Posted by Tina
This isnt a trail of breadcrumbs; this audit trail is lit up like an airport runway. You can see it a mile off. Subpoena e-mails. Find out who spread false rumors and also shorted the stock and youve got your manipulators. Irving Pollack, former SEC regulator
Naked Short Sales Hint Fraud in Bringing Down Lehman (Update1), by Gary Matsumoto – Bloomberg
** The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts. *** As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior years peak of 567,518 failed trades on July 30. *** The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. **
** A fail-to-deliver is a trade that doesnt settle within three days. *** We had another word for this in Brooklyn, said Harvey Pitt, a former SEC chairman. The word was fraud. *** While the commissions Enforcement Complaint Center received about 5,000 complaints about naked short-selling from January 2007 to June 2008, none led to enforcement actions, according to a report filed yesterday by David Kotz, the agencys inspector general. *** The way the SEC processes complaints hinders its ability to respond, the report said. *** Twice last year, hundreds of thousands of failed trades coincided with widespread rumors about Lehman Brothers. Speculation that the company was being acquired at a discount and later that it was losing two trading partners both proved untrue. *** After the 158-year-old investment bank collapsed in bankruptcy on Sept. 15, listing $613 billion in debt, former Chief Executive Officer Richard Fuld told a congressional panel on Oct. 6 that naked short sellers had midwifed his firms demise. *** The naked shorts and rumor mongers succeeded in bringing down Bear Stearns, Fuld said in prepared testimony to Congress in October. And I believe that unsubstantiated rumors in the marketplace caused significant harm to Lehman Brothers. **