That practice is called “kiting”.This week we are beset by religious visions while we discuss “All Souls”! We’re talking how much Scully loves killing kids, Mulder’s being on our shit list this week because of how dismissive he is, the discovery of a Marita with a personality, how we simply do not have time to solve the question of “Why does God allow bad things to happen to good people?” in this 45-minute episode, and of course spend a lot of time throwing tomatoes at our old enemy Father McBoo. While all of these sophisticated naked shorting machines are already getting the 10-day grace period that they shouldn’t be getting in the first place, they also have a strategy for the 11th day: They simply shift their bets to another related company so that the clock starts all over again. That kind of time frame is destroying companies. We have talked to dozens of lawyers and traders who attest that these naked shorters have had no trouble staying naked for months when the actual limit is technically two days.
#Xfile shot selling full#
The most insidious aspect is this, though: The funds behind these big naked shorts are highly sophisticated machines that can easily take full advantage of any loopholes, not to mention the Canadian regulators.
While technically, traders only have two days to settle those shorts, they are often given 10 days under “exceptional circumstances”, according to CME.Īnd as far as some Canadian regulators are concerned, all circumstances appear to be “exceptional”. It’s an existential crisis for companies targeted by naked shorters. Stocks are sent into a tailspin when shorters fail to settle a trade and cannot find any stock to buy back, meaning that there are more shares which seem to be outstanding than there really are on the market. The disruption doesn’t end there, either. That loophole may have turned the Toronto Stock Exchange (TSX) into a free-for-all. So far, naked shorters have gotten away with their destructive market tactics due to a loophole that requires them to have a “reasonable expectation” of settling a trade without actually borrowing the stock. That starts the regulatory ball rolling … but it isn’t enough. The prohibition would do one very important thing: It would mean that Ontario regulators would only have to prove “intent” and not “causation”, making them far more powerful if they choose to use that power.
The same legislation was already enacted in British Columbia. Why? Because Canadian markets are being threatened severely by “short and distort” and “pump and dump” campaigns. The first move came in January 2021, when the Ontario Capital Markets Modernization Task Force recommended a new prohibition against “misleading or untrue statements” about public companies. The only question now is whether the Canadian regulators have the teeth to follow through. Finally, after years of watching dubious short-sellers manipulate stocks and destroy companies, Canadian regulators are ready to do something about it, and unscrupulous short-sellers who have been living lives of obnoxious luxury paid for by ordinary shareholders have every reason to worry.
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