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SEC To Restrict Short Selling Again, Party At Cyber Stalker Patrick Byrne’s House

January 24, 2010 at 10:21 am
by Timothy Sykes

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Over-concerned with ignorant public opinion and the ranting and ravings of the lunatic short selling conspiracist and now prominent cyber stalker Overstock.com Inc. (OSTK) Patrick Byrne, the SEC probly will approve this new rule which Bloomberg reports:

Concern that short-sellers accelerate stock declines may prompt the Securities and Exchange Commission to adopt a rule next month aimed at curbing bearish bets when equities are plunging.

The regulation would require the trades be executed above the best existing bid in the market when shares fall 10 percent in a day, said Brian Hyndman, the senior vice president in transaction services at Nasdaq OMX Group Inc. In a short sale, an investor borrows an asset and sells it, hoping to profit from a decrease by repurchasing it later at a lower price.

Forcing short sellers to wait for a stock to rise above the best price bid may prevent them from flooding the market with sell orders and causing losses to multiply. Some exchange officials say the restrictions known as uptick rules don’t work, citing studies that show they may be less effective during panics that drive prices down and volatility up.

“There is no empirical data to support the introduction of a new rule,” Hyndman said yesterday at a securities industry conference in Chicago. “But this is the least intrusive of the proposals the SEC was considering.”

Hyndman expects the SEC to adopt a so-called alternative uptick rule that includes a 10 percent trigger, changing regulations that were eliminated from U.S. markets in 2007. The commission asked the public last April to comment on strategies to cushion the impact of short selling following criticism that hedge funds and other speculators used trading tactics to deepen market retreats that began in 2008.

Long ago I gave up trying to enlighten people about the strategy of short selling, accepting its destiny to always be hated and misunderstood–whenever I see misguided regulations like this, all I can do is smile and think the SEC could better spend their time going after the frauds and incompetents whose stocks are worth short selling into oblivion, carcass companies like Spongetech Delivery Systems Inc. (SPNG), Hemispherx Biopharma, Inc. (HEB), Imaging3 Inc. (IMGG) and Medical Care Technologies Inc. (MDCE).

(I will never accept mainstream society’s ignorance when it comes to penny stocks…the corruption there is far easier to teach than trying to get a society full of Forrest Gumps that taking negative positions in stocks is okay)

So what does this new rule mean for PennyStocking? Absolutely nothing…when shorting the hardest to borrows stocks, like I successfully did with MDCE, I have to be early in my entry anyways so shorting into upticks vs. downticks doesn’t bother me one bit…in fact, this new rule will probly make more people scared to partake in my strategy, helping to free up some shares so thank you SEC!

It’s questionable whether this rule will even apply to OTCBB and Pink Sheet-listed companies since even the competence-lacking SEC understands those companies aren’t real…and the gullible suckers who continually lose on them aren’t worth caring about (you’re stuck with me chumps…I’m your only friend!)

All this new rule and its surrounding media hype will do is cause an uptick in the number of emails I get from wannabe short sellers, so I am anticipating that misguided rush and answering everyone here….that’s right, this entire blog post is an example of short selling hype by way of introducing reason.

I have not given up the fight to educate about short selling…it’s not only worthwhile, it’s an incredibly important market stabilizer when the hype & BS get out of control, as they often do in this circus of a stock market & financial media industry.

To be fair, Bloomberg is rated highly on Investimonials, check it out!

Posted in idiots, SEC, Short Selling

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  1. SEC To Restrict Short Selling Again, Party At Cyber Stalker Patrick Byrne's House
  • Anonymous

    ““There is no empirical data to support the introduction of a new rule,” ”

    haha so of course let’s do it then!

    anyway This is a wussy version of the uptick rule anyway. I lived with the old one this watered down version doesn’t phase me. Might actually be good news if it placates the SEC enough from making a more strict one.

  • Anonymous

    *************
    Forcing short sellers to wait for a stock to rise above the best price bid may prevent them from flooding the market with sell orders
    *****************

    Funny how no one complains when the market is flooded with buy orders.

    These rules are always so ricidulous

  • sman

    let me be the first to tell you that short selling stocks on up tick is a HUGE PAIN IN THE ASS and verry veryy annoying and fustrating!..but what did you think was gonna happen??? lol..the system finally got sick of all you “shortsellers” ingorrance and spitting in peoples faces!

    thats the only logical reason to really change the rule!

    they will do the same to the forex after capping leverage at 10:1

  • H. Oodlum

    There is a special place in Hell for people like you, Timothy.

  • Craig

    I hope they pass the law because it would put a stop to predetors like Sykes taking advantage of novice investors.

  • http://www.timothysykes.com Anonymous

    LOL Craig, what stock promotion firm do you work for? a.) predator has one ‘e’ you moron and b.) i teach people to identify and profit from stock promoters like u…like all the recent pump and dumps like AENY, YHW, IMGG, SPNG, MDCE, ECOB…the list goes on and as long as goons like you keep selling your soul to the devil…but I do thank you for being so predictable!

  • http://www.mindbodypolitic.com/ Lila Rajiva

    Hi

    Up moves in a market are quite different from down moves. Any trader knows that. Booms climb a wall of worry. Busts are like falling off a cliff. Even the most parabolic rise can’t
    match a crash in momentum.

    They certainly deserve different regulatory treatment.

    Lila Rajiva

  • Anonymous

    “Busts are like falling off a cliff.”All the more reason to allow shorts! Shorts eventually have to buy to cover allowing markets to catch a bid while falling.You want to see how well market does in a crash without shorts I suggest you really re look objectively at the fall of 2008 during short ban and post ban

  • http://www.mindbodypolitic.com/ Lila Rajiva

    Sure….if it’s a covered sale…
    but if it’s not, then it’s a problem..
    And before anything else, it’s a problem because it’s a fraud to sell something that’s not yours…and on which you can’t deliver.

    Re falling off the cliff..
    If prices go down sharply, with mark to market accounting that means valuations in the portfolio change drastically, that means reserve requirements rise, and credit gets cut off..

    By the time speculators come around to bid up the price, the business has gone bankrupt….even when it’s not that bad a business.

    Imagine you have a house..not the greatest house…maybe it needs some repairs..maybe the market is soft and the price is dropping.
    Now would you let perfect strangers who don’t have title put fraudulent titles up for auction and determine the price of your house from that?

  • Anonymous

    Naked shorting is vastly overblown smokescreen to prevent people from looking at the real problems.

    namely excessive leverage and horrific derivative products like Credit Default Swaps.

    As for the rest it’s pretty simple don’t use mark to market accounting then if you are worried about it. A lot of firms don’t. If your business goes bankrupt from one day’s worth of price action guess what? You have too much leverage anyway.

    as for the house analogy, it wouldn’t bother me if someone shorted my house. After all it’s one guaranteed future buyer. I now have greater liquidity and price stability for my asset. As long as I don’t have excessive leverage I can easily wait them out if need be.

  • http://www.mindbodypolitic.com/ Lila Rajiva

    It’s actually the opposite.

    CDSs are being used to blow smoke in the face of the failed to delivered problem.. or counterfeiting problem…or stockfraud problem (aka Naked short selling). If you go to the Deep Capture site, you’ll see they talk about counterfeiting, insider trading, collusion with the media AND CDS.

    But CDS is only a tool. If you’re going to ban CDS, you could as well ban equities, as Roger Ehrenberg wrote in a recent Business Insider post. They were not a problem prior to 2006 when they were specifically used in a fraudulent manner. The problem isn’t CDS (the knife). it’s illegal, fraudulent behavior (the murder) and the guys who do it (murderers).
    Don’t put the knife in jail. Put the murderer in it.

    CDS has been abused and used as a speculative tool while selling it as a hedge. Over insuring is the problem with CDS – ie. buying CDS worth multiple times the value of the loan or bond underlying. So – yes, that’s part of a general problem of leverage.
    But the specific way CD was used was, I suspect, to manipulate it and thus the indices that relied on it to create panics about businesses that were then massively shorted by colluding funds.

    I’d think a lot harder about that house analogy….

    The problem is efficient market theory and the idea that prices at all ends of the spectrum operate in the same way, when manifestly they don’t – which is just what astute traders live off, even if they don’t always understand it.

    Einhorn in my humble opinion is full of it.

  • Anonymous

    You know I was going to bother to refute all that misguided thinking but then you not only cited Deepcapture as a legitimate source which everyone knows is a very unethical thinly veiled astroturfing site but also trashed Einhorn whose track record is nearly impeccable (as well as being aboveboard in his actions).

    So I figure why bother? clearly this person is not willing to listen to reason. And I imagine you probably feel the same way about me.

    good luck to you.

  • http://www.mindbodypolitic.com/ Lila Rajiva

    Not at all. Give me an argument with substance. You haven’t so far.

    You:

    “everyone knows” – who’s everyone, please? And why should I listen to them?
    “legitimate” – what gives something legitimacy or doesn’t give it…what you agree with? Or evidence, logic, my own reading, facts…

    “astroturfing” – astroturfing is predominantly pushing the owner’s interests and selling the owner’s products, neither of that is true of the site..
    I really don’t care what the professional societies say about it, since none of the professional writers called this crisis. People in the alternative media did, spin it as the MSM might.

    And even so, even if a site does not fall into the category of standard media.,..that isn’t of itself a reason to doubt its material since the material is well documented.

    If it wasn’t well documented, I imagine libel suits would have taken care of the matter by now. I wonder why no one has sued for libel.

    Deep Capture addresses far more issues than anything that ever affected Overstock.
    Hmmm would you also call The Street astroturfing, by the way ? Or any of the major media outlets which have substantial corporate ownership and dare not cross certain lines because of it?

    And which, moreover, sell products that benefit their owners? Deep Capture is doing research and investigation no major outlet does..someone has to finance them…what’s so bad if they got their finances from Byrne?

    Would you rather they got government funds? If so, would you worry that they’d be toeing the government line? Doesn’t the Columbia Journalism Review get funding from hedge funds? Is it likely then that the CJR will criticize hedge funds? Does that mean everything the CJR writes is biased too?
    Nest…
    Einhorn’s track record is impeccable?
    Let’s see..he shorted Lehman in 2008 or he wouldn’t even have broken even, because he took such a big hit.
    And Allied which he shorted from 2002 only really went down because of the market going down…in 2009.
    He’s jumped on the gold wagon very late as well

    Anyway, no one is arguing about his intellect. He might be a very smart guy.
    I’m suggesting that some of his past actions in the market make his opinions about CDSs odd – since he used CDSs in exactly the way he condemns now..and wants to ban them.
    I wonder why..

    I’m willing to listen to reason.
    But you haven’t given me anything but a knee jerk response…and you didn’t refute any point I made.

    I see reason and evidence at Deep Capture despite the bad language..
    That’s why I became convinced there was something to it..
    Overstock could go to the dogs for all I care…and Byrne might be cooking his books too..

    It’s irrelevant to the evidence of corruption and collusion that the site has, and the analysis.
    I doubt they would have regulators, the SEC and the FBI listening to them if there was nothing there.

    If you can give me specifics of why CDSs alone are so bad and not interest rate swaps or other kinds of derivatives and how banning this one thing makes things better, let me know..

    And if you can refute anything at Deep Capture and show me it’s an out and out lie, I’ll be happy to consider it.

    If you can tell me the emails they have on their site are fraudulent, the IP addresses showing wiki manipulation and sock puppeting are fraudulent, and their analysis of stock fraud is off, please show me.

    Happy to listen.

    And if you can show me what anyone there did that was so wrong that even mentioning them is taboo…and what Einhorn did that is so great that I cannot even question him..
    go ahead.

    I’m all ears.
    Always willing to change my mind if I see new evidence..

    But sticks and stones don’t really do it for me..

  • EMMY

    I THINK ALL SHORT SELLING SHOULD BE STOPPED
    NO ONLY BY BEARS BUTBY BIG BROKERAGE COMPANYS