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A sample of the data can be seen here. The chart below shows the settlement date for each trading day, the stock symbol, the quantity of failures to deliver and the stock price.
Settlement Date Symbol Quantity (Fails) Price
3/19/08 BSC 2,120,638 $5.91
3/20/08 BSC 13,789,126 $5.26
3/24/08 BSC 12,588,395 $6.39
3/25/08 BSC 11,736,910 $11.25
3/26/08 BSC 7,673,413 $10.94
3/27/08 BSC 9,340,963 $11.21
3/28/08 BSC 12,396,655 $11.23
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Careful review of the Bear Stearns Naked Short Data reveals the pattern of activity leading up to the dramatic drop in financial stocks. From 2004 through 2007 failures to deliver on any one trading day were less than 1 million shares. In January 2008 the failures to deliver increased above 1 million shares on one trading day. March 2008 had up to 13.78 million shares fail to deliver on one day. The share price dropped from over $100 to under $5 as this entire process played out.
There are many factors that contribute to a decline in stock price. These include but are not limited to: 1) negative general market conditions 2) adverse operational events that are company specific 3) bona fide shareholders selling their shares ("long sales") and 4) short selling. Failures to deliver, a.k.a. naked short selling, occurs when short sellers sell stock they don't own and they do not borrow the shares from a bona fide shareholder. This distorts the laws of supply and demand to where, theoretically, there could be infinite number of shares outstanding and the naked short selling could drive a stock to zero. This manipulative activity induces long shareholders to also sell their shares in fear and can result in a company declaring bankruptcy because day to day operations are so heavily influenced by perception, a company's ability to borrow and by its ability to sell equity to raise cash for operations. The failure to deliver data released by the SEC demonstrates that this is happening and is widespread.
According to BUYINS.NET data provided by NYSE, AMEX, NASDAQ, OTCBB and PINKSHEETS, there have been approximately 7,739 companies that have had failures to deliver in their shares for 5 or more consecutive trading days since Reg SHO was enacted on January 1, 2005. Over 50% of all publicly traded companies have shown up on the Threshold Security Lists. It is safe to assume that possibly every publicly traded company has had failures to deliver if we include companies with less than 5 consecutive trading days failing to deliver.
It is important to note that since late October 2008, the average number of stocks that have shown up on the Threshold Security Lists has dropped from over 500 per day to under 50 per day. This is because it takes 5 consecutive trading days of failures to deliver to show up on the naked short lists and the SEC is beginning to enforce the T+3 locate, borrow and deliver requirements of Regulation SHO. Theoretically, there should never be another company on the naked short lists because of the amendment to Reg SHO.
Regulation SHO took effect January 3, 2005, and provides a new regulatory framework governing short selling of securities. It was designed with the objective of simplifying and modernizing short sale regulation and providing controls where they are most needed. At the conclusion of each settlement day, data is provided on securities in which: 1) there are at least 10,000 shares in aggregate failed deliveries for the security for five consecutive settlement days, and 2) these failures constitute at least 0.5% of the issuer's total shares outstanding. SEC Regulation SHO, under the Securities Exchange Act of 1934, mandates that, if a clearing agent has had a fail-to-deliver position for 13 consecutive settlement days, that clearing agent, and the broker/dealer it clears for, must purchase securities to close out its fail to deliver position. Amendments to Regulation SHO in October 2008 now all for T+3 locate, borrow and deliver requirements for ALL short sales in every US stock. Broker dealers are required to buy-in any account that is still failing to deliver on T+4.
Bear, Stearns Securities (NYSE: BSC | Quote | Chart | News | PowerRating) offers the necessities for securities traders. The global clearing services subsidiary of prominent US investment bank JPMorgan Chase, it provides securities lending, clearing, and other services to investment advisors, broker-dealers, and fund managers. Bear, Stearns Securities is a leader in fixed income trading, financing, and processing in the US and Europe as well. Investment opportunities cover equities, fixed income, structured products, and options, futures, and foreign exchange products. Parent Bear Stearns was acquired by JPMorgan in 2008 after it suffered heavily from its investments in the subprime mortgage market.
JPMorgan Chase & Co. (NYSE: JPM), a financial holding company, provides a range of financial services worldwide. The company operates through six segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury and Securities Services, and Asset Management. The Investment Bank segment provides various investment banking products and services, including advising on corporate strategy and structure, capital raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, and research. It serves corporations, financial institutions, governments, and institutional investors. The Retail Financial Services segment offers regional banking services, mortgage banking, and auto finance services that include checking and savings accounts, mortgages, home equity and business loans, and investments through bank branches, ATMs, online banking, and telephone banking. The Card Services segment issues credit cards. This segment has a joint venture with First Data Corporation, which involves in the processing of MasterCard and Visa payments. The Commercial Banking segment provides lending, treasury services, investment banking, and asset management services to corporations, municipalities, financial institutions, and not-for-profit entities. The Treasury and Securities Services segment offers transaction, investment, and information services. It also offers cash management, trade, wholesale card, and liquidity products and services to small and mid-sized companies, multinational corporations, financial institutions, and government entities. The Asset Management segment provides investment and wealth management services to institutions, retail investors, and high-net-worth individuals. It also offers global investment management services; trust, estate, and banking services; and retirement services. JPMorgan Chase & Co. was founded in 1823 and is headquartered in New York, New York.
About BUYINS.NET
WWW.BUYINS.NET is a service designed to help bonafide shareholders of publicly traded US companies fight naked short selling. Naked short selling is the illegal act of short selling a stock when no affirmative determination has been made to locate shares of the stock to hypothecate in connection with the short sale. Buyins.net has built a proprietary database that uses Threshold list feeds from NASDAQ, AMEX and NYSE to generate detailed and useful information to combat the naked short selling problem. For the first time, actual trade by trade data is available to the public that shows the attempted size, actual size, price and average value of short sales in stocks that have been shorted and naked shorted. This information is valuable in determining the precise point at which short sellers go out-of-the-money and start losing on their short and naked short trades.
BUYINS.NET has built a massive database that collects, analyzes and publishes a proprietary SqueezeTrigger for each stock that has been shorted. The SqueezeTrigger database of nearly 2,200,000,000 short sale transactions goes back to January 1, 2005 and calculates the exact price at which the Total Short Interest is short in each stock. This data was never before available prior to January 1, 2005 because the Self Regulatory Organizations (primary exchanges) guarded it aggressively. After the SEC passed Regulation SHO, exchanges were forced to allow data processors like Buyins.net to access the data.
The SqueezeTrigger database collects individual short trade data on over 7,000 NYSE, AMEX and NASDAQ stocks and general short trade data on nearly 8,000 OTCBB and PINKSHEET stocks. Each month the database grows by approximately 50,000,000 short sale transactions and provides investors with the knowledge necessary to time when to buy and sell stocks with outstanding short positions. By tracking the size and price of each month's short transactions, BUYINS.NET provides institutions, traders, analysts, journalists and individual investors the exact price point where short sellers start losing money and a short squeeze can begin.
All material herein was prepared by BUYINS.NET, based upon information believed to be reliable. The information contained herein is not guaranteed by BUYINS.NET to be accurate, and should not be considered to be all-inclusive. The companies that are discussed in this opinion have not approved the statements made in this opinion. None of the companies in this report have paid to be included in this report. From time to time we will mention a company that may have previously paid $995 per month for market data purchased from BUYINS.NET. This opinion contains forward-looking statements that involve risks and uncertainties. This material is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities. BUYINS.NET is not a licensed broker, broker dealer, market maker, investment banker, investment advisor, analyst or underwriter. Please consult a broker before purchasing or selling any securities viewed on or mentioned herein. BUYINS.NET will not advise as to when it decides to sell and does not and will not offer any opinion as to when others should sell; each investor must make that decision based on his or her judgment of the market.
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