SEC requests copy of DVD: STOCK SHOCK

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Denise Hubbard's picture
Denise Hubbard
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SEC requests copy of DVD: STOCK SHOCK

http://satwaves.com/blog/2009/06/26/sec-investigating-illegal-naked-short-selling/"

Stock Shock, the movie that promises to shed light on illegal naked short selling, has actually caught the eye of the United States Securities & Exchange Commission. Stock Shock is a documentary that educates viewers about illegal trading practices, through the stories of Sirius XM (SIRI) investors who believe they were the victims of naked short selling

http://williambanzai7.blogspot.com/2009/07/stock-shock.html

umaperegrina's picture
umaperegrina
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Re: SEC requests copy of DVD: STOCK SHOCK

Denise,

Thanks for bringing that to our attention. The financial sense newshour did a great interview with Sandra Mohr and Susanne Trimbath June 20.  Glad to see it's garnering some attention.

http://www.financialsense.com/fsn/main.html

Lori

 

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crash_watcher
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Re: SEC requests copy of DVD: STOCK SHOCK

 Here’s my review of “Stock Shock,” which I watched today!

 

I first heard about this documentary from an interview at the Financial Sense Newshour, where Jim Puplava interviewed Sandra Mohr the producer and Susanne Trimbath, one of the people interviewed in the documentary (http://www.financialsense.com/Experts/2009/Mohr.html).   The story sounded so intriguing, I bought the DVD (about $20 delivered; http://www.stockshockmovie.com/ ). 

 

I found this to be a well-made production that was both entertaining and educational.  The characters telling the story are mostly Sirius Satellite shareholders (or former shareholders), and, hearing it from them this makes the story more compelling than a documentary involving naked short selling might sound at first.  Its style reminded me of “Who Killed the Electric Car.”

 

The story starts with the tale of Sirius Satellite, a satellite radio company that sounds like it has a lot going for it (I have never used it, and I never owned any shares in Sirius Satellite, or what is now Sirius-XM).  Many subscribers to the service though it was so great that they bought shares in the company (“buy what know,” as the saying goes).  Despite many roadblocks from the FCC and NAB (Nat’l Assoc. Broadcasters, i.e., traditional AM/FM radio companies), many shareholder thought the stock was finally poised to take off after they merged with the one other satellite radio company, XM. 

 

Instead, the stock dropped from a high of about $10/sh to $0.05/sh.  That’s right, a nickel a share.

 

The documentary suggests that there is good evidence that that this incredible share price drop was due to an organized attack on the company.  Exactly who the culprits are, they don’t exactly say, but, the possibilities include the CEO Mel Karmazin, their competitors (i.e., the traditional AM/FM radio companies), hedge funds and organized crime, or all of the above.  

 

However, it is clear that one of the main tools of the attack was naked short selling.

 

Legitimate short sellers, the documentary explains, “borrow” stocks shares from other shareholders and sell them.  They bet that the stock will soon be worth less, so they can buy the stock back cheap and then replace the borrowed shares. 

 

Naked short sellers, on the other hand, never actually borrowed the shares from an owner. Rather, they just sell stock shares that they never owned.  Yes, that right, it supposed to be illegal.  The SEC is supposed to police this kind of thing. 

 

Anyway, the naked short sellers can make incredible profits by doing naked short sales over and over, while failing to deliver, or at least delaying delivery of, the shares to the buyers on the other end of the transaction.  Eventually as more and more of these counterfeit shares circulates in the market, the shares price can get driven down into the penny stock range, as demonstrated for Sirius Satellite.  At that point, the naked short seller can buy the stock shares very cheap, and then settle up with the buyer, if they want.

 

So what about the government?  Where is the media?  The documentary gives several possibilities for their seemly lackadaisical response:

 

1) These transactions all occur electronically and can be very difficult to trace, e.g., by some FBI or SEC agent. 

2) Wall Street pays off the politicos and the media with campaign contributions and the purchase of commercial time.

3) The media participates in the attack by doing a smear campaign of the target company (e.g., see Cramer’s you tube interview showing how he used to get the “Bozo Reporters” or Bashers to do it:

; http://antisocialmedia.net/antisocial-multimedia/jim-cramer-on-market-manipulation-in-his-own-words/ ). 

4) The government ended the up-tick rule in July 2007.  The up-tick rule required a stock trader to wait until the stock rises in price before he can short sell the stock again.  The government introduced the up-tick rule after 1929 to help control short selling.  So why did they end the up-tick rule?  According to the documentary, the government’s reason was that the rule was “not helpful.”  However, it seems that the SEC really did drop the ball by making short selling even easier, and by not going after naked short selling.

 

The last 30 minutes of “Stock Shock” was the most intriguing, as it suggests that the scope of this corruption is much bigger than just Sirius.  For instance, in fall 2008, there was massive short selling of the financial stocks, and, eventually the SEC finally had to step in and halt all short selling for a period, to stop these companies from being totally wiped out.  After all, if you can naked short sell there really is no limit on the number of stocks you can sell short, since you never owned any in the first place.  Wes Christian, an interviewee, estimated that the number of counterfeit electronic shares of credit swaps, stock securities, treasuries and bonds to be on the order of $93 trillion, and called it the greatest theft in US history. 

 

Meanwhile, the government wants to boost confidence in the market so that we will all want to “invest” again.  Who wants to be a pawn in this game? 

 

After watching “Stock Shock” I feel like my personal investing in the stock market or even mutual funds is like bringing a pocket knife to a nuclear war.   If you are invested, you owe to yourself to educate yourself about this practice. 

 

Here’s one thumb up for “Stock Shock.”

 

p.s.

Patrick Byrne’s “Deep Capture” Movie gives a much more detailed presentation explaining naked short selling, and, how this was used to attack his company, Overstock.com (http://www.deepcapturethemovie.com/).  Jim Puplava also has a series of “Crime of the Century” presentations explaining how this was done to attack a number of smaller gold or silver mining companies (http://www.financialsense.com/metals/crime/main.html).  I highly recommend both, if you want to delve deeper down the rabbit hole. 

 

 

Kurosawa's picture
Kurosawa
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Re: SEC requests copy of DVD: STOCK SHOCK

Sounds interesting is this DVD easy to find as in rent?

Morpheus's picture
Morpheus
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Re: SEC requests copy of DVD: STOCK SHOCK
umaperegrina wrote:

Denise,

Thanks for bringing that to our attention. The financial sense newshour did a great interview with Sandra Mohr and Susanne Trimbath June 20.  Glad to see it's garnering some attention.

http://www.financialsense.com/fsn/main.html

Lori

 

Lori. I love financial sense newshour. Have you seen the CNBC video with Karl Denninger on The Market Ticker website? 

Put it this way, Denninger made my fiancee's and my mouths drop. Holy cow. I mean, wow! Did CNBC throw his butt off the air lickety split.

Check it out, the CNBC clip. It's 30 seconds only because CNBC cut him off. LOL

 In short, I LOVE the financial blogosphere. I call it the Free Press.

http://market-ticker.denninger.net/

crash_watcher's picture
crash_watcher
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Posts: 146
Re: SEC requests copy of DVD: STOCK SHOCK

Kuroswa: the documentary just came out, so I think the only option for now is to buy it.  However, the material that I cited in my p.s., is completely free and gives a pretty good introduction to naked short selling and its negative repercussions on companies.

Denise, your link to: http://satwaves.com/blog/2009/06/26/sec-investigating-illegal-naked-short-selling/%22 seems to bring up an error page.  Do you have a better link?  I can not find any other news stories to verify that the SEC has actually requested a copy of STOCK SHOCK, or, that explains why they would do this.

crash_watcher's picture
crash_watcher
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Posts: 146
Re: SEC requests copy of DVD: STOCK SHOCK

After some more digging, I have answered my own question raised in #5:

"Satwaves has learned that several days ago, an agent for the SEC contacted a representative of Stock Shock, as that agent had been alerted to the allegations of hedge fund wrongdoings that were made in the film. A copy of the movie was  sent to the agent, who then called back the movie’s representative to get more details, yesterday. The second phone call from the SEC lasted for 20 minutes, and included talk of media collusion as well." http://stockshock.us/ 

If this story is true, I think it is very sad that this movie has given the SEC it first notice of possible "hedge fund wrongdoings."

Denise Hubbard's picture
Denise Hubbard
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Joined: Jul 2 2009
Posts: 3
Re: SEC requests copy of DVD: STOCK SHOCK

 thank you Crash for the link information. Here is a new link regarding the same matter.

http://www.prlog.org/10282455-sec-requests-copy-of-financial-film-stock-shock.html

Great job with the synopsis of the movie. DH

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