I got an interesting email in my inbox this morning, wherein a US-listed company announced their intention to delist in the US, and seek more equitable and fair markets - abroad.
This is in a direct response to naked short selling in the US markets.
You can read the press release here.
Now, when a nation starts seeing its resources departing due to inequity, and has to place disincentives in the process to keep them here, we stop being the great nation others come to with the expectation of prosperity, and start becoming more like Soviet Russia.
Our tax code already has gone a long ways down that road - if you renounce your US citizenship now, every dollar over $500K is taxed at a 50% rate, regardless of whether you have already paid taxes on it (you have). Why? Because the US views your money as its money - they would have gotten it when you died, so why should they be "cheated" out of "their" money?
This went into effect under Clinton.
It is the closest thing we have to currency control, and is essentially a 50% fine for wanting to go somewhere else with your cash and your brain.
Now we are seeing many large IPOs occurring outside of the US, and I believe we will see other companies departing the US market for more fair systems. The news is out that our market is a rigged game, the Wild West, where the banditos get away with murder while the sheriff's asleep. That's what happens in a global market where companies are free to shop for jurisdiction. Why stay in a fixed game, to be savaged by criminals, if you can take your business elsewhere?
Good question. Although it is highly likely that our market system can trade derivatives or ADRs of the foreign listing, and just naked short sell those into the ground, making it impossible to truly escape the reach of the Wall Street predators.
I can make a prediction. We will see an increasing number of issuers looking for ways to escape, and chucking it in on the US system, and moving abroad (presuming there is a way for that to be effective). And we will see cries for interventionist legislation blocking that, presumably for patriotic reasons, but in actuality to prevent escape from the predators.
I don't know how listing on the London bourse would impact the ability of the US markets to list the stock and then manipulate it here. But I do know that what you are seeing is a larger number of companies trying to figure out how to get out from under the criminality that now defines Wall Street's actions. After the Vonage IPO and the OSTK debacle, there isn't even a pretense of fair play or equitable treatment, and the regulators are a standing joke, who "study" the impact of the destruction of companies for years, and hold roundtables to chat about it, and request comments, and stall laws to avoid any actual solutions.
The simple solution - settle all trades at T+3 or break the trade - is always avoided, or argued as though that were an impossibility. I mean, think of how it would constrict Wall Street's trading if they actually had to deliver what buyers were paying for!
I think the game is over now. This company is merely one of the first to do what many will likely do over the next year. I know that they will be mocked for their business activities - erotic items - as that is the easy shot, rather than addressing the substance of their complaint. To that, I will simply point out that the adult film business is roughly 2+ times the size of mainstream Hollywood's business.
The real question is, how much IPO and listing business do we have to lose before the problem is correctly seen as damaging the integrity of our market system?
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Speaking of integrity and our market system, this article on the Utah conflagration says it about as well as anything I've seen.
Utah caved, and sold out its issuers in exchange for Wall Street's favors.
What they get in return is unknown. But what Utah companies and citizens don't get is any protection from illegal naked short selling. Instead, the very things that the law was intended to address - the stalling, and non-regulations that are the stock in trade of the SEC - are trumpeted as virtues by Utah, and the idea is that after years of being savaged with no relief from anyone, it is a good idea to wait still longer to see if THIS TIME maybe some regulation will be passed by the SEC that will do anything at all.
I can answer that. Reading the SEC proposed amendments to SHO, the options MMs will still have the ability to naked short sell to their heart's content, the regular MMs will still have the ability to naked short sell to their hearts' content, and no meaningful penalties are being suggested for violation of the pablum-like rules that do exist. No hard borrow is required, nothing is proposed to address the "desking" and creation of fraudulent securities entitlements, nothing is done to address the myriad number of ways to rig and game the system.
And most notably, no effort is made to observe the 1934 Securities Exchange Act edict that calls for PROMPT SETTLEMENT, including transfer of record ownership, for ALL transactions. The SEC is still considering that to mean EXCEPT for the dozens of exceptions they have created, in violation of the Act.
Until we have a regulator who behaves responsibly, and consistent with the law that created them, there is little reason for hope that the regulator is anything but a rubber stamp for Wall Street.
And now we can add Utah to the pile of "This time it's different...doh...uh...actually not" cases we have seen.