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Brandon Matthews (pseudonym) is the founder of, which was borne of his desire to help retail investors after witnessing the continually changing ways that Wall Street can cheat them. Brandon has worked for Monroe Parker Investment Bankers, Morgan Stanley Dean Witter, American... More
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  • Wall Street's Latest Scheme: ETF Investors At Risk 0 comments
    Oct 17, 2010 12:27 PM | about stocks: AGQ, AOR, DUG, IDV, MZZ, SQQQ, SRTY, UGL, ZSL

    As most of you know, I have put myself on the front lines of market manipulation for some time now. My desire to help individual investors has always been trumped by Wall Street cheats, which have fleeced retail investors for years. When Sirius XM Radio was being victimized by illegal naked short selling, I brought the issue into the spotlight through my articles and through my appearance in the documentary "Stock Shock - The Short selling of The American Dream." I have written about the case of CMKM Diamonds, in which it is alleged that the Federal Government used the company in a sting operation to nab naked short sellers, which may have resulted in historic losses for the company's investors.

    Certain aspects of the media turned their sites on me as some sort of paranoid conspiracy theorist, only to find out that in the end I was right. For last 18 months Sirius XM as well as YRCW shareholders watched in disbelief as the common stock of each was being gamed first on one exchange, then another. It was not until Sirius XM shares spiked above the one dollar threshold and YRCW was to perform a reverse split, that the market makers themselves decided to speak out against the manipulation. Sirius XM investors had reported to the Securities and Exchange Commission on hundreds of occasions that this manipulation was occurring, yet got no response from the inept or corrupt agency...take your pick. The SEC at that point could no longer ignore the complaints of market makers, and Friday new  rules were announced by the CBOE that would prevent future abuses from occurring, but only at that one exchange. A little late for the fleeced retail investor I might add.

    It has been a long battle to abolish naked short selling, to reinstate the uptick rule and to level the market from abuses for the average investor. More needs to be done and thanks to the efforts of many, progress continues. Still, there is always someone looking to game the system and proof can be found in the current Reg Sho list.

    There was a time when the Reg Sho list was filled with equities that were being victimized by naked short selling. I dubbed the list a "hit list" because it told unscrupulous persons exactly which companies to gang up on and force into bankruptcy. The list itself was part of the problem. Yesterday, i happened upon the list once again for old times sake, and what I found is truly disturbing.

    The list is void for the most part of individual equities save for the likes of Blockbuster, which probably deserves to be there (Lots of sellers, zero buyers) and short favorite YRCWD. It is filled however, with ETF's, Growth Funds, Ultrashort Funds and the like. 2X and 3X ultrashort etf's have not only been shorted ad-infinitum, they are not being delivered, which takes advantage of the Naked Short sale rules because they arent "stocks."

    ETF's have become quite popular thanks to media outlets such as CNBC, which promotes analysts whom promote ETF investing nearly every day. If I've learned nothing from my own experience, it is to avoid any stock that is on that list, as you would the plague. Bull, Bear, I don't care! Gains and losses are exhacerbated and risk multiplied exponentially, and the very fact that these investments are listed means the system is not working.

    Some rather surprising names on the list include; ProShares Ultra Silver (AGQ), iShares S&P Growth Allocation Fund (AOR), ProShares UltraShort Oil & Gas (DUG), Direxion Daily Financial Bull 3X Shares (FAS), Direxion Daily Financial Bear 3X Shares (FAZ), iShares Dow Jones International (IDV), ProShares UltraShort MidCap400 (MZZ), ProShares UltraPro Short QQQ (SQQQ), ProShares UltraPro Short Russell2000 (SRTY), ProShares Ultra Gold (UGL) and ProShares UltraShort Silver (ZSL).

    In the case of the short ETF's that have been shorted and naked shorted, such as the ProShares UltraPro Short Russell2000, investors buying SRTY and betting on a market correction may be surprised when the index value rises, as the markets decline due to short covering. A declining market may force those short sellers to cover their positions and wipe out any gains that investors would have realized.

    The same holds true for SatwavesPro forum favorites FAS and FAZ. Caveat Emptor! Wall street has found a way to game the system once again, and retail investors should avoid playing the game. 

    The complete list can be viewed by clicking  here.

    Disclosure: Long SIRI, no others mentioned
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