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CSFB's Toxic Convertibles
http://www.webb-site.com/articles/toxicon.htm
CSFB's Toxic Convertibles
8th June 2005 (updated 14-Jun-05)
Over the last few years, a large and until now fairly well respected investment bank, Credit Suisse First Boston (Hong Kong) Ltd (CSFB) has been peddling a value-destroying financial instrument to small Hong Kong listed companies. In 2004, Merrill Lynch International (Merrill Lynch) also did one of these sordid deals. Like CSFB, they have apparently decided that the huge profit margins from this kind of product are worth the reputational risk it carries. Come back Frank Quattrone and Henry Blodget, all is forgiven.
Webb-site.com has been aware of the toxic convertibles scam for many years and have repeatedly warned the regulators about them in private, urging a regulatory ban. In our view, there can be no logical reason why a listed company would want to cede control to a third party over what amounts to a stream of future equity issues at deep discounts to market. The Listing Rules should be amended to prohibit listed companies from issuing convertible instruments which carry floating conversion prices. We have waited until now to compile this article because we wanted to conduct a comprehensive study of the actual results of these deals, which can each last several years, to prove how damaging they are. Recently, two of the companies we invested in have been ignorant enough to agree to these deals, and so we resolved that it was time to act.
Warning to all listed companies, particularly small, new and ignorant ones
If you run a listed company and get no further than this paragraph, just learn one thing: toxic convertibles with floating conversion prices will seriously damage your wealth. Don't even think about issuing one or your share price will almost certainly fall.
Hopefully after this story is out, CSFB and Merrill Lynch will reassess that reputational risk. if they want to salvage their reputation, they should do the decent thing and cancel the outstanding deals without redemption premiums, and cease and desist from further issues. In the meantime, if you are an institutional investor, you should consider diverting brokerage business to firms which do not promote this kind of instrument, which could damage your portfolio value. Money talks.
What is a convertible bond?
In normal circumstances, a convertible bond represents borrowings by an issuer from an investor, on which the investor receives interest and has a right to convert the bond into shares at a fixed conversion price, normally until the bond matures. The convertible bond represents a combination of a straight loan and an option to subscribe shares, and the value of the option compensates the investor for the lower interest rate than the issuer would normally pay on its borrowings. The conversion price is normally fixed at a premium to the market price at the time the bond is issued. If the shares rise above that price, then the option will be converted and result in a profit for the bondholder, and otherwise, the issuer benefits from lower-cost borrowings until the bond is redeemed. There is nothing wrong in principle with convertible bonds, other than the fact that they can ultimately result in an issue of shares without offering them to existing shareholders, in other words, dilution.
What is a toxic convertible?
CSFB has added a nasty twist to its bonds, namely a floating conversion price. The typical formula is that at any point during the lifetime of the bonds (typically 3 years), the bondholder (CSFB) can look back at the last 30 days (six weeks) of trading, and pick the lowest closing prices within that period, typically over a 4-day or 5-day average. It can then take a portion of the bonds and convert them at a set discount to that low average price, which is typically between 7% and 10%. As a result, CSFB gets a discount on a discount. CSFB can then sell those shares in the market, locking in a profit. The bond allows CSFB to choose either the floating conversion price or the fixed conversion price, whichever is lower. It result in a near-certain profit at the expense of the issuer.
The consequence of a floating conversion price is that there is no certainty over the number of shares that could be issued if the bonds are converted. This creates a massive over-hang on the market, so investors sell the shares, and as the price falls, the floating conversion price falls with it, and the potential dilution gets even worse. This is why they are known as toxic convertibles. In the case of highly geared companies, the effect can be even worse, and the bonds are sometimes known as death spiral convertibles because the price spirals down as the dilution increases. Read what the United States regulator, the SEC, has to say about toxic convertibles.
Theoretically, the lower limit to the conversion price is the par value of the shares, since under the laws of HK, Bermuda and the Cayman Islands, where most HK-listed companies are domiciled, it is illegal to issue shares for less than par value. However par value can often be only a small fraction of the current share price, allowing a long fall.
Another limit to dilution (but not conversion price) comes in the 20% general mandate to issue new shares, but the agreement with CSFB often includes an obligation to seek a fresh mandate from shareholders if the current mandate is exhausted, and in any case, these are multi-year deals so the annual general meeting will likely pass a new 20% mandate each year. It is unclear whether the agreements, which are not themselves published, include any obligation on the controlling shareholders to vote in favour of such mandates. In some cases, the issuers have sought and obtained a blanket issue mandate to cover as many shares as they need for conversions during the life of the bond.
Structural details
The CSFB deals typically split the bonds into 2 or more tranches, with the first tranche or Tranche 1 issued immediately. CSFB usually has an option to require the next tranche to be issued on the same terms, called the Additional Tranche 1. That option in itself has value, because if the share price rises after Tranche 1 is issued, then CSFB benefits from the fact that the maximum conversion price has already been fixed. Often a third tranche, which they call Tranche 2, can be issued at the option of the listed company, and this usually involves resetting the fixed conversion price based on a premium to the market price at the time of the new bond issue.
In recent deals, CSFB has included something called the "downside price", at a deep discount (typically 35-40%) to market. If the market price is at or below the downside price when bonds are presented for conversion, then the issuer has the right to redeem them instead, subject to payment of a premium (they always get their pound of flesh). However, if the issuer does not or cannot exercise that right then the conversion will proceed and the price may decline further. Note that the downside price is not actually a limit on the conversion price, because the 30-day look-back period allows CSFB to convert at less than the downside price after the price has risen back above it.
They have also sometimes included a "put price", at an even deeper discount (typically 50-60%). If the market price is below this level, then CSFB cannot convert the bonds but has the right to require redemption. If the market price reaches this level, then you can bet that the upside is limited so long as CSFB has not called for redemption, because as soon as the price begins to recover, the conversion rights become exercisable again.
It is still possible that a share price will move upwards after the bond is issued, for example, if the earnings grow fast enough to offset the dilution of the share base, or if the issue size is relatively small compared with market capitalisation, then the damage may not be as great and the overhang is smaller. Even in these circumstances, the dilution will still be a drag on the performance of the shares.
The CSFB deals usually include an option to subscribe new shares for cash worth about 15-20% of the face value of the bonds, with an exercise price at a premium to the market price at the time the bonds and options are issued. In most cases, however, the share price falls due the the overhang of the bonds, and the options are not exercised. Companies may be thinking that these options provide some kind of incentive for CSFB not to drive the price down with rapid conversions, but history shows that the options are seldom exercised, and it is clear that the bulk of the profit comes from the bond conversions.
An equity tap - outsourcing the general mandate
In several of the cases we have studied, the agreement with CSFB includes an escrow arrangement, so that part or all of the money received for the bond is placed in a trustee bank account and cannot be used by the company until the corresponding amount of the bond (or part of it) is converted. Meanwhile the money earns interest which can be used to pay the interest on the bond. This makes it even more obvious that the convertible is in effect an "equity tap" (or if you are American, a faucet) in which CSFB taps out freshly issued equity into the market whenever they see fit. Rationally they would choose moments when the floating conversion price is at the largest possible discount to the current market price, to earn the maximum profit. Remember, they can look back 30 days to pick a low point.
As readers will know, we have long opposed the general mandate sought by corporate boards from their shareholders to issue new shares for cash without offering them to existing shareholders. But the equity tap takes this a step further by effectively delegating and outsourcing the general mandate, placing it in the hands of an investment bank whose principal financial interest is to lock in the profit from the conversions.
We have no idea why companies would agree to this, particularly those which already have strong balance sheets (sometimes holding substantial net cash), good core businesses, and low P/Es. We suspect the companies are mostly ignorant rather than dishonest, and the involvement of such a prestigious investment bank might seem like a way to draw attention to an overlooked company. Well, for all the little companies who were seeking attention, now you've got ours.
Opacity
One of the many defects of Hong Kong's Listing Rules is that, while companies are required to disclose share buy-backs by the morning after the transaction, they are not required to disclose share issues. So when a placing of new shares gets completed, or when share options get exercised, or when bonds are converted, or when scrip dividends are issued, nobody knows about the new shares except the company and the person receiving them, who may then turn around and sell them. A typical HK-listed company has a daily turnover of just 0.1-0.2% of its issued shares, so even a small issue of shares hitting the market can impact the share price.
Another implication is that shareholders who are seeking to monitor whether their shareholdings have passed through the 5% legal disclosure threshold, or any of the 1% boundaries above it (6%, 7%...) don't know for sure how many shares are in issue. All they can do is check this HKEx web page, which is updated only if a company sends in a monthly return. It is unreasonable to expect investors to check that every day for each of their holdings, just in case there has been an update.
We call again on the Listing Committee to amend the rules to require immediate disclosure of all new share allotments by filing with the Stock Exchange, on the same timetable as the disclosure of share buy-backs. The same disclosure should apply to the grant of share options or the creation of any other rights to subscribe shares.
Recently, the Stock Exchange has shown signs of listening to our pleas, because in a stop-gap half-measure, they have begun requiring issuers, as a condition of listing approval for the shares underlying convertibles, to disclose within 5 trading days of each month-end whether any of the convertibles have been converted, and if so how much, and a further requirement that if, during a month, the number of shares issued since the last disclosure is more than 5% of the company, then that must be disclosed too. However, this does not go far enough. 5% of the issued shares is about 5 to 10 weeks' turnover for an average stock, and it is not much consolation to be told about it a month later.
A study of toxic convertibles in HK
We have conducted an extensive study of 15 current and prior toxic convertible issues for which online records exist - all that we could find, excluding deals with controlling shareholders, although we cover some of those at the end of the article. Of the 15 deals, CSFB has led 13 of them, 1 was by Merrill Lynch, and one by an obscure firm called FB Gemini.
Limitations of the study
As mentioned above, we cannot know exactly which dates all the conversions are made, because there is no disclosure requirement. However, by carefully analysing statements in annual reports, interim reports, shareholder circulars and announcements, we can narrow conversions of blocks of bonds to a range of dates. We can then look at the volume weighted average price (VWAP) during the same period, that is, the average price at which all shares traded in the market during that period, and we can calculate the average discount of the floating conversion price compared with the VWAP. Hence we can estimate the profit that the bondholders made, or the effective discount to market at which the shares were issued during the conversion period.
We emphasise that these are only estimates, and there may be considerable variance between the estimate and the actual profit, depending on exactly when the bonds were converted and the resulting shares sold. However, if you analyse as many cases as we have, then the average of all cases will be a pretty accurate estimate. In some cases, where we do not have access to daily data before 2003, we have measured VWAP to the nearest week. Again, while this makes individual discount calculations less accurate, it will even out on the average and will not affect the validity of the results.
We have adjusted for bonus issues, stock splits, consolidations and rights issues. We use the phrase "scrip-adjusted" to describe this. We ignore the effect of dividends.
Expenses
In the course of our case studies, apart from the damage caused by toxic convertibles, we found that they also seem to involve unusually high issue expenses, averaging around 5% of the bond issue, whereas a typical equity placing would cost 1-2%. We can't help wondering whether someone, either the subscriber or a middle-man, is charging an arrangement fee. Whatever, the cause, it is a further drag on the company.
Summary and findings
Of the 15 toxic convertible issues we studied, involving 13 listed companies, 9 have run their course, 4 still have bonds outstanding, and the latest 2 have not yet had any bond conversions. The average market cap of the companies involved at the time they agree to the deals was US$142m, and the average maximum size of the deals (excluding the 15-20% options) is about US$18m.
· <![endif]>We found that in 13 out of 15 issues, or 87% of the time, the share price at the time of writing (7-Jun-05) was less than when the bond was first announced. The average movement in share price for all 15 cases (including the two that rose) was a 30.0% drop.
· <![endif]>Looking at the average conversion price for each bond issue, in 10 out of 13 cases, it was lower than the market price before the issue was announced, and the average discount of all 13 cases was 29.8%.
· <![endif]>Looking at the average conversion price compared with the VWAP during the conversion periods, we found it was lower in all 13 cases, by a weighted average discount of 23.7%.
· <![endif]>In terms of money raised for the issuer, before expenses, CSFB's gross profit margin is therefore about 31%. It certainly beats doing straight equity placings for a 1% fee.
· <![endif]>Put simply, for every US$1m the company receives from CSFB, CSFB makes a profit of about US$310k.
· <![endif]>Companies also pay issue fees and expenses averaging 5% on money raised.
Here is a summary of the findings, in order of issue date.
The above table excludes the US$1.36m redemption premium paid by Sunway to terminate its deal early, and the US$2.51m settlement paid by EganaGoldpfeil to stop another tranche of bonds. Several of these deals are still in progress, so the total profit shown is less than the final figure.
Now we cover the cases in detail. To navigate among them, use the "companies in this story" links at the top of this page.
EganaGoldpfeil
On 15-Dec-99, EganaGoldpfeil (Holdings) Ltd (EGP, 0048) announced a single-tranche issue of US$15m toxic convertibles to CSFB with a fixed conversion price (scrip-adjusted) of $2.80, compared with a market price of $2.44. EGP had a market value of HK$2,383m (US$305.5m).
In fact, this was not the first toxic convertible by EGP - it announced one back on 21-Apr-97 which was issued on 1-May-97, but we don't have the announcement as it predates the online system, and we don't know who the subscribers were.
Here's the estimated conversion history of the 1999 bond:
The table shows that the average conversion price was $1.726, or a 29.3% discount to the price when the bonds were first announced, and we estimate that CSFB made a profit of $31.8m. At the end of the conversion period, on 30-Nov-02, the shares closed at $1.52, a fall of 37.7% since the bond was announced.
Round 2
Not satisfied, EGP came back for more, and on 27-Feb-03 it announced a new issue of up to US$25m toxic convertibles, with an initial Tranche 1 of US$10m and a fixed conversion price of $1.6184. CSFB also received an option to subscribe up to 9,035,336 shares at the fixed conversion price. The stock closed the previous day at $1.36, valuing EGP at HK$1,539m (US$197.4m). Issue expenses were US$212,500, or 2.125%.
On 6-Jun-03, EGP and CSFB amended the redemption provisions, apparently to deal with the fact that the par value of EGP's shares is HK$1 which sets a floor on the legal price of any shares issued to satisfy a redemption.
On 15-Jan-04, EGP and CSFB amended the agreement again, to reduce the interest rate, reflecting the lower bank deposit rates of the time, and to change the floating conversion price from a 7% discount to a 10% discount to the average of the 5 lowest closing prices in a period of 30 trading days. They then issued US$5m of Additional Tranche 1 bonds. The market price the previous day was $1.85, so the fixed conversion price of $1.6184 was already in the money. CSFB also received options to subscribe 4,517,668 shares at $1.6184 each. At the same time, EGP issued the US$10m Tranche 2, which had a fixed conversion price of $2.0604, and came with options to subscribe 7,066,098 shares at the same price. Issue expenses were US$290k.
On top of all that, on the same day, EGP granted CSFB a further option to require EGP to issue a further US$10m Tranche 3 bonds, exercisable once at any time until 27-Feb-06. The bonds would have a 3-year maturity. On 10-May-05, perhaps finally realising the damage these instruments cause, EGP announced that it had agreed with CSFB to cancel the right to subscribe Tranche 3, as well as the existing share options and the ones which would have come with Tranche 3. The announcement contains numerous errors which have yet to be corrected, and although you won't find it mentioned in the summary, EGP had to pay CSFB US$2.51m (HK$19.6m) to cancel the deal.
The conversion history, as near as we can estimate, is as follows:
As shown, the average conversion price of the bonds was $1.308, and CSFB has made an estimated profit of HK$14.0m so far, plus the $19.6m they were paid to cancel Tranche 3 and the options, plus whatever they will make on the US$15.7m of toxic convertibles outstanding at the latest interim report date of 30-Nov-04.
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China Rare Earth
On 13-Jun-00, less than 8 months after it listed, rare earth and refractory products maker China Rare Earth Holdings Ltd (CRE, 0769) agreed an issue of up to US$10m toxic convertibles to CSFB, with an initial Tranche 1 of US$5m and a fixed conversion price of HK$1.34, a 24% premium over the closing price that day of about $1.08, when CRE was valued at HK$648m (US$83.1m). CSFB also received an option to subscribe 4m shares at $1.6035. CRE had an option to issue a Tranche 2 of US$5m within 75 days after Tranche 1 was fully converted, but they let it lapse. At least they got that right.
The estimated conversion history is as follows:
So the average conversion price (including the options) was $1.157, which was a 40.0% discount to the estimated selling price CSFB could have obtained during the conversion period. On 7-Jun-05, the shares closed at $0.95.
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Sunway
On 25-May-00, less than 9 months after it listed, calculator maker Sunway International Holdings Ltd (Sunway, 0058) agreed an issue of up to US$20m toxic convertibles to CSFB and The SCM Growth Fund II L.P. (SCM), with an initial Tranche 1 of US$10m and a fixed conversion price of HK$2.1087, a 20% premium to the closing price that day of about $1.76, which valued Sunway at $1,760m (US$225.6m). The bond subscribers also received options to subscribe 11.5m shares at the fixed conversion price.
Update, 14-Jun-05
In the original version of this article, we incidentally suggested that SCM may have been managed by Strong Capital Management Inc. Sources now indicate that this was not the case, and SCM was more probably managed by a firm called "Strategic Capital Management". We regret any confusion caused.
The estimated conversion history is as follows:
As you can see, only US$1.3m was converted, at an average price of $0.491, or 72.1% below the market price when the bond was first announced. The bonds included an option for Sunway to redeem the bonds if they were presented for conversion while the market price was $1.00 or less, at a redemption price "determined under the Subscription Agreement", the formula for which was not disclosed. The market price did indeed descend well beyond this point, and Sunway ended up paying a total premium of about HK$10.6m to redeem the rest of the bonds, which is more than the $10.1m value converted. Overall then, Sunway issued 20.6m shares for a negative price. What a painful lesson. Since then, they haven't issued any shares. The stock closed at $0.29 on 7-Jun-05.
Incidentally, Sunway is one of only a few companies in HK with 3 generations simultaneously on the board - a Grandfather, his daughter, two granddaughters and their mother (who was married to the late Chairman).
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Asia Aluminium
On 30-Aug-00, Asia Aluminium Holdings Ltd (AA, 0930), which in a tech-bubble moment, renamed itself "Global Applied Technologies Holdings Ltd" before reverting to its old name, agreed an issue of up to US$16m toxic convertibles, including an initial Tranche 1 of US$13m, of which US$8m went to CSFB and US$5m to SCM, and a US$3m Tranche 2 to be issued 3 weeks later to SCM. So overall, the US$16m deal went 50:50 between CSFB and SCM.
Both Tranches had a fixed conversion price of HK$1.375 (scrip-adjusted). The Tranche 1 bond issue was completed on 1-Sep-00, and then next day it was disclosed that AA had also granted options to CSFB and SCM to each subscribe for 12.5m shares at $1.42 (adjusted) per share.
The estimated conversion history is as follows:
On 31-Aug-00, the day before the first bond was issued, the shares closed at $1.2125 (adjusted), valuing AA at about HK$2.51bn (US$322m). As you can see, the average conversion price was $0.517, a 57.4% discount to that price, and an average 25.9% discount to market prices prevailing during the estimated conversion periods over the next 2 years. We estimate that CSFB and SCM made a profit of HK$44m while AA raised $124.8m before expenses. The amount of expenses was not disclosed. None of the share options was exercised.
AA is a company which has spewed out new shares like Vesuvius. The toxic convertible was just a part of this. In the 4 years from Jun-00 to Jun-04, its Earnings Per Share fell 23.8% even though its net profit rose 37.2%. It's hard to grow your EPS when your "S" grows faster than your "E". The shares closed on 7-Jun-05 at $0.90.
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Tidetime Sun
On 28-Feb-01, Tidetime Sun (Group) Ltd (Tidetime, 0307), which has had 3 names in the last year alone, agreed an issue of up to US$16m toxic convertibles to CSFB, with an initial Tranche 1 of US$8m and a fixed conversion price of HK$0.2399. The shares closed the previous day at $0.225, valuing Tidetime at HK$1,381m (US$177.1m). CSFB also received options to subscribe up to 70m shares at $0.2369 each. Issue expenses were US$400k (5%). These options were not exercised, and Tidetime did not exercise its option to issue a US$8m Tranche 2.
The estimated conversion history is as follows:
So the conversion price averaged $0.0969, a 56.9% discount to the market price when the bond was announced.
Round 2
Tidetime's then management did not learn much from this experience, because on 6-Jun-02 it announced another toxic convertible, this time up to US$26m with FB Gemini Asset Management Ltd (FB Gemini). The shares closed the previous trading day at $0.136, valuing Tidetime at HK$1,267m (US$162.5m). An initial US$6m Tranche 1 was issued on 9-Jul-02 and US$3.5m was immediately converted at $0.102. FB Gemini also received an Option to subscribe US$150k at the fixed conversion price.
On 27-Aug-02, the agreement was amended and FB Gemini surrendered its right to require Tidetime to issue another US$20m of bonds, and in return, received a "Further Option" to subscribe up to US$4m at any of the actual conversion prices of the Tranche 1 bonds. On 27-Sep-04, the deal was amended again, to change the conversion formula for the remaining US$200k of bonds, to lower the exercise price of the $150k option and to cut the size of the Further Option.
Here's the estimated conversion history so far:
So the average conversion price so far has been a 53.7% discount to the market price before the deal was announced. The deal expires on 9-Jul-05. We should note that Tidetime is one of the most prolific issuers of shares in the market, and has reported a loss for 9 consecutive years under various management. As of 30-Apr-05 it had 23.22 billion shares in issue. The shares have been suspended since 25-Apr-05 at $0.017.
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Far East Pharmaceutical Technology
On 14-Aug-01, just under a year after listing, Far East Pharmaceutical Technology Co Ltd (FEPT, 0399) agreed an issue of up to US$12m toxic convertibles to CSFB, with an initial Tranche 1 of US$4m and a fixed conversion price of HK$0.41125 (scrip-adjusted). The stock closed at $0.335 that day, valuing FEPT at HK$461m (US$59.1m). CSFB also received options to subscribe up to 18,966,564 shares (adjusted) at the fixed conversion price. Issue expenses were US$320k, or 8% of Tranche 1.
On 14-Dec-01, CSFB exercised its right to require FEPT to issue US$4m Additional Tranche 1 with the same fixed conversion price as Tranche 1. FEPT also exercised its right to issue US$4m Tranche 2 with an amended fixed conversion price of HK$0.4775 (adjusted). The floating conversion price for Tranche 2 was amended from a 7% discount to a 9% discount to the (lowest) average of any 4 consecutive closing prices in a 30-day look-back period. The stock closed at $0.425 that day. Issue expenses were US$320k, or 4%.
On 7-Jan-02, FETP announced that on 18-Dec-01, CSFB waived the requirement in the agreement for shareholders' approval of the Additional Tranche 1 and Tranche 2 but, with the general mandate almost exhausted, FETP obtained a fresh general mandate to issue shares at an EGM on 29-Apr-02.
The estimated conversion history is as follows:
As you can see, the volatile nature of this stock allowed CSFB to achieve exercise prices which averaged 33.3% less than the volume weighted average price for the periods in which bonds were converted. We estimate that they made a profit of HK$50m, while FETP raised $96.4m net of expenses of $5.0m.
FETP's crash
We divert briefly to tell you what happened to FETP afterwards. Readers may recall that on 17-Jun-04, FETP's share price crashed 92% and swas suspended 4 minutes before the market closed, never to trade since. On 24-Jun-04, brokerage Guotai Junan Securities (Hong Kong) Ltd (GJ), the Co-lead Manager of FETP's IPO, disclosed that on 17-Jun-04, the day of the crash, it had enforced a share pledge on 25.9% of FETP and had sold about 5.53% at an average of $0.069 in the market that day. On 29-Jun-04, Celestial Securities Ltd (Celestial) also disclosed that it had acquired and sold 8.56% at an average of $0.101 on the day of the crash. These two sales added up to 14.09%. At least one other party was involved, because the controlling shareholder reported a reduction of its holding of 15.81%, and recorded sales at a higher maximum price than the brokers.
As brokers, GJ and Celestial were exempt from disclosing their security interest in the shares until it became enforceable, so the public never knew about the pledges, and could not factor this information into their investment decision to hold the shares. This and several other cases pushed the Securities and Futures Commission to review whether the exemption for banks and brokers should be continued, and we have long called for it to be scrapped. Pledges represent the potential for a forced sale, and this is negative to valuation of stocks, particularly when a company's loans include covenants that the controlling shareholder will remain in control, as they did in this case, so a forced sale means that the company's bank loans go into default.
Predictably, banks, brokers and listed companies were opposed to disclosing such negative information, and recently, the SFC decided to do nothing but form a working group to study it further.
It appears that a syndicate of banks led by Raiffeisen Zentralbank Osterreich AG (Singapore branch) and Standard Chartered Bank (SCB) were taken for a ride, agreeing a US$80m loan on 10-May-04. On 15-Sep-04, SCB filed a winding-up petition, and on 22-Sep-04 provisional liquidators were appointed. All the directors who were on board at the time of the crash have since quit citing "health reasons" or "personal reasons". Questions remain over why a company which apparently had so much cash was in need of a bank loan, and what happened to all that money. The last annual accounts for 30-Jun-03, audited by CCIF CPA Ltd, showed cash in the balance sheet of HK$644m.
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Global Green Tech
On 13-Dec-01, just under a year after its IPO, skin cream maker Global Green Tech Group Ltd (GGT, 0274) agreed an issue of up to US$12m toxic convertibles to CSFB, with an initial Tranche 1 of US$4.08m and a fixed conversion price of $1.8019 (scrip-adjusted). CSFB also received an option to subscribe 3m shares at $2.0791 each. The shares closed that day at $1.267 (adjusted), valuing GGT at HK$467.6m (US$59.94m).
On 9-Apr-02, GGT and CSFB agreed to swap the remaining US$1.78m of the original Tranche 1 with a new batch on identical terms, in order to get around the depleted general mandate. On 30-Apr-02, GGT sent a circular to shareholders and obtained their approval to issue as many shares as necessary to satisfy all future conversions of the bonds.
On 9-Jul-02, GGT exercised its right to require CSFB to subscribe US$3.84m Tranche 2, with a fixed conversion price of $2.2453 (adjusted). On 30-Jan-04, CSFB exercised its right to require GGT to issue the US$4.08m Additional Tranche 1.
The estimated conversion history is shown below.
The table shows that the average conversion price was $0.987, a discount of 22.1% to the price when the bond was first announced. The shares closed on 7-Jun-05 at $0.80.
Options excess
As a side note, we should remark that GGT is one of the worst exploiters of Hong Kong's lax listing rules on share options, dishing them out not just to employees but to consultants, customers and suppliers. We calculate that as of 25-Apr-05, 36.5% of the existing issued share capital had resulted from the exercise of options. Of course, the value of these options has not until now been required to be recorded as an expense in the income statements. New accounting standards should change that.
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Champion Technology
On 22-May-02, Champion Technology Holdings Ltd (Champion, 0092) agreed an issue of up to US$24m toxic convertibles to CSFB, with an initial Tranche 1 of US$8m and a fixed conversion price of HK$2.3635. The stock closed at $1.88 the previous day, valuing Champion at HK$1,070m (US$137.2m). CSFB also received options to subscribe 4,949,905 shares at the fixed conversion price. Issue expenses were US$306k.
On 27-Jun-02, Champion announced that it would sent a circular to shareholders seeking authority to issue "the appropriate number of shares" on conversion of the bonds - in other words, opening the door to almost unlimited dilution of the share capital, beyond the 20% general mandate that they already held. The circular failed to spell out the maximum number of shares that could be issued in a worst-case scenario, instead focussing on the fixed conversion price. Approval was obtained.
On 26-Sep-03, US$8m of Tranche 2 bonds were issued, with a fixed conversion price of HK$1.98. The market price that day was $1.68, valuing Champion at HK$1,169m (US$149.8m). CSFB also received an option to subscribe 5,881,515 shares at $1.98 each. Issue expenses were US$262k.
You will notice that we have skipped the Additional Tranche 1, which CSFB had not called to be issued. The 3-year term of the original bonds was set to expire on 22-May-05, but on 28-Apr-05, CSFB and Champion amended the agreement and issued US$8m Additional Tranche 1 bonds, extending the maturity until 22-Nov-05 and amending the put price to $1.00. The shares closed on 28-Apr-05 at $1.18. Issue expenses were another US$273k. As previously agreed, CSFB also received an option to subscribe 4,949,397 shares at the fixed conversion price of $2.3635 each, although that is obviously of little value now.
On 13-May-05, Champion disclosed the formula which would apply if bonds were presented for conversion while the market price was below the downside price of $1.10. Basically Champion would then have the option to redeem by payment of an extra 8% interest. CSFB wins either way.
Obviously this deal is still in progress, but based on the accounts up to 31-Dec-04, here is the estimated conversion history:
As you can see, the average conversion price up to 31-Dec-04 was $1.116, which was a 40.6% discount to the market price when the bonds were first issued. Champion had issued equity for HK$92.8m, paid expenses of US$841k (HK$6.6m), and CSFB has made an estimated profit of HK$27.7m. The stock closed on 7-Jun-05 at $1.21.
Champion is a sorry story in itself - if you adjust for 3 bonus issues, a consolidation and a rights issue, then the IPO price in Aug-92 was $3.673. The company has also pumped out a stream of bonus warrants to its shareholders so that there has been one in issue at almost all times since it was listed. All that a warrant issue does is to reduce the company's ability to optimise the capital structure, since they cannot control when the warrants will be exercised.
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Tack Fat
On 19-Dec-02, less than 8 months after listing, Tack Fat Group International Ltd (Tack Fat, 0928) announced an issue of up to US$12m toxic convertibles to CSFB, with an initial Tranche 1 of US$4m and a fixed conversion price of HK$0.62. The stock closed at $0.55 that day, valuing Tack Fat at HK$730.4m (US$93.6m). CSFB also received options to subscribe US$0.8m for 11.744m shares at $0.531 each.
This was one of the smaller deals, so the overhang was less and the stock price actually rose. On 3-Oct-03, CSFB exercised its option to require Tack Fat to issue US$4m Additional Tranche 1 bonds, together with options to subscribe another 11.744m shares at $0.531 each. That day, the share price was $0.87, so the Additional Tranche 1 with options already had an expected profit of HK$16.56m (US$2.12m).
We estimate the conversion history was as follows:
Overall, the table shows that Tack Fat issued 123.1m shares for HK$71.9m (before expenses of $3.4m) at an average price of $0.584, and CSFB earned an estimated profit of $18.0m, or about 20% of the estimated gross amount raised. At 28-Dec-04 (when the interim report was finalised) they also still had options to subscribe 5.528m shares at $0.531. That day, the shares closed at $0.85, implying an intrinsic value of $1.8m.
So far, Tack Fat has not, as far as we know, exercised its right to require CSFB to subscribe the final Tranche 2 of US$4m. Perhaps they have learnt from their experience. Tack Fat closed on 7-Jun-05 at $0.98.
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Hua-Han Bio-Pharmaceutical
On 22-Jul-03, Hua Han Bio-Pharmaceutical Holdings Ltd (HHBP, 0587) announced an issue of up to US$12m toxic convertibles to CSFB. The stock closed at $1.19 before the announcement, valuing HHBP at HK$676m (US$86.7m). The fixed conversion price was $1.4879.
Tranche 1 was US$3.5m (HK$27.3m), less expenses of HK$2.9m. CSFB also received options to subscribe 4,587,078 shares at $1.3094 each. Further details were disclosed in an announcement on 8-Aug-03, and, and an Additional Tranche 1 of US$4.5m (HK$35.1m), less expenses of HK$2.3m was issued on 5-Sep-03, when the shares closed at $1.35.
On 30-Oct-03 the company issued a further clarification and the next day dispatched a circular to obtain shareholders approval for the possible issue (at the option of HHBP) of US$4m Tranche 2 convertible bonds and the issue of "such number of new shares as may be required" upon their conversion. In other words, an unlimited general mandate had bee outsourced to CSFB.
As of 31-Dec-04, a total of US$7.25m had been converted and US$0.75m remained outstanding, so the company had not yet pulled the trigger on the next US$4m tranche. The conversion history, as near as we can estimate, is as follows:
As you can see, up to 31-Dec-04 the average conversion price was $0.964 per share, or 19% less than the market price when the bond was first issued. The company has so far issued equity for $56.5m before expenses of $5.2m. Net of expenses, HHBP has raised only $51.27m, or $0.876 per share.
On 7-Jun-05, HHBP closed at $1.00 per share. The company has also been a heavy issuer of share options to directors, employees and consultants.
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Egana Jewellery & Pearls
Earlier in this chronology we covered the toxic convertibles issued by EganaGoldPfeil. EGP has a listed subsidiary, Egana Jewellery & Pearls Limited (EJP, 0926). On 10-Feb-04, EJP agreed to issue up to US$45m of 5-year toxic convertibles, not to CSFB, but to Merrilll Lynch, who were jumping on the toxic bandwagon for the first time in Hong Kong, at least.
The shares closed the previous day at HK$2.10, valuing EJP at HK$651.4m (US$83.52m) so the maximum bond issue represented a huge portion of the company.
The initial US$10m (HK$78m) Tranche 1 carried a fixed conversion price at the lesser of $2.50 or 122% of the market price the day before closing. When the issue closed on 26-Feb-04, the market price was already $2.475 (a price not seen since then), so the fixed conversion price was set at $2.50, and Merrill Lynch received options to subscribe about 5,548,929 shares at the same price. Issue expenses were HK$3m.
An additional US$5m Tranche 1a was agreed to be issued between 45 and 150 days later. Each side had an option to issue another US$5m Tranche 2a from day 151 to day 250, which EJP could optionally increase with a US$5m Tranche 2b on the same day. The same fixed conversion price of $2.50 applied to all these tranches. Apparently neither Tranche 1a nor Tranche 2 was issued.
Merrill Lynch was also given an option to subscribe US$5m Tranche 3a from day 251 to day 350, and US$5m Tranche 4a from day 351 to day 500. If either of these options was exercised, then EJP had the right to increase the issue size with US$5m Tranche 3b or US$5m Tranche 4b, on the same respective issued dates. As clarified on 26-Feb-04, the fixed conversion prices for Tranche 3 and Tranche 4 would be 122% of the 30-day volume-weighted average price prior to issue.
On 13-Jan-05, Merrill Lynch exercised its right to require US$5m Tranche 3a to be issued, together with options to subscribe 3,518,342 shares at the fixed conversion price of $1.656. EJP chose not to add a Tranche 3b. The shares closed that day at $1.37. On 18-Feb-05, EJP announced that listing approval for the underlying shares had been obtained, but didn't say when. On 7-Mar-05 EJP announced that the approval was in fact obtained on 4-Feb-05, and from then until 28-Feb-05, US$2.5m had been converted. On 17-Mar-05, EJP announced that the rest of Tranche 3a had been converted on 9-Mar-05, which was the same day that they had put out a standard statement saying they had no idea why the volume had increased. Really!
So far, the estimated conversion history is as follows:
As you can see, the average conversion price has been $1.136, a discount of 45.9% to the market price of $2.10 when the toxic convertibles were first announced, and we estimate that Merrill Lynch has made about $31m from the issue so far, plus any profits they may make from the share options if the price recovers. The number of shares in issue has been diluted by 33.2% since the bond was announced, entirely because of conversions. The stock closed on 7-Jun-05 at $1.32.
As far as we know, Merrill Lynch has not yet required EJP to issue Tranche 4a, and they have until the 500th day after the first bond, being 10-Jul-05, to do so.
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Art Textile
On 6-Dec-04, Art Textile Technology International Co Ltd (Art Textile, 0565) agreed an issue of up to US$15m toxic convertibles to CSFB, including an initial US$10m Tranche 1 with a fixed conversion price of $0.8579. Issue expenses were US$563k, or 5.63%. The shares closed the previous day at $0.69, valuing Art Textile at HK$604.8m (US$77.54m). Up to 31-May-05, none of the bonds had been converted, but the overhang has been enough to drive the market price down 24.6% in 5 months, closing at $0.52 on 7-Jun-05. The fall came despite the fact that the company reported interim net profit up 32.3% for the six months to 31-Dec-04.
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Sinotronics
On 27-Apr-05, CSFB found its latest victim, Sinotronics Holdings Ltd (Sinotronics, 1195), which agreed to an issue of up to US$15m toxic convertibles, including an initial Tranche 1 of US$10m with a fixed conversion price of $1.1722. Issue expenses were US$600k, or 6%. The shares closed the previous day at $0.85, valuing Sinotronics at HK$421.3m (US$54.02m).
Up to 31-May-05, no bonds have yet been converted, but since the announcement, the shares have fallen 12.9%, closing on 7-Jun-05 at $0.74.
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Dishonourable Mentions
The toxic convertible has also been used by lesser-known subscribers, and we mention them here as a warning to our readers.
Rexcapital International
On 12-Jun-01, REXCAPITAL International Holdings Ltd (RexInt, 0155) agreed an issue of HK$100m 5% 3-year toxic convertibles to a BVI company called Kingfair Co Ltd, whose owner was not disclosed. The fixed conversion price (scrip adjusted) was $0.982 and the bonds were issued on 26-Jun-01. They were fully converted by 26-Jan-04. The average conversion price (adjusted) was $0.230.
On 22-Jul-02, in a connected transaction, Rexcapital International Holdings Ltd (RexInt, 0155) agreed to buy Rexcapital (Hong Kong) Ltd from Rexcapital Partners Incorporated, which in turn was 75% owned by Victor Chan How Chung, the Chairman and then 29.5% shareholder of RexInt, in return for HK$80m of 2-year toxic convertibles with a fixed conversion price of $0.36 (scrip-adjusted). The market price the previous trading day was $0.26. The acquisition was completed on 13-Dec-02. By the time the notes matured on 13-Dec-04, a total of $60m had been converted into shares at an average price of $0.070, a 73.1% discount to the market price when the bond was issued.
RexInt closed on 7-Jun-05 at $0.166, valuing the company at $456.9m. Net tangible assets at 30-Sep-04 were $346.2m, but this includes a receivable of $350m for the purported sale on 29-Oct-03 of 87.5% of REXCAPITAL Infrastructure Ltd (RI) to a BVI company called Sky China Holdings Ltd (Sky China), the owners of which have never been disclosed. Sky China has not paid a penny, and in the audit report for the year ended 31-Mar-04, Grant Thornton said "we have been unable to obtain sufficient information to satisfy ourselves as to the recoverability of a receivable". The reason the sale is so questionable is that in the 2 years ended 31-Mar-03, RI, which purportedly owns a fibre optic network in the PRC, recorded zero turnover. This business had been acquired for huge piles of cash in a series of transactions in 1999 and 2000, from a BVI company, the owner of which was not disclosed. The acquisition was made despite the PRC ban on foreign ownership of telecom networks.
BUBBLE WARNING: If you count the receivable at zero, and adjust for a recent placing and bond conversions, then RexInt has net tangible assets of only about HK$38m, so it is trading at about 12x adjusted net assets. If you own RexInt, get out now.
South Sea Petroleum
On 25-Nov-04, South Sea Petroleum Holdings Ltd (SSP, 0076) announced a HK$80m toxic convertible with companies represented by a man who had been negotiating "for a certain period of time" with the government authority of Mongolia to establish a 60:40 oil exploration joint venture in the country. The shares closed that day at $0.53, valuing SSP at HK$254m. On 4-Apr-05, the agreement was terminated, without shares being issued. By then, the shares had fallen to $0.39, down 26.4%.
As a footnote, readers may recall that SSP was a ramped stock which underwent a spectacular 1-day 88.9% crash on 31-Aug-04, falling from $3.325 to $0.37, during which some of the Chairman's shares were dumped by a margin lender. As in the case of Far East Pharmaceutical (see above), there had been no legal requirement for prior disclosure of the pledge.
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Copyright Webb-site.com, 2005
BANKSTERS AND OFFICIALS TIGHTENING OWN NOOSE
http://www.worldreports.org/news/16_criminal_organisatio
http://mp3.rbnlive.com/Greg/0608/20060817_Thu_Greg.mp3
other updates
@
http://arcticbeacon.com/
Would like to nominate a stock to this board. MGEN, formerly MDGN.
20:1 R/S on 9/6/05 to reduce the o/s to 1,556,822 and over 182M outstanding as of today.
Be CAREUL, People...There is a group or an individual, waking up dead stocks with low or no float, and hoping MOMO players will jump on board and keep the pyramid scheme going.
PABN, SFTW, SPZN, FFPM to name a few recent 1000%+ runners, are all DEAD STOCKS.
The run usually dies after one day, leaving the last in buyers holding the bag. Unlike a usual pump and dump run, where the bagholder has hope that the company will issue news or a pr, to raise the PPS to a level where they can get out again, there is no hope in these cases. These buyers become the dictionary definition of bagholders.
The companies associated with these tickers are all either bankrupt, out of business, or have merged and gone private. Some may not even have legally tradeable shares.
In my opinion, these tickers should have been delisted a long time ago, but there are alot of OTCBB and Pinkie shells lying around. I have researched their trading history through Bloomberg and they all shares the same thing in common. Their first trade is between 11 am -Noon, and then they are picked up by IHUB a few minutes later. According to Ameritrade, the first trade has been out of NY. I also have calls in to NASDAQ and the SEC.
I started following this story a couple of weeks ago, when a couple of these went from .002 to .05 in a few hours. This week there were a few more. I was open to all possibilities, but after a number of phone calls and returne emails, I am left with only one conclusion:
THIS IS A SHAMELESS PUMP AND DUMP OPERATION
Many people will be left holding the bag with these turds, and people are going to be hurt.
If you hear of a stock going up 300% in an hour, and you can't find a single piece of DD on the company, it's a pump and dump.
I wish I had better news on this, but I don't. Don't want to be preachy but I really hate to see people get scammed like this.
(I used to be a reporter, so I started following these stories to see if there was something more interesting about all these "zombie" stocks coming to life...perhaps fallout from RegSho. Sadly, there is nothing very interesting here...just a plain old fashioned P&D operation.)
Senate subcommittee submits report on offshore tax havens
http://www.mercurynews.com/mld/mercurynews/news/politics/15174858.htm
more@
http://www.waynemadsenreport.com/
http://levin.senate.gov/newsroom/supporting/2006/PSI.taxhavenabuses.080106.pdf
FROM THE DESK OF:
Mr. SHING LI,
BANK OF OVERSEAS CHINESE
TAIPEI,TAIWAN
Dear Friend,
How are you today and business in your country? I am
Shing Li, Bank Manager of bank of Overseas,Taiwan. I
would respectfully request that you keep the contents
of this mail confidential and respect the integrity of
the information you come by as a result of this mail.
I contacted you independently of our investigation and
no one is informed of this communication. I would like
to intimate you with certain facts that I believe
would be of interest to you. I know you would be
wondering why I am writing you with a request such as
this but I only urge you to read on.
A British Oil consultant/contractor with the Chinese
Solid Minerals Corporation, Mr.Courtney Steven made a
numbered time (Fixed) Deposit for twelve calendar
months, the Chinese Solid Minerals Corporation that
Mr. Courtney Steven died from an airplane crash.The
bank immediately launched an investigation into
possible surviving next of kin to alert about the
situation and also to come forward to claim his
estate. If you are familiar with private banking
affairs, those who patronize our services usually
prefer anonymity, but also some levels of detachment
from conventional processes. In his bio-data form, he
listed no next of kin.
In the field of private banking, opening an account
with us means no one will know of its existence,
accounts are rarely held under a name; depositors use
numbers and codes to make the accounts anonymous. This
bank also gives the choice to depositors of having
their mail sent to them or held at the bank itself,
ensuring that there are no traces of the account and
as I said, rarely do they nominate next of kin.
Private banking clients apart from not nominating next
of kin also usually in most cases leave wills in our
care, in this case; Mr. Courtney Steven died
interstate. In line with our internal processes for
account holders who have passed away, we instituted
our own investigations in good faith to determine who
should have right to claim the estate. This
investigation has for the past months been unfruitful.
We have scanned every continent and used our private
investigation affiliate companies to get to the root
of the problem.
According to the Laws of Republic of China, at the
expiration of 6 (Six) years, the money will revert to
the ownership of the Chinese Government if nobody
applies to claim the funds. What I wish to relate to
you will smack of unethical practice but I want you to
understand something. It is only an outsider to the
banking world who finds the internal politics of the
banking world aberrational. The world of banking
especially is fraught with huge rewards for those who
occupy certain offices and oversee certain
portfolios,I alone have the deposit details and they
will release the deposit to no one unless evidence of
relationship with the deceased, which I shall provide
you with, is presented. I alone know of the existence
of this deposit for as far as Bank of Overseas is
concerned, the bank's management has no single idea of
what? the history or nature of the deposit. They are
simply awaiting instructions to release the deposit to
any party that comes forward.
I am aware of the consequences of this proposal. I ask
that if you find no interest in this project that you
should discard this mail. I ask that you do not be
vindictive and destructive. If my offer is of no
appeal to you, delete this message and forget I ever
contacted you. Do not destroy my career because you do
not approve of my proposal,If you find yourself able
to work with me, contact me through this email
address. If you give me positive signals, I will
initiate this process towards a conclusion. I wish to
inform you that should you contact me via official
channels; I will deny knowing you and about this
project. I repeat, I do not want you contacting me
through my official phone lines nor do I want you
contacting me through my official email account.
Contact me only through the numbers I will provide for
you and also through this email address. My official
lines are not secure lines as they are periodically
monitored to assess our level of customer care in line
with our Total Quality Management Policy. Please
observe this instruction religiously. Please, again,
note I am a family man, I have a wife and children. I
send you this mail not without a measure of fear as to
what the consequences may be, but I know within me
that nothing ventured is nothing gained and that
success and riches never come easy or on a platter of
gold. This is the one truth I have learned from my
private banking clients. Do not betray my confidence.
If we can be of one accord, we should plan a meeting,
soon.
In closing, please observe utmost confidentiality, and
be rest assured that this transaction would be most
profitable for both of us because I shall require your
assistance to invest my share in your country. Upon
receiving your reply, I will then furnish you with a
more comprehensive detail of this transaction and what
is required of you.
Please reply via to my private Email: shingli900@yahoo.com.cn
Awaiting your urgent reply.
Yours Sincerely,
Mr.Shing Li.
PM's would be appreciated ..if anyone wants to respond. Thanks..MWC
Additionally does anyone know of any company's that successfully took real people to court for posting deceptive information under multiple alias's and won court cases...MWC
When someone goes to incredible lengths to discredit a company or person using alias's on boards can he be held legally accountable if it can be shown they have intentionally and with malious made statements that they knew or should of known to be untrue? If agreements are reached whereby the plaintiff and respondant reach a shut up order..how long due those usually stay in place and what are the typical consequences of violating such agreements..Just curious? MWC
A must listen .. take note on the software companies
Okay. It's Memorial Day and I've been working all day. I want you to go to the free show link (eventually it will be in the archives, and in about an hour at the Ipod download). I have a two hour show that will blow your mind on 9/11. This man Richard Andrew Grove, a whistleblower who worked for the big boys and money people behind 9/11 has come out with information to set the 9/11 movement on fire.
Although many have rejected his work (too busy, big egos, whatever) including the IRS, Treasury Dept and SEC, what he exposes on Marsh & McLellan, AIG, Dyncorp, Spitzer, Stewart Air Force Base, Fitzgerald, Bremer, missing gold and bucks of 9/11, software that predicts the future and more will ASTOUND YOU as it did me. I will be having him live on the show in June, but wanted you to hear this urgent information immediately. That is why I worked on it all day.
If you are a journalist, blogger, etc., DO NOT think this is a ruse. I expect you to LISTEN intently to what this man is presenting and act on it.
If you are a friend, subscriber, past guest, listen and then relisten. Pass it on to every outlet and every email list, group you have. This information is EXPLOSIVE. The more of us that know this information, the greater the chances I won't be killed for presenting it, and the greater the chances for a real revolution in America's thinking processes.
Go beyond the explosions, destruction of evidence, etc., and learn who BENEFITTED and HOW on 9/11 to find out who the Corporate Fundamentalists are that were behind it all.
Thank you for trusting me with this one, it's well worth it.
Love,
Meria
"We're mad as hell and we're not going to take it anymore".
"THE MERIA HELLER SHOW"
www.Meria.net Soon in it's 7th year!
"Meria is the best weapon of mass instruction we have ; the inventor of internet radio reality"-
Greg Palast , Investigative Journalist
MERIA WILL BE A KEYNOTE SPEAKER AT THE 911 "RECLAIMING OUR FUTURE" Conference in
Chicago, June 2-4. Check out www.911Revealingthetruth.org for more information.
NOTICE: Due to Presidential Executive Orders, the National Security Agency may have read this email without warning, warrant, or notice. They may do this without any judicial or legislative oversight. You have no recourse nor protection save to call for the impeachment of the current President.
From New World Order globalists to our endangered environment to emerging spirituality, The Meria Heller Show shines the light of truth on our troubled planet. Listen to a FREE recent show here: http://www.meria.net/freeshow.html (Windows Media Player required). For just $20.00 per month, you can hear the live show and interact with Meria using Yahoo Messenger, browse through the thousand-plus shows in the archives, AND you'll receive Meria's exclusive breaking news e-mail updates. Find a subscription option to fit your budget here: http://www.meria.net/subscribe.html
© 2005 Meria Heller. All Rights Reserved. Feel free to forward this entire message with copyright included, for nonprofit use only.
--
The Meria Heller Show - The Mouth That Roars!
http://www.Meria.net
"Meria is the best weapon of mass instruction we have." - Greg Palast
The Plan to Replace the Dollar With the 'Amero'
http://www.humaneventsonline.com/article.php?id=15017
Anybody see movie Boiler Room? >>>
http://www.investorshub.com/boards/board.asp?board_id=5811
WORLD EXCLUSIVE
Mystery of the 5.5 ton coke fight Deepens
Cia "Cocaine one"& Putting PLanes in Suspense
May 2 2006--Venice,FL.
by Daniel Hopsicker
In the two weeks since an American DC9 airliner was busted by Mexican troops at a small airport in the Yucatan, carrying 5.5 tons of cocaine packed neatly into 128 identical black suitcases (somewhat hilariously marked 'private') the search for the true owners of the plane has produced these startling new developments...
The busted DC9, dubbed "Cocaine One" in an earlier story, had an identical twin, a second airliner painted with the same distinctive blue-and-white-with-gold-trim of official U.S. aircraft, the MadCowMorningNews can reveal exclusively, and under the control of the same company. Or Company.
SkyWay Aircraft was the only tangible asset of SkyWay Communications Holding, a firm whose existence served as nothing more than a meager excuse to run a penny stock fraud scam, successfully relieving investors of over $40 million dollars in only three years.
During 2003 and 2004, both DC9's controlled by the firm (N-numbers N900SA & N120NE) boasted an official-looking Seal beside the door bearing the familiar image of an American eagle clutching olive branches and arrows in its talons, around which were emblazoned the words "SKYWAY AIRCRAFT, PROTECTION OF AMERICA'S SKIES."
A cover story should at least provide a little, you know...cover
The Seal and paint job made the planes look like they belong to Homeland Security, specifically the TSA (Transportation Security Administration.)
The tricked-out airliners were supposedly used to perform in-flight demonstrations of the spiffy new technology of SKYWAY AIRCRAFT and its corporate parent SKYWAY COMMUNICATIONS HOLDING CORP.
That could not, however, have been the true purpose of the planes.
SkyWay said it's patented technology promised to protect airplanes from terrorism, and provide high-speed Internet at 30,000 feet. To the shock and anger of investors who lost 30-40 million dollars, it did nothing of the kind.
Even a cursory inspection of the company and its principals quickly reveals that SkyWay had no products, no prospects, and nothing to demonstrate.
What they did have, though... were a couple of airliners masquerading as official U.S. Government planes.
Imagine the possibilities.
Vancouver stock scams make a sudden appearance in our tale
SkyWay Aircraft wasn't in the business of in-flight entertainment or Homeland Security, we discovered. They were in the business of putting out press releases.
We wondered: were we being too harsh? Had the company’s management merely been over-enthusiastic, overly-optimistic, or mis-informed? Not a chance...
Glenn and Brent Kovar, a father-and-son pair of scamsters and penny stock fraud specialists, "ran" (we used the word advisedly) SkyWay. They had run the same scam several years earlier with similarly gratifying (for them) results.
The firm was called Satellite Access Systems, (SAS) which, as best we can figure, ended up being worth about three one-thousands of a penny per share.
The Vancouver Sun linked them to a Vancouver stock promoter who was kicked off the Vancouver Stock Exchange, Rene Hamouth, and a U.S. promoter described by Forbes magazine as a "persuasive scoundrel" found guilty of "awarding himself millions in excessive compensation, siphoning off company funds to cover personal expenses, and diverting company assets."
But, as they say in TV-land: Here's the beauty part...Chairman Glenn Kovar liked to boast about his long-standing ties to the CIA.
We took the Seal off. Forget about the Seal.
Frederic Geffon from Royal Sons LLC, the Florida air charter company which the FAA listed as the last registered American owner of "Cocaine One," was happy to talk about Brent and Glenn Kovar's most recent (last year) bankruptcy.
"Their company is a scam and he’s a scammer. I got sold a bill of goods about his stock. Everybody out here at the (Clearwater-St. Pete International) airport invested with him, and we all lost it all."
In an exclusive interview, Geffon was quick to point out that the DC9 was no longer his concern when it left the general aviation terminal at Clearwater-St. Pete on April 5th heading for Caracas and its ignominious rendezvous with destiny.
Moreover, he told us, the phony Homeland Security Seal was no longer on it, a statement confirmed by photos of the plane taken in Mexico after its interdiction (see photo above.)
'N' numbers are like car registrations, only not as precise
It ranks as one of the Top Ten Drug Seizures in World History.
But among the numerous mysteries surrounding the case is the question of why a story of a mountain of cocaine headed straight downhill towards the American market had been received by U.S. officials and the major media with such stony silence.
U.S. authorities have made no statements identifying the organization involved in the massive drug move. Nor have they addressed serious questions with obvious national security implications.
Why was an airliner allowed to impersonate an official Dept of Homeland Security aircraft? How did it then end up being owned by crooks boasting of American intelligence connections... and involved in drug smuggling?
Most importantly... On whose behalf did all that coke take wing?
Youth wants to know.
'Cocaine One' not a fit subject for polite company
Even the identity of the co-pilot arrested with the plane (the pilot escaped, natch) remains a mystery, though initial news reports confirmed his name as one of the few actual known facts in the case.
A theory was being floated by Venezuelan officials this week that the airliner had switched crews somewhere after leaving Caracas but before being busted in Ciudad del Carmen in Mexico's state of Campeche.
You could almost hear the sound of creaking leather on the shoes of officials back-pedaling away from the case as fast as their little feet could carry them.
How is it that the owner of an airliner carrying 5.5 tons of cocaine remains unidentified?
Nobody’s saying. Not the FAA. And not the former owner of the plane, who could tell... but refuses to divulge to whom it was sold.
According to FAA registration information available online at the time the story broke 'Cocaine One' was registered to Frederic Geffon's Royal Sons LLC.
That statement was rendered inoperative several days later when the FAA announced the DC9 had been retroactively “delisted and exported to Venezuela."
All the way from Oklahoma City, you could hear the sound of little FAA feet, backpedaling furiously.
"The FAA been berry berry good to me"
An email from an FAA official did nothing to clear up the confusion.
“Our records show Douglas DC9-15, serial number 45775, formerly N900SA, was cancelled 04/13/2006, for export to Venezuela. The aircraft was last registered in the name of Royal Sons Inc, 15875 Fairchild Dr, Clearwater FL. The file will not be available to be sent out until it is updated in approximately 2 weeks.”
Had someone been caught with their hand in a cookie jar which the FAA was helping them extricate?
Did the FAA’s refusal to release ownership records for at least several more weeks indicate that the question of who owned 'Cocaine One' is fated to never be answered? Would it end up being like other questions about equally inconvenient subjects, like, say, the one about who had walked off with the half-trillion dollars that “disappeared” during America’s S & L Scandal?
Out at the Clearwater-St. Pete International Airport, Royal Son’s owner Frederic Geffon could not agree more with the FAA’s recent statement. It cleared Royals Sons LLC from any responsibility for the plane hauling tons of cocaine across the Caribbean from Caracas to Mexico.
Like the song says: "It wasn't me"
In an exclusive interview with the MadCowMorningNews, Geffon claimed he sold the DC9 weeks ago...
“I had nothing at all to do with the plane by the time it was busted,” Geffon told us. “I sold it three weeks ago (in late March) to an aircraft broker, on behalf of someone in Venezuela.”
“The airplane was out of my name,” he continued. “I sent a blank form to the title company. Another airplane broker was also involved. It was delisted on the same day as the incident."
On other questions, however, Geffon proved less helpful.
Asked the name of the Venezuelan buyer he sold the plane to, he responded, “I’m not at liberty to say. I’ve been asked not to say to whom the plane was sold.”
Who asked him not to say?
“I’ve been asked not to say who asked me not to say,” he said.
Place all of our folders in "suspense" too, please
Could he could tell us, then, who was piloting the plane when it flew out of Clearwater?
“No, because I wasn’t looking out the window,” he replied. “I was focused on business.”
Could the confusion be deliberate? An aviation executive in Venice thought so...
"When it comes to registering airplanes, it’s the Wild West out there," he explained.
“An airplane is a mobile, big ticket item. Yet there are no airport police doing ramp checks, or checking N numbers at airports.”
“The FAA system for registering airplanes is little-changed from when it was started back in the good ol boy days of the 1930’s. Each plane has a paper folder, for example, stuffed with all correspondence regarding airworthiness and ownership relating to that plane.”
“Its an antiquated system which some feel is kept deliberately in place to encourage a certain ambiguity when a plane is interdicted. When a change of registration is mailed in, the FAA places a plane’s folder in what they call “suspense.”
“That’s a tremendous inducement to anyone with a chance of having a plane nabbed to keep floating sales in progress. The CIA, for example, is very adept at keeping files on its planes “in suspense.”
Did somebody say… CIA?
An airliner mistaken for one belonging to the U.S. Government, said our aviation source in Venice with a smirk, would have definitely advantages for a drug smuggler.
But wait. There's more...
"One of us cannot be wrong"
“Glenn Kovar told everybody he was with the CIA,” Frederic Geffon said. “A lot of people at the airport believed him, and became investors in his scam.”
The question of whether there might be a Central Intelligence Agency connection to a plane loaded with 5.5 tons of cocaine is, to some (you know who you are) like asking if the Pope might be Catholic.
One of two things must be true: We are looking at a pattern of systematic ambiguity meant to protect the privacy of the rich and famous. To keep their options open... A pattern which plays right into the hands of the unscrupulous, namely drug dealers, and/or, worse yet, terrorists.
Or... we're fantasizing, and what the FAA is saying is true... is true, and 'Cocaine One' has passed through several owners since it was owned by the scamsters at SkyWay Aircraft, in which case nothing about SkyWay is germane to a story about 128 suitcases filled with cocaine baking in the heat on a runway in the Yucatan.
If the FAA is telling the truth, we've been wasting your time. You could have had a V8. Or been surfing for internet porn.
Still here? Okay, we'll continue... But, fair warning:
Abandon hope, all ye who enter here...
Break up the Yankees, FEMA, & the FAA
What first taught us to take the word of the federal agency which regulates aviation with at least a few pinches of salt were the numerous occasions during the research for Welcome to TERRORLAND where we learned of big-time corruption inside the FAA.
The FAA went out of its way to protect terror flight school honcho Rudi Dekkers, for example. An aviation mechanic who worked for Dekkers said he'd been forced by law to report criminal acts which he witnessed Dekkers commit.
"Dekkers did an import of an airplane," the mechanic explained. "We found dents on the front of a wing and replaced sheet metal, and then we found ribs that were crushed, which renders an airplane un-airworthy. Yet Dekkers still sold the plane!"
"And when I turned him in to the FAA, they didn’t do a damn thing."
A second brief example should suffice. It also involved Rudi Dekkers. He had forged another aviation executive’s signature on a repair order to indicate required repair work on a helicopter had been completed. When that executive discovered it, he told us, he too was legally compelled to report it to the FAA.
"I couldn’t believe it,” he said indignantly. "I called the FAA to report a violation and was warned to leave Dekkers alone. An FAA guy came out and sat me down and said: ‘I suggest you back out of this.'"
Of course, as we reported earlier, Frederic Geffon's Royal Sons was listed with an address which traced to Huffman Aviation's hanger at the Venice Airport. Geffon, however, denies any responsibility for the listing.
Deconstructing the official story
To recap... The official explanation so far appears to be as follows:
"A shadowy and still-unnamed-but-obviously-very-unlucky Venezuelan company bought a DC9 airliner that used to use camouflage to appear to be a U.S. Government plane, and then got caught with 5 tons of cocaine."
Those crazy Venezuelans! Muy stupido, non?
On the off chance that things are not what they seem we had decided to take a look at who had owned the plane before its epic flight...
The two DC9’s were purchased several years ago by a still-unexplained partnership between Frederic Geffon’s Royal Sons LLC and SkyWay Aircraft, the only subsidiary of SkyWay Communications Holdings Corp.
Given the level of intrigue surrounding the case, the revelation that we are no longer talking about the ownership of just one airliner tricked out to resemble a government plane, but two, comes as something less than a shock.
Why do we believe that the sordid tale of Skyway Aircraft will be shown to have relevance to that of the DC9 with enough cocaine to cut a line all the way to heaven? The answer is simple: SkyWay was responsible for painting two DC9's to look like they belong to the US Dept of Homeland Security.
This does not appear to us to be an innocent act.
Moreover, the planes were parked at the general aviation terminal at the Clearwater St. Petersburg Airport, just a few hundred yards away from a major U.S. Coast Guard facility housed at the airport.
Yet—despite America’s hyper-security conscious post-9.11 aviation environment—two airliners conspicuously painted to resemble government planes sat beside a facility of a branch of the U.S. military...and aroused no suspicion.
How strange is that? We wanted to ask the Coast Guard that question. And other ones too: Have they ever heard of elite deviance, or deep politics, or state-sponsored crime?
Alas, although we remain hopeful, our calls for comment to the Coast Guard Station at the Clearwater-St Petersburg Airport have not yet been returned.
Perhaps someone else might have better luck.
Thursday: The rest of the story. It gets even weirder.
http://www.madcowprod.com/
Hers a good read >
http://www.investorshub.com/boards/read_msg.asp?message_id=10873069
Fox guarding the Hen house
http://accounting.pro2net.com/x52810.xml
SUPPRESSED DETAILS OF CRIMINAL INSIDER TRADING
LEAD DIRECTLY INTO THE CIA'S HIGHEST RANKS
http://www.whatreallyhappened.com/illegaltrades.html
Tanzanian legislator wants errant investors spanked Thursday April 6, 10:13 AM
DAR ES SALAAM (Reuters) - The Tanzanian government should add spanking to its list of possible punishments for errant investors, local media on Thursday quoted a member of parliament saying.
"Spanking should be added in the list of punishments to deal with investors who are not abiding by the laid down laws," The Citizen newspaper quoted legislator Masolwa Cosmas Masolwa as saying during a parliamentary debate on a bill to strengthen laws that regulate banks and other financial institutions.
"A stroke or two on offenders would humiliate them and whip them back in line," the state-owned Daily News also quoted Masolwa, who belongs to the ruling party, as saying.
The east African nation's political stability since independence in 1961 and healthy recent economic growth has made it popular with foreign investors who have poured more money into Tanzania recently than into neighbouring Kenya or Uganda.
Firm sues 11 banks over "naked" short-selling fees
Wednesday April 12, 7:46 pm ET
By Jonathan Stempel
NEW YORK (Reuters) - A firm on Wednesday filed an antitrust lawsuit against 11 major U.S. broker-dealers, accusing them of colluding over six years to collect unearned fees as a result of a "naked short selling" practice.
In its complaint filed with the Manhattan federal court, Electronic Trading Group LLC accused the defendants of improperly charging fees by failing to borrow or deliver stock needed to back short sales, essentially resulting in "phantom" transactions. The plaintiff seeks triple damages, and the lawsuit seeks class-action status.
Defendants include the broker-dealer units of Bank of America Corp. (NYSE:BAC - News), Bank of New York Co. (NYSE:BK - News), Bear Stearns Cos. (NYSE:BSC - News), Citigroup Inc. (NYSE:C - News), Credit Suisse Group Inc. (CSGN.VX), Deutsche Bank AG (XETRA:DBKGN.DE - News), Goldman Sachs Group Inc. (NYSE:GS - News), Lehman Brothers Holdings Inc. (NYSE:LEH - News), Merrill Lynch & Co. (NYSE:MER - News), Morgan Stanley (NYSE:MS - News) and UBS AG (UBSN.VX).
Short-selling involves a bet that a company's stock will fall. Typically, an investor sells borrowed stock, and hopes to buy it back at a lower price to replenish the lender.
In a naked short sale, the investor sells stock that has not yet been borrowed. Naked short selling is usually illegal, in part because the stock supposedly underlying the transaction may never be borrowed or may not exist. It can be permitted to promote market stability.
The 32-page complaint claims the broker-dealers charged the plaintiff and others for the cost of securities lending, when in fact the broker-dealers did not "cover" short sales, failed to disclose this, and nevertheless charged inflated fees.
"Defendants dominate the market for prime brokerage services to short sellers and tolerate among themselves chronic failures to deliver by which clients are charged for 'borrowing' when in fact no borrowing actually takes place," the complaint said. "Plaintiffs and class members were charged fees, commissions and/or interest for nothing."
The plaintiffs, according to the complaint, "were being used as pawns in defendants' naked short selling scheme to their detriment."
Citigroup spokeswoman Christina Pretto said the lawsuit is without merit. Bank of America spokeswoman Shirley Norton, Credit Suisse spokeswoman Victoria Harmon, Lehman spokeswoman Kerrie Cohen and Merrill spokesman Mark Herr declined to comment. The other banks and the plaintiff's lawyer did not immediately return phone calls.
*****************************************************************
Getting warmer...
Pssst: Want a Copy of BusinessWeek?
Felix Gillette
In recent years, BusinessWeek, like many of its rivals, has slogged through a tough environment for business magazines in the wake of the dot.com meltdown. This past December, for instance, executives of the McGraw-Hill-owned magazine shuttered its print editions in Europe and Asia in favor of revamped Web sites.
That said, BusinessWeek's print edition appears to have maintained its popularity in recent years with at least one group of longtime devotees -- crooked investment bankers.
Yesterday, federal authorities made several arrests in a wide-ranging case of insider trading. The allegations, in part, revolved around a supposed scheme to gain illegal, early access to the print edition of BusinessWeek.
“The Feds yesterday arrested two young Wall Streeters and a mole at a BusinessWeek print shop for running a trans-Atlantic insider trading scam that enlisted investment bank colleagues and a stripper to rack up $6.7 million in ill-gotten gains,” the New York Post reported today. “Authorities said Goldman Sachs analyst Eugene Plotkin, 26, Merrill Lynch banker Stanislav Shpigelman, 23, and a former colleague plotted to pilfer the markets using information about pending mergers leaked by the young banker and buying stocks based on tips gleaned from stolen prepublication copies of BusinessWeek's 'Inside Wall Street' column.”
Elsewhere, various media outlets were passing along the glossy-paged details of the conspiracy.
“The three men…later recruited two employees who worked at a private printing plant in Hartford, Wis., where BusinessWeek magazine is printed,” investigators told the New York Times.
“The indictment alleges they recruited two people to apply for jobs at the Hartford, Wisc., plant where the magazine is printed and to then pass on the names of the stocks that would be mentioned favorably,” reported the Washington Post.
While most reporters today treated the targeting of BusinessWeek as novel bit of fraud, reporters at the Wall Street Journal noticed that this was hardly the first time that a bunch of Wall Street cheats had conspired to get their paws on early copies of the magazine.
“This is the third time a criminal case has been brought involving unpublished information from the BusinessWeek column,” reported the Journal. “In a late-1980s case, a broker allegedly bribed a printing-press employee to get the BusinessWeek column hours before it was available to the public. Another investor was convicted in 1999 of trading on the advance information from the column obtained by bribing a newsstand operator.”
Not once. Not twice. Three times! For those keeping score at home, that's a hat trick for the lucky guy at the SEC in charge of keeping an eye on the BusinessWeek printing presses.
All of which would seem to suggest that, in the future, Wall Street warriors looking for some hot magazine copy would be well advised to steer clear of BusinessWeek -- and, perhaps, stick to renewing their subscriptions to Stuff.
http://www.cjrdaily.org/the_audit/pssst_want_a_copy_of_businessw.php
SEC unveils charges in insider trading ring
Tue Apr 11, 2006 11:54 AM ET
WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission announced on Tuesday charges in an international insider trading ring that involved employees at Goldman Sachs Group Inc. and Merrill Lynch and Co. Inc.
The SEC said the schemes yielded at least $6.7 million in illicit gains and were orchestrated by Eugene Plotkin, a Goldman Sachs research analyst, and David Pajcin, a former Goldman Sachs employee.
Plotkin and Pajcin persuaded a Merrill Lynch analyst to provide tips on upcoming mergers in exchange for a cut of the trading profits, the SEC said.
The two men also recruited two people to steal advance copies of Business Week magazine and give them tips on companies discussed favorably in the "Inside Wall Street" column, the commission said.
The SEC held a press conference on Tuesday morning with federal prosecutors to announce the charges.
http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=domesticNews&storyID=uri:2006-04-11...
--------------------------------------------------------------------------------
9/11 - Bank Buys Broker for CONCEALED DEMOLITION
http://www.911eyewitness.com/truth/index.php?name=News&file=article&sid=39
SEC Brings Emergency Action in Federal Court to Stop Fraudulent Manipulation of Microcap Stocks
On April 6, 2006, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Eastern District of New York charging Faisal Zafar and Sameer Thawani with perpetrating an ongoing securities fraud over the internet. The complaint alleges that since late 2004 and as recently as March 2006, Zafar and Thawani have engaged in a "pump and dump" scheme to manipulate the market for at least 24 thinly traded "microcap" or "smallcap" stocks. The defendants have made over $873,000 by purchasing the stocks, anonymously disseminating false information about the companies on popular internet message boards, and then selling the stocks at artificially inflated prices.
Acting on the Commission's application for emergency relief, the Court issued a temporary restraining order that, among other things, froze the defendants' assets and set a date for a hearing on the Commission's motion for entry of a preliminary injunction against further violations and other relief while the action is pending.
The Commission's complaint identifies the defendants as follows:
Faisal Zafar, age 32, resides in Yaphank, New York, and is listed on the website of a company called Secure-Minds, Inc. ("Secure-Minds") as its President and CEO.
Sameer Thawani, age 27, resides in Lake Grove, New York, and is listed on the Secure Minds website as its Vice President.
The complaint further alleges the following facts:
After buying shares at prevailing market prices, Zafar and Thawani used online aliases to post messages touting the stock and containing phony press release excerpts or other fake "news" about the issuer to deceive investors. The phony headlines concocted by the defendants include huge business contracts, mergers and strategic alliances between these little-known issuers and an array of major corporations -- such as Google, Kmart and Sun Microsystems -- and other dramatic developments designed to make the targeted stocks appear to be surefire investment opportunities. The defendants have also preyed on fears about terrorism and international health epidemics to deceive investors. After the London subway bombings and reports concerning a deadly "bird flu" virus, Zafar posted messages falsely stating that one issuer was receiving a contract from the Department of Homeland Security to improve security on New York City subways, and that another issuer was acquiring a company that produces "bird flu" vaccine.
Zafar and Thawani are engaged in a classic internet "pump and dump" manipulation scheme whose basic structure is as follows: (1) one or both of the defendants purchase shares of the issuer's stock in their online brokerage accounts; (2) the defendants register multiple online identities ("User IDs") with internet message board services; (3) the defendants post multiple messages attributed to their User IDs on internet message boards devoted either to the touted stock or to other, more widely followed stocks; (4) the messages contain materially false statements about the issuer and urge other investors to buy the stock; and (5) as soon as the stock price increases due to purchases spurred by the false statements, the defendants sell their shares at the inflated price for a quick profit. After their sales, the price of the stock quickly returns to its pre-manipulation level. These events sometimes all occur within the span of a single day.
The defendants have created at least 300 different User IDs and have used them to post well over one thousand messages fraudulently touting the stock of at least 24 small-cap issuers, some of them on multiple occasions. The defendants created these multiple online aliases in order to conceal their identities from investors and make it appear as if the same breaking "news" is coming from multiple independent sources. More recently, the defendants have also targeted specific investors by posing as moderators of internet user groups devoted to low-priced stocks and sending emails to the group members while simultaneously posting false messages on different internet message boards about the same stock under different user names. The emails have been sent out under user names such as "marketgeneral" and "danielbknight," among others. These emails purport to alert investors to imminent news about the stock and urge them to capitalize by buying the stock before the "news" is made public.
The complaint alleges that by engaging in this conduct, the defendants violated antifraud provisions of the federal securities laws. Specifically, the complaint alleges that Zafar and Thawani violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Act of 1934 ("Exchange Act") and Rule 10b-5. The complaint seeks a final judgment (i) enjoining the defendants from violations of these provisions of the federal securities laws; (ii) ordering them to disgorge all their ill-gotten gains; and (iii) and imposing civil money penalties. Pending a final determination of this action, the complaint also seeks a preliminary injunction against the foregoing violations and continuation of the emergency relief ordered today.
The Commission acknowledges the cooperation of the United States Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter.
http://sec.gov/litigation/litreleases/2006/lr19642.htm
stock fraud
By Robert Schroeder
Last Update: 3:48 PM ET Apr 6, 2006
WASHINGTON (MarketWatch) -- The Securities and Exchange Commission charged two New York men with securities fraud and froze their assets Thursday, alleging the individuals used the Internet to manipulate the market for 24 microcap stocks. The defendants, Faisal Zafar and Sameer Thawani, in some cases linked their fraud to concerns about terrorism and health epidemics, the SEC said. The agency said the two men created at least 300 different Internet user IDs and used them to post more than 1,000 messages about the stocks. The SEC is seeking penalties and repayment of $873,000 in ill-gotten gains.
The Story Of Leo Wanta: 'The 27.5 Trillion Dollar Man'; The Key Question Looms: Will The Illuminati Banksters Get the Money First Or Will The American People Get It, As Wanta Is Legal Guardian And Trustee On Behalf Of The People Of The United States
According to a 2003 federal court ruling by a courageous judge from Virginia, Wanta has been authorized as legal guardian of the vast sum of money made from profits at the end of the Cold War. In one of the most important stories of our time, Wanta holds the 'finacial key' to the vast criiminal Illuminati banking network and he says with the help of the American people their system can be destroyed.
26 Mar 2006
By Greg Szymanski
The only thing standing in the way of life and death for Ambassador Leo Wanta is he "knows where the money is hidden" and the Illuminati banksters don't.
A former U.S. Treasury official appointed trustee to a large sum of money by President Ronald Reagan, Wanta holds the financial "golden key" to 27.5 trillion dollars, money he says now held in public trust for the American people.
To back up Wanta's trustee status as protector of trillions, a federal judge in Alexandria, Virginia, in 2003, ruled in his favor, saying Wanta's trustee status is legally binding and the money is rightfully the property of the American people.
The federal court case, however, has left federal prosecutors in a perplexed state of mind, as they have not yet officially appealed the ruling, perhaps thinking it is better to let "sleeping dogs sleep" until they get their 'cooked ducks or judges in the right government pond."
But the real problem, as it stands today and why the money remains in limbo, is simply if Wanta returns the money to the U.S. Treasury, it will be immediately hi-jacked from the people and put into private Iluminati bank accounts since under the present Federal Reserve and the national banking system, there are no laws protecting the American people's money.
"Dutch (President Reagan} always intended the money be returned to the American people to be used for roads, schools and health care," said Wanta last Thursday on Greg Szymanski's radio show, the Investigative Journal, where the former Ambassador spoke for two hours while still being held under house arrest in his Switzerland home.
During the interview that can be heard in full by going to The Investigative Journal archives at www.rbnlive.com , Wanta literally blew the lid off the Illuminati's world wide banking scam, as well as providing detailed information about how Illiminati banksters with help from the Bush crime family and former President Clinton have already hijacked 752 billion dollars in what has been called by European investigators "the biggest bank heist in world history."
Besides the large sums of money at stake and the need to revamp the Federal Reserve and national banking laws to protect the public not private interests, Wanta's story involves undercover intrigue and espionage at the highest levels, providing a mystery story better than any Hollywood movie can offer.
Behind following the money, his story involves saving President Reagan's life in a little known assassination attempt left unreported in the mainstream press (see rbn interview), authority to arrest Marc (Reich) Rich, a meeting with Vince Foster just prior to his untimely death and just prior to Wanta being placed in a Swiss dungeon for 134 days when he confronted Rich, who was allowed to go free through White House connections.
To better understand Wanta's role and the importance of his story, not to mention how 27.5 trillion dollars could provide a good jump start to the American economy, it's best to go back to his original assignment in the Reagan administration at the time the Cold War was coming to a close.
At this time, Wanta, a distinguished U5 Secret Service/Treasury officer was the primary US Financial Warfare officer engaged in operations to "collapse" the Soviet Empire through financial maneuvers to prevent the Soviet military devoting larger resources to military expenditure.
For his financial plan which destabilized the Russian currency and resulted in huge dollar profits, leading into the 27.5 trillion in trust, instead of being recognized for his service, he was set-up by the Clinton's and the Bush crime family after being released from the Swiss jail, sentenced to a 22 year jail term on bogus Wisconsin state income tax evasion charges
Although recently released and protected in a sense by the 2003 federal court ruling in his favor, Wanta has languished much of the time since 1993 in jail and now under house arrest, the primary reason for his predicament being he audited the Illuminati's giga-financing operation of 1989-92 too accurately far the liking of certain high-level official crooks controlling the purse strings.
Regarding the Rich arrest in Switzerland and his meeting with Foster, Wanta said this on The Investigative Journal last week:
"I was named Ambassador from Somalia to Switzerland and Canada as a cover to arrest Rich. When I go there, I found myself in a Swiss dungeon and Rich was set free. Foster was also there on behlaf of the Clinton's, asking for $250 million to be used for The Children's Fund, which Hillary was the chairman. I thought it was to be used for a good cause so We gave him the money.
"Later Vince attempted to help me out of my situation, but I was later notified he was found dead and I never found out what happened to the $250 million."
Although Wanta had no idea what The Children's Fund was all about, later a financial investigator, Marco Saba of the Organized Crime Observatory in Switzerland wrote this about turned out to be a secret fund:
"One component of this information concerns the activities of the CIA operative known as Mrs Hillary Rodham Clinton. For some years prior to the elevation of her husband, Bill, a CIA operative like his ''CIA wife'', Hillary had been in control of an organization calling itself the Children''s Defense Fund. Executive Order 12333 (1981) of President Reagan, the US intelligence services were authorised to operate what became known as Title 18, Section 6 USG corporations for intelligence purposes, and to deny any intelligence community connection (that is, to lie about their real purpose). Some of these entities have touchy-feely, welfarish titles, like The Children''s Defense Fund. It is alleged, un the basis of intelligence community leakages, that Hillary became accustomed to treating this fund as her own private slush fund."
However, behind the scenes of Rich, Foster and the Clinton's, a bigger game of world politics and deception was being played out, as Wanta unknowingly was caught in the middle of the U.S./Soviet double-cross of the American people, as the two collaborated to bring about an orchestrated fall of the Soviet Union.
An excerpt from an article from the Centro Studi Monetari, Arab-Asian Affairs, Vol. 29, Numbers 8&9, December 2005, explains the backstabbing and double-crossing going on behind the scenes when the Cold War was being orchestrated to a close to serve the purposes of the demonic Illuminati powers pulling the strings behind the scenes, as Wanta unknowingly serving patriotic U.S. interests was in the middle of the whole mess:
The following are key parts of the article:
THE 'TAKEDOWN' OF LEO WANTA In 1993, while on a mission ordered by William Sessions, head of the FBI, to Switzerland, the legendary US Treasury Secret Services/CIA/FBI operative Leo Wanta - known to have been President Reagan's favourite intelligence operative (or 'junkyard dog') - was arrested and flung into a stinking Swiss dungeon, where he was illegally held incognito for 132 days. His instructions from Sessions had included the arrest of Marc Rich. He is believed to have been accompanied by Delmart Vreeland, a US Office of naval Intelligence operative who may have been instructed to shoot Marc Rich during a boat trip on Lake Geneva, but who allegedly failed to fulfil this mission when Wanta's head got in the way, and his handler allegedly told him not to shoot. William Sessions was summarily dismissed by President Clinton with no warning, and Vincent Foster, an operative who was charged inter alia with financial transactions involving the innocent sounding CIA front called the Children's Defense Fund, was found murdered in Fort Macy Park, Virginia.
Following an intervention by the Israeli Prime Minister, Leo Wanta was released by the Swiss authorities, bundled onto a plane for New York, marched in shackles through the airport, and arraigned in a New York US courthouse on trumped-up tax evasion charges concerning an ancient tax amount allegedly arising from Leo Wanta's intelligence operations many years previously in connection with a vending machine company that had been established by US law enforcement to trace drug-trafficking perpetrators who had been distributing drugs through vending machines. The trumped-up allegations were orchestrated on behalf of President Clinton by his close associate Tommy Thompson, then US Attorney in Wisconsin, who became that State's Governor, and later surfaced in the Bush Jr. Cabinet. Wanta was sentenced to 22 years in jail, later commuted to house arrest. COMPARTMENTALIZATION OBSCURED FULL PICTURE The significance of these complex circumstances surrounding Leo Wanta (condensed in the foregoing summary) is that, due to compartmentalization, Wanta and Sessions had been unaware that Marc Rich was assisting the United States (with help from Clinton), in collaboration with Soviet intelligence, to bring about the transformation of the USSR and its economy that has been described. In other words, the US Presidency necessarily had a more complete, or broader, overview of strategy than Sessions and Wanta et al. Confirmation of this fact has been provided directly to your correspondent by Mr Wanta himself who, when informed by the Editor that he had been working not so much for the United States but actually for the Illuminati, responded (in May 2005): 'Yes, but we didn't understand that at the time'.
The Editor commends Leo Wanta for this very honest admission, because it provides a vital clue and confirms the basic integrity of the present analysis. Removal of Marc Rich and his vast scamming network from the scene would have slowed down the process described, and would have impeded the implementation of the joint US-Soviet strategy to convert the 'former' USSR into a viable long-term supplier of oil and gas products to the West. Let us now tease out the game of double-bluff that was going on, which masked the Soviet strategic deception dimension to all this.
As has been seen, 'Europe from the Atlantic to Vladivostok' was never a starter until the 'transformation' (and dollarisation) of the Soviet economy had taken place. The 'Yeltsin period', during which the underground economy and the hegemony of intelligence scamming operations were to be leveraged in order to release the full potential of the KGB-mafiya and the 'scamocracy' in a Leninist manner, was a prerequisite for the rapid-fire imposition of the 'state controlled capitalism' model that the strategists needed to surface in the interests of fulfilling the 'Europe from the Atlantic to Vladivostok' strategy. Assets of the Party-State would indeed, the strategists foresaw, be stolen: but they would be recovered, with compound interest, by implementing a 'new form' of the 'Party's Gold' strategy: and this is what happened. We are still, you will recall, in two-dimensional mode here: that is to say, for purposes of minimizing obfuscation, we are excluding the Illuminati dimension (to which we shall revert).
Bearing in mind the rigorous implementation of usually counterproductive compartmentalization within the colossal US intelligence community, only the leading strategists in Moscow and Washington were ostensibly in possession of 'a copy of' the blueprint. From the United States' perspective at sub-Presidential level, it was 'all systems go' to convert the USSR from an enemy into the United States' close energy collaborator, and a source of oil shipments to the United States and elsewhere (mainly Europe) - thereby freeing up resources for exploitation by the US energy corporations both in the 'former' USSR and in other parts of the world. The Central Intelligence Agency, which is the clandestine foreign policy arm of the US Presidency, serves the interests of the oil companies. ESSENCE OF THE SOVIET DOUBLE-CROSS Therefore, in the minds of compartmentalized US intelligence operatives, including the most brilliant Financial Warfare experts among them such as Leo Wanta, this was always all about opening up Soviet energy resources to the West in general, and to the United States in particular. The Soviet Leninist deceivers made sure that this was indeed the objective, and collaborated with their US intelligence counterparts accepting their 'Black Operations' funding 'on exchange for' close collaboration with US and British intelligence as though they had been corrupted and were betraying Lenin himself - whereas in reality, from their viewpoint, this was a game, in which the stupid Westerners though they had corrupted their Soviet counterparts. The truth was that they were helping the Soviets to implement the fulfilment of their long-range 'collapsible Communism' strategy, as exposed by the genuine Soviet defector Anatoliy Golitsyn [see: The Perestroika Deception, by Golitsyn, available via http://www.edwardharle.com]. In short, the Soviets played a devious game of double bluff - exploiting the greed of the vast US intelligence community.
In the simplest of terms, as the dust has finally settled from the Cold War, the issue of the 27.5 trillion held by Wanta in trust for the American people still remains in limbo. According to Wanta, though, the issue is simple: change the banking laws so the money can be used for the people, not put into accounts of criminals.
According to Saba, who investigated and traced Wanta's behind the scenes accounting of how some of the money has already been misappropriated, it's easy to see why Illuminati banksters want to get their dirty hands on the money before it gets into the hands of American people.
Here is a portion of Saba's article about what he calls the "biggest bank heist in world history."
THE STALINESQUE ANO CALIGULA-LIKE PURGE
In the meantime, the high-level crooks -- who are known to be most uneasy at the continuing leakage of information which threatens their exposure, and who, being indifferent to human life which they regard as expendable, have resorted to the ultimate sanction in innumerable cases -- have procured that dose on 500 operatives, lawyers and others have been ''taken down'' (liquidated, ''suicided'', placed under house arrest, jailed on trumped-up charges, or dismissed) in a Stalinesque purge of those considered a threat to the continued cover-up o! crimes referred to generically as the Iran-Contra scandal, which in fact covers a far widen spectrum of serial illegality than its name implies. It also covers ''legitimate'' intelligence Financial Warfare operations in which Leo Wanta was extensively involved, and its operational codename was the name of his primary Title 18, Section 6 corporation, New Republic/USA Financial Group, and its several affiliates.
One method that Leo Wanta says is being used to hide all trace of some of the original alleged embezzlements, is that stolen banking or 138 Treasury instruments are being used and re-used as collateral for bank loans. The effect of this ruse is to ensure that the original embezzled instrument is permanently in the custody of financial institutions, and thus beyond the scrutiny of the authorities -- not that this is likely, since, as Leo Wanta told your correspondent finally on 25th April, US Treasury officials are complicit in the vast cover-up operation which has continued ever since the main alleged embezzlements took place in the early 1990s.
2.7% OF $27.5 TRILLION, THANK YOU VERY MUCH
In the case of the unprecedented giga-funding operation on behalf of the Illuminati, which was presided over by President George W. Bush Sr., the crooks helped themselves and their friends -- including Opus Dei, via an entity calling itself the Francis X Driscoil Trust -- to 2.7% of the total intended giga-loan. namely $742.5 billion A new breakdown of how the allegedly embezzled funds were distributed was given on page 144 of the magazine, and is reproduced here on page 9.
When these alleged giga-embezzlements were taking place or had been spotted, the biggest crisis in the history of the international financial system developed. Specifically, given that the funds were to be paid out in US dollars, the transactions were all necessarily handled by the Federal Reserve, under the supervision and control of Dr Alan Greenspan. But although the giga-funding started in 1989, the transmission of funds from the Federal Reserve sudden ceased (we are not, in the available public domain documents, told to whom the funds were to have been transmitted, but the primary recipient was a nexus of accounts loosely referred to as the Global Security Fund, based in Belgium, which is traditionally the financial centre for the Illuminati, and Chicago, where some of the funds may subsequently have been intermingled in the vortex of the derivatives industry).
Available public domain documentation shows that the Netherlands Bank and some other central banks, together with various very large commercial institutions, embarked upon legal proceedings against the Federal Reserve when the payouts ceased in 1991. In other words, the international financial system was on the verge of effective collapse, since payments were not being implemented.
The documented information we have published relates an extensive, seemingly never-ending, litany of excuses that were made by the US authorities while the payments were being stalled. All trust between certain European central banks, financial institutions and the Federal Reserve was corrupted to vanishing point. And why were the payouts stalled? Because the massive embezzlement that we document were in the process of being undertaken, way beyond the scrutiny of the international financial community generally.
While the financial payments were suffering from internal constipation, no-one had a clue what was going on; so the Dutch authorities (who are very litigious) started the ball rolling by instituting legal proceedings, given the scale of the monies that had been provided and were suddenly not being paid out. The Netherlands Bank also demanded to take up its vacant seat on the Federal Reserve Board, which is to a considerable extent owned by European financial powers and forces. After the alleged embezzlements, the payouts were finally resumed in 1992 (but on the basis of exchange rates, where foreign currency had been provided, prevailing on the dates of the suspensions).
THE WORLD''S BIGGEST-EVER BANK!NG HEIST
This was nothing less than the biggest bank heist in the history of humanity. No less than $742.5 billion of funds -- admittedly raised for what we consider to be thoroughly evil New Underworld Order purposes -- was misappropriated. Wanta, a servant of the US Presidency, was engaged in the fund-raising and speaks German when telephoned. This is the language of the high-level Illuminati. However Wanta is a technical operative, working, or so he always assumed, for the President of the United States. Moreover we know that is loyalty to the presidency was exploited by the Illuminati, probably without (as is often the case with technicians) him understanding the broader picture, because he told your correspondent in May 2004 that the funds had been raised to support the ''Global Security Environment'', which, judging by the tone of his comments, he did net consider to be a worthy project. .As a patriotic American. he was disparaging about the ''New World Order'' generally
The United States is the designated enforcement arm of the Illuminati and their associates, who are engaged in the Judaic masonic programme to impose the New Underworld Order. That is why the United States has 700 bases worldwide which require massive continuing injections of liquidity and why Britain is constantly reducing its armed forces. This is part of the meaning of Leo Wanta''s phrase ''Global Security Environment''. The Germans are surreptitiously doing the opposite to the British with their military as they have a special status in the New Underworld Ordnung. But that takes us into territory beyond the scope of this update en the geofinancial impasse surrounding Leo Wanta, a brave and loyal intelligence officer and servant of successive Presidents of the United States.oo
2.7% OF 527.5 TRILLION CREAMED 0FF THE GIGA-FUNDING OPERATION
The following is summary of receipts identified in handwritten analytical notes performed by the distinguished US Secret Service Treasury agent, Leo Wanta, on some of the transactions involved in the giga-financing operation involving a colossal loan to the Illuminati from 200+ international banks of $27,5 trillion, to finance the ''Global Security Environment'', a.k.a. the New Underworld Order, which is to be enforced by the United States as the sole enforcement, a.k.a. for the project. Sufficient funds were raised to bribe every policymaker, intelligence officer, ruler, Prime Minister, President and senior official for the whole of the 21st century. This fund is now worth $60-$70 trillion at a minimum -- and with collateral leverage, probably far more.
First Financial Services Ltd: 890812
Five billion dollars Total $5,000,000,000
Francis X Driscoll Trust: Allegedly involves the Vatican and CIA Ops
(see below 890810 five hundred million dollars Total; $500,000,000
See also Pinnacle Holdings
Hawaii National Bank Corporation Trust Account: 890812 Two and a half billion dollars Total: $2,500,000,000
International Financial Services Ltd: Date not shown
Ten billion dollars $10,000,000,000
International Financial Services Ltd: Five billion dollars 5,000,000,000
International Financial Services Ltd
Twenty-five billion dollars $25,000,000,000
International Financial Services Ltd, Wyatt W. Liscomb, Escrow Atty:
890810 Ten billion dollars $10,000,000,000
Total, International Financial Services;
Fifty billion dollars $50.000.000.000
Allegedly Marc Rich [Reich], highly-rated Israeli intelligence asset
Martwell Investments Ltd. Inc.: 890807 Money laundering
Two billion dollars $2,000,000,000
Martwell Investments Ltd. Inc.: 890808 Money laundering
One hundred billion dollars $100,000,000,000
Martwell Investments Ltd, Inc.; 890810
Five hundred million dollars $500,000,000
Martwell Investments Ltd. Inc.: 890610
Two billion dollars 52,000,000,000 Allegedly funds stolen
from Enron Corporation investors (pension funds allegedly stolen)
Total Martwell Investment Trust, Ltd. Inc + Martwell Investments
Ltd; One hundred and four billion five hundred million dollars
$104,500,000,000
Allegedly in part George H W Bush
Pilgrim Investments: 890810 Five hundred million dollars $500,000,000
Pilgrim Investments: 890810 Five hundred million dollars $500,000,000
Pilgrim Investments 890811 Five hundred million dollars $500,000,000
Pilgrim, Investments: 890811 One hundred billion dollars $100,000,000,000
Pilgrim Investments: 890810 Jorqe [= George] Bush One billion dollars
$1,000,000,000
Allegedly narcotics and illegal weapons sales: Money laundering
Pilgrim Investments: Ltd 890811 One hundred billion dollars
$100,000,000,000
Pilgrim Investments: 890811 Twenty-five billion dollars $25,000,000,000
Allegedly narcotics and illegal weapons sales: Money laundering
Pilgrim investments: Twenty-five billion dollars $25,000,000,000
Pilgrim Investments: Two and a half billion dollars $2,500,000,000
Pilgrim, Investments: Two and a half billion dollars $2,500,000,000
Pilgrim Investments, Inc. (Keith Bennett Group 890810
One billion dollars $1.000.000.000
Pilgrim Investments Trading Account: 890811
Ten billion dollars $10.000.000,000
Total, Pilgrim Investments outlets:
Two hundred and seventy-seven billion, five hundred million dollars
$277,500,000,000
Pinnacle Holdings/ Francis X Driscoll Atty Trust
[CIA Ops]: 890810 Five hundred million dollars $500,000,000
Pinnacle Holdings/ Francis X. Driscoll Atty Trust: 890810
Five hundred million dollars $500,000,000
Pinnacle Holdings/ Francis X Driscoll Atty Trust:
Twenty-five billion dollars $25,000,000,000
Pinnacle Holdings/ Francis X Driscoll Atty Trust
[CIA Ops]: 890811 Five hundred million dollars $500,000,000
Total Pinnacle Holdings/Francis X Driscoll Atty Trust [CIA Ops]:
Twenty-six billion five hundred million dollars $26,500,000,000
Driscoll = Allegedly on behalf of Opus Dei/The Vatican
Prudential Bache Securities: 890805
One hundred billion dollars Total: $100,000,000,000
Rocio Lopez Perez 890811
Five hundred million dollars $500,000,000
Rocio Lopez Perez: 890811
Five hundred million dollars $500,000,000
Total Rocio Lopez Perez: One billion dollars $1,000,000,000
Silverado Investment, Inc [Neil Bush): 890815
Total Five hundred million dollars $500,000,000
Synergy Trust: 890811 Fifty billion dollars
Total: $50,000,000,000
Unknown: 890810 Five hundred million dollars $500,000,000
Unknown: 890810 Five hundred million dollars $500,000,000
Unknown: 890810 Ten billion dollars $10,000,000,000
Unknown: Date not shown: Five billion dollars $5,000,000,000
Unknown: Date not shown: Five hundred million $500,000,000
Unknown: Date not shown: Ten billion dollars $10,000,000,000
Unknown: Date not shown: Twenty-five billion dollars $25,000,000,000
Unknown: Date not shown: Twenty-five billion dollars $25,000,000,000
Unknown: Date not shown Twenty-five billion dollars $25,000,000,000 Unknown: 890811 Ten billion dollars $10,000,000,000
Unknown 890810 Ten billion dollars: $10,000,000,000
Total unknown recipients: One hundred and twenty-one billion
five hundred million dollars $121,500,000,000
Wm. W. Wilson Atty Special account: 890807
Two billion dollars $2,000,000,000
Wm. W. Wilson Atty Special Trust: 890808
Ten billion dollars $10,000,000,000
Wm. W. Wilson Atty Specie! Account/Trust:
Twelve billion dollars $12,000,000,000
Grand total: Seven hundred and forty-two billion five hundred million dollars $742,500,000,000. Now worth at least $2,0 trillion.
These data are collated from the handwritten analytical notes accompanying the print-out sets shown or pages 150-160 only of International Currency Review, Volume 30, Numbers 2 and 3, which were made available and placed in the public domain by US intelligence. The Editor itemised the entries in the handwritten notes, gauging them to represent transactions which diverged from the intended destinations of the giga-funds. In summary, what happened was that 2.7% of the proceeds of the Illuminati''s unprecedentediy gigantic loan were creamed off for the benefit of the parties shown. Since we are dealing with international criminal intelligence operations, it is no surprise at all that the crooks concerned should have helped themselves to a proportion of the funds. Notice the destinations, which include Opus Dei (Francis X. Driscoll Trust), which is in the driving seat in Vatican affairs -- all 31 cardinals appointed by the late Pope being Opus Dei members. It should be noted that those data illustrate only one component of the financial scandal. Funds belonging to the US Government and lodged in accounts of Title 16 Section 6 intelligence corporations are hidden offshore all over the world.
The biggest, most brazen alleged organised embezzlement operation in world history.
CUT-PRICE AFGHANI HEROIN FLOODING BRITAIN
The colossal increase in opium poppy production in Afghanistan that has taken place since US intelligence seized control over the heroin business from the Taliban, who had all but stamped it out by early 2001, has resulted, as predicted, in a flood of cheap heroin into the United Kingdom. In its Annual Report for 2003, the United Nations agency called the International Narcotics Control Board, voiced its concern over the impact of two years of bumper poppy crops after the fall of the previous r驧irne. Since the Taliban was removed from power, drug production, supervised of course by corrupt US intelligence cadres (now headed up by the former US State Department Under-Secretary of State, Richard Armitaqe, who left his post in order to establish an ''import-export agency'' in Kabul), has resulted in 3,600 tons of opium being produced in 2003, representing a 6% increase over revived output in 2002. Ten million addicts worldwide were said in March 2004 to be hooked on heroin produced in Afghanistan, and 1.7 million farmers are economically dependent on opium production in the country. Half-hearted attempts to encourage crop substitution failed because farmers can earn three times more by growing opium poppies. The heroin they produce is shipped along the Balkan route -- secured by the West from the hands of Yugoslav criminal operatives in the Balkan wars of the 1990s -- and through eastern Europe, to destinations such as The Netherlands and the United Kingdom.
Consumption of drugs depends on supply rather than demand -- a reversal of the normal commercial equation. Therefore, the Taliban had the right idea. It just didn''t coincide with the preferences of criminalized US intelligence, so they had to go, at any cost. That''s how desperate the world situation has become.
For more informative articles, go to www.arcticbeacon.com
http://www.arcticbeacon.com/26-Mar-2006.html
Greg Szymanski
Listen to my Radio Broadcast live Monday night at 8pm Pacific time on LewisNews, returning Jan. 1 2006 Radio http://webs.lewisnews.com/radio/index.htm. Greg is also regular on Rense.com the first Thursday of every month at 9pm pacific time.
Greg also has his own daily show on the Republic Broadcast Network. Go to www.rbnlive.com and will be starting a daily program on the Genesis Communications Network soon at www.gcnlive.com Greg Szymanski is an independent investigative journalist and his articles can been seen at www.LewisNews.com. He also writes for American Free Press and has his own site www.arcticbeacon.com
if you need a new password for stockhideout just let me know. I will give you one
Thanks, SA! Very informative post, and nice to know Nemo hasn't forgoten about us here.
I lost my password, got a new one, and the dogs ate it. I'll try getting back to the hideout soon!
Josh
From nemo for all to read
http://www.sgrm.com/art42.htm
Naked Shorting hits 60 Minutes, Congress to Hold Hearings on Hedge Funds, and Unbiased Journalism? – March 24, 2006
David Patch
Fifteen Minutes of What NBC’s Dateline left in the Cutting Room Floor
To think, it has now been an eternity since NBC’s Dateline chocked on their exclusive story regarding a Wall Street scandal they once considered calling “Financial Terrorism in the US.” The reported multi-part series on illegal shorting and securities fraud that Dateline spent better than a year preparing for was reduced to a 15-minute fluff piece that was hardly worth the effort. Many believe the trimming down stemmed from self-preservation on behalf of NBC parent General Electric (NYSE: GE) fearing Wall Street retaliation.
That story of financial terrorism will reportedly unfold before your eyes but this time through a direct competitor to NBC. CBS’ 60 Minutes will air this Sunday March 26 with their own version of what lies in hiding within our securities markets. The stories the financial press have so far shied away from coverage on or covered from a singular side. The 60 Minutes storyline:
BETTING ON A FALL – Investment pools for the very rich are known as hedge funds. One of the major ones is being accused of spreading negative information about a major company and then betting on its falling stock price. Lesley Stahl reports. Janet Klein is the producer.
This is must see TV (isn’t that an NBC line) for anybody that doubts the reality of market abuses leveraged off unscrupulous Hedge Funds willing to go to great lengths to turn a profit.
Recall earlier this month the SEC fined Bear Stearns $250 Million for aiding Hedge Funds (prime brokerage customers) in illegal trading strategies. Excerpts from the SEC Complaint include:
Linda Chatman Thomsen, SEC Enforcement Division Director, said, "For years, Bear Stearns helped favored hedge fund customers evade the systems and rules designed to protect long-term mutual fund investors from the harm of market timing and late trading.”
“On the clearing side, BSSC gave introducing brokers and prime brokerage customers with mutual fund trading business direct access to its mutual fund order entry system. This system permitted users to enter orders until 5:45 p.m. and processed all trades, regardless of when they were actually received, as if they had been received before 4:00 p.m.”
In layman’s terms, Bear Stearns gave their preferred clients the combination to the vault and then walked away. It was a conspiracy aimed at cheating the investing public while insuring the Hedge Funds maintained profitable returns to their wealthy clients.
Those producers at NBC and CNBC should watch and learn what financial journalism is all about. CNBC’s coverage to date has been to vilify any and all that dare challenge the Hedge Fund Community. Now why is that?
Hedge Funds to meet with Senate Banking Committee
The Senate Banking Committee has announced that on March 28, 2006 public hearings will be held with members of the Hedge Fund Community as well as market regulators to discuss the impacts Hedge Funds have on the global financial community. Is this more politicking or is it more of the too little too late syndrome we have seen comes before us by this committee?
Members of the Senate Banking Committee have been lobbied for years to investigate the Hedge Fund Community and how they have abused the short sale process to profit at the expense of small business leaders, local communities, and investors across the globe. The lobbyists seeking the hearings were the under-funded US people of this nation some representing the constituency of the Senate Committee Members. As a result of the lack of lobbying funds, rumored hearings were continually being squashed by Committee Chair Richard Shelby (R: AL) as the financial community lobbied against such hearings.
Concern over the effectiveness of this hearing is based on the attendees who will be represented and the agenda.
According to a report out of the Financial Times, It is believed that the hearings will aim to improve communications between hedge funds and legislators. In attendance will be John Gaine, president of the Managed Funds Association and Jim Chanos, head of the Coalition of Private Investment Companies and founder of Kynikos Associates, $3 billion hedge fund. Also reportedly included in attendance will be Emil Henry, the assistant Treasury secretary for Financial Institutions.
The hearings will be a bust, in my opinion, if the Hedge Funds are merely afforded the opportunity to come in and explain how they are good for our markets. Without significant counter-parties available to challenge the Hedge Funds the Committee will not see the overall market picture and thus act out change with only a portion of the facts.
Recent SEC and NASD enforcement activities have centered on the special privileges afforded these Hedge Funds by the Financial Institutions. From Bear Stearns handing over the combination to the vault in order to illegally trade, to Market Makers illegally shorting on behalf of Hedge Funds, and now possible Hedge Fund collusion with market Analysts involving “hatchet job” reports aimed at collapsing security valuations the Hedge Fund Community appears to have an inside track on how to effectively move markets for personal profiteering.
It could be a bad day on Capital Hill if the Banking Committee simply allows those that are possibly destroying our markets to speak freely about how they believe they are the best thing our markets have ever seen.
Out of an article in InvestorsOffshore.com pertaining to this hearing “Jochen Sanio, head of German financial supervisor BaFin, has revealed that he is ‘scared as hell’ of the influence that hedge funds now exert over the financial markets, and cited them as the number one threat to global financial stability with their risky and often highly leveraged positions.”
Let’s just hope our Congress Men and Women on this side of the Ocean take this threat just as seriously.
An Inside Look at your Typical Journalism Conference?
Finally, from the world of unbiased Journalism,
One of the major critics in the SEC Subpoena on financial journalists SABEW (Society of American Business Editors and Writers) will host their annual conference on May 1. SABEW has identified that Chairman Chris Cox will be a guest of the Conference to address the subpoena issue as well as corporate malfeasance and other issues when he speaks at the SABEW conference.
SABEW has gone on record as criticizing the San Francisco Office of the SEC while patting Chairman Cox on the back for backing off the subpoenas for the time being. Not understood is whether Chairman Cox first approved these subpoenas as part of normal course of business and then backed off due to “political pressures.” Maybe the financial press in attendance at the Conference can spawn an answer from the Chairman on that particular open issue.
Leading the headlines in the press release SABEW claimed that Chairman Cox rebuked his enforcement staff for not consulting him before sending out the subpoenas. But reports out of Chairman Cox himself have not supported these allegations and comments by Commissioner Campos in his March 3 speech during the “SEC Speaks Conference” further identify that the media has misrepresented the facts in drawing to their own conclusions.
Campos’s comments on this matter included a rebuke of his own: “In my view these statements have been incorrectly interpreted in the media and in the public to indicate that our Enforcement Staff did something wrong.” Campos concluding his remarks by stating, “Finally, it goes without saying, no one is above the law. If in any matter it is important for the integrity of the investigation to enforce a subpoena, it will be done through appropriate legal process of the federal court system, without hesitation.”
Whether Chairman Cox addressees the realities of the issue or plays the politician to the end must be decided after his speech on May 1.
Also listed as speaking is Herb Greenberg. In the press release by SABEW, Herb Greenberg, a MarketWatch columnist and one of the reporters subpoenaed by the SEC, will discuss the subpoenas and other tactics to intimidate investigative reporters in a panel discussion. He'll be joined by Joseph Nocera, a New York Times columnist, and Dan Colarusso, business editor of the New York Post. Dave Beal, columnist for the St. Paul Pioneer Press, will moderate the panel.
What we know of this panel is that Herb Greenberg has received a subpoena by the SEC in which it is yet to be decided whether Greenberg is a target in the SEC’s case or not. Herb will be a panelist nonetheless to tout his own personal agenda.
Also on this panel is Joe Nocera of the NY Times and Dan Colarusso of the NY Post. Nocera drafted an article that blasted the SEC for their actions, as did the business writers for the NY Post. Are you getting the picture of this panel?
So unless I am missing something a Panel all committed to one side of the pendulum is not really a panel after all. The panel will be nothing short of self-serving rhetoric that can be presented as fact without the hindrance of a challenge. It should be a hoot to hear in Herb’s own words how Herb Greenberg has been victimized one more time.
I wonder if anywhere in this conference somebody within the crowd will have the courage to step up and address the financial presses stronghold on what is being disclosed to the mainstream public. Clearly Commissioner Campos was not impressed with their latest coverage and so it was left unreported. Also left unreported, Commissioner Atkins comments on March 3 when he stated “Fraud in this market manifests itself through old-fashioned boiler-rooms with hard-sell cold-calling; new tactics such as cyber-smear or the infamous voicemail that was supposedly incorrectly left on machines giving a bogus stock "tip; and bear raids composed of an unholy alliance of abusive short sellers, stock promoters, class-action lawyers, and others.”
Cyber-smear can easily fall into journalism and bear raids composed of an unholy alliance of abusive short selling goes right to the heart of the 60 Minutes program and the reason behind the subpoenas served to members of the financial press.
So why has most of the investing population never heard these comments? Could it be that the financial press is not as unbiased as they present themselves to be? Maybe the better question would be, what else have the financial press refused to present to the general population and why?
Feds Indict Four in Nigerian Advance-Fee Scam
March 24, 2006
Four people have been indicted on federal charges of running an "advance-fee" scheme that targeted U.S. victims with promises of millions of dollars, including money from an estate and from a lottery, according to federal prosecutors.
Three of the defendants named in the 11-count indictment -- two of whom were Nigerian citizens residing in the Netherlands -- were arrested in Amsterdam by Dutch authorities on February 21, 2006, based on a criminal complaint filed in the United States. They are being held by the Dutch authorities pending extradition to the United States. The fourth defendant, also a Nigerian citizen, is a fugitive.
The charges include one count of conspiracy, eight counts of wire fraud, one count of mail fraud and one count of bank fraud, according to Assistant U.S. Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney Roslynn R. Mauskopf of the Eastern District of New York.
As part of a massive advance-fee scheme, the defendants allegedly sent spam e-mail to thousands of potential victims in which they falsely claim to have control of millions of dollars located in a foreign country that belongs to an individual with a terminal illness.
They are said to have then allegedly solicited the help of the potential victims to collect and distribute the funds to charity.
In exchange for the victims' help, the defendants allegedly promised the victims a share of a large inheritance, and inform the victims that they must pay a variety of advance fees for legal representation, taxes or bogus documentation. After the victims wire-transfer funds to pay the "required fees," the defendants do not deliver the funds as promised. The victims lost more than $1.2 million.
"The defendants in this scheme allegedly fleeced many unsuspecting American victims with promises of charitable contributions and personal riches," said Assistant Attorney General Fisher. "We cannot allow these scam artists to prey on innocent victims in this country, and we will work across the globe to knock out these fraudulent get-rich-quick schemes."
"Global fraudsters need to know that we are determined to find and prosecute them," said U.S. Attorney Mauskopf. "Potential victims need to know that any email offering millions of dollars that requires that they send money to receive this windfall is a scheme. Delete it."
The investigation was initiated by Dutch authorities. After identifying victims in the United States, Dutch authorities notified the U.S. Postal Inspection Service, which opened its own investigation. Dutch authorities, as part of "Operation Dutch Treat," arrested three of the defendants on a criminal complaint filed in the Eastern District of New York.
The maximum penalty for mail and wire fraud is 20 years in prison, and the maximum sentence for bank fraud is 30 years in prison. The conspiracy charge carries a maximum penalty of five years in prison.
DJ UPDATE:Organized Crime Members Charged In Penny Stk Fraud
03/23/2006
Dow Jones News Services
(Copyright © 2006 Dow Jones & Company, Inc.)
(Updates with additional details of branch locations in third paragraph, stocks manipulated in 10th paragraph.)
By Chad Bray
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Members of the reputed Colombo and Luchese organized-crime families have been charged with manipulating the market for penny stocks as part of a broader racketeering case in Brooklyn, federal prosecutors said.
In an indictment unsealed Thursday, the U.S. Attorney's Office in Brooklyn alleges at least six of 10 men the Federal Bureau of Investigation arrested on Thursday on racketeering charges secretly controlled at least 15 branch offices of brokerage firms in the New York City boroughs of Brooklyn, Manhattan and Staten Island.
Through those branches, prosecutors claim they ran a scheme to artificially inflate the price of penny stocks. Many of the branches were in the heart of Manhattan's Financial District within blocks of the New York Stock Exchange.
Prosecutors described it as a classic "pump and dump" scheme, in which licensed and unlicensed brokers misrepresented the prospects of certain stocks to potential investors, in exchange for large commissions.
The defendants then sold their holdings in those stocks at inflated values, costing investors more than $20 million, the government said.
The ten men arrested are: Joseph Baudanza, 61 years old; Carmine Baudanza, 63 years old; John Baudanza, 36 years old; Jerry Degerolamo, 34 years old; Arthur Gunning, 40 years old; Craig Leszczak, 31 years old; Craig Marino, 36 years old; Robert Podlog, 32 years old; Ronald Giallanzo, 35 years old; and Vincent Rossetti, 40 years old.
They are facing charges ranging from racketeering and extortion to conspiracy and securities fraud.
Lawyers for the men couldn't immediately be reached for comment Thursday.
Prosecutors allege the prices of more than a dozen stocks were artificially manipulated as part of the scheme.
They included shares of Legends Sports Inc., Axxess Inc., HTTP Technology Inc., Learner's World Inc., Rollerball International Inc., SIMS Communications Inc., Flexweight Corporation, Rick's Cabaret International Inc., Blini Hut Inc., Orex Gold Mines Corporation, Motorsports USA Inc., Evans Systems Inc., Silver Star Foods Inc. and America's Hedge Fund.
Many of the stocks, which were allegedly referred to as "house stocks" by the defendants, were traded on the Over-the-Counter Bulletin Board or the NASDAQ small-cap stock market, the government said. They were mostly small companies, start-ups or companies that did no business at all, according to the indictment.
Prosecutors said commissions of as much as 20% to 50% of the price of the house stock were paid to encourage brokers to tout them to the public. The brokers didn't disclose these commissions to the public, instead telling investors they would receive a nominal commission or no commission would be charged, according to the indictment.
In order to hide the proceeds, the profits were laundered by wiring funds and making cash transfers through domestic and foreign banks, while utilizing nominee accounts and corporations to hide the true ownership of the illegal proceeds, the government said.
-Chad Bray; Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
From Jim Bishop ...
http://www.investorshub.com/boards/read_msg.asp?message_id=10326120
Day traders accused in securities fraud scheme
3/21/2006 4:36:13 PM
Several former and current officers, directors, and managers of a Manhattan day trading firm were charged Tuesday in a superseding indictment with participating in a ''front-running'' securities fraud scheme that generated more than $800,000 in illegal profits, prosecutors said.
New charges were filed against Robert F. Malin, vice chairman and president of A.B. Watley Group Inc., and Linus Nwaigwe, the company's director of compliance and a former National Association of Securities Dealers compliance examiner; Michael A. Picone, Watley's former chief operating officer, and Keevan H. Leonard, Watley's former supervisor of proprietary trading.
Also named in the superseding indictment were several people originally indicted in August 2005. They include Kenneth E. Mahaffy, Jr., a former Merrill Lynch & Co. and Citigroup Global Markets Inc. stock broker; Timothy J. O'Connell, a former Merrill stock broker; and David G. Ghysels, Jr., a former Lehman Brothers stock broker.
In addition to the criminal charges, the Securities and Exchange Commission filed a civil complaint against Malin, Nwaigwe, Picone and Leonard.
''Front-running'' occurs when stock brokers inform traders outside the brokerage firm, such as day traders, that a customer of the brokerage firm has placed a large order to buy or sell a particular stock, prosecutors said. The information allows day traders to trade in the same stock before the customer's order is e
xecuted, in anticipation of a movement in price. As a result, the firm's customers often do not obtain as favorable a price as they might have.
Steven Scaring, counsel for Mahaffy, has not seen the new indictment yet, but expects that his client will plead not guilty to it as he did to the original indictment.
''We will try to get this case tried as soon as possible. Mr. Mahaffy fully expects to be vindicated,'' Scaring said.
O'Connell's lawyer, Mildred Whalen, also said she hadn't seen the superseding indictment. ''But it is my understanding that there are no new charges against Mr. O'Connell, that the new indictment added on defendents,'' she said.
Jerry Bernstein, attorney for Robert Malin, said his client was falsly accused and will fight the charges. Ghysels' lawyer, Jeff Hoffman, declined to comment until he obtains a copy of the indictment from the U.S. Attorney's Office.
Lawyers representing Nwaigwe, Picone and Leonard were unavailable for comment.
The superseding indictment unsealed Tuesday alleges that between January 2002 and February 2004, Mahaffey, O'Connell, Ghysels and Coughlin routinely provided day traders at three New York City-based day trading firms with customer order information, which was disseminated through internal speaker systems, known as ''squawk boxes.''
Some of the brokers also accepted cash bribes from the day traders in exchange for squawk box access, prosecutors said.
The superseding indictment alleges that the day traders profited from the scheme by trading ahead of the large orders that were broadcast through the squawk boxes. When the squawk boxes disseminated information concerning a large sell order for a particular stock, the day traders would ''short sell'' the same securities before the larger order was executed.
Either way, the day traders profited from the movement in price, prosecutors said.
''By bribing unscrupulous stock brokers, the former A.B. Watley managers and day traders who were charged today were able to secretly tap into a steady flow of extremely valuable, confidential information from some of Wall Street's most well known institutions,'' U.S. Attorney Roslynn Mauskopf said in a statement.
Prosecutors also announced Tuesday that Paul F. Coughlin, another former Merrill broker, and William B. Deakins, a former Watley day trader, pleaded guilty to related charges of conspiracy to commit securities fraud for their roles in the scheme. Ralph D. Casbarro, another former Citigroup broker, pleaded guilty to conspiracy to commit securities fraud last October.
Attorneys for Coughlin and Deakins were also unavailable for comment.
http://www.investorshub.com/boards/read_msg.asp?message_id=10284781
he's very nice, very, very honest and to the point.
that's fine with me. i have you networking with for a long time. do you ever talk to him?
if so tell him mick said hello.
Good questions, Mick. Even though Capt Nemo's charting new waters, I see no need for a new moderator. Rick created this unique board and I'd like to see his name remain in honor, as would others, I'm almost certain.
any results for nascar today. i have been updating all morning for us.
hi A.J. , i still have your forum in our iboxes. will there be a new moderator here?
i added these to our BBCMF and s.a.d.'s
NetWorking with Moderator: FinancialAdvisor Assistants: FinancialAdvisorFinancialAdvisor's College Class(FACC)...#board-2767
NetWorking with Moderator: kgoodrich Assistants: cats, flota, Gok...Seasonals rock...#board-1616 & #board-3424 Seasonals rock.
NetWorking with: Moderator: puppman Assistants: Creede Bighorns, rrufff...The Transparent Flamingo 2...#board-5260
NetWorking with Moderator: SeriousMoney, Assistants: None...
Toby Smith Stock Review...#board-4469
Moderator Or An Assistant To These Forums In This Click...#msg-10253185
NetWorking with Moderator: Trade_4_Money,Assistants: IAMSAM, Pay_tience...PENNIES TO DOLLARS...#board-3802
IN THE MATTER OF KAUTILYA "TONY" SHARMA
On March 17, the Commission issued an Order Instituting Administrative
Proceedings Pursuant to Section 15(b) of the Securities and Exchange
Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940,
Making Findings and Imposing Remedial Sanctions (Order) against
Kautilya "Tony" Sharma (Sharma). The Order finds the Commission sued
Sharma, president of Geek Securities, Inc. (Geek Securities), a
broker-dealer registered with the Commission, and Geek Advisors, Inc.
(Geek Advisors), an investment adviser registered with the Commission,
in the civil action entitled Securities and Exchange Commission v.
Geek Securities, Inc. et. al., Civil Action No. 04-80525-Civ-
PAINE/JOHNSON, in the United States District Court for the Southern
District of Florida, alleging Sharma engaged in pervasive market
timing and late trading on behalf of institutional clients. The
Commission also alleged that despite warnings from mutual fund
companies Sharma and others used various deceptive activities to evade
detection of ongoing market timing and accepted final trade
instructions after the 4:00 p.m. EST closing of the market, knowing
that the trades received the same-day NAV pricing. On February 9,
2006, a final judgment in the civil case was entered by consent
against Sharma, permanently enjoining him from future violations of
Section 17(a) of the Securities Act of 1933, Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder, and from aiding and abetting
violations of Section 15(c)(1) of the Exchange Act.
Based on the above, the Order bars Sharma from association with any
broker, dealer, or investment adviser. Sharma consented to the
issuance of the Order without admitting or denying any of the findings
in the Order. (Rels. 34-53507; IA-2498; File No. 3-12241)
Con case tangled in property
Adam Harvey
New York
20mar06
A CONMAN who stole $90 million from TV doctor James Wright and other investors diverted the cash into luxury properties in Australia and the Bahamas.
US court documents show New Zealander Derek Turner used the stolen money to buy a $5.25 million parcel of waterfront land in the Sydney suburb of Hunters Hill and other property, including a pair of adjoining luxury apartments.
One of the flats, a penthouse, is now on the market for $1.6 million.
"I think his plan was to buy up several hundred yards of waterfront property so he could build a Derek Turner compound," said assistant US attorney Larry Ferazani, chief prosecutor in the case.
A US judge, who sentenced Turner last month to 20 years' jail, ordered the forfeiture of all the properties to try to recover some of the money investors lost -- but those efforts have been complicated by some of Turner's unusual real estate deals.
For instance, he bought the Hunters Hill land on the condition the owner of the property could remain living there free until he died, said FBI special agent Matthew Galioto.
"Turner was not a very good businessman," commented Agent Galioto.
Similar complications are delaying the sale of the Bahamas properties.
Investigators with the US Department of Justice and the FBI say the scammed investors will probably recover less than a quarter of their money.
Whatever his business skills, Turner managed to persuade Dr Wright and 68 other Australian and US investors that he was the astute manager of an successful investment fund.
Turner boasted of astronomical annual returns of about 37 per cent, and was soon swamped with cash.
Starting in 1999, according to US District Court documents, Dr Wright claimed his not-for-profit charity, Medi-Aid, invested $90 million with Turner.
Turner gave out fake investment certificates and tricked everybody with a simple pyramid scheme: he used the cash of new investors to make "interest" payments to the original investors.
Turner was caught only because his scheme was noticed by a convicted conman turned fraud-fighting priest named Barry Minkow, a teenage entrepreneur who spent most of his 20s in jail after being convicted of fraud.
He immediately recognised Turner's scheme was a con, and brought it to the attention of the FBI.
Turner was arrested and his lack of contrition and bizarre attempts to blame the investors for their lost money contributed to his hefty prison term.
His crimes have had an impact. Medi-Aid says it will not be able to build planned retirement villages and low-cost housing in NSW. Some of the smaller investors are virtually destitute.
"There was one gentlemen who survived the Holocaust who has lost his life savings. Another man was living off the interest payments. He's lost it all," said Mr Galioto
85 percent of the account holders lost money after opening an Express IRA account
wow
perfect example why letting people manage their own retirement money isn't a guarantee of having a secure retirement.
our little friend's view is merely self serving and selfish... not a reflection of what really works in the real world
Murray, Frank & Sailer LLP has Filed a Shareholder Class Action Against Micron Technology, Inc. -- MU
Friday March 17, 6:00 pm ET
NEW YORK, March 17, 2006 (PRIMEZONE) -- Murray, Frank & Sailer LLP has filed a class action lawsuit in the United States District Court for the District of Idaho, on behalf of shareholders who purchased or otherwise acquired the securities of Micron Technology, Inc. (``Micron'' or the ``Company'') (NYSE:MU - News) between February 24, 2001 and February 13, 2003, inclusive (the ``Class Period''). Murray, Frank & Sailer LLP charges Micron and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Micron manufactures and markets semiconductor devices worldwide.
The complaint alleges that at the start of the Class Period, Micron and its employees (along with others in its industry) were engaged in a scheme to manipulate the price of dynamic random access memory, a type of computer memory semiconductor chip, commonly known as DRAM. Specifically, the complaint alleges that during the Class Period, defendants falsified the Company's public statements and financial reporting by concealing the following material adverse facts from the investing public: (a) that Micron and its co-conspirators had entered into and engaged in a combination and conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of DRAM to be sold to certain original equipment manufacturers of personal computers and servers; (b) that Micron's publicly reported sales and earnings had been improperly inflated due to illegal price-fixing activities during the Class Period; and (c) that as a result of defendants' participation in the illegal price-fixing activities, Micron's sales and earnings reports and forward-looking price forecasts issued during the Class Period were false and misleading.
According to the complaint, as a result of defendants' false and misleading Class Period statements, the Company's shares traded at inflated prices enabling the Company to issue more than $632 million worth of debt during 2003, sell over $480 million worth of warrants and complete numerous stock-for-stock acquisitions using the Company's inflated shares as acquisition currency. Insiders also sold approximately $4.5 million worth of their own personally held Micron stock at inflated prices during the Class Period.
Murray, Frank & Sailer LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than fifteen years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
If you purchased or otherwise acquired Micron securities on any exchange between February 24, 2001 and February 13, 2003, and sustained damages, you may, no later than April 25, 2006, move the Court to serve as lead plaintiff. Shareholders outside the United States may also join the action, regardless of which exchange was used to purchase the securities. To serve as lead plaintiff, however, you must meet certain legal requirements. You can seek to join this class action as lead plaintiff online at http://www.murrayfrank.com/CM/NewCases/NewCases.asp. If you would like to discuss this action, this announcement, or your rights and interests, please contact plaintiff's counsel Eric J. Belfi or Bradley P. Dyer of Murray, Frank & Sailer LLP.
More information on this and other class actions can be found on the Class Action Newsline at http://www.primezone.com/ca.
Former General Re, AIG execs plead not guilty
Four were indicted earlier this month for their alleged role in a $500-million book-cooking scheme.
February 16, 2006: 12:09 PM EST
ALEXANDRIA, Va. (Reuters) - Three former officers of the reinsurance unit of Warren Buffett's Berkshire Hathaway, and one former executive of insurance giant American International Group, pleaded not guilty in federal court Thursday.
The four were indicted earlier this month on 13 criminal counts of conspiracy, fraud and making false statements for their role in an alleged $500-million book-cooking scheme.
Shares in AIG (down $0.45 to $67.84, Research) fell 0.8 percent on the New York Stock Exchange Thursday.
Class A shares of Berkshire Hathaway fell 0.1 percent.
HealthSouth settles suit for $445M
Class-action deal gives money and stock to investors who said they were harmed by firm's accounting.
February 23, 2006: 10:20 AM EST
NEW YORK (Reuters) - HealthSouth Corp., a provider of rehabilitation services, said Thursday it has agreed to settle federal class-action lawsuits over its accounting and financial reporting for at least $445 million.
Birmingham, Ala.-based HealthSouth said it is not admitting wrongdoing in the settlement, which also covers some former executives and directors.
The terms call for investors to receive $230 million in cash from HealthSouth's insurance carriers, and $215 million in common stock and warrants. The latter includes about 25.1 million common shares and 11-year warrants to buy 40.8 million shares at $8.28 each.
Investors would also receive 25 percent of net recoveries from judgments that HealthSouth obtains against former Chief Executive Richard Scrushy, former auditor Ernst & Young and former lead investment bank UBS.
The settlement is subject to completion of final documentation and court approval.
"This proposed settlement represents a major milestone in HealthSouth's recovery," Chief Executive Jay Grinney said in a statement.
Calls to lawyers for plaintiffs in the class-action cases were not immediately returned.
HealthSouth previously settled charges over its financial reporting with the Securities and Exchange Commission and Department of Justice.
The settlement with investors "will put the bulk of the legal issues relating to pre-March 2003 periods behind us," General Counsel Gregory Doody said in a statement.
An Alabama jury acquitted Scrushy last year of charges that he engineered a $2.7 billion accounting fraud. Scrushy still faces civil charges.
Spitzer brings fraud suit against H&R Block
New York attorney general accuses accounting firm of defrauding customers, seeks $250 million in fines.
By David Ellis, CNNMoney.com staff writer
March 16, 2006: 7:49 AM EST
NEW YORK (CNNMoney.com) - New York Attorney General Eliot Spitzer sued the financial services firm H&R Block on Wednesday, accusing it of fraudulent business practices involving IRA accounts marketed to its tax preparation customers.
H&R Block (down $1.37 to $20.63, Research) stock tumbled on the news, falling by as much as 8 percent on the New York Stock Exchange.
New York Attorney General Eliot Spitzer
The suit, filed in State Supreme Court in Manhattan, seeks $250 million in fines in addition to refunds from the Kansas City, Mo.-based accounting firm for steering approximately 500,000 customers into IRA accounts that were "virtually guaranteed" to lose money.
Separately Wednesday, class action law firm Lerach Coughlin filed a complaint against H&R Block in federal court in Kansas City, Reuters reported. The class action lawsuit, also related to the tax preparation company's retirement accounts, accuses the firm of breaching its fiduciary duties and using deceptive and unfair trade practices.
Customers who opened an Express IRA account were often burdened by unadvertised account fees, making it difficult to grow their savings, said Spitzer, who is currently seeking the Democratic nomination for governor of New York.
"(H&R Block) has been advertising itself quite consistently as being in your corner," said Spitzer at a press conference. "I think it is fair to say that they are not in your corner -- they've been putting their clients in the corner instead."
Spitzer's suit contends that 85 percent of the account holders lost money after opening an Express IRA account.
H&R Block rebuffed Spitzer's attacks, defending the IRA product which has been in existence since 2001.
"Make no mistake -- we believe in the Express IRA product and are proud of the opportunities it presents for our client," H&R Block Chairman and CEO Mark A. Ernst said in a prepared statement.
H&R Block noted that Express IRA account holders have accumulated over $360 million in savings, more than $50 million in tax benefits and that the interest rates paid on Express IRA accounts remain competitive.
An IRA offers a tax-deferred means of saving for retirement, providing investors with a variety of investing options, including stocks and mutual funds. H&R Block's Express IRA, while tax-deferred, only allowed account holders to save funds in an interest-bearing money market account.
The civil complaint, which was in response to information from an H&R Block tax preparer, said that company officials were aware that accounts might cost more in fees than they collected in interest.
Assessing the fees
Some of the Express IRA account holders carried balances that hovered around the minimum deposit requirement of $300, but were required to fork over a variety of fees -- including a $15 setup fee and a $10 annual maintenance fee, Spitzer said.
Upon closing their accounts, individuals were also assessed a closing fee as well as having their account balance hit with a tax penalty.
One unnamed 32-year-old from Albany, NY resident cited in the complaint opened an Express IRA account in 2002 with the minimum contribution of $300. The account earned $10.29 in interest over the past four years; the account holder paid $45 in fees over that same period of time.
"Had people been told about the fees that were extracted year after year, it is our belief that those investors would have made a fundamentally different choice about whether or not to open these accounts," Spitzer said.
The suit, which resulted from an investigation that began in 2005, alleges that in some instances interest on the retirement accounts paid less than one percent annually.
An internal H&R Block e-mail obtained by CNN revealed that Spitzer offered to settle the claim for an undisclosed amount prior to Wednesday's announcement.
The complaint also noted that many of the individuals who were hit hardest were working families and that H&R Block marketed the Express IRA account to encourage customers to use the company's tax preparation business.
The H&R Block suit, which comes just weeks ahead of the tax filing deadline, is the most recent campaign by Spitzer, who has built a reputation of being a watchdog of Wall Street as well as a guardian of consumer interests.
The thing I like about him is he actually is intelligent. If the Exxon Valdez had happened in NYC's harbor Exxon Mobil would be filing for Chapter 11 instead of raking in $36B in profits last year.
Spitzer's about the only one I've seen actually do anything about the bad guys on Wall Street. I wish there was a couple hundred more enforcers just like him.
It is funny as hell considering our little friend who keeps pushing Roth IRAs. When people went to H&R they'd sell them on opening an IRA when they did their tax return. Only problem was it was a crappy IRA managed by H&R that invested in mutual funds that yielded less than the service fees on the IRA. So if you opened up an IRA with them after a year when they hit you with the service fee people actually lost money. That added up to 85% of the people who opened IRAs with them.
Spitzer is the most hated man on Wall Street.
got more info on that?
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