Forum Post: Wall St "Naked short selling" threat

I am trying to get out the word about "naked short selling" and a film about the people who have been trying to stop it. (see definitions of Naked Short Selling at end of this post) We need more awareness of The practice trades as many as 1 billion "phantom" shares a day on Wall St. This fraud rips off our economy and investors (including retirement plans) while lining the pockets of hedge funds and other traders.

If anyone is interested in organizing a gathering to help spread the word about this film--or you know someone who would be able to and interested--please let me know who/how to contact.

This documentary film is a hard-hitting, inspiring and heart-wrenching journey into a world that is short-selling the American dream. The Wall Street Conspiracy tells the story of how a small, diverse group of activists, entrepreneurs, legislators and lawyers—including an attorney who successfully fought Big Tobacco—have dedicated their lives to protecting that dream. The film chronicles their attempts to expose what’s called “naked short selling,” a trading glitch that allows short-sellers to run down company stocks by flooding the market with trades based on “phantom” shares. Film viewers discover how hedge funds and some of the nation’s largest banks have been part of a systematic fraud, trading on as many as 1 billion nonexistent shares a day while robbing hard-working Americans of trillions of dollars. Small businesses—the heart of American enterprise—have been their easiest targets, and they’ve gotten away with attacking larger and larger companies, some of which were critical in the 2008 financial meltdown. Millions of American workers’ pensions, 401(k) savings, and jobs have been the ultimate victims of this practice, and the entire financial capital structure is vulnerable. A myth of complexity has helped hide naked short selling. But the film reveals its simple bare facts and solutions, leaving viewers inspired and prepared to help raise awareness and rein in this fraud.

review blurb: … a practice that critics say could destroy the U.S. economy. --newstimes See the trailer: http://thewallstreetconspiracy.com

HOW DOES NAKED SHORT SELLING WORK? my description: traders pretend they have borrowed stocks, which they sell on the market. since these are in addition to the the real stocks for a company, they tend to put downward pressure on the values/prices of the stocks that actually do exist. the trader waits for stock values to go down, then they get to buy back at a discount the same number of fake shares they sold at the original higher value.

here's an excerpt from yahoo answers re Naked Short Selling http://answers.yahoo.com/question/index?qid=20080918075628AAEeFIQYahoo Best Answer - Chosen by Voters

[Naked] short selling, is basically, selling stocks you dont have, and buying them back, within a short period. anticipating a rapid drop (before the transaction is settled, usually 3 days)

lets say, a stock is worth $10 a professional investor thinks the stock wil drop further. so he will sell 1000 $10 shares (worth $10'000 he does not have. this will make him go short 1000 stocks. (like being in debt)

2 days later, the stock has indeed dropped, to $90, the investor decides to buy back the stocks he sold before the stockexhange forces him to cough up the shares he doesnt have. he buys 1000 stocks at $9000 and closes his short position.

net profit: $10,000 - $9,000 = $1,000