|
|
Post by harryx1 on Mar 2, 2023 10:01:32 GMT -5
Too bad Deerfield isn't listed in there...
|
|
|
|
Post by ktim on Mar 2, 2023 17:09:25 GMT -5
Looking up FTD for CLNV it appears as of a month ago it was very low... like 3,000 shares. That would be very interesting if they provide evidence of 40M naked shorts (about 10% of float). I'm very very curious in who holds those "counterfeit" shares, and why they have them without evidence that the transfer occurred with the transfer agent.
Harry, if there is some concrete evidence of such in any of these links please let me know. I am quite interested in this topic.
|
|
|
|
Post by prcgorman2 on Mar 2, 2023 17:38:14 GMT -5
Curious too. Reading SEC Regulation SHO requirements for closing out a FTD short position, I've been curious what was meant by replacing the naked shares with "shares of like kind". That's not a straight-forward phrase. It makes it sound like an instrument of value is traded, but not necessarily shares of the shorted stock. And there's an enforcement issue to understand. Do the FTDs result in any punitive action by the SEC? Does it need to rise to the level of a Bernie Madoff scandal before that happens? FTDs and aging FTDs happen all the time. Are there automated citations issued? (It sounds like their might be.) Is there an SEC compliance audit and reporting process to measure performance of short position closing transactions?
Basically, I'm wondering if the law and regulations give the SEC enormous power that they rarely exercise but which should be exercised more often. Eight years of an empty trade information database designed to improve transparency would seem to indicate the SEC is a(nother) federal farce.
|
|
|
|
Post by ktim on Mar 2, 2023 18:08:48 GMT -5
Curious too. Reading SEC Regulation SHO requirements for closing out a FTD short position, I've been curious what was meant by replacing the naked shares with "shares of like kind". That's not a straight-forward phrase. It makes it sound like an instrument of value is traded, but not necessarily shares of the shorted stock. And there's an enforcement issue to understand. Do the FTDs result in any punitive action by the SEC? Does it need to rise to the level of a Bernie Madoff scandal before that happens? FTDs and aging FTDs happen all the time. Are there automated citations issued? (It sounds like their might be.) Is there an SEC compliance audit and reporting process to measure performance of short position closing transactions? Basically, I'm wondering if the law and regulations give the SEC enormous power that they rarely exercise but which should be exercised more often. Eight years of an empty trade information database designed to improve transparency would seem to indicate the SEC is a(nother) federal farce. I'm guessing that going beyond the mechanism of closing out the FTD, any civil citation would likely depend on proving an entity acted in bad faith with regard to the shorting... and that likely is hard to prove under current system. They should simply change to requirement that shares be obtained not simply "located". Though how to deal with market making activities might be tricky. Likely applying the same rule to market makers would adversely affect liquidity and thus execution prices. |
|
|
|
Post by casualinvestor on Mar 6, 2023 10:28:06 GMT -5
In this age of fast computers, there are no technical barriers stopping market makers from keeping an inventory of "borrowable" shares from various brokers (schwab, etc) updated in real time. My conversations with a lending specialist suggest that it's a partially manual process. Probably because the people whos shares get lent out are the "favorites". I'd love to earn a few % a year on my MNKD shares, but I'm not cool enough.
The liquidity argument is hollow. MM's could have borrowable shares "on tap" if they wanted to. They don't want to, so they don't have to setup a system , and then pay the borrowing fees.
Then there's the fact that there's no tracking of whether a "fake share" is being borrowed to create another fake share. This definitely was happening with Gamestop
|
|
|
|
Post by ktim on Mar 6, 2023 11:19:11 GMT -5
Most market makers don't borrow shares as they don't want to hold directional positions in shares. Whether they buy at the bid and then sell at the ask or the other way around, they pocket the spread... mostly the goal is to end the day neither being long nor short in shares. Gets more complicated for market makers dealing in options, but still making money without risk is usually preferred to trying to make it with risk.
Market makers would not in general pay to borrow shares as part of their role of providing liquidity.
My understanding is based on having known traders at market making firms. That was some time ago. Though, I doubt the basic nature of it has changed.
|
|
|
|
Post by cretin11 on Mar 6, 2023 12:15:50 GMT -5
In this age of fast computers, there are no technical barriers stopping market makers from keeping an inventory of "borrowable" shares from various brokers (schwab, etc) updated in real time. My conversations with a lending specialist suggest that it's a partially manual process. Probably because the people whos shares get lent out are the "favorites". I'd love to earn a few % a year on my MNKD shares, but I'm not cool enough. Actually, you probably are cool enough to get shares lent out. Anybody can, as long as your brokerage participates in the program and you have whatever minimum they require. However, the lending rate is so paltry these days that you wouldn't gain much by doing it. There was a time when MNKD share lending rate was over 20% for an extended period, and topped out at over 40% (maybe over 50% i can't remember for sure) for a brief time. Having a relatively modest number of shares lent could bring in thousands of dollars per month. |
|
|
|
Post by casualinvestor on Mar 6, 2023 14:26:58 GMT -5
Well, I did have my shares lent out in Oct 2017 through 2018, and still participate in the share lending program. The point is that MNKD has had 20-30 million shares shorted for years, and I bet some shares are borrowed from Schwab. But since it's free money, everyone wants the benefit. Even if it's just 2-3%, it adds up over the years.
I wonder if this kind of favoritism is illegal
|
|
|
|
Post by ktim on Mar 8, 2023 21:45:10 GMT -5
Well, I did have my shares lent out in Oct 2017 through 2018, and still participate in the share lending program. The point is that MNKD has had 20-30 million shares shorted for years, and I bet some shares are borrowed from Schwab. But since it's free money, everyone wants the benefit. Even if it's just 2-3%, it adds up over the years. I wonder if this kind of favoritism is illegal Definitely legal. Companies have no duty to treat clients/customers equally. I too remember those days of high rates. Was why I transferred all my shares in MNKD from TDA to Schwab. Bugging the lending program desk could sometimes get the shares lent out again after being returned, but eventually they simply said there wasn't enough demand. |
|
|
|
Post by prcgorman2 on Mar 20, 2023 16:03:26 GMT -5
No special news. Just sharing. December looked kind of ugly comparatively. No numbers for March yet. fintel.io/sftd/us/mnkd |
|
|
|
Post by longliner on Mar 25, 2023 13:54:23 GMT -5
$MNKD Quote from John Brda, Ex-CEO of Torchlight $MMTLP "Shorting against a warrant is illegal. No one has forced the issue, but $GTII could be the first. It is a massive problem for all CEOs. I saw a stat that 97% of all deals done this way trade down, way down. The funds in the deal, sell the stock for breakeven or even a loss, then short the shit out of the stock using the warrant as a backstop. A warrant is not a borrowed share, in fact, it is not a share at all. Prime brokers are complicit in this practice and they destroy all that have done an offering in this manner, including $MMAT "
Sounds familiar somehow... Hope to leave those waters for sure.
|
|
|
|
Post by ktim on Mar 25, 2023 19:21:22 GMT -5
$MNKD Quote from John Brda, Ex-CEO of Torchlight $MMTLP "Shorting against a warrant is illegal. No one has forced the issue, but $GTII could be the first. It is a massive problem for all CEOs. I saw a stat that 97% of all deals done this way trade down, way down. The funds in the deal, sell the stock for breakeven or even a loss, then short the shit out of the stock using the warrant as a backstop. A warrant is not a borrowed share, in fact, it is not a share at all. Prime brokers are complicit in this practice and they destroy all that have done an offering in this manner, including $MMAT " Sounds familiar somehow... Hope to leave those waters for sure. What law (or regulation) prevents holders of warrants or convertible debt from shorting? One can find that described as a hedging strategy on various financial sites as if it's legal. I've seen it discussed for ages with regard to MNKD and other companies. Has something changed recently? I think companies like MNKD can restrict shorting contractually when issuing debt/warrants, but that likely would cut out the class of creditors MNKD has had to use in the past. |
|
|
|
Post by longliner on Mar 25, 2023 19:37:47 GMT -5
Can I short a warrant?
This means you can only take a long position in a call or a put warrant by buying such standard warrant and close out such long position previously established by selling such standard warrant – that is, you cannot short sell such standard warrant.
|
|
|
|
Post by agedhippie on Mar 25, 2023 23:24:36 GMT -5
Can I short a warrant? This means you can only take a long position in a call or a put warrant by buying such standard warrant and close out such long position previously established by selling such standard warrant – that is, you cannot short sell such standard warrant. I have messed around with warrants in the past. There is a standard arbitrage where you hold the warrant and short the stock to lock in the current gain. It's low risk because you know you will have the stock to cover when the warrant converts and you know exactly what it will cost. This works when the warrant is at a discount to the stock which is often the case in loans. It relies on the warrants being registered so they can be traded, but that's often a condition of the loan. Shorting a warrant itself? I am with you there - never heard of it! |
|
|
|
Post by prcgorman2 on Mar 26, 2023 10:37:12 GMT -5
Can I short a warrant? This means you can only take a long position in a call or a put warrant by buying such standard warrant and close out such long position previously established by selling such standard warrant – that is, you cannot short sell such standard warrant. I have messed around with warrants in the past. There is a standard arbitrage where you hold the warrant and short the stock to lock in the current gain. It's low risk because you know you will have the stock to cover when the warrant converts and you know exactly what it will cost. This works when the warrant is at a discount to the stock which is often the case in loans. It relies on the warrants being registered so they can be traded, but that's often a condition of the loan. Shorting a warrant itself? I am with you there - never heard of it! It is interesting to wonder what shorting would look like if creditors were prevented from shorting a company whose warrants they own. Would it prevent making a legal agreement with another company to have them short the company whose warrants you own on the condition you can provide the shares at conversion, and split the proceeds in some fashion at maturity? |
|
