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Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 5/30/2006 6:10 AM

Dave Patch got the FOIA data on Cal Maine Foods (CALM) over the weekend, and wrote an amazing blog on it for this site.

The FOIA data can be seen here.

Dave's blog can be viewed here.

So, what does it mean?

Well, Dave nicely summarizes how a bear raid was used to clear the fails - that would be a deliberate downward manipulation of the share price to shake loose shares from longs who panic, or get margin calls.

The NASD has claimed that it is "possible" that the data represents options related fails.

Huh.

Sure. 10%+ of a company's stock, and a bear raid. But we are treated to "possible" explanations.

Isn't it nice how the SEC and the NASD discuss "possible" explanations for FTDs, and yet always ignore the glaringly obvious one?

How often do we have to see the same exact pattern - high fails, then huge drops in price as the fails clear - before we stop with the tortured explanations, and articulate the obvious truth?

Someone, likely a cartel of hedge funds, working with some prime brokers and the specialist, is gaming these stocks, and driving the price down, even as buying is taking place to clear the fails. The trading has ALL the earmarks of the bear raids from the 1920s. All.

And yet the see no evil, hear no evil regulators have plentiful explanations, each more distantly plausible than the last. Which just drives me nutty, and highlights the crux of our current market crisis.

The regulators aren't trying to stop obvious rampant manipulation. They are seeking to maintain as much secrecy as possible, so that their explanations of alternatives remain plausible.

I look at the NFI data, for which multiple bear raids are evident, and now the Cal Maine data, for which one massive bear raid is evident, and I ask the simple question: If this isn't what market manipulation using FTDs and a coordinated, RICO patterned takedown by collusive brokers and hedge funds looks like....then what would it look like? Cal Maine is another firm that Rocker Partners was/is believed to be short - another one with the same pattern of SHO abuse as NFI (also a Rocker short) - and yet the regulators can't add two and two to make four?

Again, I'm sickened by this. How many lost their retirements from this abuse, while some bureaucrat wonks dismissed it all as BS?

This is yet another brick in the wall which fortifies the complicity of the regulators with the miscreants. Our federal scheme is broken, and it is up to the states to protect their citizens. There are far too many comfy million dollar salary law-firm positions waiting for good little SEC boys and girls for that system to be anything but badly compromised, and the NASD is asleep at the wheel, or worse.
Copyright ©2006 Bob O'Brien
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Comments (29)
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By ostkprtnr on 5/30/2006 7:48 AM
good research boys, keep it up!
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By bobo on 5/30/2006 7:59 AM
Isn't it sort of amazing how these astounding coincidences ALWAYS result in windfall profits for those who are short these companies, or who have FTD positions, and NEVER benefit the shareholders?

What are the odds that these sorts of POSSIBLE trading patterns would create unexpected boons for short sellers, 100% of the time, and always destroy long holders?

How many more FOIA requests will have to show the same pattern for our lawmakers to recognize this to be prima facie evidence of stock manipulation by Wall Street, to benefit its largest hedge fund customers?

Wanna bet Biovail has the same pattern? How about KKD? TASR? NAVR? Just think of a short that the little cartel has on, and then match it to the SHO list, and then place your bets on how many have the IDENTICAL pattern of "possible" bear raids...
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By bobo on 5/30/2006 9:16 PM
Pervil: I believe you just have to have adequate "interest" in trading them and market makers willing to trade them.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By bbhindyou on 5/31/2006 4:57 AM
Come on bunny.This has been tail-or made for the funny bunny to satorize.It's egg-zactly what the bunnys been saying all along.You haven't been adding enough to the funny blog lately hop to.If there were any better material out there I can't imagine what it could be.He who laughs last and all that. PLEASE ! Your faithful fans await.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By bryedge on 5/31/2006 6:53 AM
The WSJ finally found time to report the new Utah law fighting illegal trading.

http://online.wsj.com/search/date.html#SB114868740944964826

Securities Industry Weighs Suit
Over New Utah Short-Sale Law

By JED HOROWITZ and CAROL S. REMOND

The DTCC makes light of the number of failures and their ineptness/possible(?) collusion with no challenge from WSJ reporters.

Less than a tenth of 1% of the 39 million trades cleared daily on average by the DTCC result in failures to deliver, a DTCC spokesman said.

39,000 trades fail DAILY / 10,000,000 per year

I doubt a computer glitch could account for this many REGULAR errors and the WSJ making notice of the commissions the DTCC collects for thoseTEN MILLION MISTAKES would be far too much to expect.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Jody on 5/30/2006 7:59 AM
Dave did a great job with CMKX Diamonds as well.

Three Cheers for Dave.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Niel Storts on 5/30/2006 8:29 AM
Well, I believe it might be time. It is obvious that those entrusted to maintain a society based upon the rule of law have failed.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Patchie on 5/30/2006 8:42 AM
The state closest to this issue appears to be Utah. We have teh state legislature making laws to stop the abuse and two Senators willing to step forward and ask teh tough questions.

I would urge all of you to write a very clear and professional letter to Both Bob Bennett and Orin Hatch and thank them for their support. As you write for their continued support mention these blogs and the FOIA data as proof that our voices and concerns must be heard openly in a public Senate hearing.

These letters MUST be professional without threat or intimidation as some have been in the past. We have allies in our camp. Don't scare them away.

Go UTAH !!
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By ginger on 5/30/2006 9:12 AM
The Senators can expect non-professional threatening and/or intimidating letters from those who want to preserve the status quo.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By a spectator on 5/30/2006 10:02 AM
First of all congrats to the team for the latest developements. Last week was one to cheer about but felt a bit cold this morning at the following headline.
"http://biz.yahoo.com/ap/060530/white_house_shake_up.html?.v=17"

While it could seem off topic, when watching the big pictures one comes to think nothing is off topic and every bit interrealtes to eachother in this small world...

What good can be expected from politicians when you see this:

One more Fox (no joke with words) guarding the hens. Just disgusting.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By tbs_theman on 5/30/2006 10:04 AM
NYSE and NASDAQ are SROs. As far as I can tell, the shareholders of the respective companies have a lawsuit against these entities for failure to perform their fudiciary duties. They would need to show that they did something about the FTDs. They need to show they investigated them and the investigation did not turn up abuse. They also need to make public all documents in the investigation. Simply saying "no one told us" is not good enough. The high level of fails should have triggered an investigation.

If it did not - everyone, especially the CEO of the NASDAQ and NYSE, should be held liable and should be brought to justice.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Patchie on 5/30/2006 12:00 PM
For those interested in the raw data analyzed with some charts, teh data is available at :


http://www.investigatethesec.com/NFI_Historical.xls

http://www.investigatethesec.com/Calm_Maine_FOIA.xls

I think you will be appalled at what you see.
Secretary of the Treasury By rick on 5/30/2006 12:32 PM
Disturbing. Explains a lot. This could be a long war.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By mhatmccane on 5/30/2006 12:50 PM
I wonder what the data for Enron would show ? Now that the designated fall guys have been convicted, what's the real story of how Enron could fall so far so fast.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Pevilis Nosthumus on 5/30/2006 1:13 PM
Bobo,
Perhaps the hedges realized the flaw in the system and are utilizing it indirectly. Here is what I mean:
Say for NFI or CALM as the price goes up the hedges are using legit borrow and selling short. They do this until they know the borrow is tight. Then they force the issue by buying the sh*t out of the puts and forcing the marketmaker/specialist to hedge by selling naked. Then comes the FUD campaign and the rest is history. In this scenario though the hedges aren't bribing the specialist but they certainly are knowingly exploiting a flaw in the system. Perhaps a bit too simplistic but I wonder if it is in a broad sense accurate.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Patchie on 5/30/2006 1:43 PM
mhatmccane,

Believe it or not, i asked the SEC for that exact data and was turned down. The answer, the SEC has only been receiving this data since 2004 (Reg SHO being passed). So now you know why it has taken so long to correct, they were never looking despite years of complaints on the issue.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Babson on 5/30/2006 2:01 PM
I especially like the part with 160,000 new fails on 177,000 trading volume with the stock down 3%.

I think it's time for all the talk to stop. People need to be strung up for this.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Claire S. on 5/30/2006 2:11 PM
Are the fails being matched up properly with the trading volume for the correct days?
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Patchie on 5/30/2006 2:22 PM
Claire, take the FTD day and subtract 3.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Niel Storts on 5/30/2006 5:51 PM
Nice evening. I see the weather over in Larkspur is dandy. Have a nice evening.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By bobo on 5/30/2006 6:09 PM
What do you do when the protectors are ignoring the cries of the victims?

Pevillus: I believe that is a likelihood, however it is impossible to gauge how strong a likelihood. How about nobody gets to sell any stock on the SHO list naked - confirmed borrow only.

Is that so hard? It would end this overnight. And yet it isn't being done.

Ask yourself why.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Pervilis Nosthumus on 5/30/2006 6:56 PM
Agreed. I don't intend my comment to mean there is no abusive and/or collusive NS. There certainly is evidence of this on the non-optionable BB and pink sheet stocks.

I just wonder if this is how Rocker and some of the larger hedges like SAC are going to play dumb regarding NS. "Technically, uhhhh we didn't do nutttin', it was those options market-makers that FTD'd. The FUD? Well, uhhhhh prove it! er, uhhh, Bill of Rights, yeah!"

It just seems that these larger guys have stuck to targeting only those stocks that have listed options (NFI, BVF, OSTK, CALM, etc.) I may be wrong about this.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By rico on 5/30/2006 6:58 PM
Patchie:

We need to name names.

What management level regulators turned their heads prior to 2004 and why? Operation Bermuda Short was in 2000 - 2001.

Did those regulators benefit personally?

Could they be personally liable in lawsuits? Could they be arrested as part of RICO?

As long as it is the all powerful SEC, NASD, NASDAQ, NYSE, AMEX, etc. that we are complaining about, nothing will be done.

When we identify that Bob Regulator took a bribe and needs to be arrested, then that's when things will change.

I don't know how to do a FOIA request, but I think we should get the minutes of the meeting where they decided to grandfather shorts.

Who said what? Who was in favor of protecting the industry to protect the shorts from a squeeze?

I believe that organizations like the SEC are 99% full of honest hardworking people who's efforts are sabotaged by a handful of powerful people who take bribes. We need to get those people arrested.

Bobo, what do you do when the protectors don't heed the cries of the victims? You arrest the protectors.

...off with their heads...
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By rico on 5/30/2006 7:04 PM
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-05-30T214403Z_01_N30439728_RTRIDST_0_FINANCIAL-HEDGEFUND-BANKRUPTCY-UPDATE-2.XML
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By bobo on 5/30/2006 7:16 PM
Pervilus: I remember when I bought my first shares of NFI almost 3 and a half years ago - there were no options - these turds were knee deep in it already for over half a year, and options didn't start until almost a year into it.

So that piece doesn't fit. Not to say they don't play that way, but I would bet that if you pull the trading records for the specialist and the ECNs you will see a lot of selling into downward price in a decidedly non-market maker manner, and in violation of the uptick rules. Call it a hunch. I have 3 years of trading data where that seems to be the case.

Although I know how much we would all be shocked to discover that the specialists, prime brokers and hedge funds are all crooks...

Again.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By InTheKnow on 5/30/2006 7:30 PM
Richard Ney had the specialists pegged back in the 60's and they called him a nut job. How right he was!
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By Pervilis Nosthumus on 5/30/2006 7:38 PM
Fair enough. Incidentally, I have been trying to find the specific criteria for listing options on stocks (been to the CBOE site, they just give a vague answer). Do you or anyone else know where I can find this out?
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By dave on 5/30/2006 8:05 PM
Intheknow, everyone should read Richard Ney:

"The New York Stock Exchange is not an auction market (2Ney, 86), though many investors still hold onto that image. It is a rigged market. Volume is an effect of price. Prices are controlled absolutely by the specialists, the 'market makers' in individual stocks. It was this discovery that led Mr. Ney to eventually give us small investors a priceless gift: enlightenment."

http://www.siliconinvestor.com/readmsg.aspx?msgid=21965890

Pervillis, I've been wondering that myself.

Note that the specialist will normally hedge by shorting when selling a put and buying when selling a call.

At expiry, the specialist will do the opposite.
Re: Cal Maine FOIA Request Shows Yet Another SHO List Company with 10+% Of All Shares Failed By dave on 5/30/2006 8:11 PM
Grasso ransom.

http://www.suntimes.com/output/savage/cst-fin-terry253.html

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