It looks like we weren’t sceptical enough about Matt Taibbi’s assertion that he has a video showing a trader who executes a short sale on tens of billions of shares of the stock of one of America’s largest financial firms.
Because the video doesn’t show that at all.
As you see from the screen shot above the video actually shows a trader attempting an impossible trade and having it rejected by the trading system he is using.
Taibbi’s moment by moment description of the 31 second long video ends at 00:17. At that point he writes, “At seventeen seconds, at the bottom, you see that the firm Penson has now approved the trade and ‘located’ the multibillion amount of shares. The trade goes through.”
10 seconds later in the video, however, we see that the trade isn’t approved at all. It’s rejected by the system because is violates the maximum position for the symbol or account on which the order was placed.
Rather than showing a system vulnerable to naked short selling, Taibbi’s video shows the system working perfectly well.
It’s easy to see how this pop-up window was missed by Taibbi. It appears for only a fraction of a second. Perhaps a second at most. See if you can spot it at the 00:27.
Taibbi says the video was given to him last week. He doesn’t say who gave him the video. But he was pretty clearly misled. So the question is who is misleading Taibbi and why are they doing it?