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Web Bot Right on Silver: London Fix Cracked — Silver Derivatives Were About to Blow – Silver Fix Rigged to Save Them??

from jsnip4:

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2 comments to Web Bot Right on Silver: London Fix Cracked — Silver Derivatives Were About to Blow – Silver Fix Rigged to Save Them??

  • JP

    Sorry, I couldn’t get past Kitty interrupting.

  • rich

    Case Sheds Light on Goldman’s Role as Lender in Short Sales

    It would be easy to overlook the case against Goldman Sachs filed by the Securities and Exchange Commission on Jan. 14. It involved a complex piece of Wall Street plumbing, levied a minuscule $15 million fine, and came on the same day that Goldman agreed to pay up to $5 billion to settle prosecutors’ claims that it sold faulty mortgage securities to investors.

    But the smaller settlement merits close study because it sheds light on one of Wall Street’s most secretive and profitable arenas: securities lending and short-selling.

    Although the firm settled the matter without admitting to or denying the S.E.C.’s allegations, some of Goldman’s customers may now be able to recover damages from the firm, securities lawyers say.

    Essentially the regulator said Goldman advised its clients that it had performed crucial services for them when it often had not. Customers who paid handsomely for those services may want their money back.

    The $15 million punishment is just petty cash for Goldman, but this case tells us a lot about one of the most important duties that Wall Street firms perform for their clients — executing trades for hedge funds and other large investors. When these clients want to bet against a company’s stock, known as selling it short, they rely on brokerage firms to locate the shares they must borrow and deliver to a buyer.

    Selling stock short without first locating the shares for delivery is known as naked shorting. It is a violation of Regulation SHO, a 2005 S.E.C. rule. Goldman’s failure meant that some of its clients were unknowingly breaching this important rule.

    The S.E.C. has said that naked shorting can be abusive and may drive down a company’s shares. Therefore, brokerage firms are barred from accepting orders for short sales unless they have borrowed the stock or have “reasonable grounds” to believe it can be secured. This is known as the “locate” requirement.

    Goldman violated the rule from November 2008 through mid-2013, the S.E.C. said. Through that period, which included the precipitous market decline of early 2009, the firm was “improperly providing locates to customers where it had not performed an adequate review of the securities to be located.”


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