FOIA on NYSE/NASDAQ Fails - April 2004-2005
FOIA on OTCBB/AMEX Fails
The two FOIA requests downloadable above contain aggregate numbers, which don't include any preferred stock or debt trading as equity. Thus, the first FOIA proves that there are hundreds of millions of FTDs in a handful of Reg SHO NYSE/NASDAQ companies - highly concentrated fails in 40-50 companies, once you exclude the preferred issues and such that also occupy the SHO list. And these data do not include any "ex-clearing" FTDs.
The lobby that would have us all believe that this isn't a big problem would do well to consider the impact of 5-10 million FTDs over and above legitimate short shares in a company like OSTK or NFI, and then further consider that ex-clearing fails are likely 4-5 times as large.
Is it a significant problem when as much as 75+% of daily volume in some stocks could well be fakes, never to be delivered? Here's a fun thought - how many of the millions of shares that trade hands daily on the ECNs, which are from related party account A to B, never are delivered, as they are accomodated ex-clearing, and the "buyer" isn't ever going to demand them - it being the right arm of the same corpus whose left arm sold - the entire dance's point being to create a sale transaction or million to drive a stock's price down?
The OTCBB data is indicative of a whole new dimension of larceny in the bulletin board stocks. A billion shares a day on many days FTD - and again, that doesn't include any ex-clearing FTDs, or FTDs from offshore clearing groups.
So now we have billions of shares FTD.
Of note is that some days we see the FTD level drop by 30 million or more, and yet there isn't a correlation between Reg SHO company stock price and those clearing fails. That raises an even more disturbing set of questions - is the data dependable? Are there bear raids occurring where prices are driven down in order to trigger margin calls, creating supply with which to clear fails by manipulating the price down? Is there some other even more nefarious mechanism at play?
Whatever your sentiment, you cannot deny the FOIA data - this is a huge problem for a group of stocks that is targeted for manipulation, and attempting to spread the data over the entire galaxy of stocks is disingenuous.
Now don't you wonder how many FTDs were grandfathered, if this is the SEC's idea of a "trivial" problem?