Wednesday, September 21, 2011

Letter to SEC and Congress - Time to Occupy.

Dear Sec Staff and Congressional Representation (Senators Patty Murray & Maria Cantwell, House Representative Rick Larsen),

I’d like to demand in the strongest terms an investigation into the trading of LDK Solar Inc (LDK).

LDK has recently been on the Naked Short Threshold List for nearly a month, which indicates a high level of Fails-to-Deliver, and which can and does, in this case, indicate Fraudulent and Abusive Trading Practices.

Also of note is that LDK Solar had previously been on the Naked Short Threshold list for well over a year, prior to the financial collapse in ’09. At the time, known naked-short-sellers such as Mario Asensio and others were manufacturing allegations against the company, which, to this day, have never been realized.

For years, the Yahoo Finance Messageboard has been a hive of short-rumormongers alleging impending Bankruptcy and other false claims, and this continues today. Leadership of these public manipulators on Yahoo rests with members Twoheadedsnake1234 and Higherphat. Over the last 5 years, both have led in calls of impending bankruptcy and have made numerous demonstrably false claims.

Of particular interest at this moment are a set of private loans between the Company’s CEO and various Lenders, in which the CEO stands to be forced to give up his own shares in the case that LDK’s share price reaches predetermined levels. There is clearly interest in these shares, as demonstrated in LDK’s Q2 Earnings call, where two references were made to this situation, one by Colin Rusch of ThinkEquity and one by Sam Dubinsky of Wells Fargo[1].

The interest in these shares is clear today as Twoheadedsnake1234 initiates a thread entitled “Who said margin call wont happen,” in which he states “For reference in 2008 his loans were based on around $4- a share. This was something like 25M shares as security.” [2]

As can be seen in Figure 1, the reported Fails-to-Deliver Shares of LDK had reached as over 100% of Daily Volume on 08/30/2011. Additional data is provided below.

This is OUTRAGEOUS!

It cannot be that over a day’s worth of volume can be failed-to-deliver without having a significant and fraudulent impact on the price of the security. Somebody in this case is being stolen from. Shares that they purchased are not being delivered to the proper accounts, as agreed between the buyers and sellers, and Equity is systematically and illegally destroyed.

In the SEC’s own words:

“where a seller of securities fails to deliver securities on settlement date, in effect the seller unilaterally converts a securities contract (which is expected to settle within the standard three-day settlement period) into an undated futures-type contract, to which the buyer might not have agreed, or that might have been priced differently." By this definition, Naked Short Selling of stocks is certainly akin to Fraud. The buyer in this case has not agreed to the purchase of an undated futures contract. The buyer has agreed to pay for a share of Stock, which is not received.“ [3][4]

In addition to the contractual fraud that takes place by way of these Fails-to-Deliver, the proliferation of these Fails has a direct negative impact on the Price of the Shares. This has impact upon the very operational security of the Company, as rumors and artificially devalued share prices act to decrease the availability of financing to the company.


It’s quite clear from the expressed interest in these shares, held by the CEO, in conjunction with the exceedingly high levels of Fails-to-Deliver, that there is a concentrated effort by some on Wall Street to devalue of the shares to such point as margin can be called. By this process, these interests are illegally destroying the equity of Investors (and of Americans).


It’s known that the SEC will never publically discuss their interest or activity in investigating wrongdoing, and in fact, it is known that the SEC routinely destroys historical records of prior investigations [5]. However, it’s also known that over the last five years the SEC has received a very large volume of complaints about just this kind of trading practice that has surrounded LDK Solar, and if record of them has not been destroyed, these complaints could be shown to have come from a host of independent observers of this process.


This criminal activity must be investigated without delay. There is real fraud happening right now. It’s demonstrable, and it’s Criminal.


Figure 1: Source: FINRA, SEC, Yahoo Finance via http://dailyshortvolume.com/CompanyData/CompanyData.aspx?Ticker=LDK



[1] http://seekingalpha.com/article/290465-ldk-solar-s-ceo-discusses-q2-2011-results-earnings-call-transcript?part=qanda
[2] http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_L/threadview?m=te&bn=51438&tid=732354&mid=732354&tof=2&frt=2#732354
[3] http://www.sec.gov/rules/final/2007/34-56212.pdf
[4] http://americansolareconomy.blogspot.com/2009/05/letter-to-sec-on-naked-short-selling.html
[5] http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=36486



Fails-to-Deliver Data per SEC and Yahoo:

Ticker_Date Fails_Count_Shares Daily_Total_Volume Fails_Volume_Ratio
----------- -------------------- ------------------ ----------------------
2011-08-31 2673144 3223751 0.82920299985948
2011-08-30 2935704 2883532 1.01809308861493
2011-08-29 2762990 3550268 0.778248289988249
2011-08-26 2032191 4111721 0.494243408052249
2011-08-25 1534633 3488576 0.439902412904291
2011-08-24 1431871 4129243 0.346763559325523
2011-08-23 905834 5336658 0.169738064534021
2011-08-22 1275761 5261286 0.242480830732258
2011-08-19 1442150 12237587 0.117845944629444
2011-08-18 2593451 5050900 0.513463145182047
2011-08-17 3431713 4139500 0.829016306317188
2011-08-16 3349328 3737000 0.896261172063152
2011-08-15 2670714 4875400 0.547793822045371
2011-08-12 1759886 3770300 0.466776118611251
2011-08-11 544905 7254700 0.0751106179442293
2011-08-10 364782 8825600 0.0413322606961566
2011-08-09 217054 6527300 0.0332532593874956
2011-08-08 31069 6990900 0.00444420603927964
2011-08-05 24652 7581600 0.00325155639970455
2011-08-04 137804 7056100 0.0195297685690396
2011-08-03 86880 4936100 0.0176009400133709
2011-08-02 42893 2786200 0.0153948029574331
2011-08-01 153471 2792500 0.0549582811101164
2011-07-29 165665 4483300 0.0369515758481476
2011-07-28 74529 2831800 0.0263185959460414
2011-07-27 604431 3820700 0.158199021121784
2011-07-26 249867 3130700 0.0798118631615932
2011-07-25 755163 4377800 0.172498286810727
2011-07-22 991262 7177300 0.13811071015563
2011-07-21 872224 2135400 0.408459305048235
2011-07-20 948327 2846700 0.333132047634103
2011-07-19 329145 4350700 0.0756533431401843
2011-07-18 427889 6289600 0.068031194352582
2011-07-15 493656 1953500 0.252703352956232
2011-07-14 15261 2867700 0.00532168636886704
2011-07-13 72658 4627200 0.0157023686030429
2011-07-12 110132 9367000 0.0117574463542223
2011-07-11 133149 4558000 0.0292121544537078
2011-07-08 3062 3819100 0.000801759576863659
2011-07-07 110085 6066600 0.0181460785283355
2011-07-06 79112 5182800 0.0152643358802192
2011-07-05 26887 2842200 0.00945992540989374



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