Oldtent Archives 2007 - 2008

Short Seller Taken to Court

We have no idea who Giovanni Spagnolo is. We don’t know whether he is a professional trader, a small investor, a fund manager or anything else.

But what we do know is the Australian Securities & Investment Commission (ASIC) has taken him to court for short selling.

To be more precise, for naked short selling.

You see, what Mr Spagnolo did was sell shares that he did not own. Furthermore, he didn’t borrow the stock from anyone in order to deliver it on settlement. That is what makes it a naked short sell.

We don’t know the full details of the case other than what is on the ASIC website:

“ASIC alleges that between 28 May and 24 October 2007, Mr Spagnolo sold shares and options that he did not own, contrary to Section 1020B(2) of the Corporations Act, in a practice known as ’short selling’… Mr Spagnolo applied for shares and options in capital raisings by the companies.
Before they were issued, he agreed to sell them on the stock exchange.

Mr Spagnolo failed to deliver the shares and options on the due date for settlement.”

The problem as we see it is that Mr Spagnolo appears to have done exactly what large institutions do as a matter of course. The main difference is that the institutions are permitted to do so while the private investor is not.

The underwriter of a share issue can short sell stock in advance in order to reduce their exposure if they are left holding stock from a public offering or a placement. Yet it appears that private investors cannot do the same thing.

We wonder if this is the best way to tighten up the rules on short selling.

We don’t think it is.

There is a much simpler solution that could be easily implemented.

ASIC and the ASX should just follow the same system that operates in Hong Kong.

In Hong Kong investors must deliver stock to the exchange on the settlement day otherwise it triggers a ‘buy-in.’

That means if you want to short sell you must borrow the stock and deliver it to the exchange.

If you don’t then the exchange automatically buys the stock back for you, thus closing out the trade.

HARARE (AFP) - Zimbabwe’s largest gold mining firm has stopped operations at
its five mines across the strife-torn country, resulting in 5,000 people
losing jobs, an official said Thursday.

The southern African nation, currently gripped by a post-election crisis,
has been ravaged by hyperinflation which shot up to 321 million percent on
October 9, along with a high unemployment rate and food shortages.
afp.google.com/

It might be there last chance to get something of value with those worthless pieces of paper.

If they have their work done by first delivery notice Yes! Absolutely! Dirty Deeds Done Dirt Cheap….All it takes is a few phone calls and zzzzzzzzzzzzappp we wake up a lot wealthier and no one else can buy an a 1/10 th ounce not on their life.
SOB’s I hate them for what they do.

think the banks have enough nerve to hit the comex and other storage units when december delivery comes around?

rno

I know the so called new chief of staff personally and Axelrod….All I can say is…I AM GLAD I”M IN DOWN HERE. I never thought that easy street would come that close to me and I don’t want any part of it..none nohow no way I was tempted for oh…about 2 1/2 seconds I am here and here I stay..with people I trust and care for …but I would not rule out asking for the W.P.A contract to build a macadem 2 lane road from Roxbury,Mass. to say Pasadena,CA. or getting a no-bid contract to build a 3,000,000 cubic yard sand castle over Homestead Fl. to recognize Hurricane Andrew…..Haaaaa oh never mind just never mind…CHARGE!

swiss franc and euro about to go green. a$ and nz$ aren’t far behind. usdx may bite the dust tonight.

rno

These EMPs  if that was what Sinclair was talking about can knock out power too. Besides needing alternative energy back-up sources at that time because if it comes to that gas pumps won’t work either, but the stock market will be put on hold. And of course physical PM back up system will be needed. Just seems Russia is heating up it’s war threats, don’t see any problem solving going on there.

Think you may be right as to direction of some on those dollars..the rest manipulating markets everywhere in every corner of the world. It’s like piranha feeding on the sacrificial cows. Had fun in Belize City did you? Can’t wait for next update.

as long as 727 holds I figure we are going to 1206 as stated for over a yr now., but it sure doesnt feel like it/the shares just dont agree.

longer term 1496? same support level

I suspected that, thanks for the post. One can only think when they have their bunkers full, they will let the prices explode. That is if Russia doesn’t cause everything to explode first.

Long day in Belize City just back ..ok news …Your last post mentioned Jessie’s warning against trading these markets because the banks are using the money they receive from Paulson to trade …not loan out….that is exactly what I was jumping up and down about for weeks now.
Take it just one little step out….what is it that they are buying with CASH [along with trading as cover fire] hmmmmm….what seems to be missing from dealers shelves around the world hmmmmm now the picture has become focused eh?

looks like a good buy signal last week on the weekly reversal up. the looney must be tough to trade unless someone has a good cyclical system.

last week was so volatile that you would have to be very careful taking a position. if you are doing something else like buying stock in loonies without margin, go for it!!!

rno

“The present crisis is scary, but only because no one knows what crazy new scheme the government will introduce every other day. Resources were invested improperly during the housing boom, and the economy needs time to heal itself. There is no way around this fact. The sooner the government gets out of the way, the sooner recovery can begin.”

mises.org/story/3191

“We urge casual traders and investors to stay on the sidelines. This is a dangerous market.
The ‘banks’ are loaded with liquidity but do not wish to make loans, so they using market speculation as a supplement to income. As they have the biggest pockets, the best access to opaque information, and lax regulations which allows them to move prices to their advantage, it makes little sense to play in such an artificial game.”

jessescrossroadscafe.blogspot.com/

Thanks, inbelievable.Now if we knew someone from China to see if it the same there, but as of yet their economy hasn’t been hit as hard as ours…yet. Till people slow the pace of buying goods which I presume has already started.

Maya, I missed that. I will try to send it to the one who wrote that. But doupt if it will change his views on Gov. which are like most of ours anyways. Hey you know Antiqua wants to change the name of a mountain there to Obama, to attract tourist. Now thats a first in history too! lol