Saturday, April 14, 2007

Canada Repudiates Baloney


Canadian market authorities issued a report on Friday, authored by Canada's Market Regulation Services, describing the extent of Canada's "fails to deliver" problem -- the subject of hysteria by the crackpot Baloney Brigade anti-short-selling movement and its corporate sponsors.

The conclusion: fails are a de minimus issue, and are only rarely a result of the "naked short-selling" bugaboo.

Here's an article on the study in a Canadian business newspaper. It has otherwise received no coverage of which I am aware, and was brought to my attention by a reader.

The study found no evidence of excessive or prolonged “fails” on Canadian marketplaces. Only 0.27% of trades by study participants failed to settle. The predominant cause of failed trades was administrative delay or error accounting for almost 51% of “fails”; less than 6% of fails resulting from the sale of a security involved short sales; fails involving short sales are projected to account for only 0.07% of total short sales; the more “junior” the marketplace in terms of the type of security traded, the higher the incidence of failed trades; special settlement trades experienced a significantly higher rate of failure; and, approximately 88% of failed trades settled within five days after the “expected” settlement date, with 98% settling within 15 days after the “expected” settlement date.
The shame is that Canadian officials were forced to divert time from pursuit of real stock fraud in chasing down this non-issue.

It's even more unfortunate that the U.S. Securities and Exchange Commission continues to waste valuable resources in pursuit of this mirage. The current SEC chairman and commissioners are even more craven on this issue than their predecessors.

This report has been met with stunned silence from the Baloney Brigade's wack-a-doo websites and the blame-shifting corporate hacks who fund this fraudulent campaign.

I am sure that they'll be cranking out the usual conspiracy theories, spin, lies, distortions, and personal attacks on the study's authors -- all to perpetuate this flagrant waste of regulatory resources.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

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