The Scamming Of Investors Continues, Courtesy Of The Rumormill Formerly Known As The Equity Market (Zero Hedge)

Great post by Tyler Durden of Zero Hedge. Grandpa encourages everyone to visit their site for some very high level information combined with classic Zero Hedge delivery.

1) Somebody (wink wink) spreads a rumor that shorting government-owned companies will be banned. Citi is one of these companies.

2) Rumor spreads, causing AIG, C, FNM and FRE to skyrocket.

3) Citi announces it is placing $2 billion in TruPS Trus Preferred Securities), benefiting from the stock-buying orgy.

4) Cramer, and a bunch of fourth-rate analysts come out of the woodwork, and join the bandwagon, saying how Citi is massively undervalued and how the stock is merely an indication of the market realization that Citi's -100% Tier 1 capital when Marked-to-Market is a much more palatable 349,594,388% when Marked-To-Bull***.

5) SEC (wink wink) comes out with a one sentence refutation of the rumor late at night, when nobody will notice: "There is no truth to the rumor that we are considering restricting the short-selling of stocks in which the government has a stake," John Nester, Securities and Exchange Commission.

And that's how the market works nowadays. Better luck next time.


Grandpa:
Bullish Manipulation: Shares of Freddie Mac and Fannie Mae soared as much as 18.5 percent and 15 percent, respectively, before closing 7.6 percent and 5.9 percent higher. American International Group spiked 12.6 percent, and Citigroup jumped 7.6 percent.

Headline from Washington Post: Bank of America changes overdraft policy; SEC takes on market rumors.

Takes on market rumors! You must be kidding. This is how the SEC takes on market rumors that create a stock, group of stocks or the market to move higher. Mary Schapiro and her band of Wall Street advocates tend to be a bit more agressive if the rumor causes a stock to go down in value.

Text of a statement issued Tuesday by U.S. Securities and Exchange Commission spokesman John Nester in response to rumors in the market that affected the stocks of some financial institutions: "There is no truth to the rumor that we are considering restricting the short selling of stocks in which the government has a stake."