Failure to Deliver should not exist. The basic rules of supply and demand are betrayed by this concept. If a Christie’s auction failed to deliver the auctioned item, but sent a replica that is treated and “valued” just as with the original, both of their prices are then diluted. Nefarious intent lies behind the semi-rational “because we need liquidity” argument for naked shorting and strategic Failure to Deliver securities. This becomes a massive tool that can (is) used to defraud investors knowingly every single day. Counterfeiting money gets you arrested immediately. How is this not worse? The answer is that it is worse. Any and every tool available to mitigate this fraudulent activity should be utilized, lest anyone else involved (even players with secondary and tertiary involvement) be complicit in this fraudulent activity.
Anonymous-JB Comment On Regulatory Notice 21-19
Failure to Deliver should not exist. The basic rules of supply and demand are betrayed by this concept. If a Christie’s auction failed to deliver the auctioned item, but sent a replica that is treated and “valued” just as with the original, both of their prices are then diluted. Nefarious intent lies behind the semi-rational “because we need liquidity” argument for naked shorting and strategic Failure to Deliver securities. This becomes a massive tool that can (is) used to defraud investors knowingly every single day. Counterfeiting money gets you arrested immediately. How is this not worse? The answer is that it is worse. Any and every tool available to mitigate this fraudulent activity should be utilized, lest anyone else involved (even players with secondary and tertiary involvement) be complicit in this fraudulent activity.