The people to blame

kennyboy66_2

StevieJ wrote: »

Could you explain to me how the pension fund that handed over the Northern Rock shares at X value and received them back worth probably nothing gained?

Of course they lost (well the pension fund members did) - but if they thought the shares would fall they would not be holding them in the first place.

As an aside, how difficult a job does Andrew Caldwell (getting paid £4.5m!) have in coming up with a valuation for Northern Rock.

No doubt a 800 page report to come up with the value of a big fat zero.

Plasticman

Pobby wrote: »

From the bbc. These are the people who are affecting everyone in a negative way

http://news.bbc.co.uk/1/hi/magazine/7625107.stm

and they will get away with it!

Not sure that it's fair to blame the guy from Dad's Army. Especially as he's been dead since 1973.

kennyboy66_2

StevieJ wrote: »

I agree, I have no problem with the short sellers, the point I am trying to flush out is whether some fund managers are acting counter to the interests of their clients.

A wise old Irish accountant once said to me that your interest should always be in the following order.

1) To yourself & your family.
2) to your professional / occupational standards .
3) to your company (and shareholders / members).

Fund managers follow the herd because they are safer that way.

StevieJ

Are short sellers subject to Insider Dealing rules?

WTF?_2

StevieJ wrote: »

Could you explain to me how the pension fund that handed over the Northern Rock shares at X value and received them back worth probably nothing gained?

Are you seriously suggesting that short selling brought NR down? NR went bust because their business model was unviable and short-sighted. Nothing whatsoever to do with short selling.

Anyone who lost out because they were holding shares in NR made a bad investment decision, that is the long and short of it. Nothing to do with being the unlucky victims of short sellers.


The institutions who were long on the shares would have been committed to holding the shares anyway and would have lost anyway when the company was nationalised.

If they really thought that NR was going to go bust, those holders would have had plenty of chance to dump the shares themselves.

They chose to hold on to them, they lost out. Such is the stock market.

kennyboy66_2

StevieJ wrote: »

Are short sellers subject to Insider Dealing rules?

Yes, however a look at the number of sucessful insider dealing prosecutions would indicate how difficult it is to prove.

StevieJ

kennyboy66 wrote: »

Yes, however a look at the number of sucessful insider dealing prosecutions would indicate how difficult it is to prove.

Nuff said.

tomstickland

StevieJ wrote: »

Could you explain to me how the pension fund that handed over the Northern Rock shares at X value and received them back worth probably nothing gained?

From my limited understanding I believe it's as simple as:
-fund owns shares for long term growth
-fund lends shares to short sellers for short term bonus
-the shares would have fallen anyway, so the short sellers simply make some profit out of the dip
-in the long term the shares rise back up

If succesful it will actually make more money in the future because the drop in share price allows them to buy even more of them.

StevieJ

tomstickland wrote: »

From my limited understanding I believe it's as simple as:
-fund owns shares for long term growth
-fund lends shares to short sellers for short term bonus
-the shares would have fallen anyway, so the short sellers simply make some profit out of the dip
-in the long term the shares rise back up

If succesful it will actually make more money in the future because the drop in share price allows them to buy even more of them.

That is a pretty good explanation, it still doesn't justify the funds support for shorting the shares in vulnerable organizations e.g. banks that can can be subject to a whispering campaign that can lead to masses of savers withdrawing deposits.

Generali

StevieJ wrote: »

Could you explain to me how the pension fund that handed over the Northern Rock shares at X value and received them back worth probably nothing gained?

The pension fund gained because they received a lending fee. The shares had no value because:

1. NRK was insolvent
2. There was a run

At least the lenders got something out of it.

StevieJ wrote: »

Are short sellers subject to Insider Dealing rules?

Yes.