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Phantom Shares

There is a large portion of America’s middle class that turns to investments as a means of retirement. A lot of people like to keep tabs on stock they have invested in, or receive as benefits. Some might receive shares of a stock as an incentive to take care of the company they work for insuring they and the company are profitable.

Then one day the moment in the spotlight comes and the company goes public on the market. The glitter quickly fades to gloom as the company you and so many worked so hard for falls in value %15-%35 in the first month continuing the trend over the next year. Someone must be to blame but not who you might think.

Welcome to the realization you have been the target of “naked short sales” of your stock. Small cap companies are at the greatest risk. While there are efforts in place to regulate it, there are still many investors and companies paying the price. To bring you up to speed here is a interesting piece Bloomberg news did on how and why it is happening.

The DTCC, the company behind all wall-street transactions processes $1.4 quadrillion in trades per year and by the way here is what that number looks like $1,400,000,000,000,000! The SEC stated that %1.5 of trades per day are not settled now in small amounts %1.5 might seem like a drop in the bucket but when that much money is changing hands it is a more than substantial sum, $6,000,000,000 in trade do not clear every day. But is that really all that does not clear?

Watch the full documentary (25 minutes)

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