Lucy Komisar on Naked Short Selling and other Wall Steet gambits

© Ivan Kmit |

Here is an interview that Lucy Komisar, an investigative reporter specialized on matters related to financial fraud and tricks, gave to Dave Emory for his show, For The Record. Being not a specialist of the financial sector, I won’t venture too far. But there are certain things that I want to draw your attention to, and these are the few tricks that have been developped recently by the crooks of Wall Street. Here they are: short selling, naked short selling and credit default swap.

Short selling happens when a broker buys shares for a client and wait for a certain period of time before transfering it to the buyer. In other terms, the broker waits for the value of the shares to rise on the market before transfering it, therefore making a direct profit in the exchange, besides his normal commission. To give an example, let’s say a broker buys shares at $10 and then waits three days, the legal period of wait, and transfers them at the new current value, for example $12. He then makes a direct profit of $2 per share, plus the commission. Naked short selling happens when a broker buys shares that don’t exist, through a mecanism of « lending » of shares that the Wall Street crooks have invented. With this scheme, the client buyer is not really the owner of the shares, even if he or she possesses papers of ownership. This scam is exposed when there is a vote of share owners and that a greater number of votes are counted than the actual number of shares that exist for that stock. But evidently, the broker gets paid by the « buyer » the value of this phantom share as if it would be real. And credit default swap happens when debts are bundled in large packages and resold in the form of derivative products. You might have heard of the expression « toxic assets ». Anyway, I remind you that I am not sure to get all the nuances for these abstract notions and financial manoeuvres, that is why I am suggeting you to listen to the interview and read the description that Emory made of it in FTR #650. Also, I have joined an article by Lucy Komisar posted on her website about AIG and their financial gambits and problems.

We are governed by crooks and liars. If it is not evident for you already, I think there is more than enough material for you here to change your mind. Welcome to Brave New World.

FTR #650

Lucy Komisar on AIG