America's financial system is a mess and the U.S. Securities and
Exchange Commission is to blame.
Short sellers, in a concerted effort to defend themselves and
abuse the lack of regulation by the SEC, are now targeting
Citigroup while our financial journalists, analysts and government
regulators continue to do nothing.
At Market Rap we've pointed out correctly again and again the
market's new primary targets for short sales, which now require no
uptick rule and in many cases are likely not even borrowed
shares.
Hartford Financial Services is now under $5 and Morgan Stanley
is fighting to hold $10. But the new target is the giant
Citigroup which in five days has lost nearly two thirds of its
value. At under $4, it is a disgrace to watch and be a part
of a capital market that is allowing nerdy unethical Wall Street
gangster to destroy the world economy.
Even former SEC Chairman Harvey Pitt stated last night on
television: “naked short selling is what’s causing a
lot of the problems in the market.”
SEC Chairman Christopher Cox should be in jail for this willful
neglect. It is a travesty for our history books. It is
a national disgrace that it has come to this and still there is no
enforcement of rules and no sufficient regulation on short
selling. And where are the exchanges? Why hasn't the
New York Stock Exchange put in stringent rules to curb the abuse of
short selling? Indeed, they have not seen an initial public
offering in months. Why would a private company ever want to
be a public company knowing what can be done to them in an
unregulated market where nerds can destroy your share value in
minutes.
It's painful to be a part of, it's painful to watch and it is a
tragedy of epic proportions. The only positive irony I see in
all of it is the fact that the same companies who lobbied for the
short sellers are now victims of the nerdy gangs they themselves
helped create. They are eating each other alive and looking
for their next victim. They have an insatiable appetite for
stocks to short because that is how they do their business.
But it is not an efficient market when half or more of a fund's
money is committed to essentially betting down companies. How
is that a positive contribution to the world you are a part
of? How much longer must we put up with a lack of regulation
for a mechanism of trading that is being overused and abused.
It's time for investors to call their representatives and push for
them to act immediately for the sake of the entire global financial
system.