry of people like Patrick Byrne and pumpers of penny stock junk, along with higher-priced junk such as Novastar financial.

Cami, your point lacks logic. Joseph Kennedy = uptick rule necessary? Decades later, a completely different regime, no proof that it was the right tool then, and you claim it's the right tool now? You can do better.

I have an idea on slowing down.

First off, those who claim short selling is the problem, please bring some EVIDENCE to the table. And by evidence, I don't mean co-incidence. ("Stocks are down, therefore we need restrictions on short selling!") I mean evidence.

Evidence first, then conclusions, unless you're one of the knee-jerks at the SEC, hoping to avoid being hauled in front of the knee-jerks in Congress.

Sj -- who thinks that we needed (and still need) more short selling, because the overly enthusiastic rube is much more dangerous than anything else in the market, both to himself, and to his fellow rubes.

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#8) On April 08, 2009 at 3:36 PM, TMFBent (99.81) wrote:

Schapiro's maybe worse than clueless.

Although many in the public blame short-selling for enflaming market volatility over the past 18 months, Schapiro said there is no "specific empirical evidence" that the absence of the uptick rule fueled it.

Yet you're going to waste time and resources debating this issue?

Unreal.

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#9) On April 08, 2009 at 4:04 PM, SARG0N (27.12) wrote:

“Commissioners such as Kathleen Casey were generally skeptical of linking the 2007 abolition of the uptick rule to the last 18 months of stock market declines.

But SEC Chairman Mary Shapiro acknowledged the intense pressure on the agency to address short selling, telling Wednesday's meeting that no other issue had generated as many emails and comments since she took the position in January.”

Bunch of whining losers who can not own up to the fact they make a poor bet and so they blame others for their bad choices. These people have no business putting money in the stock market.

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#10) On April 08, 2009 at 4:05 PM, TMFHelical (98.85) wrote:

Seth,

I am not one to decry naked short selling as the bane of the market.  In fact I've posted that I have yet to see a truly solid company brought down or even targeted by said short sellers.

But if it is illegal, it should be enforced, regardless of whether it is truly a problem or not.  The SEC does indeed have a stake in insuring that the market functions with confidence, and that involves making sure that shares bought are actually delivered and in a timely fashion.  There is nothing wrong with shorting, but the requirment to borrow shares to do so should be enforced.  Abuse that, as in practice it at a large scale designed to manipulate, and face a fine.  Also be forced to deliver shares, such as by borrowing them which is what should have been done in the first place.

 

TMFHelical

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#11) On April 08, 2009 at 4:54 PM, clanza875 (33.39) wrote:

Short-selling has been the go-to bogeyman during every major economic meltdown, because its an easy target for policy makers and a public that would prefer to find easy scapegoats rather than face the hard facts.

Whoever made this point, Bent I think, hit the nail on the head. This has nothing to do with short selling and everything to do with mismanaged risk at banks and insurance companies. Don't blame the shortsellers for profitting off of their incompetence.

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#12) On April 08, 2009 at 6:19 PM, camistocks (< 20) wrote:

Obviously people don't understand the markets. The stock market is dominated by emotions.

Bent, you say that I have to bring some proof against short sellers. Well what did I do in my previous blogs? I pointed out how short sellers were distorting and even destroying the markets.

We do not need to protect short sellers. We need to protect long term investors. What happened to the original message of the Motley Fool which was someting like "we are against them" and we will help you.

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#13) On April 08, 2009 at 7:59 PM, TMFBent (99.81) wrote:

Wait Cami, are you saying you've got the empirical proof that even the SEC commissioner says doesn't exist?

Please give us the links so we can get to it.

And the original message of the Motley Fool has never been anything like "we are against them." The Motley Fool suffers little-f fools very unhappily, and I submit that anyone who believes in inhibiting the full and free shorting of stocks has fallen victim to little-f foolishness.

The market exists to put a price on stocks, and without full and free shorting, you have only one piece of the pricing mechanism working properly.

Think of it as a parallel to our flawed ranking system for posts in caps. You can only recommend. You can't unrecommend, or otherwise vote "this comment isn't worth reading." Thus, we have a system where the world's lousiest posts and comments still have a positive rec total.

Sj

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#14) On April 08, 2009 at 8:39 PM, russiangambit (29.30) wrote:

TMFBent, it was published by Bloomberg a couple weeks ago, the proof that there was blutant naked short selling of Lehman on the scale that did influence the price action.

Anyway, as an honest short-seller myself, I just wish they already do it .It is not going to affect anything really. Except may be make hedge funds follow the rules just like the rest of us. It will be just like the FASB mark-to-market rule, done and over and what  is next?

They banned short sales this summer with no warning. I was holding short on COF at the time. It went from $40 to $60 in 2 days. Where is it now? Hmm.

They are obviously barking at the wrong tree, but so what. At least this time they are going about it in more proper manner, they are going to be discussing it for months. Since the market has attention span of a 3 y.o., it will be all forgotten in a week from now.

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