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Taking Stock Of An Electronic Exchange
Everyone knows the leading destination for stock trading in the U.S. is the southwest corner of Wall & Broad -- the New York Stock Exchange. Replacing it with computers in Chicago, New York, and Altamonte Springs, Fla., is the stated goal of Archipelago Holdings, a company only 211 people strong. Ridiculous?
Archipelago hopes you won't think so. This operator of an electronic trading system called Archipelago Exchange, or ArcaEx, is getting ready to ask public investors to take a stake in its improbable dream.
On Mar. 2 the Chicago firm filed papers to prepare for an initial public offering to be led by Goldman Sachs. Will this be a sweet deal? It's impossible to say just yet, since the amount of money Archipelago expects to raise and how much of the equity it will give up in return is yet to be disclosed. In addition, Archipelago execs, including co-founder and CEO Gerald Putnam, are keeping quiet ahead of the deal. Fortunately, you can find plenty of hints about Archipelago's outlook and valuation in its securities filing.
HERE IS WHAT'S striking: For a company founded barely seven years ago, Archipelago has gathered a lot of momentum. In two years' time its share of trading in NASDAQ stocks has swelled to more than 24% from less than 6%. Traders are attracted to its ability to match four out of five buy or sell orders swiftly and anonymously within ArcaEx. It does so electronically, without the intervention of humans on an exchange floor, as at the NYSE, or of a securities dealer (NASDAQ). When it can't match orders, it routes them to rival exchanges.
Its share of trading in NYSE-listed issues last year barely topped 1%, but as big trading firms increasingly take their orders elsewhere, opportunity beckons. With added growth from such new securities as exchange-traded funds, Archipelago's array of Sun Microsystems servers in 2003 handled 12.4% of all U.S. securities trading volume. With that, and a consequent 28% leap in revenue, to $459 million, Archipelago netted $1.9 million. How does that compare? Very nicely next to its nearest public-company rival, Instinet Group. Last year, Instinet's revenue grew just 3%, and the company lost $73.8 million.
About twice as big by revenue and controlled by giant Reuters Group. Instinet is busily cutting staff and other costs. However, it can be counted on to keep downward pressure on the transaction fees that make up nearly all of Archipelago's revenues. "I have never seen such price competition in all my days," says John Bogle, the Vanguard Group founder who serves on Instinet's board. Margin pressure doesn't stop there. NASDAQ has cut some fees, and the NYSE's new regime is moving toward more automated trading. That could sap some of Archipelago's appeal to traders suspicious of the matching of trades by humans on the Big Board's floor.
As it happens, Instinet owns 4% of Archipelago and may sell some of its stake in the IPO alongside shares sold by the company. Fellow stockholders, who also may sell some shares, are a familiar bunch: Goldman, the private-equity firm General Atlantic Partners, Credit Suisse First Boston. Fidelity Investments, Merrill Lynch, Charles Schwab and more.
What are their shares worth? When Archipelago last November issued employee stock options, the exercise price it set indicated a total equity value of $535 million. The same month, General Atlantic paid $125 million for a 23.4% stake, also suggesting a value near $535 million. Yet these figures are for illiquid private stock. A third way to figure Archipelago's public-market value is to check the multiples of sales and book value investors pay for Instinet. At those, 2.1 times book and 1.9 times the past 12 months' sales, Archipelago's value ranges from $640 million to $870 million. A key difference: Archipelago in 2003 made a small profit; Instinet is still fighting to get in the black.
Once Archipelago goes public, here's another way to check its progress: Unlike most issues trading on ArcaEx, its own shares are set to trade exclusively there. If it keeps building on the momentum it's now enjoying, Archipelago may never change hands at Wall & Broad.
I wonder when the SEC will start a trading symbol of their own? Looks like they are making a good deal of money (that of course. . .is going to the government). Interesting, corporate America puts the pawns in office...and look who is paying the price. Hmmmm?
SEC gets tough on companies hindering investigations
By Kathleen Day / The Washington Post
WASHINGTON--The Securities and Exchange Commission is sending a pointed message to corporate America: Cooperate during federal investigations ... or else.
Starting with a warning in the fall of 2001 and bolstered more recently by a series of civil cases and millions of dollars in penalties, the SEC has signaled a tougher policy. The agency is not only enforcing the nation's securities laws, but also vigorously reacting to how well companies and individuals help or hinder federal probes, according to lawyers who follow its enforcement actions.
``If the legal and corporate community hasn't gotten the message, they are deaf,'' said David Gourevitch, a securities fraud lawyer, former SEC enforcement attorney and former New York state securities prosecutor. ``There's tremendous pressure on corporations and individuals to cooperate in investigations. The SEC is out there pounding that message whenever they can.''
The strategy is part of a series of new tactics the agency has implemented. With business scandals producing daily headlines about corporate misconduct that has cost the investing public billions of dollars, the SEC has sometimes appeared to be playing catch-up to the more aggressive efforts of others, especially New York Attorney General Eliot Spitzer. But now it is moving on many fronts, including nailing companies that try to derail investigations, according to lawyers in and outside the agency.
The Justice Department's criminal obstruction-of-justice case against Arthur Andersen LLP two years ago--which put the accounting firm out of business--and its more recent case against Martha Stewart have been well publicized. In both cases the Justice Department lawyers won on allegations of a coverup during a federal probe of alleged securities law violations, not on charges involving the alleged violations themselves.
The SEC's change in policy has made fewer headlines than those Justice Department cases, but it has been heard loud and clear in the corporate legal community. ``There's no doubt the SEC staff have substantially increased the penalties for those companies that they believe haven't cooperated,'' said William R. Baker III, former associate director of enforcement at the SEC and now a partner at Latham & Watkins LLP.
The most recent example was the announcement this week by Lucent Technologies Inc., which said it agreed in principle, without admitting or denying guilt, to pay a $25 million penalty to the SEC as an addition to a previous settlement of investigation into the company's accounting practices. The SEC's staff didn't impose a fine in connection with the alleged violations, accepting instead a promise from the company to stop the practices in question. Rather, the entire $25 million penalty was imposed because of what the SEC staff ``considered Lucent's lack of cooperation during the investigation and certain actions taken by the company subsequent to the agreement in principle,'' according to a Lucent press release.
Last week the SEC fined Bank of America Corp. $10 million for withholding and destroying documents requested in connection with an ongoing investigation into whether the company's brokerage unit engaged in illegal trading based on inside information about its upcoming analysts' reports.
A number of companies in the past two years, including Xerox Corp. and American International Group Inc., also have been hit, as part of broader settlements of alleged securities violations, with large penalties that the SEC made clear could have been avoided if the firms had been helpful.
Several investment banks, including Deutsche Bank, Goldman Sachs, Morgan Stanley and a unit of Citigroup Inc., were fined $8.25 million for failing to properly maintain documents such as e-mails that the SEC requires them to keep so federal regulators can properly oversee the companies.
``Any effort to impede an SEC investigation may itself become the subject of an enforcement proceeding,'' Stephen Cutler, head of the SEC's enforcement division, said in an interview.
In addition to penalizing companies that refuse to cooperate, the SEC has implemented a strategy called ``sweeps'' to try to detect problems before they become pervasive in an industry. For example, according to sources familiar with the probes, the SEC launched a review of oil companies' financial statements in recent months, following revelations by Royal Dutch/Shell Group that the multinational oil company overstated its oil and gas reserves. Similarly, the SEC has launched a review of the grocery industry following accounting errors at Royal Ahold NV, the owner of Giant Food.
The SEC won't confirm or deny such investigations, but sources say that the willingness of companies to be forthcoming is essential for such large-scale reviews to be efficient and effective in rooting out fraud.
The emphasis on cooperation was formally unveiled in the fall of 2001, when the SEC, under then-Chairman Harvey Pitt, issued a report saying the agency, when deciding what charges to bring and penalties to impose, would weigh factors such as how responsive a company was during a probe. The issue was so important, SEC sources say, that Pitt wrote much of the report himself, rather than directing agency attorneys to draft it.
The Seaboard decision--which got its name from the company involved in the decision--has become a hallmark of agency policy that securities lawyers describe as a carrot-and-stick approach. It emphasizes that companies can reduce charges against them, and possibly even avoid being charged with securities fraud altogether, if they help SEC staff identify individuals who are at fault.
Some attorneys say the agency needs to make sure that the rights of those under investigation are not compromised by the approach.
``In the carrot-and-stick approach, the question for lawyers is: Is there any room for advocacy on behalf of the client or will the SEC characterize that as obstruction?'' Baker said.
Cutler, in response to such questions, says that the SEC welcomes ``zealous advocacy'' because ``it helps us frame better cases and it makes sure we get to a more just result.'' He said that obstruction--behavior that interferes with justice because it interferes with getting at the truth--is clearly different.
Energy industry gets away with murky accounting practices
By Rachel Beck / AP Business Writer
NEW YORK -- Energy companies announcing big reductions in their oil and gas reserves have left many investors wondering what happened -- did the oil suddenly disappear or was it never there in the first place?
Don’t expect an easy answer to that.
The recent cuts by big names like Royal Dutch/Shell Group and others have provided a glimpse into the energy industry’s murky accounting practices, which are the result of imprecise government regulation that gives great discretion to oil company executives and allows results to be based largely on guesswork.
So-called proved oil and gas reserves are the estimated quantities that a company expects to commercially extract; unproved reserves are less certain to be extracted. Although some experts say that tallying reserves is more of an art than a science, they are considered an important asset for energy companies and are closely watched by investors as a key measure of future profit potential.
Shell announced in January it was reclassifying 20 percent, or 3.9 billion barrels, of its proved reserves to the unproved categories. And on Thursday, it said it reduce its estimated proved reserves by an additional 250 million barrels.
Other companies have done the same in recent months, including El Paso Corp. of Houston, which knocked down its proved reserves by 41 percent.
Companies often acknowledge the difficulties involved in determining reserves. Oil and gas can be buried deep below the earth’s surface, so there isn’t any easy way to gauge precisely what is down there and how much will actually be retrieved.
Also, changes in prices can require revisions in reserves. It might not be profitable to drill for hard-to-get oil when prices are at $15 a barrel, but that thinking changes when prices reach $30.
“There is some big science and some strong math behind what we do,” said Gary Swindell, a Dallas-based petroleum engineering consultant. “But at the end of the day, there is rarely enough information to feed our equations fully, and there is almost always some piece of conflicting information.”
That uncertainty can be exaggerated because of loose regulations, which give companies lots of leeway in determining their reserve levels and allow for divergent practices in the energy industry.
Using rules dating back to the late 1970s, the Securities and Exchange Commission requires companies to disclose their proved oil and gas estimates at the end of each year. They also need to say whether those proved reserves are developed, meaning they can be extracted by using equipment already in place, or undeveloped, which means more work and equipment is needed.
Proved figures are based on what companies believe they can recover with “reasonable certainty” from their energy reservoirs. The trouble is that companies can have different standards for what reasonable is.
Companies also can choose between two methods to account for their reserves. One, called the successful efforts method, is considered more conservative because companies more quickly have to write off their failures. Under the full-cost method, companies have a longer disclosure period.
Consider the case of Shell to see some of these inconsistencies at work.
Chevron Texaco and Exxon Mobil are Shell’s partners in Australia’s giant Gorgon gas project. While Shell had booked the reserves from that project as proved, the others did not. As it turns out, those proved reserves ended up accounting for a good portion of what Shell reclassified recently.
Shell’s revision doesn’t mean the oil doesn’t exist. But by moving its reserves from proved to unproved, the energy giant has acknowledged that it took an unrealistic view of how quickly the fields could be developed.
Now the SEC is now conducting a formal investigation into Shell’s accounting for its reserves.
Maybe the recent wave of reserve revisions will prompt calls for some standardization in the industry, or possibly even lead to tighter regulations in booking reserves.
An immediate change could come in requiring companies to hire independent engineers to review reserve estimates. They could work much like the auditors who test the accuracy and methodology of corporate financial statements.
That could at least begin to bring greater clarity to the industry’s accounting.
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck@ap.org
A beefed-up NASD short-selling rule designed to make
the market more efficient may very well have the opposite affect - at least
temporarily.
That's because technological changes haven't been made that would allow NASD
and non-NASD members to exchange the necessary information that puts them in
compliance with the new short sale rules.
The result: Non-NASD members looking to do short sales could be spending a
lot of time on the phone with NASD market makers confirming that they have, as
required under the new rule, taken steps to locate shares before entering in a
short sale transaction.
This has the potential of affecting a large base of traders. Non-NASD
members include the New York Stock exchange, the American Stock Exchange,
regional exchanges, specialists firms and most foreign brokers.
NASD strengthened its existing affirmative determination rule late last
year, expanding the rule to cover non-NASD members. The new NASD rule is
schedule to take effect on April 1.
But as it stands, BRASS, an electronic trade execution system widely used by
market markers and trading firms in the U.S., has yet to make necessary
changes to its software to address NASD's affirmative determination rule.
BRASS is owned by SunGard (SDS).
SunGard has been telling clients that it will take two to three months for
its order management system to be able to handle a new step required by NASD
in short sale trades by non-members.
Tom King, president of SunGard Trading Systems, said Friday that his company
provided its clients with an alternative to process those orders. King said
the alternative may not be "as streamlined as they would prefer" but that it
will allow clients to process short sale orders from non-NASD members while
SunGard works on implementing technical changes to its trading system. King
wasn't able to comment on how long it would take his company to implement
technical changes needed to deal with NASD's new short sale rule. King said
only a very small amount of orders would be affected.
BRASS is the predominant Nasdaq market making trading system and also
support trade execution and order management on NYSE, AMEX and Nasdaq.
A short seller typically borrows stock from a broker to sell it into the
market, betting that the share price will fall so that he can buy the stock
back at a lower price and pocket the difference.
Under the rule, brokers and dealers engaged in a short sale transaction must
make sure that shares can be delivered by settlement date, three days later.
The new NASD affirmative determination rule doesn't cover non- members,
instead it effectively makes it the responsibility of NASD members to make
sure that their trading counterparts have taken steps to locate the shares
necessary to timely settle a transaction before completing a short sale.
Andrew #####, director of business development and international trading at
Canaccord Capital Corp. in Vancouver said that the difficulties of executing
short sales would significantly reduce short selling from Canada.
"Because of the lack of a system solution to pass the locate information to
market makers, we'll have to pass the information on a manual basis. This will
result in placing an order over the phone," Jaffy said.
NASD last month delayed implementation of its broader affirmative
determination rule, which was originally scheduled to take effect on Feb. 20,
to provide its members with additional time to make technological changes to
their systems to comply with the new requirement.
Some members "needed time to reprogram their systems in order to create this
interim step before accepting orders," Steve Luparello, executive vice
president of Market Regulation at NASD told Dow Jones Newswires on Feb. 18. A
spokeswoman for the NASD said Friday that no members had "indicated to us that
they won't be ready."
SunGard is not a NASD member.
Market makers engaged in bone fide market making activities will continue to
be exempt under NASD new affirmative determination rule.
(Carol S. Remond is one of four "In The Money" columnists who take a
sophisticated look at the value of companies and their securities and explore
unique trading strategies.)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074;
carol.remond@dowjones.com
(END) Dow Jones Newswires
03-26-04 1622ET
SEC to Take Hard Look at Off-Balance-Sheet Disclosures
AccountingWEB.com - March 24, 2004 - Off-balance-sheet transactions, once abused by Enron to hide debt and overstate profits, will be closely scrutinized as regulators look for ways to improve financial disclosures.
That warning came from Donald T. Nicolaisen, chief accountant of the Securities and Exchange Commission, according to the Wall Street Journal. Nicolaisen said at a Financial Accounting Standards Advisory Council meeting Tuesday that the agency will study the details about off-balance-sheet activity that companies provided in their latest filings. The SEC will provide Congress with a report on the issue later this year, he said.
In the past, companies have not been required to report how their current or future financial conditions might be affected by off-balance-sheet arrangements, which often involve entities formed to diversify risk and issue securities, leasing arrangements and other contractual obligations, the Journal reported.
Companies are beginning to report on their connection to an unconsolidated entity, including nature, size and amount of risk in SEC filings, but studies have shown that not all companies are embracing the requirements.
Nicolaisen also told the advisory council that the SEC will continue helping companies disclose more useful, understandable financial information. For example, the SEC issued guidance late last year intended to improve disclosures in the "management discussion and analysis" section, or MD&A, in companies' stockholder reports.
The advisory council, which acts as a "sounding board" to the Financial Accounting Standards Board, also heard a report from FASB Chairman Robert Herz. In the next few days, FASB is expected to reveal its plan to require companies to recognize employee stock-option compensation as an expense on income statements. The board then plans to hold public roundtable discussions in late June before it enacts a final rule, Herz said.
In recent weeks, executives of technology firms and other options-dependent companies have stepped up their lobbying campaign to persuade lawmakers to intervene.
Rhombic Corporation Sponsors Nuclear Research Project at the University of Illinois
VANCOUVER, British Columbia--(BUSINESS WIRE)--Feb. 25, 2000--Rhombic Corporation (OTCBB:NUKE - news) announces that work has begun at the University of Illinois on the company's Disperse Composite Materials (DCM) technology to develop a low cost method to neutralize radio active wastes, especially the long lived nuclides which can be converted into stable nuclides.
The DCM technology is a method of manufacturing a high efficient disperse deposit material or dust plasma, that is made up of a homogeneous interior covered with a thin and strong connective coating.
The DCM plasmas can be produced as catalysts, as abrasive wear-resistant grinding materials of high strength, and as intermediate material for soldering or welding of various ceramic and other nonmetal items with metals such a solder for the junction of high temperature superconductors and electric current leads.
Among a large number of other applications of Disperse Composite Materials is the reduction of costs in the production of high quality lipsticks and other pigments, and the production of metal alloys with new kinds of mechanical properties.
The research underway on the DCM is based on patent rights assigned to Rhombic Corporation by Russian, German and American scientists, including Dr. Vladimir Fortov, former Russian minister of science, and Dr. Reinhard Hopfl, a German physicist.
The work at the university is supervised by Dr. George Miley of the Department of Nuclear Engineering, and Dr. Heinrich Hora of the University of New South Wales, Australia. Dr. Hora is a developer of the DCM technology assigned to Rhombic Corporation and consultant an the progress of the work.
For further details, call the company's Public Relations office at 888/821-6607 or 604/421-5543. The Lawrence Adams Ltd. phone in New York is 212/736-4800 or view the Rhombic website www.rhombic.com
Statements in this news release looking forward in time involve risks and uncertainties, and actual results may be materially different. Factors that could cause actual results to differ include activity levels in the securities markets and other risk factors.
For further details, call the Company's Public Relations office at 888-821-6607 or 604-421-5543. The Lawrence Adams Ltd phone in New York, NY is 212-736-4800
http://web.archive.org/web/20000530123644/www.rhombic.com/022400.html
NEWS RELEASE
October 1, 1999
CLARIFICATION to RELEASE from RHOMBIC CORPORATION Dated 28 September 1999
REGARDING IC&C Consulting Services Retained by Rhombic for Nuclide Battery:
The summary information provided by Rhombic in that news release was not clear, because it was a compressed summary of a large volume of information materials on IC&C's 75-year history rich in achievements recognized by world leaders and the international press.
The following are some key issues to be corrected:
1) The IC&C organization was erroneously identified as a Corporation and the name was incorrectly spelled:
The name is "not "International Computer and Communication Corporation"
The name "is" International Computers & Communications (IC &C)
2) The Executive Consultants retained by Rhombic are part of the IC&C Global Consulting Group
* This is a worldwide nonprofit group of former CEOs and senior executives with extensive experiences in technology, business and investment
* Since 1982 corporate and government clients from around the globe included Xerox Corporation, Ford Aerospace, Andrew Corporation, ETRI-Korea, Vincent Interactive Netherlands-New Zealand, newly-privatized FIT Telecoms, NASA, INTELSAT, the International Telecommunication Union, etc.
3) This consulting group is affiliated with the non-governmental non-profit association IC&C World Leaders Council:
* This is the only worldwide executive association for development partnerships and investments in computers and communications.
* Founded in 1923 in Paris as "International Council for Planning and Innovation", transferred in 1940 to the United States, and reorganized in 1982, IC&C has at present members m 30 countries on 5 continents.
* Members include companies such as Bell Atlantic and Fujitsu, academic institutions such as Deggendorf University and the Russian Academy of Sciences, as well as government and corporate leaders.
* Since 1984 over 2000 leaders participated in 23 IC&C World Leaders Summits, sponsored by leading companies including Microsoft, IBM, France Telecom, Nokia, Fujitsu, Singapore Telecom, Teledesic, Globalstar, etc These summits resulted in hundreds of alliances and over 20 billion dollars in investments.
Out of respect for the world leaders who are members of IC&C's exclusive and highly- select "club" and who value privacy. IC&C does not advertise in the internet or in the media. All IC&C events are "by personal invitation only".
For further details, call the company's Public Relations Office at (888) 821-66O7 or (604) 421-5543, or view the Rhombic website: www.rhombic.com.
HEAD OFFICE
901 - 1212 Howe Street
Vancouver, BC Canada V6Z 2M9
TEL: 604-683-4864 FAX: 604-683-4814
BRANCH OFFICE
23120-.56th Avenue
Langley, BC Canada V2Y 2Z8
TEL: 604-530-7234 FAX: 804-530-7235
http://web.archive.org/web/20000708113048/www.rhombic.com/100199.html
NEWS RELEASE
June 11, 1999
NEUTRON DETECTOR TO BE DEVELOPED
Rhombic Corporation announces that the company has acquired the technology to develop a solid state diamond based neutron monitor/detection device..
Because of the company's expertise in diamond films, and its patented :Forced Diffusion" technology, work on the monitor/detection device can be developed at the University of Missouri along side other applications of "Forced Diffusion"..
Rhombic Corporation is planning to develop the concept of a very small solid state monitor/detector. This would mean it also would be portable, and useful in personnel monitoring at nuclear power plants, as a portable detector of weapon's grade nuclear materials, as a sensor for nuclear reactors, and as a device for small area flux profiling.
By varying the doping element infused into diamond through "Forced Diffusion", it is predicted that an array of detectors could be built that are sensitive to various energy neutrons. Such an array could do small area spectrum analysis of neutron energies.
This proposed device also would be saleable to the purchasers of the Inertial Electrostatic Confinement (IEC) fusion devices soon to be produce din Europe. The IEC devices created neutrons by the millions per second through fusion of hydrogen atoms. Rhombic's proposed monitor/detector would help track the neutron activity.
http://web.archive.org/web/20000525150347/www.rhombic.com/061199.html
REPORT ON NUCLID BATTERY
April 9, 1999
Recent planning among the Russian and German co-inventors of the Rhombic Radio Nuclid Battery (Dust Plasma Battery) includes information about extensive experiments by the Russian Academy of Sciences with anticipated new runs on the MIR Space Station.
Members of the forthcoming International Space Laboratory, after docking its third module, and scheduling astronauts for the year 2000, will provide a priority experiment in space to be performed by the Rhombic Dust plasma Battery.
The last experiments in the MIR space station were continued throughout January 1999, and are still being evaluated at present. One of the first experiments in the manned flight in early 2000 will be on dust plasmas. A Russian team will cooperate in the experiment with a team from the Max Plank Institute in Germany.
Dr. Heinrich Hora, representing Rhombic Corporation, recently initiated contact with the INTERNATIONAL COMPUTER AND COMMUNICATION CORPORATION (IC&C) in Reston, Virginia, for promoting the Battery for use among the low orbiting communication satellites to be launched in the near future for the fast expanding cellular and internet business.
Large-scale development and mass production of the Battery may necessitate the involvement of a large satellite company or a consortium of them. Doctor Hora's contacts with communication companies, in particular IC&C, may help Rhombic in these developments.
Dr. Hora's latest report indicates that the much lighter weight and lesser cost of Rhombic's Super Compact Battery may prove essential to reduce the projected cost of the first 400 satellites into space.
Former vice president of the Russian Academy of Sciences, Dr. Vladimir Fortov, lately reported to Dr. Hora that there has been "extensive progress" of work on the SRB with dust plasmas.
Contacts will take place between the top producers of satellites at the IC&C summit in Geneva, 13/14th of June, 1999. Among new members being sponsored is the Russian Academy of Sciences. Rhombic Corporation soon will have the honor of being considered as a member.
For further company details (OTC-BB-NUKE) call the public relations office at 1-888-821-6607, or view the Rhombic website http://www.rhombic.com or E-Mail rhombic@direct.ca.
http://web.archive.org/web/20000708102401/www.rhombic.com/040999.html
NEWS RELEASE
June 21, 1999
Rhombic Corporation (OTC-BB Nuke) announces that the company has accepted a proposal from the University of Missouri to use its laboratory facilities, technical equipment, and personnel, to develop selected projects using the company's "Forced Diffusion" technology.
Purification of silicon carbide and gallium nitride wafer materials will begin July 1, 1999 under the supervision of Dr. Mark Prelas. The wafers will be bought from US manufacturers in two and three inch crystal sizes, and treated with the patented "Forced Diffusion" process.
The University proposal is to use the Rhombic technology "to purify the gallium nitride of the unintentional oxygen and silicon impurities incorporated into the structure, and to purify the silicon carbide wafers of the pollutants boron, nitrogen, and oxygen.
The gallium nitride wafer is a blue laser generator, and silicon carbide is a major factor in high temperature, high speed electronics. Both materials are light emitting diodes that can be modified to produce photovoltaic cells that assist in the conversion of ultra violet light to electricgy. Reducing the impurities in the wafers would give them an improved effectiveness with a longer life span, and simplify the construction of photovoltaic cells.
According to the 1999 Industry Report, "Silicon will remain the dominant material for substrates and wafers for the foreseeable future with demand exceeding $7 billion in 1999. The push for ever greater performance at lower prices has brought new wafer technologies into the market."
Rhombic's patented "Forced Diffusion" process can be used to add to or to take out impurities from diamond, silicon carbide, gallium nitride, and other special mterials to midify the optical, chemical, electrical, and mechanical properties of those materials.
Rhombic Corporation will announce soon that, beginning September, 1999, its "Forced Diffusion" technology will be used to develop a second project at the University of Missouri's facilities.
For details on Rhombic Corporation, call the company's public relations office at 1-888-821-6607 and 604-421-5543, or visit the Rhombic website at www.rhombic.com.
Wm. Larry Owen
President
http://web.archive.org/web/20000603140156/www.rhombic.com/062199.html
Datascension Inc. Mandatory Certificate Exchange Progressing
LAS VEGAS, Feb 13, 2004 (BUSINESS WIRE) -- The mandatory stock certificate exchange for Datascension Inc., (OTCBB:DTSNV), formerly known as Nutek, Inc. is progressing as planned.
Many certificates have already been received by Datascension's transfer agent, Transfer Online, Inc., to start processing the exchange for certificates bearing the new CUSIP number, Company name and the beneficial owner's name. The first round of certificates is expected to be mailed to shareholders and brokers next week.
Datascension instituted the mandatory certificate exchange as it changed its name from Nutek, Inc. to Datascension Inc., its CUSIP number to 238111108 and trading symbol to DTSN on January 26, 2004.
Concurrently, the Company's trading temporarily changed to a "when issued" status, symbolized by a "V" added to the end of the ticker symbol, to alert and allow sufficient time for brokerages, clearing houses and investors to exchange the Company's stock certificates for new certificates bearing the new Company name, CUSIP number and names of the beneficial owners. (Brokers: please refer to NASDAQ's January 30, 2004 UNIFORM PRACTICE ADVISORY UPC # 015-2004) While the stock is in a "when issued" status, the SEC T+3 requirement for settlement of trades within three business days is suspended. As soon as the "when issued" status is removed, the "V" will be removed from the ticker symbol and all unsettled trades will require immediate settlement. All trades will then be required to comply with T+3 settlement rules.
NASDAQ will lift Datascension Inc.'s "when issued" status when certificates representing a sufficient number of shares have been exchanged. The timing of this is entirely dependent upon how quickly the stock certificates are sent in for exchange. The Company has spoken with the National Association of Securities Dealers (NASD) and the situation is being monitored so as to insure compliance with these rules and the timely removal of the "V" from the ticker symbol.
"The 'when issued' status is one of many positive happenings occurring in the Company," explained Murray Conradie, CEO of Datascension Inc. "Our name change to Datascension Inc., illustrates our move to focus on a single industry that has proven to be profitable. Nutek, Inc., now Datascension, Inc., has been profitable for the past eight consecutive quarters, primarily due to the Datascension International subsidiary's data collection and market research business. Additionally, we've been meticulously executing our strategic growth plan to increase shareholder value, recently opening a new facility in the Dominican Republic and expanding our call center facility in Costa Rica. These actions enable us to accommodate new data collection and market research business we've already contracted and to provide capacity for further growth."
As part of the name change, CUSIP number change and ticker symbol change, all issued and outstanding shares of Nutek's current common stock MUST be exchanged for new certificates bearing the name Datascension Inc., and the name of the beneficial owner, or these shares will be void, shall not entitle the certificate holder to any of the rights of a shareholder of the Corporation, and shall be deemed worthless, non-transferable and non-tradable in any public or private market or exchange after April 25, 2004.
"We thank our shareholders, the transfer agent, and the brokerage community for their continued patience and support during the mandatory certificate exchange procedure," noted Conradie. "We understand that this is a time-consuming task for all involved, but it is a necessary part of our effort to protect and enhance shareholder value and grow the company with a singular focus."
STOCK CERTIFICATE EXCHANGE PROCEDURE FOR STOCKHOLDERS
Stockholders who have in their possession paper stock certificates should read and carefully complete the Letter of Transmittal, which is available online at http://www.nutk.com/5/transletter.htm. This letter is also available by fax or U.S. Mail by calling 866-242-2405. The completed Letter of Transmittal must then be forwarded together with the stock certificate(s) via an insured, traceable delivery service to the Company's transfer agent, Transfer Online, Inc., 227 SW Pine Street, Suite 300, Portland, OR 97204. Tel: 503-227-2950 Fax: 503-227-6874. Note that there is no need to, and nor should, stockholders endorse the back of the stock certificate.
Stockholders who hold their shares in street name with a broker are urged to immediately confirm with their broker that the broker is including their name on the list of beneficial owners being submitted to the Company's transfer agent. These stockholders will not be required to take any further action, unless their broker instructs them otherwise. The Company urges stockholders to make all requests in writing to their broker and keep a record of all communication.
PROCEDURE FOR SHAREHOLDERS EXPERIENCING PROBLEMS WITH THEIR BROKERAGE RELATING TO DATASCENSION'S STOCK
Shareholders are advised to have all Datascension-related communication with their brokers in writing. Written correspondence is the only proof of what is communicated between brokers and shareholders. If shareholders experience problems with their brokerage related to Datascension's stock, they should submit an explanation of the problem along with copies of their written correspondence regarding the matter directly to the company by email to share.exchange@datascension.com , by fax to 702-262-0033 or US mail to Datascension Inc, 6330 McLeod Drive, Suite 1, Las Vegas, NV 89120. Datascension can only attempt to assist those who provide copies of written correspondence.
CERTIFICATE EXCHANGE PROCEDURE FOR BROKERAGES
In conjunction with NASDAQ Uniform Practice Advisory UPC # 015-2004 noted above, the Company advises broker dealers with customers that hold Nutek, Inc. stock to promptly request from the Depository Trust Company (DTC) stock certificates representing the number of shares, which reflect their ownership position, and to submit the certificates along with the beneficial owner information, as described in the Letter of Transmittal. Broker dealers should contact DTC directly for instructions on withdrawing their position. The number of shares represented by the certificates and delivered to the transfer agent must match exactly the number of shares held by the beneficial owners or this will delay processing.
PROCEDURE FOR BROKERAGES WHO HAVE QUESTIONS OR ARE EXPERIENCING PROBLEMS RELATING TO TRADING DATASCENSION'S STOCK
Brokers are advised to submit in writing a detailed explanation of the problem or questions they have related to Datascension's stock to our Investor Relations contacts. Datascension can only attempt to assist those who provide written correspondence.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained in this press release are forward-looking statements and information relating to the Company that is based on the beliefs of the management of the Company, as well as assumptions made by and information currently available to the management of the Company. Such statements reflect the current views of the Company with respect to future events, and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
SOURCE: Datascension Inc.
(Voluntary Disclosure: Current Position- None;)
The Shadowy Story Behind Scientology's Tax-Exempt Status
Will Scientologists now take on the SEC and get involved in the political process to "Clear America" of corruption?
On Oct. 8, 1993, 10,000 cheering Scientologists thronged the Los Angeles Sports Arena to celebrate the most important milestone in the church's recent history: victory in its all-out war against the Internal Revenue Service.
For 25 years, IRS agents had branded Scientology a commercial enterprise and refused to give it the tax exemption granted to churches. The refusals had been upheld in every court. But that night the crowd learned of an astonishing turnaround. The IRS had granted tax exemptions to every Scientology entity in the United States.
"The war is over," David Miscavige, the church's leader, declared to tumultuous applause.
The landmark reversal shocked tax experts and saved the church tens of millions of dollars in taxes. More significantly, the decision was an invaluable public relations tool in Scientology's worldwide campaign for acceptance as a mainstream religion.
On the basis of the IRS ruling, the State Department formally criticized Germany for discriminating against Scientologists. The German government regards the organization as a business, not a tax-exempt religion, the very position maintained for 25 years by the U.S. government.
The full story of the turnabout by the IRS has remained hidden behind taxpayer privacy laws for nearly four years. But an examination by The New York Times found that the exemption followed a series of unusual internal IRS actions that came after an extraordinary campaign orchestrated by Scientology against the agency and people who work there. Among the findings of the review by The New York Times, based on more than 30 interviews and thousands of pages of public and internal church records, were these:
http://www-2.cs.cmu.edu/~dst/Cowen/essays/nytimes.html
Hartcourt Courting Preston Gates?
Is Hartcourt getting sued by the SEC and what does Preston Gates have to do with the company?
Bush May Not Be KO'd Yet, but he's definitely got his gloves off and has lost most of his clothing.
Bringing the SEC under Investor Control?
100 million investors chipping in $1.00 each might cover the cost of bringing down the SEC, but it would cost half that much just to organize the investors to collect it, and the other half would have to go to a good bunch of lawyers just to take on the case which would take about a decade to handle the 37 million plus pages of documents needing to be brought before the Supreme Court, so you are correct, you are kidding yourself and anyone who reads your post. There is no evidence anywhere we can find that suggests that anyone has ever sued the SEC and won. But there are alternatives to using force and the current court system young Jedi Knight.
Miserable Failure
Using a technique called "Google bombing," Internet jokesters have been engaging in political mischief-making again. Go to Google, type in "miserable failure," and then click on "I'm Feeling Lucky." And while you're at it, do the same with "french military victories" and "weapons of mass destruction."
The Second Amendment is now moot. The Fourth Amendment was usurped by the Patriot Act. What would you like to do about it?
Predictions of collapse of Philippine economy, Afghanistan bloodshed will lead to limited nuclear war in middle east, and Iran will invade Iraq within a year.
Will the 911 Victims Sue the United States Government instead of the Saudi's for $1 trillion or just joinder the government in that action?
How do you go about starting the impeachment process?
Let the Choir Sing
Bush Ready in the Ring
No Pictures Please, the Emperor Has No Clothing Any More
http://play.rbn.com/?url=livecon/kcrw/g2demand/ls/ls040321le_Show.rm&start=13:56&proto=rtsp
"Osama bin Laden Found Dead, Autopsy shows he died before 911"
Connect the Military Industrial Financial Media Complex Dots:
http://www.conspiracydigest.com/carlyle_group.html
http://www.informationclearinghouse.info/article3995.htm
"A 1-megaton air burst could kill everyone within a radius of 7 km from the hypocentre."
http://www.fas.org/nuke/control/icj/text/ianw_ijudgment_19960708_dissenting_koroma.htm
A 1 megaton nuclear bomb can now be carried on the back of one human suicide bomber.
In other news the lesson to be learned is never issue any press releases about public companies until after the fact of any event is totally completed.
http://www.investorshub.com/boards/read_msg.asp?message_id=2681538
http://www.investorshub.com/boards/read_msg.asp?message_id=2679778
The Rolling Blog of GAG - Initials of the Hornblower. Everyone else just keep blowing your whistles until the reign stops and we have slayed the dragon at the gates.
Information Security: Further Efforts Needed to Address Serious Weaknesses to USDA.
http://www.gao.gov/cgi-bin/getrpt?GAO-04-154, Highlights - http://www.gao.gov/highlights/d04154high.pdf
Is password-lending a cybercrime? According to Judge Buchwald in the Southern District of New York, Berkshire violated this law. The court reasoned that using the userid and password in violation of a contractual provision was an unauthorized access. http://www.securityfocus.com/columnists/222
CIA to issue cyberterror intelligence estimate - The CIA, working with the FBI, the Department of Homeland Security and the Pentagon, this week will publish the first-ever classified National Intelligence Estimate (NIE) on the threat of cyberterrorism against U.S. critical infrastructures. http://www.computerworld.com/printthis/2004/0,4814,90448,00.html
Security experts bemoan poor patching - Vulnerability assessment firm Qualys supported the statements, made during a panel discussion at the RSA Security Conference here, with data culled from monitoring its clients' networks. The data, collected over two years, shows that it takes a month to cut by half the number of vulnerable computers connected to the Internet. http://news.com.com/2102-7355_3-5164650.html?tag=st.util.print
E-mail ensnarls bank in privacy inquiry - Southern Commercial Bank may have compromised the privacy of more than 40,000 customers - and may have violated state and federal guidelines - by e-mailing unsecured personal data to an independent computer programmer. http://www.stltoday.com/stltoday/business/stories.nsf/0/9D53CE21E23D8AB486256E430024A17A?OpenDocumen...
Bank ATMs Converted to Steal IDs of Bank Customers - A team of organized criminals is installing equipment on legitimate bank ATMs in at least 2 regions to steal both the ATM card number and the PIN. The team sits nearby in a car receiving the information transmitted wirelessly over weekends and evenings from equipment they install on the front of the ATM. http://www.utexas.edu/admin/utpd/atm.html
March 12, 2004 - NCUA - Small Credit Union's Rights under the Small Business Regulatory Enforcement Fairness Act of 1996 - This letter is to inform you of your rights as a small business entity under the Small Business Regulatory Enforcement Fairness Act of 1996. www.ncua.gov/ref/SmallCU/SBREFACompliance.pdf
March 12, 2004 - Unauthorized Banking; Unlicensed Bank: Lincoln Bank and Trust Company Limited, Montserrat, WI - This issuance notifies national banks that the OCC has received information that the Lincoln Bank and Trust Company Limited of Montserrat, WI, is claiming to hold a valid offshore banking license issued by the Financial Services Commission in Brades, Montserrat. This company's license was revoked on May 1, 2001, and has not been reinstated. www.occ.treas.gov/ftp/alert/2004-9.txt
March 12, 2004 - OCC Closes Guaranty National Bank of Tallahassee and Appoints FDIC Receiver - Guaranty National Bank of Tallahassee, Tallahassee, Florida, was closed today by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation was appointed receiver. The bank, with approximately $71 million in assets, was chartered in 1986. www.occ.treas.gov/scripts/newsrelease.aspx?Doc=GWZSYG2.xml
March 12, 2004 - OCC Reports Derivative Volume Surpasses $70 Trillion - Derivatives held by U. S. commercial banks increased $3.9 trillion in the fourth quarter, to $71.1 trillion, the Office of the Comptroller of the Currency reported today in its quarterly Bank Derivatives Report.
Press Release: www.occ.treas.gov/scripts/newsrelease.aspx?Doc=M6Q98K6.xml
Attachment: www.occ.treas.gov/ftp/deriv/dq403.pdf
March 12, 2004 - Guidance on Safeguarding Customers Against E-Mail and Internet-Related Fraudulent Schemes - The FDIC is alerting financial institutions to the increasing prevalence of e-mail and Internet-related fraudulent schemes targeting financial institution customers. The attached guidance provides financial institutions with background information on these schemes and describes how institutions can assist in protecting their customers. www.fdic.gov/news/news/financial/2004/fil2704.html
March 12, 2004 - Remarks by Chairman Alan Greenspan Education At the Boston College Finance Conference 2004, Boston, Massachusetts March 12, 2004 www.federalreserve.gov/BoardDocs/Speeches/2004/20040312/default.htm
March 11, 2004 - Financial Holding Companies - Under the Bank Holding Company Act, bank holding companies may elect to be financial holding companies Following is a list of those companies whose elections to become or be treated as financial holding companies are effective. www.federalreserve.gov/GeneralInfo/FHC/default.htm
March 11, 2004 - Statistical Release - Structure and Share Data for U.S. Offices of Foreign Banks - This report shows the assets of each foreign bank office in the United States and is in three parts. Part 1 lists the offices by type, part 2 by country of the foreign bank "family" owning the office, and part 3 by Federal Reserve District and state. Each part shows the assets of each U.S. office. www.federalreserve.gov/Releases/Iba/default.htm
March 11, 2004 - Interagency Guidance Issued on Unfair or Deceptive Acts or Practices by State-Chartered Banks - The Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation today issued guidance outlining standards they will apply to determine when acts or practices by state-chartered banks are unfair or deceptive.
Press Release: www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/default.htm
Press Release: www.fdic.gov/news/news/press/2004/pr2004.html
Press Release: www.fdic.gov/news/news/financial/2004/fil2604.html
March 11, 2004 -Chairman Alan Greenspan - Education Before the Committee on Education and the Workforce, U.S. House of Representatives www.federalreserve.gov/boarddocs/testimony/2004/20040311/default.htm
March 10, 2004 - Marshall & Ilsley Corporation's Dennis J. Kuester Appointed to 2004 Federal Advisory Council - The board of directors of the Federal Reserve Bank of Chicago announced today that Dennis J. Kuester, president and chief executive officer of Milwaukee-based Marshall & Ilsley Corporation, has been appointed to the Federal Reserve System's Federal Advisory Council. www.chicagofed.org/news_and_conferences/news/2004_03_10_kuester_appointed_to_federal_advisory_council.cfm
March 10, 2004 - FDIC Makes Public January Enforcement Actions; No Administrative Hearings Scheduled - The Federal Deposit Insurance Corporation today released a list of orders of administrative enforcement actions taken against banks and individuals in January. No administrative hearings are scheduled for March. www.fdic.gov/news/news/press/2004/pr1904.html
March 10, 2004 - Statistical Release G.20 Finance Companies www.federalreserve.gov/Releases/G20/Current/default.htm
March 10, 2004 - NCUA - Federal Credit Unions Adopting Underserved Areas
Growing At Impressive Pace According To NCUA Data - NCUA Chairman Dennis Dollar announced that 2003 end-of-year agency data demonstrates that the 494 federal credit unions which adopted 1021 underserved areas into their fields of membership since the inception of NCUA’s Access Across America initiative four years ago have significantly higher growth rates in membership, savings and loans than the overall growth rates among federal credit unions as a whole. www.ncua.gov/news/press_releases/2004/NR04-0309.htm
March 10, 2004 - Money Services Businesses Registration List - The Department of the Treasury's Financial Crimes Enforcement Network has updated the list of entities that have registered as Money Services Businesses. www.fdic.gov/news/news/financial/2004/fil2504.html
March 10, 2004 - The Federal Reserve Board and New York State Banking Department today announced the issuance of a joint Order to Cease and Desist and Order of Assessment of a Civil Money Penalty and Monetary Payment against Credit Agricole, S.A., Paris, France, and its affiliates in Paris, Credit Agricole Indosuez and Credit Lyonnais, S.A., and its offices and affiliates in New York, the New York branches of Credit Agricole Indosuez and Credit Lyonnais, S.A. The Order assesses fines totaling $13 million. www.federalreserve.gov/boarddocs/press/Enforcement/2004/20040310/default.htm
March 9, 2004 - NCUA - Financial Trends in Federally Insured Credit Unions, January 1 - December 31, 2003 - Along with the impressive savings and asset growth that we have seen over the past several years, the 2003 performance in lending, delinquency and overall net worth accumulation also provides a positive report. www.ncua.gov/ref/letters/2004/04-CU-02.pdf
March 9, 2004 - First Senior Deputy Comptroller Julie L. Williams Discusses Misunderstandings and Mischaracterizations of New OCC Rules - Julie L. Williams, Chief Counsel and First Senior Deputy Comptroller, today delivered the attached speech to a Government Affairs Conference held by America’s Community Bankers.
Press Release: www.occ.treas.gov/scripts/newsrelease.aspx?Doc=57D3RW7C.xml
Attachment: www.occ.treas.gov/ftp/release/2004-18a.pdf
March 8, 2004 - The Federal Reserve Board on Monday announced its approval of the applications filed pursuant to section 3 of the Bank Holding Company Act by Bank of America Corporation, Charlotte, North Carolina, to merge with FleetBoston Financial Corporation, Boston, Massachusetts, and thereby indirectly acquire Fleet National Bank, Providence, Rhode Island, and Fleet Maine, National Association, South Portland, Maine. www.federalreserve.gov/boarddocs/press/orders/2004/20040308/default.htm
March 8, 2004 - NCUA - Dollar Encourages Low-Income Credit Unions To Apply For $1 Million In "Tag" Grants - NCUA Chairman Says Congressional Appropriation Allocates $1 Million For Grants During FY 2004 Which Ends September 30, Providing "The Best Opportunity In Recent Years For Low-Income Credit Unions To Get Needed Technical Assistance" www.ncua.gov/news/press_releases/2004/NR04-0308-2.htm
March 8, 2004 - NCUA - Matz Encourages Regulators to Share Best Practices - National Credit Union Administration Board Member Debbie Matz encouraged state and federal credit union regulators to share best practices in regulations just as credit unions share best practices in member services. www.ncua.gov/news/press_releases/2004/NR04-0308.htm
March 8, 2004 - OTS Lists 66 CRA Exams Scheduled For Second Quarter 2004 - The Office of Thrift Supervision announced today that 66 savings associations are scheduled for Community Reinvestment Act examinations during the second quarter of 2004. www.ots.treas.gov/docs/77406.html
March 8, 2004 - The Office of the Comptroller of the Currency, on March 5, 2004, filed a notice of charges and a notice of assessment of civil money penalties against Grant Thornton LLP.
Notice of Charge:www.occ.treas.gov/foia/GTNoticeofChargesFinalwithproposed_CD.pdf
Notice of Assessment: http://www.occ.treas.gov/foia/GTNoticeofAssessmentofaCMP.pdf
March 8, 2004 - FDIC Issues March List of Banks Examined for CRA Compliance - The Federal Deposit Insurance Corporation today issued its monthly list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act www.fdic.gov/news/news/press/2004/pr1804.html
The list of Bank Failures and Assistance Transactions is updated through December 31, 2002. Please address questions on this subject to the Customer Service Hotline (telephone: 888-206-4662).
2002
BIF = Bank Insurance Fund
SAIF = Savings Association Insurance Fund
December 17 (BIF)
The Farmers Bank & Trust of Cheneyville, Cheneyville, Louisiana, with approximately $37 million in assets and $33.1 million in deposits, was assumed by Sabine State Bank and Trust Company, Many, Louisiana. (PR-131-2002)
November 8 (BIF)
The Bank of Alamo, Alamo, TN with total deposits of approximately $55.3 million and total assets of about $69.4 million, was for approved payout by the FDIC Board of Directors. (PR-120-2002)
September 30 (BIF)
AmTrade International Bank, Atlanta, Georgia with total deposits of approximately $10.2 million and total assets of about $12 million, was approved for payout by the FDIC Board of Directors. (PR-100-2002)
June 27 (SAIF)
Universal Federal Savings Bank, Chicago, Illinois, with approximately $52 million in assets and $40 million in deposits, was assumed by Chicago Community Bank, Chicago, Illinois. (PR-81-2002)
June 26 (BIF)
The Connecticut Bank of Commerce, Stamford, Connecticut, with approximately $398.6 million in assets and $323.7 million in deposits, was assumed by Hudson United Bank, Mahwah, New Jersey. (PR-80-2002)
March 28 (BIF)
New Century Bank, Shelby Township, Michigan, with total deposits of approximately $17.9 million and total assets of about $18.9 million, was approved for payout by the FDIC Board of Directors. (Press Release).
March 1 (BIF)
Net 1st National Bank, Boca Raton, Florida, with total deposits of approximately $27.4 million and total assets of about $34.7 million, was assumed by Bank Leumi USA, of New York, New York. (PR-26-2002).
February 7 (BIF)
NextBank, N.A., Phoenix, Arizona, with total deposits of approximately $554 million and total assets of about $700 million, was approved for payout by the FDIC Board of Directors. (PR-16-2002).
February 1 (BIF)
The Oakwood Deposit Bank Company, Oakwood, Ohio, with total deposits of approximately $60.2 million and total assets of about $72.3 million, was assumed by The State Bank and Trust Company of Defiance, Ohio. (PR-11-2002, PR-10-2002)
January 18 (BIF)
Bank of Sierra Blanca, Sierra Blanca, Texas, with total deposits of approximately $9.8 million and total assets of about $10.8 million, was assumed by The Security State Bank of Pecos, Pecos, Texas. (PR-5-2002).
January 11 (BIF)
Hamilton Bank, National Association, Miami, Florida, with total deposits of approximately $1.2 billion and total assets of $1.3 billion, was assumed by Israel Discount Bank of New York, New York, New York. (PR-3-2002).
http://www.fdic.gov/bank/historical/bank/2002/index.html
ASSURED THRIFT AND LOAN ASSOCIATION, SAN JUAN CAPISTRANO, CALIFORNIA. Total assets $56.1 million. Total deposits $51.5 million in 2,000 accounts. Insured deposits paid out. FDIC outlay $50.5 million (PR-2-92).
January 10
2 (t)THE CITIZENS BANK, DALLAS, GEORGIA. Total assets $52.6 million. Total deposits $51.3 million in 10,900 accounts. Insured deposits transferred to the First National Bank of Paulding County, Dallas, Georgia. FDIC outlay $36.9 million (PR-3-92).
January 16
3 (w)THE BANK OF VERDE VALLEY, COTTONWOOD, ARIZONA. Total assets $10.1 million. Deposits of $9.8 million in 1,400 accounts assumed by Stockmen's Bank, Kingman, Arizona. FDIC outlay $1.2 million (PR-4-92).
January 23
4 FIRST STATE BANK, BANGS, TEXAS. Total assets $16.7 million. Deposits of $16.1 million in 3,400 accounts assumed by Texas Bank, Brownwood, Texas. FDIC outlay $9.4 million (PR-7-92).
January 24
5 (c)CROSSLAND SAVINGS BANK, FSB, BROOKLYN, NEW YORK. Total assets $7.4 billion. Deposits of $5.5 billion transferred to CrossLand Federal Savings, Brooklyn, New York, a newly chartered institution managed under direction of the FDIC. FDIC outlay $1.2 billion (PR-8-92).
6 BANCO NACIONAL, NATIONAL ASSOCIATION, SAN JUAN, PUERTO RICO. Total assets $54.5 million. Deposits of $48.9 million in 3,500 accounts assumed by Eurobank & Trust Company, San Juan, Puerto Rico. FDIC outlay $43.7 million (PR-9-92).
7 (p)AMERICAN NATIONAL BANK OF NEW YORK, FLEISCHMANNS (LARCHMONT), NEW YORK. Total assets $20.7 million. Total deposits $19.6 million in 23,600 accounts. Insured deposits paid out. FDIC outlay $19.6 million (PR-10-92).
January 30
8 ATLANTIC TRUST COMPANY, NEWINGTON, NEW HAMPSHIRE. Total assets $21.3 million. Deposits of $21.4 million in 1,900 accounts assumed by Fleet Bank-NH, Nashua, New Hampshire. FDIC outlay $20.7 million (PR-12-92).
9 (p)INDEPENDENCE BANK, ENCINO (LOS ANGELES), CALIFORNIA. Total assets $555 million. Total deposits $530.2 million. All deposits paid out, with First Interstate Bank of California, Los Angeles, as paying agent. FDIC outlay $530.2 million (PR-13-92).
January 31
10 SENTINEL BANK, HARTFORD, CONNECTICUT. Total assets $73.5 million. Deposits of $69.8 million in 3,200 accounts assumed by Society for Savings, Hartford, Connecticut. FDIC outlay $69.0 million (PR-15-92).
11 FOUNTAIN BANK, SCOTTSDALE, ARIZONA. Total assets $15.2 million. Deposits of $13.8 million in 2,600 accounts assumed by Bank of Arizona, Scottsdale, Arizona. FDIC outlay $10.6 million (PR-16-92).
February 6
12 LANDMARK BANK OF FORT WORTH, FORT WORTH, TEXAS. Total assets $82.8 million. Total deposits $77.5 million in 11,500 accounts. Insured deposits assumed by Central Bank and Trust Company, Fort Worth, Texas. FDIC outlay $53.5 million (PR-17-92).
February 7
13 (w)KEMPTON STATE BANK, KEMPTON, ILLINOIS. Total assets $3.6 million. Deposits of $3.6 million assumed by Vermilion Valley Bank, Piper City, Illinois. FDIC outlay $598,000 (PR-18-92).
14 (t)MERCHANT NATIONAL BANK, FORT MYERS, FLORIDA. Total assets $30.4 million. Total deposits $29.0 million. Insured deposits transferred to Founders National Trust Bank, Fort Myers, Florida. FDIC outlay $25.1 million (PR-19-92).
February 14
15 THE CENTRAL SAVINGS BANK, LOWELL, MASSACHUSETTS. Total assets $353.3 million. Deposits of $338.9 million in 58,000 accounts assumed by MASSBANK For Savings, Reading, Massachusetts. FDIC outlay $116.7 million (PR-23-92).
February 21
16 DOLLAR DRY DOCK BANK, WHITE PLAINS, NEW YORK. Total assets $4.0 billion. Deposits of $3.7 billion in 390,000 accounts assumed by Emigrant Savings Bank, New York, New York (One branch assumed by Apple Savings Bank, New York, New York). FDIC ultimate outlay $574.0 million (PR-26-92).
17 (t)NATIONAL CITY BANK, CORAL SPRINGS, FLORIDA. Total assets $18.2 million. Deposits of $16.7 million in 1,500 accounts. Insured deposits transferred to Intercontinental Bank, Miami, Florida. FDIC outlay $14.5 million (PR-27-92).
18 (t)THE BANK OF THE BRANDYWINE VALLEY, WEST CHESTER, PENNSYLVANIA. Total assets $44.9 million. Total deposits of $47.3 million in 3,800 accounts. Insured deposits transferred to Wilmington Trust Company, Wilmington, Delaware. FDIC outlay $34.9 million (PR-28-92).
February 27
19 (t)COLUMBIA BANK, AVONDALE, ARIZONA. Total assets $15.9 million. Total deposits of $14.9 million in 2,000 accounts. Insured deposits transferred to The Valley National Bank of Arizona, Phoenix, Arizona. FDIC outlay $14.9 million (PR-31-92).
February 28
20 COLONY SAVINGS BANK, WALLINGFORD, CONNECTICUT. Total assets $31.2 million. Deposits of $27.3 million in 5,600 accounts assumed by The New Haven Savings Bank, New Haven, Connecticut. FDIC outlay $14.1 million (PR-33-92).
21 (p)MISSION VIEJO NATIONAL BANK, MISSION VIEJO, CALIFORNIA. Total assets $102.7 million. Total deposits $90.3 million in 2,700 accounts. Insured deposits paid out. FDIC outlay $85.8 million (PR-34-92).
March 6
22 (t)NEW HERITAGE BANK, LAWRENCE, MASSACHUSETTS. Total assets $89.9 million. Total deposits $90.8 million. Insured deposits transferred to The First National Bank of Boston (Bank of Boston), Boston, Massachusetts. FDIC outlay $70.4 million (PR-36-92).
March 12
23 (w)PROGRESSIVE NATIONAL BANK OF RAYNE, RAYNE, LOUISIANA. Total assets $11.4 million. Deposits of $11.2 million assumed by St. Landry Bank & Trust Co., Opelousas, Louisiana. FDIC outlay $1.3 million (PR-39-92).
March 13
24 (t)BROADWAY BANK AND TRUST, PATERSON, NEW JERSEY. Total assets $386.4 million. Total deposits $370.3 million in 41,000 accounts. Insured deposits transferred to Hudson United Bank, Union City, New Jersey. FDIC outlay $305.0 million (PR-40-92).
March 16
25 FIRST SECURITY BANK OF ANACONDA, ANACONDA, MONTANA. Total assets $30.3 million. Deposits of $30.2 million in 4,700 accounts assumed by Bank of Montana-Anaconda, Anaconda, Montana. FDIC outlay $14.7 million (PR- 41-92).
March 19
26 FARMERS & MERCHANTS BANK, TRYON, OKLAHOMA. Total assets $4.0 million. Deposits of $3.9 million in 850 accounts assumed by Union National Bank of Chandler, Chandler, Oklahoma. FDIC outlay $2.2 million (PR-43-92).
27 (w)INDEPENDENCE BANK, PLANO, TEXAS. Total assets $20.3 million. Total deposits $19.4 million in 3,700 accounts. Insured deposits assumed by First Western National Bank, Carrollton, Texas. Advance dividend of 67 percent of claims. FDIC outlay $3.6 million (PR-44-92).
28 SOUTHSIDE NATIONAL BANK, NACOGDOCHES, TEXAS. Total assets $11.1 million. Deposits of $10.8 million in 2,200 accounts assumed by Ferdonia State Bank, Nacogdoches, Texas. FDIC outlay $5.1 million (PR- 45-92).
March 20
29 THE BANK FOR SAVINGS, MALDEN, MASSACHUSETTS. Total assets $407.5 million. Deposits of $387.6 million in 62,300 accounts assumed by Medford Savings Bank, Medford, Massachusetts. FDIC outlay $126.8 million (PR-46-92).
30 (t)UNITED MERCANTILE BANK AND TRUST COMPANY, N.A., PASADENA, CALIFORNIA. Total assets $29.0 million. Total deposits $28.3 million in 1,500 accounts. Insured deposits transferred to OneCentral Bank, Glendale, California. FDIC outlay $27.2 million (PR-47-92).
March 26
31 THEODORE ROOSEVELT NATIONAL BANK, WASHINGTON, D.C. Total assets $12.6 million. Deposits of $12.2 million in 1,700 accounts assumed by Industrial Bank of Washington, Washington, D.C. FDIC outlay $11.6 million (PR-50-92).
32 AMERICAN BANK OF COMMERCE, OKLAHOMA CITY, OKLAHOMA. Total assets $13.1 million. Deposits of $13.3 million in 3,400 accounts assumed by Rockwell Bank, N.A., Oklahoma City, Oklahoma. FDIC outlay $5.5 million (PR-51-92).
March 27
33 VANGUARD SAVINGS BANK, HOLYOKE, MASSACHUSETTS. Total assets $406.5 million. Deposits of $407.7 million in 50,300 accounts assumed by Fleet Bank of Massachusetts, N.A., Boston, Massachusetts. FDIC outlay $402.7 million (PR-52-92).
34 PLACER BANK OF COMMERCE, ROSEVILLE, CALIFORNIA. Total assets $31.9 million. Deposits of $30.3 million in 2,300 accounts assumed by American River Bank, Sacramento, California. FDIC outlay $22.6 million (PR-53-92).
March 31
35 (t)FIRST COMMUNITY BANK OF CHEROKEE, WOODSTOCK, GEORGIA. Total assets $36.1 million. Total deposits $34.7 million in 3,500 accounts. Insured deposits transferred to Etowah Bank, Canton, Georgia. Advance dividend 59 percent of uninsured claims. FDIC outlay $20.0 million (PR- 55-92).
April 3
36 (t)SUMMIT NATIONAL BANK, TORRINGTON, CONNECTICUT. Total assets $90.1 million. Total deposits of $89.3 million in 13,000 accounts. Insured deposits transferred to American Bank of Connecticut, Waterbury, Connecticut. FDIC outlay $79.0 million (PR-57-92).
37 (p)BANK OF BEVERLY HILLS, BEVERLY HILLS, CALIFORNIA. Total assets $118.7 million. Total deposits $115.8 million in 1,500 accounts. Insured deposits paid out. FDIC outlay $105.7 million (PR-58-92).
April 9
38 FAIRFIELD COUNTY TRUST COMPANY, STAMFORD, CONNECTICUT. Total assets $132.4 million. Deposits of $132.0 million in 7,600 accounts assumed by Chase Manhattan Bank of Connecticut, N.A., Bridgeport, Connecticut. FDIC outlay $110.2 million (PR-60-92).
39 RED BIRD BANK OF DALLAS, DALLAS, TEXAS. Total assets $34.6 million. Deposits of $33.4 million in 6,300 accounts assumed by Bank of the Southwest, Dallas, Texas. FDIC outlay $24.0 million (PR-61-92).
April 24
40 THE NORWALK BANK, NORWALK, CONNECTICUT. Total assets $84.6 million. Deposits of $76.8 million in 6,100 accounts assumed by Bank of Darien, Darien, Connecticut. FDIC outlay $43.0 million (PR-67-92).
41 SOUTHSTATE BANK FOR SAVINGS, BROCKTON, MASSACHUSETTS. Total assets $298.3 million. Deposits of $265.2 million in 34,700 accounts assumed by BayBank, Burlington, Massachusetts. FDIC outlay $221.5 million (PR- 68-92).
42 SHORE BANK AND TRUST COMPANY, LYNN, MASSACHUSETTS. Total assets $189.4 million. Total deposits $171.6 million in 14,500 accounts. Insured deposits assumed by Eastern Bank, Lynn, Massachusetts. Advance dividend 59 percent of uninsured claims. FDIC outlay $154.6 million (PR- 69-92).
43 (t)VALLEY COMMERCIAL BANK, STOCKTON, CALIFORNIA. Total assets $29.0 million. Total deposits $27.5 million in 3,300 accounts. Insured deposits transferred to Union Safe Deposit Bank, Stockton, California. FDIC outlay $18.2 million (PR-70-92).
May 1
44 (t)METROPOLITAN BANK, N.A., WASHINGTON, D.C. Total assets $26.1 million. Total deposits $26.3 million in 1,021 accounts. Insured deposits transferred to Adams National Bank, Washington, D.C. Advance dividend 55 percent of claims. FDIC outlay $21.0 million (PR-71-92).
May 4
45 (p)THE FINANCIAL CENTER BANK, SAN FRANCISCO, CALIFORNIA. Total assets $242.7 million. Total deposits $226.3 million in 6,500 accounts. Insured deposits paid out. Advance dividend 45 percent of claims. FDIC outlay $204.7 million (PR-72-92).
May 7
46 JACKSON EXCHANGE BANK AND TRUST COMPANY, JACKSON, MISSOURI. Total assets $128.7 million. Total deposits $125.3 million in 18,400 accounts. Insured deposits assumed by Boatmen's National Bank of Cape Girardeau, Cape Girardeau, Missouri. FDIC outlay $98.2 million (PR- 73-92).
47 FIRST EXCHANGE BANK OF CAPE GIRARDEAU, CAPE GIRARDEAU, MISSOURI. Total assets $86.1 million. Total deposits $84.5 million in 7,500 accounts. Insured deposits assumed by Commerce Bank of Poplar Bluff, N.A., Poplar Bluff, Missouri. FDIC outlay $70.5 million (PR-73-92).
48 FIRST EXCHANGE BANK OF ST. LOUIS, ST. LOUIS, MISSOURI. Total assets $59.4 million. Total deposits $59.7 million in 5,800 accounts. Insured deposits assumed by Magna Bank of St. Louis, St. Louis, Missouri. FDIC outlay $50.5 million (PR-73-92).
49 FIRST EXCHANGE BANK OF MADISON COUNTY, FREDERICKTOWN, MISSOURI. Total assets $34.6 million. Total deposits $33.1 million in 5,800 accounts. Insured deposits assumed by Commerce Bank of St. Francois County, N.A., Farmington, Missouri. FDIC outlay $13.6 million (PR-73-92).
50 FIRST EXCHANGE BANK OF NORTH ST. LOUIS COUNTY, FLORISSANT, MISSOURI. Total assets $47.6 million. Total deposits $45.7 million in 6,500 accounts. Insured deposits assumed by First Bank A Savings Bank, Clayton, Missouri. FDIC outlay $36.0 million (PR-73-92).
May 8
51 (t)BROOKFIELD BANK, BROOKFIELD, CONNECTICUT. Total assets $73.2 million. Total deposits $68.7 million in 4,900 accounts. Insured deposits transferred to Bristol Federal Savings Bank, Bristol, Connecticut. FDIC outlay $62.9 million (PR-73-92).
May 15
52 MALDEN TRUST COMPANY, MALDEN, MASSACHUSETTS. Total assets $234.6 million. Total deposits $237.0 million in 38,200 accounts. Insured deposits assumed by Eastern Bank, Lynn, Massachusetts. Advance dividend 75 percent of uninsured claims. FDIC outlay $189.6 million (PR- 79-92).
May 22
53 POWDER MILL BANK, MORRIS PLAINS, NEW JERSEY. Total assets $44.1 million. Deposits of $43.0 million in 4,600 accounts assumed by Valley National Bank, Passaic, New Jersey. FDIC outlay $37.4 million (PR- 81-92).
May 29
54 WORKINGMEN'S CO-OPERATIVE BANK, BOSTON, MASSACHUSETTS. Total assets $223.7 million. Deposits of $189.9 million in 23,200 accounts assumed by The First National Bank of Boston (Bank of Boston), Boston, Massachusetts. FDIC outlay $151.7 million (PR-84-92).
55 (p)NORTH AMERICAN THRIFT AND LOAN, CORONA DEL MAR, CALIFORNIA. Total assets $18.8 million. Total deposits $18.8 million in 1,100 accounts. Insured deposits paid out. Advance dividend 70% of uninsured claims. FDIC outlay $18.1 million (PR-85-92).
June 4
56 (p)THE HOME STATE BANK, LONGTON, KANSAS, LONGTON, KANSAS. Total assets $3.9 million. Total deposits $3.9 million. Insured deposits paid out. FDIC outlay $3.9 million (PR-88-92).
57 MAYFAIR BANK, CHICAGO, ILLINOIS. Total assets $33.6 million. Total deposits $30.2 million in 5,700 accounts. Insured deposits assumed by Foster Bank, Chicago, Illinois. Advance dividend 66 percent of uninsured claims. FDIC outlay $11.9 million (PR-89-92).
June 12
58 AMERICAN SAVINGS BANK, WHITE PLAINS, NEW YORK. Total assets $3.2 billion. Total deposits $2.8 billion in 271,500 accounts. Insured deposits assumed by eight institutions. Advance dividend 75 percent of uninsured claims. Resolved with Riverhead Savings Bank, White Plains, New York. FDIC outlay $2.6 billion (PR-91-92).
59 RIVERHEAD SAVINGS, WHITE PLAINS, NEW YORK. Total assets $404.9 million. Total deposits $314.7 million in 36,600 accounts. Insured deposits assumed by eight institutions. Advance dividend 75 percent of uninsured claims. Resolved with American Savings Bank, White Plains, New York. FDIC outlay about $300 million (PR-91-92).
60 LANDMARK BANK FOR SAVINGS, WHITMAN, MASSACHUSETTS. Total assets $54.4 million. Deposits of $43.5 million in 11,100 accounts assumed by Abington Savings Bank, Abington, Massachusetts. FDIC outlay $22.1 million (PR-92-92).
61 AMERICAN INTERSTATE BANK, NEWPORT BEACH, CALIFORNIA. Total assets $43.8 million. Total deposits $41.5 million in 2,800 accounts. Insured deposits assumed by Marine National Bank, Irvine, California. Advance dividend 75 percent of uninsured claims. FDIC outlay $27.7 million (PR-93-92).
June 25
62 CASTLE HILLS NATIONAL BANK, SAN ANTONIO, TEXAS. Total assets $13.6 million. Total deposits $13.2 million in 2,300 accounts. Insured deposits assumed by International Bank of Commerce, Laredo, Texas. Advance dividend 87 percent of uninsured claims. FDIC outlay $386,000 (PR-99-92).
63 AMERICAN NATIONAL BANK -- POST OAK, HOUSTON, TEXAS. Total assets $22.7 million. Total deposits $23.2 million in 3,000 accounts. Insured deposits assumed by First Prosperity Bank, El Campo, Texas. Advance dividend 78 percent of uninsured claims. FDIC outlay $8.0 million (PR- 100-92).
June 26
64 VERNON BANK, VERNON, CONNECTICUT. Total assets $36.9 million. Total deposits $36.0 million in 3,700 accounts. Insured deposits assumed by Bank of South Windsor, South Windsor, Connecticut. Advance dividend 84 percent of uninsured claims. FDIC outlay $3.4 million (PR-101-92).
65 THE SOMERSWORTH BANK, SOMERSWORTH, NEW HAMPSHIRE. Total assets $109.9 million. Deposits of $103.9 million in 11,000 accounts assumed by New Dartmouth Bank, Manchester, New Hampshire. FDIC outlay $58.3 million (PR-102-92).
66 OLYMPIC INTERNATIONAL BANK AND TRUST, BOSTON, MASSACHUSETTS. Total assets $140.3 million. Total deposits $142.3 million in 3,800 accounts. Insured deposits assumed by Haymarket Cooperative Bank, Boston, Massachusetts. Advance dividend 55 percent of uninsured claims. FDIC outlay $127.7 million (PR-103-92).
July 17
67 (w)STATE BANK OF SPRINGFIELD, SPRINGFIELD, MINNESOTA. Total assets $31.2 million. Deposits of $29.1 million in 4,400 accounts assumed by Southwest State Bank, Windom, Minnesota. FDIC outlay $4.0 million (PR- 107-92).
July 23
68 FIRST NATIONAL BANK OF TEXAS, WEBSTER, TEXAS. Total assets $85.8 million. Total deposits $82.5 million in 6,700 accounts. Insured deposits assumed by First Prosperity Bank, El Campo, Texas. Advance dividend 75 percent of uninsured claims. FDIC outlay $28.8 million (PR- 108-92).
July 31
69 MASSACHUSETTS BANK AND TRUST COMPANY, BROCKTON, MASSACHUSETTS. Total assets $63.1 million. Total deposits $58.6 million in 5,400 accounts. Insured deposits assumed by Haymarket Co-operative Bank, Boston, Massachusetts. FDIC outlay $44.6 million (PR-111-92).
August 7
70 FOXWORTH BANK, FOXWORTH, MISSISSIPPI. Total assets $37.4 million. Deposits of $36.1 million in 5,700 accounts assumed by Trustmark National Bank, Jackson, Mississippi. FDIC outlay $19.0 million (PR- 113-92).
August 14
71 WINCHENDON SAVINGS BANK, WINCHENDON, MASSACHUSETTS. Total assets $66.2 million. Deposits of $64.1 million in 11,400 accounts assumed by Athol Savings Bank, Athol, Massachusetts. FDIC outlay $15.2 million (PR- 114-92).
August 21
72 ATTLEBORO PAWTUCKET SAVINGS BANK, PAWTUCKET, RHODE ISLAND (chartered in Attleboro, Massachusetts). Total assets $605.8 million. Deposits of $567.1 million in 104,800 accounts assumed by New Bedford Institution for Savings, New Bedford, Massachusetts. FDIC outlay $38.5 million (PR- 117-92).
August 28
73 THE UNION SAVINGS BANK, PATCHOGUE, NEW YORK. Total assets $576.9 million. Insured deposits $546 million in about 64,300 accounts assumed by Home Federal Savings Bank, Ridgewood, New York. Advance dividend of 80 percent of uninsured claims. FDIC outlay $276 million. (PR-121-92)
74 SEACOAST SAVINGS BANK, DOVER, NEW HAMPSHIRE. Total assets $82.3 million. Insured deposits of $64.8 million in 15,000 accounts assumed by First Savings and Loan Association of New Hampshire, Exeter, New Hampshire. Advance dividend of 84 percent of uninsured claims. FDIC outlay $15 million. (PR-122-92)
September 10
75 THE FIRST NATIONAL BANK OF YORKTOWN, YORKTOWN, TEXAS. Total assets $32.9 million. Insured deposits $32.8 million in 4,600 accounts assumed by Citizens Bank, Kilgore, Texas. Advance dividend of 31 percent of uninsured claims. FDIC outlay $15.9 million (PR-127-92)
September 18
76 THE WASHINGTON BANK, FAIRFAX COUNTY, VIRGINIA. Total assets $26.6 million. Insured deposits of $24.3 million in 1,950 accounts assumed by The George Mason Bank, Fairfax, Virginia. Advance dividend of 64 percent of uninsured claims. FDIC outlay $17.8 million (PR-130-92).
77 PLYMOUTH FIVE CENTS SAVINGS BANK, PLYMOUTH, MASSACHUSETTS. Total assets $216.2 million. Deposits of $182.1 million in 31,00 accounts assumed by Citizens Bank of Massachusetts, Fairhaven, Massachusetts. FDIC outlay $22.6 million (PR-131-92).
September 24
78 FIRST EXCHANGE BANK OF LITTLE ROCK, N.A., LITTLE ROCK, ARKANSAS. Total assets $22.2 million. Insured deposits of $20.8 million in 1,500 accounts assumed by First Commercial Bank, N.A., Little Rock, Arkansas. FDIC outlay $11.6 million (PR-132-92).
September 25
79 HOMETOWN BANK, EDISON, NEW JERSEY. Total assets $26.0 million. Deposits of $24.9 million in 1,800 accounts assumed by Somerset Trust Company, Bridgewater Township, New Jersey. FDIC outlay $21.5 million (PR-134-92).
80 HIGHLANDS COMMUNITY BANK, N.A., CLINTON TOWNSHIP, NEW JERSEY. Total assets $20.6 million. Deposits of $19.7 million in 1,500 accounts assumed by Somerset Trust Company, Bridgewater Township, New Jersey. FDIC outlay $11.2 million (PR-135-92).
October 2
81 THE HOWARD SAVINGS BANK, NEWARK, NEW JERSEY. Total assets $3.6 billion. Deposits of $3.4 billion in 400,000 accounts assumed by First Fidelity Bank, N.A., Newark, New Jersey. FDIC outlay $310 million (PR- 137-92).
82 FIRST CONSTITUTION BANK, NEW HAVEN, CONNECTICUT. Total assets $1.6 billion. Deposits of $1.4 billion in 130,000 accounts assumed by First Federal Bank, FSB, Waterbury, Connecticut. FDIC outlay $4.2 million (PR-138-92).
83 (t)EASTWEST BANK, NATIONAL ASSOCIATION, KIHEI, HAWAII. Total assets $3.4 million. Total deposits $3.2 million in 1,050 accounts (no uninsured deposits). Insured deposits transferred to First Hawaiian Bank, Honolulu, Hawaii. FDIC outlay $497,000 (PR-139-92).
October 6
84 (a)FREEDOM BANK, RANGER, TEXAS. Total assets $21.6 million. Total deposits of $20.9 million acquired by Peoples State Bank, Clyde, Texas. FDIC Board approved assistance September 25, 1992. FDIC outlay $360,970 (PR-141-92).
October 16
85 (p)UNIVERSAL BANK, LANHAM, MARYLAND. Total assets $22.1 million. Total deposits $20.5 million in 1,500 accounts. Insured deposits paid out. Advance dividend of 56 percent. FDIC outlay $19.8 million (PR- 144-92).
October 30
86-105 SUBSIDIARIES OF FIRST CITY BANCORPORATION OF TEXAS, INC., HOUSTON, (b)TEXAS. Total assets $8.8 billion. Total deposits $7.9 billion in 900,000 accounts. FDIC created 20 bridge banks (New First City-Texas, Houston, N.A., e.g.) to assume all assets and insured deposits of:
FIRST CITY, TEXAS-HOUSTON, N.A.
FIRST CITY, TEXAS-AUSTIN, N.A.
FIRST CITY, TEXAS-DALLAS
FIRST CITY, TEXAS-SAN ANTONIO, N.A.
80 percent advance dividend paid to uninsured claims. All deposits in remaining 16 banks assumed by the following bridge banks:
New First City, Texas -- El Paso, N.A.
New First City, Texas -- Aransas Pass, N.A.
New First City, Texas -- Lake Jackson, N.A.
New First City, Texas -- Alice, N.A.
New First City, Texas -- San Angelo, N.A.
New First City, Texas -- Orange, N.A.
New First City, Texas -- Midland, N.A.
New First City, Texas -- Lufkin, N.A.
New First City, Texas -- Tyler, N.A.
New First City, Texas -- Corpus Christi, N.A.
New First City, Texas -- Beaumont, N.A.
New First City, Texas -- Bryan, N.A.
New First City, Texas -- Madisonville, N.A.
New First City, Texas -- Kountze, N.A.
New First City, Texas -- Graham, N.A.
New First City, Texas -- Sour Lake, N.A.
On January 27, 1993, the 20 First City bridge banks were assumed by 13 acquirors (PR-7-93).
November 6
106 GREENWOOD BANK OF BETHEL, BETHEL, CONNECTICUT. Total assets $36.9 million. Deposits of $33.3 in 2,400 accounts assumed by Union Savings Bank of Danbury, Danbury, Connecticut. FDIC outlay $29.1 million (PR- 153-92).
November 13
107 GUARANTY-FIRST TRUST COMPANY, WALTHAM, MASSACHUSETTS. Total assets $325.5 million. Total deposits $313.0 million in 31,400 accounts. Insured deposits assumed by Fleet Bank of Massachusetts, N.A., Boston, Massachusetts. FDIC outlay $286.9 million. Advance dividend 66 percent of uninsured claims (PR-154-92).
108 FIRST NEW YORK BANK FOR BUSINESS, NEW YORK, NEW YORK. Total assets $548.2 million. Total deposits $500.7 million in 22,000 accounts. Insured deposits assumed by The Merchants Bank of New York, New York, New York. FDIC outlay $406.2 million. Advance dividend 50 percent of uninsured claims (PR-155-92).
109(b)METRO NORTH STATE BANK, KANSAS CITY, MISSOURI. Total assets $472 million. Total deposits $494 million in 64,000 accounts. FDIC created new bridge bank, Missouri Bridge Bank, National Association, to assume all assets and insured deposits. Advanced dividend 50 percent of uninsured claims (PR-156-92). Missouri Bridge Bank purchased by Boatmen's First National Bank of Kansas City, Kansas City, Missouri on April 6, 1993. Additional advance dividend 10 percent of uninsured claims (PR-32-93).
110INVESTORS BANK & TRUST COMPANY, GRETNA, LOUISIANA. Total assets $50.4 million. Deposits of $48.1 million in 7,900 accounts assumed by Delta Bank & Trust, Belle Chasse, Louisiana. FDIC outlay $808,000 (PR-157-92).
111 STATEWIDE THRIFT AND LOAN, REDWOOD CITY, CALIFORNIA. Total assets $10.4 million. Deposits of $9.5 million in 600 accounts assumed by Fireside Thrift Company, Newark, California. FDIC outlay $3.8 million (PR-158-92).
November 23
112(b)THE MERCHANTS BANK, KANSAS CITY, MISSOURI. Total assets $1.5 billion. Total deposits $1.4 billion in 70,000 accounts. Assets and insured deposits assumed by FDIC-created Missouri Bridge Bank, N.A. Advanced dividend 50 percent of uninsured claims (PR-160-92). Missouri Bridge Bank purchased by Boatmen's First National Bank of Kansas City, Kansas City, Missouri, on April 6, 1993. Additional advance dividend 25 percent of uninsured claims (PR-32-93).
December 4
113 HERITAGE BANK FOR SAVINGS, HOLYOKE, MASSACHUSETTS. Total assets $1.32 billion. Deposits of $984.7 million in 136,800 accounts assumed by Fleet Bank of Massachusetts, N.A., Boston, Massachusetts. FDIC outlay $108.7 million (PR-167-92).
114 BURRITT INTERFINANCIAL BANCORPORATION, NEW BRITAIN, CONNECTICUT. Total assets $546.4 million. Total deposits $489.4 million in 53,500 accounts. Insured deposits assumed by Derby Savings Bank, Derby, Connecticut. Advance dividend 72 percent of uninsured claims. FDIC outlay $239.3 million (PR-168-92).
115(p) HUNTINGTON PACIFIC THRIFT AND LOAN ASSOCIATION, HUNTINGTON BEACH, CALIFORNIA. Total assets $42.0 million. Total deposits $37.3 million in 820 accounts. Insured deposits paid out. FDIC outlay $37.1 million (PR-169-92).
December 10
116(a) CITIZENS STATE BANK, PRINCETON, TEXAS. Open assistance approved for loan guarantees worth $599,000. Total assets $13.2 million. Deposits of $12.6 million assumed by Princeton Investor Group, Inc., Princeton, Texas (PR-172-92).
December 11
117 MERITOR SAVINGS BANK, PHILADELPHIA, PENNSYLVANIA. Total assets $4.1 billion. Deposits of $2.9 billion in 344,000 accounts assumed by Mellon Bank, N.A., Pittsburgh, Pennsylvania (PR-173-92).
118-119 EASTLAND SAVINGS BANK, WOONSOCKET, RHODE ISLAND, and EASTLAND BANK, WOONSOCKET, RHODE ISLAND. Total assets $482 million. Total deposits $445.2 million in 103,000 accounts. Insured deposits assumed by Fleet National Bank, Providence, Rhode Island. Advance dividend 71 percent of uninsured claims. FDIC outlay $40 million (PR-174-92).
120 SAILORS AND MERCHANTS BANK AND TRUST, VIENNA, VIRGINIA. Total assets $33.0 million. Deposits of $31.7 million in 6,000 accounts assumed by First Union Bank of Virginia, Vienna, Virginia. FDIC outlay $14.7 million (PR-175-92).
December 18
121(p)THE BREMEN STATE BANK, BREMEN, KANSAS. Total assets $2.3 million. Total deposits $2.4 million in 370 accounts (no uninsured deposits). Insured deposits paid out. FDIC outlay $2.4 million (PR-178-92).
122 THE RUSHVILLE NATIONAL BANK, RUSHVILLE, INDIANA. Total assets $35.6 million. Total deposits $31.9 million in 6,000 accounts. Insured deposits assumed by Peoples Trust Company, Brookville, Indiana. Advance dividend 54 percent of uninsured claims. FDIC outlay $1.6 million (PR-179-92).
http://www.fdic.gov/bank/historical/bank/1992/index.html
Bank Failures & Assistance
1991
(w) Whole bank P&A; (t) Insured deposit transfer; (p) Payoff; (a) Assistance transaction; (b) Bridge bank
Jan. 6
1 (b)BANK OF NEW ENGLAND, N.A., BOSTON, MASSACHUSETTS. Total assets $13.9 billion. Total deposits $9.1 billion. FDIC created a bridge bank (New Bank of New England, N.A.) to assume all assets and deposits. (PR-3-91). On April 22, 1991, Fleet/Norstar Financial Group, Inc., Providence, Rhode Island, along with Kolhberg Kravis Roberts & Co., New York, New York, agreed to purchase the bridge bank from the FDIC. (PR-61-91).
2 (b)CONNECTICUT BANK & TRUST COMPANY, N.A., HARTFORD, CONNECTICUT. Total assets $7.1 billion. Total deposits $6.8 billion. FDIC created a bridge bank (New Connecticut Bank & Trust Company, N.A.) to assume all assets and deposits. (PR-3-91). On April 22, 1991, Fleet/Norstar Financial Group, Inc., Providence, Rhode Island, along with Kolhberg Kravis Roberts & Co., New York, New York, agreed to purchase the bridge bank from the FDIC. (PR-61-91).
3 (b)MAINE NATIONAL BANK, PORTLAND, MAINE. Total assets $1.0 billion. Total deposits $930 million. FDIC created a bridge bank (New Maine National Bank) to assume all assets and deposits. (PR-3-91). On April 22, 1991, Fleet/Norstar Financial Group, Inc., Providence, Rhode Island, along with Kolhberg Kravis Roberts & Co., New York, New York, agreed to purchase the bridge bank from the FDIC. (PR-61-91).
Jan. 11
4 COMMUNITY NATIONAL BANK, GLASTONBURY, CONNECTICUT. Total assets $90.0 million. Deposits of $92.2 million in 16,100 accounts assumed by Fleet Bank of Connecticut, Hartford, Connecticut. FDIC outlay $78.638 million. (PR-5-91).
Jan. 22
5 (t)AMERICAN BANK, NATIONAL ASSOCIATION, RIO RANCHO, NEW MEXICO. Total asset $15.8 million. Insured deposits of $17.8 million in 1,900 accounts transferred to United New Mexico Bank at Albuquerque, Albuquerque, New Mexico. FDIC outlay $15.300 million. (PR-8-91).
Jan. 24
6 METROPOLITAN NATIONAL BANK, FARMERS BRANCH, TEXAS. Total assets $93.9 million. Deposits of $91.4 million in 14,800 accounts assumed by Comerica Bank - Texas, Dallas, Texas. FDIC outlay $53.629 million. (PR- 9-91).
Jan. 25
7 ALVARDO BANK, RICHMOND, CALIFORNIA. Total assets $35.5 million. Deposits of $34.0 million in 3,300 accounts assumed by Pacific Bay Bank, Richmond, California. FDIC outlay $3.794 million. (PR-10-91).
Jan. 29
8 CITIZENS NATIONAL BANK & TRUST COMPANY OF CHICAGO, CHICAGO, ILLINOIS. Total assets $22.6 million. Deposits of $21.7 million in 6,700 accounts assumed by First Bank of Oak Park, Oak Park, Illinois. FDIC outlay $11.203 million. (PR-12-91).
Jan. 31
9 BANK OF THE HILLS, AUSTIN, TEXAS. Total assets $278.8 million. Deposits of $257.5 million in 47,400 accounts assumed by Team Bank, Dallas, Texas. FDIC outlay $156.416 million. (PR-13-91).
10 ROCKPORT BANK, NATIONAL ASSOCIATION, ROCKPORT, TEXAS. Total assets $21.1 million. Deposits of $20.3 million in 2,600 accounts assumed by The Bank of Corpus Christi, Corpus Christi, Texas. FDIC outlay $13.081 million. (PR-14-91).
Feb. 1
11 THE MERCHANTS BANK AND TRUST COMPANY, NORWALK, CONNECTICUT. Total assets $297.0 million. Deposits of $277.8 million in 18,900 accounts assumed by Union Trust Company, Stamford, Connecticut. FDIC outlay $248.973 million. (PR-16-91).
12 MAINE SAVINGS BANK, PORTLAND, MAINE. Total assets $1.3 billion. Deposits of $1.1 billion in 186,000 accounts assumed by Fleet Bank, Portland, Maine. FDIC outlay $80.500 million. (PR-17-91).
Feb. 7
13 LOCKHART STATE BANK, LOCKHART, TEXAS. Total assets $26.4 million. Deposits of $25.9 million in 5,600 accounts assumed by Omnibank, National Association, Houston, Texas. FDIC outlay $8.916 million. (PR-18-91).
14 FIRST NATIONAL BANK IN KAUFMAN, KAUFMAN, TEXAS. Total assets $22.0 million. Deposits of $20.8 million in 5,000 accounts assumed by The Farmers & Merchants National Bank, Kaufman, Texas. FDIC outlay $4.822 million. (PR-19-91).
Feb. 14
15 (w)MERCHANTS TRUST & SAVINGS BANK, KENNER, LOUISIANA. Total assets $44.9 million. Deposits of $43.7 million in 8,100 accounts assumed by First American Bank and Trust, Vacherie, Louisiana. FDIC outlay $9.990 million. (PR-22-91).
16 THE FIRST NATIONAL BANK OF WORTHAM, WORTHAM, TEXAS. Total assets $8.0 million. Deposits of $8.0 million in 2,400 accounts assumed by Farmers State Bank, Groesbeck, Texas. FDIC outlay $3.046 million. (PR-23-91).
Feb. 21
17 (w)SOUTHWEST NATIONAL BANK, ALBUQUERQUE, NEW MEXICO. Total assets $40.0 million. Deposits of $35.8 million in 1,600 accounts assumed by The Bank of New Mexico, Springer, New Mexico. FDIC outlay $1.920 million. (PR- 24-91).
Feb. 22
18 (w)THE McKINLEY BANK, NILES, OHIO. Total assets $69.1 million. Deposits of $65.6 million in 9,700 accounts assumed by The Dollar Savings & Trust Company, Youngstown, Ohio. (PR-25-91).
Feb. 28
19 (w)UNITED CITIZENS BANK, NATIONAL ASSOCIATION, COLLEGE STATION, TEXAS. Total assets $54.4 million. Deposits of $53.0 million in 14,300 accounts assumed by First American Bank, Bryan, Texas. FDIC outlay $4.568 million. (PR-27-91).
Mar. 8
20 (w)FIRST MARINE BANK OF FLORIDA, PALM CITY, FLORIDA. Total assets $17.2 million. Deposits of $16.5 million in 3,100 accounts assumed by 1st United Bank, Boca Raton, Florida. FDIC outlay $3.650 million. (PR- 32-91).
21 (w)SEAFIRST BANK, PORT ST. LUCIE, FLORIDA. Total assets $12.1 million. Deposits of $11.9 million in 1,900 accounts assumed by Riverside National Bank of Florida, Fort Pierce, Florida. FDIC outlay $1.917 million. (PR- 33-91).
22 MANILABANK, LOS ANGELES, CALIFORNIA. Total assets $20.3 million. Deposits of $19.2 million in 800 accounts assumed by UST California, National Association, Los Angeles, California. FDIC outlay $14.147 million. (PR-34-91).
Mar. 14
23 COOLIDGE CORNER CO-OPERATIVE BANK, BROOKLINE, MASSACHUSETTS. Total assets $86.3 million. Deposits of $83.0 million in 6,500 accounts assumed Brookline Savings Bank, Brookline, Massachusetts. FDIC outlay $68.995 million. (PR-36-91).
24 (w)CROSSROADS BANK, VICTORIA, TEXAS. Total assets $24.4 million. Deposits of $23.1 million in 7,000 accounts assumed by Victoria Bank and Trust Company, Victoria, Texas. FDIC outlay $4.015 million. (PR-37-91).
Mar. 15
25 (t)BLACKSTONE BANK AND TRUST COMPANY, BOSTON, MASSACHUSETTS. Total assets $52.7 million. Deposits of $49.8 million in 2,500 accounts transferred to Bay Bank, N.A., Boston, Massachusetts. FDIC outlay $48.225 million. (PR-39-91).
Mar. 21
26 CITADEL BANK, WILLIS, TEXAS. Total assets $22.4 million. Deposits of $21.8 million in 5,300 accounts assumed by Tomball National Bank, Tomball, Texas. FDIC outlay $6.210 million. (PR-42-91).
27 (p)SABINAL BANK, SABINAL, TEXAS. Total assets $22.1 million. Deposits of $21.7 million in 3,000 accounts paid to insured depositors. FDIC outlay $21.706 million. (PR-43-91).
Mar. 28
28 THE LANDMARK BANK, HARTFORD, CONNECTICUT. Total assets $237.2 million. Deposits of $212.2 million in 58,500 accounts assumed by People's Bank, Bridgeport, Connecticut. FDIC outlay $206.100 million. (PR-46-91).
Mar. 29
29 CITY BANK AND TRUST, CLAREMONT, NEW HAMPSHIRE. Total assets $117.8 million. Deposits of $119.5 million in 6,500 accounts assumed by First NH Bank, Concord, New Hampshire. FDIC outlay $112.9 million. (PR- 49-91).
30 (t)CITIZENS NATIONAL BANK, LIMON, COLORADO. Total assets $8.2 million. Deposits of $8.1 million in 1,800 accounts transferred to The First National Bank of Limon, Limon, Colorado. FDIC outlay $5.622 million. (PR-50-91).
Apr. 4
31 FIRST STATE BANK, WEIMAR, TEXAS. Total assets $26.2 million. Deposits of $25.9 million in 4,500 accounts assumed by Hill Bank & Trust Co., Weimar, Texas. FDIC outlay $4.352 million. (PR-51-91).
Apr. 5
32 (w)THE BLUEVILLE BANK OF GRAFTON, GRAFTON, WEST VIRGINIA. Total assets $48.9 million. Deposits of $46.9 million in 12,900 accounts assumed by The Empire National Bank of Clarksburg, Clarksburg, West Virginia. FDIC outlay $4.078 million. (PR-52-91).
Apr. 11
33 (w)AMERICAN BANK & TRUST COMPANY, SHREVEPORT, LOUISIANA. Total assets $61.3 million. Deposits of $61.0 million in 3,700 accounts assumed by Tri-State Bank and Trust, Haughton, Louisiana. FDIC outlay $12.096 million. (PR-54-91).
Apr. 12
34 (t)WHITNEY BANK AND TRUST, HAMDEN, CONNECTICUT. Total assets $49.9 million. Deposits of $46.6 million in 2,200 accounts transferred to First Constitution Bank, New Haven, Connecticut. FDIC outlay $44.364 million. (PR-55-91).
35 ARIZONA COMMERCE BANK, TUCSON, ARIZONA. Total assets $81.8 million. Deposits of $79.2 million assumed by Arizona Bank of Commerce, Tucson, Arizona, and Caliber Bank, Phoenix, Arizona. FDIC outlay $53.849 million. (PR-56-91).
Apr. 18
36 COMMUNITY NATIONAL BANK, SHERMAN, TEXAS. Total assets $18.1 million. Deposits of $17.9 million in 4,500 accounts assumed by American Bank of Sherman, National Association, Sherman, Texas. FDIC outlay $2.939 million. (PR-60-91).
37 COLUMBINE VALLEY BANK AND TRUST, JEFFERSON COUNTY, COLORADO. Total assets $8.7 million. Deposits of $8.5 million in 1,900 accounts assumed by Vectra Bank, Denver, Colorado. FDIC outlay $5.522 million. (PR- 64-91).
May 3
38 (t)BOSTON TRADE BANK, BOSTON, MASSACHUSETTS. Total assets $352.9 million. Deposits of $328.9 million in 8,100 accounts transferred to First National Bank of Boston, Boston, Massachusetts. FDIC outlay $310.000 million. (PR-67-91).
May 9
39 (w)CHIRENO STATE BANK, CHIRENO, TEXAS. Total assets $12.8 million. Deposits of $12.3 million in 2,200 accounts assumed by The First State Bank, Gladewater, Texas. FDIC outlay $1.336 million. (PR-69-91).
40 TEXAS BANK AND TRUST OF TEMPLE, TEMPLE, TEXAS. Total assets $48.4 million. Deposits of $48.0 million in 6,700 accounts assumed by The Peoples National Bank of Belton, Belton, Texas. FDIC outlay $9.9 million. (PR-70-91).
41 (t)VILLAGE GREEN NATIONAL BANK, JERSEY VILLAGE, TEXAS. Total assets $30.0 million. Insured deposits of $27.2 million in 3,200 accounts were transferred Bank of America Texas, National Association, Houston, Texas. FDIC outlay $18.6 million. (PR-71-91).
42 THE FIRST NATIONAL BANK OF POTH, POTH, TEXAS. Total assets $19.3 million. Deposits of $19.0 million in 2,500 accounts assumed by the Bank of Floresville, Floresville, Texas. FDIC outlay $8.0 million. (PR-72-91).
May 10
43 MADISON NATIONAL BANK, WASHINGTON, D.C. Total assets $530.8 million. Deposits of $373.7 million in 46,000 accounts assumed by Signet Bank, N.A., Washington, D.C. FDIC outlay $367.4 million. (PR-74-91).
44 MADISON NATIONAL BANK OF VIRGINIA, MCLEAN, VIRGINIA. Total assets $176.0 million. Deposits of $154.5 million in 18,100 accounts assumed by Signet Bank-Virginia, Richmond, Virginia. FDIC outlay $113.5 million. (PR- 74-91).
45 (t)THE WASHINGTON BANK OF MARYLAND, BALTIMORE, MARYLAND. Total assets $38.0 million. Insured deposits of $35.0 million in 2,100 accounts transferred to The First National Bank of Maryland, Baltimore, Maryland. FDIC outlay $30.8 million. (PR-75-91)
May 16
46 FIRST NATIONAL BANK OF CEDAR HILL, CEDAR, HILL, TEXAS. Total assets $11.6 million. Deposits of $11.8 million in 2,600 accounts assumed by First State Bank, Blooming Grove, Texas. FDIC outlay $1.610 million. (PR-76-91).
47 (w)CAPITAL BANK, DALLAS, TEXAS. Total assets $118.3 million. Deposits of $112.3 million in 11,200 accounts assumed by Bank One, Texas, N.A., Dallas, Texas. FDIC outlay $15.978 million. (PR-77-91).
May 17
48 (w)FIRST CITY BANK, NEW ORLEANS, LOUISIANA. Total assets $56.3 million. Deposits of $56.7 million in 3,200 accounts assumed by First Bank and Trust, New Orleans. FDIC outlay $9.578 million. (PR-79-91).
49 (w)COSMOPOLITAN NATIONAL BANK OF CHICAGO, CHICAGO, ILLINOIS. Total assets $121.4 million. Deposits of $115.9 million in 7,800 accounts assumed by Cosmopolitan Bank and Trust Co., Chicago, Illinois. FDIC outlay $10.223 million. (PR-80-91).
May 22
50 (w)FIRST NATIONAL BANK OF TOMS RIVER, TOMS RIVER, NEW JERSEY. Total assets $1.8 billion. Deposits of $1.6billion in 259,100 accounts assumed by First Fidelity Bank, National Association, Newark, New Jersey. FDIC outlay $144.293 million. (PR- -91).
May 23
51 (w)LIBERTY NATIONAL BANK, LOVINGTON, NEW MEXICO. Total assets $57.9 million. Deposits of $55.7 million in 10,200 accounts assumed by Western Commerce Bank, Carlsbad, New Mexico. FDIC outlay $3.209 million. (PR- -91).
May 24
52 (t)FIRST SECURITY BANK, ROANOKE, VIRGINIA. Total assets $16.2 million. Deposits of $14.9 million in 1,600 deposit accounts assumed by Pocahontas Bankshares Corporation, Bluefield, West Virginia. FDIC outlay $12.573 million. (PR-83-91).
53 FLORIDA STATE BANK, HOLIDAY, FLORIDA. Total assets $99.3 million. Deposits of $82.5 million in 13,000 accounts assumed by the Orange Bank, Ocoee, Florida. FDIC outlay $48.816 million. (PR-84-91).
May 31
54 GOLDOME, BUFFALO, NEW YORK. Total assets $9.9 billion. Deposits of $5.4 billion assumed by Key Bank of Western New York, N.A., Buffalo, New York, and subsequently by First Empire State Corporation, Buffalo, New York. FDIC outlay $2.3 billion. (PR-85-91).
55 (t)UNIVERSITY BANK, N.A., NEWTON, MASSACHUSETTS. Total assets $337.1 million. Deposits of $313.3 million in 18,116 accounts transferred to Sterling Bank, Waltham, Massachusetts. FDIC outlay $310.6 million. (PR- 86-91).
June 6
56 NORTHWEST BANK, NATIONAL ASSOCIATION. Total assets $7.4 million. Deposits of $7.2 million assumed in 2,600 accounts assumed by Valley-Hi National Bank of San Antonio, San Antonio, Texas. FDIC outlay $1.6 million. (PR- 87-91).
June 7
57 WOBURN FIVE CENTS SAVINGS BANK, WOBURN, MASSACHUSETTS. Total assets $250.0 million. Deposits of $235.4 million in 38,800 deposit accounts assumed by Sterling Bank, Waltham, Massachusetts. FDIC outlay $215.6 million. (PR-88-91).
June 13
58 THE BANK OF HORTON, HORTON, KANSAS. Total assets $158.7 million. Deposits of $155.7 million in 4,300 accounts assumed by Kansas State Bank, Holton, Kansas. FDIC outlay $125.5 million. (PR-90-91).
59 TASCOSA NATIONAL BANK OF AMARILLO, AMARILLO, TEXAS. Total assets $89.2 million. Deposits of $88.6 million in 12,400 accounts assumed by Team Bank, Fort Worth, Texas. FDIC outlay $28.6 million. (PR-91-91).
60 PEOPLES BANK, HEWITT, TEXAS. Total assets $17.8 million. Deposits of $17.1 million in 3,600 accounts assumed by The National Bank of Gatesville, Gatesville, Texas. FDIC outlay $4.2 million. (PR-92-91).
61 (w)TEXAS PREMIER BANK OF VICTORIA, NATIONAL ASSOCIATION, VICTORIA, TEXAS. Total assets $13.1 million. Deposits of $12.9 million in 2,200 deposit accounts assumed by Victoria Bank and Trust Company, Victoria, Texas. FDIC outlay $1.3 million. (PR-93-91).
June 21
62 BEACON CO-OPERATIVE BANK, BOSTON, MASSACHUSETTS. Total assets $32.2 million. Deposits of $30.1 million in 2,700 deposit accounts assumed by Grove Bank, Boston, Massachusetts. FDIC outlay $16.9 million. (PR- 95-91).
June 28
63 FIRST MUTUAL BANK FOR SAVINGS, BOSTON, MASSACHUSETTS. Total assets $1.1 billion. Deposits of $1.1 billion in 129,600 deposit accounts assumed by First National Bank of Boston (Bank of Boston), Boston, Massachusetts. FDIC outlay $813.4 million. (PR-96-91).
July 12
64 (w)DRIPPING SPRINGS NATIONAL BANK, DRIPPING SPRINGS, TEXAS. Total assets $21.5 million. Deposits of $21.6 million in 4,300 deposit accounts assumed by Texas Bank, Odessa, Texas. FDIC outlay $3.3 million. (PR- 101-91).
65 (p)LANDMARK THRIFT AND LOAN ASSOCIATION, SAN DIEGO, CALIFORNIA. Total assets $13.1 million. Total deposits $12.6 million in 716 accounts. Insured deposits paid out. FDIC outlay $12.4 million. (PR-102-91).
July 19
66 (w)COMMUNITY GUARDIAN BANK, ELMWOOD PARK, NEW JERSEY. Total assets $59.0 million. Deposits of $57.9 million in 11,200 accounts assumed by Interchange State Bank, Saddle Brook, New Jersey. FDIC outlay $14.1 million. (PR-105-91).
67 PONTCHARTRAIN STATE BANK, METAIRIE, LOUISIANA. Total assets $136.8 million. Deposits of $134.0 million in 22,400 accounts assumed by First National Bank of Commerce, New Orleans, Louisiana. FDIC outlay $111.3 million. (PR-106-91).
July 25
68 THE KERENS BANK, KERENS, TEXAS. Total assets $20.0 million. Deposits of $19.9 million in 2,700 deposit accounts assumed by Cedar Creek Bank, Seven Points, Texas. FDIC outlay $13.5 million. (PR- 108-91).
July 26
69 THE HOUSATONIC BANK AND TRUST COMPANY, ANSONIA, CONNECTICUT. Total assets $66.4 million. Deposits of $61.7 million in 7,600 accounts assumed by Shelton Savings Bank, Shelton, Connecticut. FDIC outlay $46.5 million. (PR-109-91).
70 SUBURBAN NATIONAL BANK, HILLSBOROUGH TOWNSHIP, NEW JERSEY. Total assets $96.2 million. Deposits of $92.8 million in 7,300 accounts assumed by Provident Savings Bank, Jersey City, New Jersey. FDIC outlay $78.4 million. (PR-110-91).
August 9
71 CITYTRUST, BRIDGEPORT, CONNECTICUT. Total assets $2.0 billion. Deposits of $1.7 billion in 146,000 accounts assumed by Chase Manhattan Bank of Connecticut, National Association, Bridgeport, Connecticut. FDIC outlay for CityTrust and Farmers and Merchants Bank $821 million. (PR-113-91).
72 MECHANICS AND FARMERS SAVINGS BANK, BRIDGEPORT, CONNECTICUT. Total assets $1.1 billion. Deposits of $878 million in 105,000 accounts assumed by Chase Manhattan Bank of Connecticut, National Association, Bridgeport, Connecticut. (PR-113-91).
73 BANK OF SOUTH PALM BEACHES, HYPOLUXO, FLORIDA. Total assets $70.2 million. Deposits of $65.7 million in 7,800 accounts assumed by 1st United Bank, Boca Raton, Florida. FDIC outlay $25.4 million. (PR- 114-91).
74 (p)SOUTHCOAST BANK CORPORATION, WEST PALM BEACH, FLORIDA. Total assets $26.5 million. Total deposits $27.2 million in 1,908 accounts. Insured deposits paid out. (PR-115-91).
August 16
75 (t)ENFIELD NATIONAL BANK, ENFIELD CONNECTICUT. Total assets $17.0 million. Total deposits $18.2 million in 3,800 accounts. Insured deposits transferred to Savings Institute, Willimantic, Connecticut. FDIC outlay $18.2 million. (PR-117-91)
76 (w)NORTHWEST NATIONAL BANK, FAYETTEVILLE, ARKANSAS. Total assets $32.8 million. Deposits of $30.8 million in 5,900 deposit accounts assumed by Citizens Bank of Northwest Arkansas, Fayetteville, Arkansas. FDIC outlay $1.1 million (PR-118-91)
August 22
77 FIRST MEXIA BANK, MEXIA, TEXAS. Total assets $23.3 million. Deposits of $22.8 million in 4,200 accounts assumed by The East Texas National Bank of Palestine, Palestine, Texas. FDIC outlay $3.8 million. (PR-120-91)
78 (w)BUCHEL BANK AND TRUST COMPANY, CUERO, TEXAS. Total assets $28.1 million. Deposits of $26.7 9illion in 4,000 accounts assumed by First Bank, Edna, Texas. FDIC outlay $1.7 million. (PR-121-91)
August 29
79 (w)SAN SABA NATIONAL BANK, SAN SABA, TEXAS. Total assets $15.5 million. Deposits of $15.1 million in 2,200 accounts assumed by First Llano Bank, Llano, Texas. FDIC outlay $1.2 million. (PR-124-91)
80 (w)FIRST NATIONAL BANK AND TRUST COMPANY, BLACKWELL, OKLAHOMA. Total assets $35.2 million. Deposits of $34.0 million in 5,000 accounts assumed by Central National Bank and Trust Co., of Enid, Oklahoma. FDIC outlay $1.7 million. (PR-125-91)
August 30
81 HILLSBOROUGH BANK AND TRUST COMPANY, MILFORD, NEW HAMPSHIRE. Total assets $58.0 million. Deposits of $59.4 million in 3,500 accounts assumed by Peterborough Savings Bank, Peterborough, New Hampshire. FDIC outlay $55.0 million. (PR-126-91).
82 LOWELL INSTITUTION FOR SAVINGS, LOWELL, MASSACHUSETTS. Total assets $402.8 million. Deposits of $322.2 million in 34,100 deposit accounts assumed by The Family Mutual Savings Bank, Haverhill, Massachusetts. FDIC outlay $290.8 million. (PR-127-91).
83 HILTON HEAD BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, HILTON HEAD ISLAND, SOUTH CAROLINA. Total assets $63.0 million. Deposits of $59.1 million in 6,100 accounts assumed by The Anchor Bank, Myrtle Beach, South Carolina. FDIC outlay $9.0 million. (PR-128-91)
September 6
84 THE FAMILY BANK AND TRUST, ALLENSTOWN, NEW HAMPSHIRE. Total assets $45.3 million. Deposits of $45.6 million in 7,800 accounts assumed by The Valley Bank, Hillsborough, New Hampshire. FDIC outlay $25.0 million. (PR- 129-91)
85 SUFFIELD BANK, SUFFIELD, CONNECTICUT. Total assets $301.4 million. Deposits of $264.1 million in 29,100 accounts assumed by First Federal Bank, FSB, Waterbury, Connecticut. FDIC outlay $188.3 million. (PR- 130-91)
SEPTEMBER 10
86 (a)FIRST BANK AND TRUST, HARRISBURG, ILLINOIS. Total assets $26.6 million. Deposits of $25.7 million assumed in open assistance transaction by Shawnee Bancorp., Inc., Harrisburg, Illinois. FDIC outlay $673,000. FDIC Board approved 9/10/91: Assistance began September 16, 1991. (PR-132-91)
87 VALLEY BANK, WHITE RIVER JUNCTION, VERMONT. Total assets $36.2 million. Deposits of $36.0 million in 5,100 deposit accounts assumed by Vermont National Bank, Brattleboro, Vermont. FDIC outlay $25.4 million. (PR- 134-91)
September 19
88 SOUTHEAST BANK, NATIONAL ASSOCIATION, MIAMI, FLORIDA. Total assets $10.2 billion. Deposits of $8.0 billion in 1.1 million accounts assumed by First Union National Bank of Florida, Jacksonville. FDIC outlay $350 million (estimated). Closed simultaneously with Southeast Bank of West Florida, Pensacola. (PR-137-91)
89 SOUTHEAST BANK OF WEST FLORIDA, PENSACOLA, PENSACOLA. Total assets $93.0 million. Deposits of $85 million in 13,000 accounts assumed by First Union National Bank of Florida, Jacksonville. FDIC outlay $350 million (estimated: closed with Southeast Bank, N.A.). (PR-137-91)
September 20
90 BANK FIVE FOR SAVINGS, ARLINGTON, MASSACHUSETTS. Total assets $401.7 million. Deposits of $406.6 million in 46,300 accounts assumed by Cambridge Savings Bank, Cambridge, Massachusetts. FDIC outlay $281.2 million. (PR-138-91)
91 (t)MID-JERSEY NATIONAL BANK, SOMERVILLE, NEW JERSEY. Total assets $30.6 million. Total deposits $29.6 million in 2,700 deposit accounts. Insured deposits transferred to United Jersey Bank/Central, National Association, West Windsor Township, New Jersey. FDIC outlay $19.1 million. (PR-139-91)
September 27
92 MIDCOUNTY BANK AND TRUST COMPANY, NORWOOD, MASSACHUSETTS. Total assets $62.6 million. Deposits of $59.7 million in 3,000 accounts assumed by Dedham Institution for Savings, Dedham, Massachusetts. FDIC outlay $52.2 million. (PR-143-91)
October 2
93 (a)GUNNISON BANK AND TRUST COMPANY, GUNNISON, COLORADO. Total assets $22.3 million. Deposits of $21.4 million assumed in open assistance transaction by Lindoe, Inc., Ordway, Colorado. Ultimate FDIC outlay about $2.4 million. FDIC approved in principle 10/2/91. (PR-145-91)
October 3
94 HARBOR NATIONAL BANK OF CONNECTICUT, BRANFORD, CONNECTICUT. Total assets $23.5 million. Deposits of $22.3 million in 5,200 accounts assumed by The New Haven Savings Bank, New Haven, Connecticut. FDIC outlay $11.0 million. (PR-146-91)
95 REAGAN STATE BANK, BIG LAKE, TEXAS. Total assets $20.3 million. Deposits of $19.7 million in 2,700 accounts assumed by Security State Bank, McCamey, Texas. FDIC outlay $5.0 million. (PR-147-91)
October 10
96 AMOSKEAG BANK, MANCHESTER, NEW HAMPSHIRE. Total assets $985 million. Deposits of $741 million assumed by First New Hampshire Bank, Concord, New Hampshire. FDIC outlay for Amoskeag, BankEast, Nashua Trust and Bank Meridian $342 million. (PR-150-91)
97 BANKEAST, MANCHESTER, NEW HAMPSHIRE. Total assets $847 million. Deposits of $593 million assumed by First New Hampshire Bank, Concord, New Hampshire. (PR-150-91)
98 NASHUA TRUST COMPANY, NASHUA, NEW HAMPSHIRE. Total assets $441 million. Deposits of $384 million assumed by First New Hampshire Bank, Concord, New Hampshire. (PR-150-91)
99 BANK MERIDIAN, N.A., HAMPTON, NEW HAMPSHIRE. Total assets $118 million. Deposits of $106 million assumed by First New Hampshire Bank, Concord, New Hampshire. (PR-150-91)
100 NEW HAMPSHIRE SAVINGS BANK, CONCORD, NEW HAMPSHIRE. Total assets $1.0 billion. Deposits of $917 million assumed by New Dartmouth Bank, Manchester, New Hampshire. FDIC outlay for New Hampshire Savings, Dartmouth Bank, and Numerica Savings $624 million. (PR-150-91)
101 DARTMOUTH BANK, MANCHESTER, NEW HAMPSHIRE. Total assets $950 million. Deposits of $818 million assumed by New Dartmouth Bank, Manchester, New Hampshire. (PR-150-91)
102 NUMERICA SAVINGS FSB, MANCHESTER, NEW HAMPSHIRE. Total assets $636 million. Deposits of $453 million assumed by New Dartmouth Bank, Manchester, New Hampshire. (PR-150-91)
October 11
103 IONA SAVINGS BANK, TILTON, NEW HAMPSHIRE. Total assets $30.6 million. Deposits of $28.3 million in 3,400 accounts assumed by First Savings and Loan Association of New Hampshire, Exeter, New Hampshire. FDIC outlay $11.2 million. (PR-151-91)
October 18
104 CENTRAL BANK, MERIDEN, CONNECTICUT. Total assets $675.2 million. Deposits of $626.5 million in 66,800 accounts assumed by CenterBank, Waterbury, Connecticut. FDIC outlay $ 373.6 million. (PR-152-91).
105 CONNECTICUT VALLEY BANK, CROMWELL, CONNECTICUT. Total assets $28.8 million. Deposits of $27.9 million in 2,100 accounts assumed by Mid Conn Bank, Kensington, Connecticut. FDIC outlay $23.6 million. (PR-153-91).
106 (t)MISSION VALLEY BANK, NATIONAL ASSOCIATION, SAN CLEMENTE, CALIFORNIA. Total assets $42.7 million. Total deposits $40.9 million in 2,300 accounts. Insured deposits transferred to Mid City Bank, National Association, Los Angeles, California. FDIC outlay $30.3 million. (PR- 154-91)
October 24
107 (w)FIRST NATIONAL BANK, BEDFORD, BEDFORD, TEXAS. Total assets $22.4 million. Deposits of $21.6 million in 3,900 accounts assumed by First International Bank, Bedford, Texas. FDIC outlay $2.1 million. (PR- 158-91)
October 25
108 COOLIDGE BANK AND TRUST COMPANY, BOSTON, MASSACHUSETTS. Total assets $264.6 million. Deposits of $260.5 million in 29,500 accounts assumed by Pioneer Financial, A Cooperative Bank, Boston, Massachusetts. FDIC outlay $242.2 million. (PR-160-91)
109 (w)THE CITIZENS BANK OF PAGOSA SPRINGS, PAGOSA SPRINGS, COLORADO. Total assets $18.0 million. Deposits of $17.0 million in 2,600 accounts assumed by Citizens Bank of Pagosa Springs, Pagosa Springs, Colorado. FDIC outlay $1.0 million. (PR-161-91)
110 FIRST HANOVER BANK, WILMINGTON, NORTH CAROLINA. Total assets $47.6 million. Deposits of $35.5 million in 5,200 accounts assumed by Central Carolina Bank and Trust Company, Durham, North Carolina. FDIC outlay $8.2 million. (PR-162-91).
October 29
111 (p)PRIVATE BANK AND TRUST, N. A., CORAL GABLES, FLORIDA. (Nationally chartered trust company) Total assets $4.0 million. Trust assets of $90 million in 326 accounts. Insured deposits to be paid out. (PR-165-91)
October 30
112 (w)BANK OF THE SOUTH, BATON ROUGE, LOUISIANA. Total assets $38.6 million. Deposits of $37.3 million in 3,400 accounts assumed by The First National Bank in St. Mary Parish, Morgan City, Louisiana. FDIC outlay $2.8 million. (PR-166-91).
October 31
113 UNION BANK, SAN ANTONIO, TEXAS. Total assets $105.2 million. Deposits of $102.2 million in 15,700 accounts assumed by Channelview Bank, Channelview, Texas. FDIC outlay $13.7 million. (PR-167-91)
November 8
114 (t)COMMUNITY NATIONAL BANK AND TRUST COMPANY OF NEW YORK, NEW YORK, NEW YORK. Total assets $353.1 million. Total deposits $321.8 million in 47,400 accounts. Insured deposits transferred to Chemical Bank, New York, New York. FDIC outlay $286.8 million. (PR-169-91)
November 14
115 CONNECTICUT SAVINGS BANK, NEW HAVEN, CONNECTICUT. Total assets $1.07 billion. Deposits of $867.2 million in 146,400 accounts assumed by Centerbank, Waterbury, Connecticut. FDIC outlay $188.5 million. (PR- 171-91)
116 ALVARADO NATIONAL BANK, ALVARADO, TEXAS. Total assets $10.2 million. Deposits of $9.4 million in 2,300 accounts assumed by The First National Bank in Joshua, Joshua, Texas. FDIC outlay $7.9 million. (PR-172-91)
117 (t)WORTHINGTON STATE BANK, WORTHINGTON, INDIANA. Total assets $37.0 million. Total deposits $34.4 million in 3,700 accounts. Insured deposits transferred to First Farmers State Bank, Sullivan, Indiana. FDIC outlay $1.8 million. (PR-173-91)
November 15
118 DURHAM TRUST COMPANY, DURHAM, NEW HAMPSHIRE. Total assets $69.6 million. Deposits of $67.4 million in 9,500 accounts assumed by Granite Bank, Keene, New Hampshire. FDIC outlay $35.3 million. (PR-174-91)
November 26
119 (t)FIRST NATIONAL BANK OF MIAMI, MIAMI, FLORIDA. Total assets $31.4 million. Total deposits $31.0 million. Insured deposits transferred to Ready State Bank, Hialeah, Florida. FDIC outlay $3.2 million. (PR- 178-91)
December 4
120 (a)THE DOUGLASS BANK, KANSAS CITY, KANSAS. Total assets $32.0 million. Total deposits $31.1 million. Assistance from $2.3 million capital injection by Douglass Bancorp, Kansas City, Kansas, and $1.0 million payment by the FDIC. FDIC outlay $1.0 million. (PR-181-91)
December 6
121 SAYBROOK BANK AND TRUST COMPANY, OLD SAYBROOK, CONNECTICUT. Total assets $81.9 million. Deposits of $78.6 million in 7,800 accounts assumed by The New Haven Savings Bank, New Haven, Connecticut. FDIC outlay $47.4 million. (PR-182-91)
December 12
122 (t)GRANITE CO-OPERATIVE BANK, QUINCY, MASSACHUSETTS. Total assets $103.8 million. Total deposits $84.3 million. Insured deposits transferred to South Boston Savings Bank, Boston, Massachusetts. FDIC outlay $70.4 million. (PR-185-91)
December 13
123 BANK OF EAST HARTFORD, EAST HARTFORD, CONNECTICUT. Total assets $36.6 million. Deposits of $38.4 million in 3,900 accounts assumed by Bank of South Windsor, South Windsor, Connecticut. FDIC outlay $23.1 million. (PR-186-91)
124 THE BANK MART, BRIDGEPORT, CONNECTICUT. Total assets $541.3 million. Deposits of $486.8 million in 41,700 accounts assumed by Gateway Bank, South Norwalk, Connecticut. FDIC outlay $58.9 million. (PR-187-91)
125 MERCHANTS NATIONAL BANK, LEOMINSTER, MASSACHUSETTS. Total assets $160.3 million. Deposits of $147.5 million in 29,400 accounts assumed by Worcester County Institution for Savings, Worcester, Massachusetts. FDIC outlay $107.1 million. (PR-188-91)
126 (t)FEDERAL FINANCE & MORTGAGE, LTD., HONOLULU, HAWAII. Total assets $9.3 million. Total deposits $8.2 million in 300 accounts. Insured deposits transferred to First Hawaiian Creditcorp, Inc., Honolulu, Hawaii. FDIC outlay $9.3 million. (PR-189-91) and (PR-190-91)
December 20
127 NORTH RIDGE BANK, OAKLAND PARK, FLORIDA. Total assets $92.4 million. Deposits of $87.2 million in 11,000 accounts assumed by Intercontinental Bank, Miami, Florida. FDIC outlay $7.0 million. (PR-191-91).
http://www.fdic.gov/bank/historical/bank/1991/index.html
FSA nets 28 UK Web scams in one day
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ZDNet UK
July 03, 2001, 07:28 GMT
A global investigation into illegal Web activity finds 63 sites in breach of law
A one day investigation by the Financial Services Authority (FSA) and other international watchdogs has identified 28 UK Web sites that are in breach of financial services rules.
The second annual Web surf organised by the International Organisation of Securities Commissions (IOSCO) discovered a worldwide total of 63 financial sites that warranted further investigation. The one day investigation into Internet scams unearthed 28 sites in the UK and 35 Web sites overseas that appeared to offer unauthorised investment advice and investment deals, or advertised investment products, in breach of the law.
Forty-one regulatory bodies from 34 countries took part in the annual crackdown on unlawful activity on the Web. A team of over 20 FSA staff searched over 130 sites for unauthorised investment business, deposit taking and market abuse. in the month of April.
"The investigation identified various kinds of sites, including ones that offer securities promotions, or advertise parts of products that may not be legitimate, or deal in bonds without proper licences," said IOSCO secretary general Peter Clark.
The UK sites found to be breaching the law have either been investigated by the the FSA, or have been passed onto the relevant law enforcement agency. The FSA has also passed on information regarding illegal overseas sites to the appropriate overseas regulatory or enforcement agency.
"It was a coordinated effort -- it was up to individual regulators to conduct the surf day according to their own requirements, and follow up in keeping with their own regulations," said Clark.
http://news.zdnet.co.uk/hardware/emergingtech/0,39020357,2090489,00.htm
Feds: E-mail subpoena ruling hurts law enforcement
By Kevin Poulsen, SecurityFocus Mar 5 2004 6:38PM
A federal appeals court has declined to reverse last year's decision that the issuance of an egregiously overbroad subpoena for e-mail can qualify as a computer intrusion in violation of anti-hacking laws, despite an argument by the Justice Department that a side-effect of the ruling has already made it harder for law enforcement officials to obtain Americans' private e-mail.
The defendant in the case, Alwyn Farey-Jones, was embroiled in commercial litigation with two officers of Integrated Capital Associates (ICA) when he instructed his then-attorney, Iryna Kwasny, to send a subpoena to the company's Internet service provider -- California-based NetGate. Under federal civil rules, a litigant can issue such a subpoena without prior approval from the court, but is required to "take reasonable steps to avoid imposing undue burden or expense" on the recipient.
"One might have thought, then, that the subpoena would request only e-mail related to the subject matter of the litigation, or maybe messages sent during some relevant time period, or at the very least those sent to or from employees in some way connected to the litigation," reads last August's decision by the 9th Circuit Court of Appeals. Instead, the subpoena demanded every single piece of e-mail ICA's officers and employees had ever sent or received.
By the time ICA learned of the subpoena, NetGate had already provided Farey-Jones with a sample of 339 e-mails from ICA -- most of them unrelated to the matter under litigation, and many of them privileged or personal. When ICA found out, they quickly got the subpoena quashed. An outraged district court magistrate termed the subpoena "massively overbroad" and "patently unlawful," and hit Farey-Jones with over $9,000 in sanctions.
Criminal Penalties
The ICA officers and employees whose e-mail was accessed went on to sue Farey-Jones and his attorney under the civil provisions of three federal privacy and computer protection laws, but a federal judge threw out the lawsuit. The 9th Circuit partially reversed that ruling last August, finding that the subpoena didn't violate federal wiretap law, but could constitute a violation of the Computer Fraud and Abuse Act and the Stored Communications Act (SCA), which outlaw unauthorized access to computers and stored e-mail respectively.
Although the ruling addressed a civil suit, both laws include criminal penalties. That means civil attorneys issuing overbroad subpoenas -- not an uncommon event -- now risk lawsuits, and even potential criminal prosecution as computer intruders, under the decision.
"In my view, the 9th Circuit decision... potentially criminalizes a broad swath of conduct," says San Francisco attorney Robert White, who represented Farey-Jones in the appeal. Electronic civil libertarians were split over the decision, seeing it as good for privacy, but a tempting tool for abuse by zealous prosecutors or litigious companies.
But when White filed a motion for rehearing at the 9th Circuit, he found himself with an unlikely ally in the case: the U.S. Justice Department, which filed an amicus brief supporting a new hearing.
Justice Department lawyers didn't object to an expansion of the Computer Fraud and Abuse Act -- their most common weapon against accused computer intruders and virus writers - but they were deeply troubled by the court's interpretation of the SCA, which they say hobbles their ability to obtain a suspect's e-mail.
Federal law protects e-mail under two different standards: messages in "electronic storage" at an ISP can only be obtained by law enforcement officials only with a search warrant issued by a judge based on probable cause to believe that a crime has been committed. But messages that the recipient has read and chosen not to delete can be obtained with a simple administrative subpoena.
"Difficulties for Law Enforcement Nationwide"
Based on the Justice Department's interpretation of that law, the FBI is long accustomed to being able to obtain messages that the recipient has read by simply handing the ISP an administrative subpoena, only troubling a judge when they need access to unopened e-mail, or, under another requirement of the law, messages older than 180 days.
But in ruling against Farey-Jones, the 9th Circuit found that the ICA messages were still in "electronic storage" at NetGate, even though the recipients had read them. It may seem a fine point, but the Justice Department worries that that interpretation places all e-mail less than 180 days old, and stored at an ISP, into the category that requires a search warrant.
"The significance of this change for law enforcement cannot be overstated," wrote Justice Department attorney Mark Eckenwiler in the amicus brief. "Substantial quantities of evidence previously available to state and federal prosecutors are no longer available under this heightened standard."
Prosecutors in the parts of the country governed by 9th Circuit case law -- eight western U.S. states and Hawaii -- have already stopped issuing administrative subpoenas for e-mail, according to the brief, filed last September, forcing them to go to a judge and show probable cause when they want a peek into a netizen's inbox.
"Moreover, because the Internet spans state and national borders, the panel's decision is likely to create difficulties for law enforcement nationwide," reads the filing, noting that some of the nation's largest e-mail providers, including Yahoo and Hotmail, are located in the 9th circuit.
"I was grateful -- it's nice to have the government on your side," says White. "It's a question of whether something is considered to be a stored communication or not, and that's really what this case is about, to a very large extent."
But despite Farey-Jones' unexpected help from Washington, last month, the appellate court rejected both Farey-Jones' bid for a new hearing, and the Justice Department's narrow argument over electronic storage. "We acknowledge that our interpretation of the Act differs from the government's and do not lightly conclude that the government's reading is erroneous," the court wrote. "Nonetheless... we think that prior access is irrelevant to whether the messages at issue were in electronic storage." On Thursday, the court agreed to temporarily suspend the civil suite against Farey-Jones while he appeals to the U.S. Supreme Court.
<tips@securityfocus.com>
http://www.securityfocus.com/printable/news/8199
CEO Council to Lobby for Small Business Issuer Amendments to Sarbanes-Oxley
The CEO Council announced on March 17, 2004 that it has been invited by The National Small Public Company Leadership Council to participate in a private meeting with Members of the U.S. Congress and staff regarding Sarbanes-Oxley, as well as other issues impacting small emerging growth companies. The meeting will take place on April 1st and attendance is by private invitation only. CEO Council directors will also attend a series of meetings on Capitol Hill to discuss the Sarbanes-Oxley law and its impact on small public companies.All Small Business Issuers and their investors and capital markets practitioners are urged to submit their comments and recommendations for amendments or exemptions to the Sarbanes-Oxley law to The CEO Council, either by email to scrane@ceocouncil.net or in our discussion group.
http://www.ceocouncil.net/
Staff Legal Bulletin on Remote Office Supervision
The Securities and Exchange Commission's Division of Market Regulation
has issued a staff legal bulletin on broker-dealers' need for vigilant
supervision of small, remote offices. Staff Legal Bulletin No. 17
(Mar. 19, 2004). The SEC and the NASD have long expressed concern about
the compliance challenges posed by broker-dealers with geographically
dispersed offices staffed by only a few people. The bulletin suggests an
approach to remote office supervision that includes clearly articulated
firm policies and procedures and steps to promote customer awareness,
with particular emphasis on unannounced inspections conducted on a
random, surprise basis. Although the bulletin focuses on remote offices, it
notes that these supervisory suggestions also may be relevant to
non-remote offices. The bulletin is available online at
http://www.sec.gov/interps/legal/mrslb17.htm
US business group slams Bush 'deception' over Iraq war
NEW YORK (AFP) - A US business group that monitors federal spending took out a full-page advert in The New York Times, likening President George W. Bush (news - web sites) to a corrupt chief executive officer who has forfeited public trust.
Timed to coincide with the weekend anniversary of the US-led war against Iraq (news - web sites), the advertisement -- paid for by Business Leaders for Sensible Priorities -- said Bush's case for invasion "was built entirely out of falsehoods."
Highlighting the cost of the war in terms of hundreds of US casualties and tens of billions of dollars, the ad said the "state-sponsored deception" underpinning the conflict dwarfed the damage caused by the series of corporate scandals that recently rocked Wall Street.
"It's past time for finger pointing," it said.
"It's time for someone in this government to step forward and take personal responsibility for the deadly deceptions used to mislead this great nation into war.
"And that someone must be George W. Bush."
Business Leaders for Sensible Priorities was formed in 1996 on concerns that federal government spending priorities were undermining national security.
The group's 500 members include the present or former CEOs of Bell Industries, Eastman Kodak and Goldman Sachs, as well as CNN founder Ted Turner.
http://story.news.yahoo.com/news?tmpl=story2&u=/afp/20040322/pl_afp/us_vote_iraq_bush_0403221721...
"Every gun that is made, every warship launched, every rocket fired signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of it laborers, the genius of its scientists and the hopes of its children" — President Dwight D. Eisenhower, April 16, 1953
http://www.sensiblepriorities.org/
I like it pennyk, and thank you J. Bernard LoVerde, Jr.
Re: Money Laundering
On Friday, 3 June 1994, I was walking with an AMEX member along West Broadway, when we met Ken Silverman. (The name of this member must be kept confidential.) Ken Silverman is a former AMEX member, whom I believe cleared through KOT (Spear Leeds and Kellogg). My friend knows Silverman through the AMEX.
Silverman informed me that two years ago, he was approached by an AMEX member (not Gottfried, Pierson, Miceli, VanCaneghan, or anyone publicly connected with PNF). Silverman stated to this AMEX member that he was looking for investments for some individuals. (Silverman knows nothing about finance, accounting, etc.) This member, whom Silverman refused to name, recommended PNF as an investment opportunity. Silverman went to the headquarters of PNF. There Silverman met Sam Gottfried, Al Avasso, and Otis Hastings. (Silverman informed me that Otis Hastings had a broken arm. Silverman intimated that Hastings' arm was broken by Avasso.) Silverman stated that he viewed the patents and was given a demonstration of PNF's magic fire retardant. Silverman also stated that he knew the history of Greyhound Electronics. Silverman stated that he knew that Miceli and VanCaneghan were involved in the stock scam. (I do not know when Silverman learned of the invovlement of Miceli and VanCaneghan.) Silverman stated that he declined to invest in PNF because Avasso appeared to be a member of the Mafia.
Silverman is moving "hot" money. Silverman had informed me in 1987 that he owned a small lot in Jamaica. This time Silverman stated that he was involved in the importation of motorcycles and motorcycle parts into Jamaica. Silverman also stated that he was renting motorcycles in Negril to tourists. This statement seems false. My companion asked Silverman for a business card. Silverman stated that he did not have one with him. My companion then requested the name of his business, so that when my friend visited Negril he could "look him up." Silverman declined to provide my friend with the name of his business. Silverman informed him to "just ask for the white guy with the motorcycles." Obviously, Silverman was dissembling. My friend believes that Silverman is acting to invest money with individuals who are smuggling marijuana and, perhaps, cocaine from Jamaica.
On Saturday, 4 June 1994, I met another friend in the city. This individual informed me that Silverman had told him that he (Silverman) was seekning investment opportunities for "hot" money. Silverman hinted that he was seeking to invest this money for individuals who were involved in the drug trade. This friend believes that the drug involved is marijuana-a drug of which Silverman partakes.
It appears that this money which Silverman seeks to invest was at one time transferred into Silverman's trading account. I remember that in 1989 Silverman had financial problems and was searching for some financial backers. I also remember that Silverman's financial prospects were not strong-he entered into some type of agreement with a real asshole, Richard Kaplan, and then this arrangement dissolved.
Ever since I have known Silverman, he has intimated that he knew Jamaicans in the marijuana trade. I always believed that Silverman is a despicable person.
I hope that I have been helpful.
http://www.wallstreetscandals.com/FBI/fbi.yastremski.html
Dear Mr. Nussbaum:
As I have stated in a previous missive, Arthur Levitt should not be nominated as Chairman of the Securities and Exchange Commission. Arthur Levitt was totally incompetent as Chairman of the American Stock Exchange. It was during the tenure of Arthur Levitt that the Mafia exerted its influence on the floor of the American Stock Exchange. Al Avasso, a convicted felon, was a member of the AMEX under the tenure of Arthur Levitt.
Avasso set up a trading account using his wife's name to back individual traders. Avasso, himself, traded this account. Peter Orloff would execute orders for Avasso and place them in this account.
A list of the brokers who maintained financial ties to Al Avasso, a Mafia associate, during the tenure of Arthur Levitt: XXXXXXXXXXXXXXXXX Peter Berkman Sam Gottfried Robert VanCaneghan
The list expanded during the tenure of James Jones: Louis Miceli Harry Pierson George Wellington
There are others.
Perhaps the FBI should interview me.
http://www.wallstreetscandals.com/PARTI/criminal_activity/whitehouse.html
AFFIDAVIT OF XXXXXXXXXXXXXXXXX
STATE OF NEW YORK
COUNTY OF NEW YORK
being duly sworn, deposes and says:
I volunteered to give this affidavit, and have been promised no money or other gratuity in exchange for my testimony.
I have known Edward Manfredonia for approximately eight years.
On many occasions, beginning in October 1993, Edward Manfredonia requested that I observe him as he stood near the rear entrance of the American Stock Exchange, which is situated at 123 Greenwich Street, and as he stood near the front entrance of the American Stock Exchange, which is situated at 86 Trinity Place.
It was while standing outside the rear entrance of the American Stock Exchange, which is situated at 123 Greenwich Street, close to Papoo's, on 19 November 1993, that I observed two short individuals (Alan Umbria and Richard Weppler) run up to Edward Manfredonia, stop suddenly and then run into the American Stock Exchange. These two individuals were encouraged by the shouts of two other individuals (Louis Miceli and Peter Orloff) who would encourage them with shouts of "Don't hit him!" and "Don't get him!"
It was while standing outside the rear entrance of the American Stock Exchange, on 22 November 1993, that I observed one large individual (Even Lovett) and one shorter, balding individual (George Roeser)
scream at Edward Manfredonia "Eddie Manfredonia, how the fuck are you!" This foulmouthed discourse was both unprovoked and unanswered. When I questioned Edward Manfredonia as to why these individuals had yelled at him, Edward Manfredonia replied that he had reported criminal activity at the American Stock Exchange to both the Securities and Exchange Commission and to the Federal Bureau of Investigation. Edward Manfredonia further informed me that he had been instructed by FBI Agent Joseph Yastremski that he should not respond to threats and foul language directed at him.
On 3 December 1993, while Edward Manfredonia was standing outside the rear entrance of the American Stock Exchange on Greenwich Street, engaged in a discussion with an African-American man, a short individual (Alan Umbria) ran out of the rear entrance of the American Stock Exchange and ran up to Edward Manfredonia and screamed: "I'm gonna have your name put on a death list!" Edward Manfredonia did not reply. According to Edward Manfredonia, this individual, Alan Umbria, had boasted that he was a front for the Mafia on Wall Street and in a restaurant, The Court of the Three Sisters.
On 17 December 1993, I was present when a condom filled with water was hurled at Edward Manfredonia from the American Stock Exchange.
I was present, when in early April 1994, an empty liquor bottle was hurled at Edward Manfredonia from Two Rector Street. The bottle missed Edward Manfredonia by perhaps six feet and exploded upon impact.
On many occasions afterwards in 1993, 1994, 1995 and 1996, while I was walking along Greenwich Street, either behind, or to the side of Edward Manfredonia, a short individual (Alan Umbria) would shout, "Fuck you," at Edward Manfredonia.
On many occasions afterwards in 1993, 1994 1995, and 1996, while I was walking either behind or to the side of Edward Manfredonia, as we strolled along Greenwich Street, a short balding individual (George Roeser) would pass and greet Edward Manfredonia with, "Fuck you!"
On several occasions in 1993 and 1994, Edward Manfredonia would invite me to his apartment in Queens where he would telephone FBI Agent Joseph Yastremski and receive telephone calls from FBI Agent Joseph Yastremski.
I listened to these telephone calls when FBI Agent Joseph Yastremski would ask Edward Manfredonia for information concerning money laundering and the registration of stock in offshore havens.
I was present when Edward Manfredonia informed FBI Agent Joseph Yastremski that individuals (specifically, Heinz Grein) connected to Frost and Sullivan had laundered money for Al Avasso in Luxembourg.
I was present when Edward Manfredonia informed FBI Agent Joseph Yastremski that Heinz Grein, while employed by a German bank, had stated that he had moved money for Ferdinand Marcos into Switzerland.
FBI Agent Joseph Yastremski frequently asked Edward Manfredonia for information concerning Al Avasso and certain of his associates.
On one occasion, circa September 1993, FBI Agent Joseph Yastremski asked Edward Manfredonia to obtain the telephone numbers of Louis Miceli and Robert Van Caneghan at the American Stock Exchange. Edward Manfredonia informed me that he did not desire to do this because he did not wish to have their telephone numbers in his possession. Edward Manfredonia did obtain these telephone numbers for FBI Agent Joseph Yastremski.
On another occasion circa October 1993, FBI Agent Joseph Yastremski asked Edward Manfredonia if he could obtain photographs of individuals (Louis Miceli and Robert Van Caneghan). Edward Manfredonia did not comply with this request.
http://www.wallstreetscandals.com/PARTI/affidavit.html
The Honorable Sidney Stein
United States District Court
500 Pearl Street
New York, N Y 10007
Re: Edward Manfredonia,
Plaintiff Against
Board of Governors of the American Stock Exchange
Civil Action No.
02 CV 6261
Dear Judge Stein:
I apologize for troubling you with this extraordinary request, but I have been apprised of horrifying news.
First, I shall state the request. Second, I shall enumerate the reasons, both major and minor, for this request. Third, I shall request that appropriate action shall be taken. Fourth, I shall address certain matters.
Once again I apologize for this intrusion, but my lawsuit is a very unusual lawsuit and the consequences shall be far reaching.
I must request that Judge Peck either be removed from my case or that he recuse himself from this case. There exist two reasons for this request and I believe that one has definitely led to the more egregious offense.
The first reason for my requesting the removal of Judge Peck is that Judge Peck is biased against my attorney, Michael Bressler and me. In chambers Judge Peck vociferously attacked my attorney and requested that the case be dropped. Judge Peck threatened my attorney with sanctions and the loss of his license to practice law. Judge Peck threatened my attorney and me with payment of the legal fees of the Board of the American Stock Exchange, should we the case not be proved- and this must be remembered for the second reason. Judge Peck repeatedly stressed that the case would be impossible to prove insofar as to the involvement of Mayors Dinkins, Giuliani, and Bloomberg.
There also appears to be either a misunderstanding by Judge Peck or a misrepresentation by Ms. Dontzin, counsel for the defendant Board of the AMEX. I never stated that the various mayors Dinkins, Giuliani, and Bloomberg either operated in concert or contacted the American Stock Exchange. I have always assiduously maintained that the American Stock Exchange contacted the various mayors and probably lied to them when requesting the assistance of the Mayor. Of this fact I have been informed by various governors of the American Stock Exchange.
Furthermore, the various governors of the American Stock Exchange have always loudly proclaimed, regarding Robert Morgenthau, Manhattan District Attorney: Morgenthau did the AMEX a favor. We didn't have to pay him.
The above comment regarding Morgenthau was made in reference to my illegal harassment by Assistant District Attorney Tom Wornom, who famously telephoned the AMEX and stated:
1. Manfredonia never spoke to VanCaneghan's victims
2. No penetration had occurred
Thus, Robert Morgenthau, the self-proclaimed paradigm of justice, willfully protected Robert VanCaneghan, a confessed serial rapist- as a favor to the American Stock Exchange. The individual, with whom Wornom so willfully acted in concert, Joel Lovett, Vice Chairman of the AMEX, permitted the Russian Mob to take over harbor Securities. And the various governors of the AMEX stated that Morgenthau refused to investigate the bankruptcy of Harbor Securities and the takeover of Harbor Securities by the Russian Mob as a favor to the AMEX.
When I stated that I desired the records of the private investigators hired by the AMEX, Judge Peck stated, "They would be lost." This despite the fact that the American Stock Exchange is aware of all my movements: The twice monthly Saturday night dances in a Manhattan Church; my favorite restaurant for breakfast in Chinatown; the movie theater which I sometimes frequent; the Buddhist temple which I attend for my friends' religious festivals and memorials; etc. The Board of the AMEX has had me photographed and extensively followed. Detailed records such as these cannot be lost. The private investigative firm has records and these can be obtained through billing records, etc.
The second reason is much more serious and is particularly egregious. On 28 April 2003, I returned to the vicinity of the American Stock Exchange after my meeting with Judge Peck. While there, I stated to numerous individuals that Mary Dontzin, attorney for the American Stock Exchange, and the Board of the American Stock Exchange had refused to negotiate. Several individuals informed me of a most egregious situation.
Anthony Boglioli, Vice Chairman of the American Stock Exchange, and Joseph Palmeri, Governor of the American Stock Exchange, stated that the Board of Governors of the American Stock Exchange, had refused a deal because: "No one will support Manfredonia and tell the truth." If true this is prima facie evidence of a conspiracy by the Board of the American Stock Exchange to commit perjury in federal court. This also suggests that Mary Dontzin, attorney for the defendant Board of the American Stock Exchange, may be aware of this conspiracy to commit perjury. If true, this would explain Mary Dontzin's unrelenting demand for sanctions against my attorney.
Judge Peck has shown himself to plaintiff and plaintiff's attorney to be so biased against plaintiff's lawsuit that if defendant Board is aware of the position of Judge Peck, defendant Board has been strengthened in its resolve to commit perjury.
I therefore request that Judge Peck either be removed or recuse himself from this case.
Due to the serious nature of this perjury, I am requesting that the plaintiff, Edward Manfredonia; plaintiff's attorney, Michael Bressler; defendant Board of the American Stock Exchange (most notably including the floor governors, especially Joseph Palmeri; Vice Chairman, Anthony Boglioli; and Chairman Sal Sodano); defendant Board's attorney, Mary Dontzin; and Corporation Counsel of the City of New York be compelled to appear before your Honor, Judge Stein. I request that United States Attorney James Comey be present if that is possible.
I request that your Honor, Judge Stein, explain the penalties for perjury and that if any perjury is committed that individual shall be punished severely.
There is a simple test to determine if the defendant Board is willing to commit perjury. It merely requires that two questions be asked of Sal Sodano, Joseph Palmeri, and Anthony Boglioli.
The first question is: Were you notified that Robert VanCaneghan had sexually assaulted his female employees?
The second question is: Were you informed by attorneys for the American Stock Exchange that the American Stock Exchange would be responsible for all your civil and criminal penalties which you may incur for and would reimburse you for your legal fees for covering up the sexual assaults of Robert VanCaneghan?
The answer to both these questions is: Yes. If Sodano, Boglioli, and Palmeri answer in the negative it is prima facie evidence of conspiracy to commit perjury.
And to further demonstrate the degenerate moral nature of the governors of the American Stock Exchange, I wish to state most emphatically that after Robert VanCaneghan had admitted to members of the Board of Governors of the American Stock Exchange, including current members, Joseph Palmeri and Anthony Boglioli, Vice Chairman of the AMEX, that he (VanCaneghan) had sexually assaulted/raped his female employees, the AMEX Board of Governors permitted VanCaneghan to remain as a member of the Board of Governors until the expiration of his term as a governor.
Furthermore, the Board of Governors permitted VanCaneghan to retain an interest in LETCO Specialists after VanCaneghan left the AMEX even though the Board of the American Stock Exchange knew that VanCaneghan had admitted to the Board that he (VanCaneghan) was a serial rapist. And that the Board of Governors of the American Stock Exchange permitted Robert VanCaneghan to maintain this interest in LETCO even after the governors were apprised that Robert VanCaneghan and Louis Miceli had been involved in the laundering of drug money through their brokerage accounts.
Joseph Palmeri, a current governor of the AMEX, proudly boasted that he would protect VanCaneghan because he (Palmeri) had an interest to protect. Palmeri even taunted me with this boast.
I wish to state that when the Officers of Internal Affairs, visited me on 10 October 2000, these officers were not disturbed by the cover up of financial crimes at the AMEX involving in excess of one billion dollars. Only when I mentioned that the AMEX was covering up a series of rapes was I assured that action would be undertaken to correct this illegal harassment.
Inspector O'Hare and his subordinates at the Wall Street Substation were removed for covering up the rapes perpetrated by Robert VanCaneghan.
In this respect FBI Agents Joseph Yastremski and Michael Degnan, who stated to me that they were investigating the involvement of AMEX governors in stock fraud, money laundering, and narcotics smuggling at the American Stock Exchange, were no better than Palmeri and his fellow AMEX governors. Yastremski and Degnan refused to investigate Robert VanCaneghan for violating the civil rights of the women whom VanCaneghan had raped.
VanCaneghan told his victims that the AMEX would back him and utilize its influence with the New York City Police Department and the Manhattan District Attorney to ensure that no action would be undertaken. This is a policy that has continued to the present- especially with the New York City Police Department following, harassing and initimdating me.
In conclusion I wish to state that Joseph Palmeri and Anthony Boglioli willfully lied to protect a confessed serial rapist and to have the police illegally harass me and they have once again affirmed that they shall lie again to cover up criminal activity at the American Stock Exchange.
Sincerely,
Edward Manfredonia
Cc: Mary Dontzin
Corporation Counsel of the City of New York
http://www.wallstreetscandals.com/LAWSUIT/lawsuit.stein.html
The Gadfly of Trinity Place
Edward Manfredonia has been crying in the Amex wilderness
His friends had warned him to stay away. But on Feb. 9, 1999, Edward R. Manfredonia decided to take a chance. For the first time in eight years, he walked through the front door of 86 Trinity Place, headquarters of the American Stock Exchange Inc., and asked to use the library on the fifth floor.
The Amex library is open to the public. Anybody who walks in off the street can just drop by and use it without even calling ahead. The visitor standing directly behind Manfredonia had no trouble getting a visitor's pass to use the library. But not Manfredonia. After waiting 20 minutes, the answer came down from an Amex manager: No. Manfredonia could use the library only if he were accompanied by a security guard, who would watch him while he was there. No one was available to keep an eye on him, so he had to leave. ''They let all kinds into this building,'' said one of the guards. ''I don't see why you should be the exception.''
But the real reason was made plain in the lobby of the Amex building. While Manfredonia was kept waiting, a trader on the floor of the exchange came by and said hello. Then another. And then others. Some were merely acquaintances. But others were contacts who had provided Manfredonia, at considerable risk to themselves, sensitive information about the inner workings of the exchange.
VOCAL THORN. That is what makes the diminutive, 51-year-old Manfredonia persona non grata at the American Stock Exchange. For the past eight years he has become a familiar figure in the vicinity of the Amex building. Talking to people. And then going home and writing letters. This former Amex trader works full-time with one aim in mind--to ferret out wrongdoing on the American Stock Exchange and pass it on to anyone who will listen.
Amex Chairman Richard F. Syron says that Manfredonia has made ''wild'' accusations and that the volume and extreme tone of his letters have hurt his credibility. And other Amex officials had little to say about Manfredonia on the record, though privately they sought to discredit him. But some Amex members privately take a far different view. ''Over the past couple of months, we've talked about a whole bunch of subjects, and I've taken a liking to the guy,'' says one former high Amex official. ''I think he's trying to do what he thinks is right and deal with things he thinks were unfair.''
Manfredonia first came to the Amex floor as a clerk in the early 1980s and then worked his way up to trader in 1984. Occasionally he would quietly go to the media with tips. In 1988 it came to his attention that certain brokerages were involved in ''index front-running''--trying to make a killing in index options by manipulating the price of the underlying index. Manfredonia learned his first lesson as a whistle-blower--some people just don't want to listen. One prominent financial journalist ''wanted trading records, which was just impossible. When I couldn't get them, he lost interest,'' he recalls.
Manfredonia became a permanent, vocal thorn in the side of the exchange after disturbing information came his way in 1989 and 1990. He learned that employees of a specialist firm, run by a highly placed figure at the exchange, had allegedly been sexually assaulted by the official. The women would not come forward--but Manfredonia did, in complaints to the authorities that, evidently, did not endear him to exchange officials. A year later he was fired from the now-defunct trading firm that employed him at the time--at the behest of the Amex, he insists, for ''spreading rumors.''
Manfredonia says he was blackballed--barred from employment with any firm doing business on the exchange. He has been unemployed since leaving the Amex floor, subsisting on savings and help from friends--and spending a good part of his time fighting the Amex, and losing. Manfredonia has written hundreds of letters to regulators, law enforcement, and the media, leaving him with little more than piles of green certified-mail receipts. ''We are well aware of the information you've given us, and we are in fact looking into it,'' one prominent newspaper executive assured Manfredonia back in 1993 after getting a series of letters about alleged transgressions at the Amex. ''We know how to reach you,'' the exec continued, ''and there's no need to keep sending letters.'' Manfredonia stopped sending letters--and the newspaper, he notes ruefully, did nothing.
Among the subjects of his letters was former Spear, Leeds & Kellogg Managing Director Pasquale ''Pat'' Schettino (page 102). Manfredonia wrote letters to, among others, officials of companies whose stocks were allegedly traded by Schettino. That led to a libel suit by Schettino. Manfredonia, who is struggling to fight the case without an attorney, says the suit was an effort to silence him and force him to reveal his contacts. He maintains the suit was inspired by the Amex, which the exchange's head of member-firm regulation, Stephen Lister, vigorously denies. Schettino's attorney, Eric Levine, declined comment on the suit.
Manfredonia's letter-writing campaign has hardly been an example of effective business communication. His letters are often filled with trading-floor jargon and accusations in screaming-headline boldface. ''We got letters. I think we looked into it or referred to it to someone else. I didn't give it much merit or credibility. I never really looked into his allegations,'' says one former regulator who has received letters from Manfredonia. ''That's the problem with whistle-blowers. They may have a very meritorious claim, but they don't convey it well.''
Manfredonia has become a figure of fun, sometimes openly taunted by Amex traders and clerks. But one thing is certain. Regulators and law enforcement cannot claim that they could not have known what's been going on at the American Stock Exchange. Ed Manfredonia has been telling them for years.
http://www.businessweek.com/1999/99_17/b3626009.htm
My name is Edward Manfredonia, and I am a former member of the American Stock Exchange. I wish to inform you of criminal activity at the American Stock Exchange. Read the information on this web site and you shall learn how a stock exchange truly operates.
My allegations were featured in a Business Week cover story; the April 26, 1999, which you can read here. [An archived version can be found here.]
The entirety of the story is much bigger than Enron, Arthur Andersen, World Com, Xerox, and even previous scandals such as Ivan Boesky and Michael Milken. The reason: The federal government actively covered up these crimes and assisted in the perpetration of these crimes. My primary motivation is that the federal government and the Manhattan District Attorney have protected Robert VanCaneghan, a millionaire and former governor of the American Stock Exchange, who has admitted that he is a serial rapist. Robert VanCaneghan raped his female employees and Mary Jo White and Robert Morgenthau have protected a confessed serial rapist.
Would you want your daughters and wives to work in a city where white serial rapists are protected even after they have admitted to raping women.
This website is divided into two parts.
PART I
You must read my missives to Janet Reno and to Federal Judge Casey as an introduction. Part I exposes major criminal activity at the American Stock Exchange which was covered up by the federal government (Securities and Exchange Commission, Department of Justice, Internal Revenue Service, Federal Bureau of Investigation, etc.); the State of New York (Manhattan District Attorney, Attorney General of the State of New York, and New York City (New York Police Department) because Arthur Levitt, former Chairman of the American Stock Exchange (AMEX) and afterwards, Chairman of the Securities and Exchange Commission, did not wish crimes such as rape, sexual enslavement, money laundering, narcotics smuggling, etc.- all of which occurred at the American Stock Exchange during Levitt's tenure as Chairman of the AMEX, and which continued after his resignation, to become known.
These crimes were covered up because Arthur Levitt wished these crimes, especially rape, to be covered up. To this end, his friends, Howard Safir, Police Commissioner; Robert Morgenthau, Manhattan District Attorney; Mary Jo White, United States Attorney for the Southern District of the State of New York; Peter Kann, Chairman of Dow Jones; and Arthur Sulzberger, Chairman of The New York Times, were willing to permit Caucasian women to be raped by Robert VanCaneghan, a millionaire and governor of the American Stock Exchange, and were willing to have African-American and Latino women submit to sexual enslavement by Richard Mondarine, a manager of the American Stock Exchange. All this to protect Arthur Levitt and the American Stock Exchange.
Paul Volcker, former Chairman of the Federal Reserve and a member of the Board of Governors of the American Stock Exchange, also led in this cover up. Volcker induced Richard Syron, one of his disciples and an individual with a history of mental illness, to become Chairman of the American Stock Exchange.
PART II
Part II details criminal activity at the American Stock Exchange. The American Stock Exchange covered up criminal activity involving its stocks and options. Stocks such as Hanover Direct, IVAX, Forest Drugs, etc. the principal officers of which were governors of the American Stock Exchange were illegally traded. Other stocks, such as PSI, OnSite Energy, Bowmar, Hanover Direct, etc. were not only illegally traded but were manipulated. I mailed missives to the public governors of the AMEX, especially some of those chief executive officers whose stocks were illegally traded and informed them of stock manipulation and illegal trading. These public officers did nothing, but covered up the illegal trading of the stocks of their companies.
This covering up of illegal trading, with the blessing of the Securities and Exchange Commission and the Department of Justice, has occurred to the present with Jonathan Frey, a specialist, illegally selling the stock of Devon Energy short on a minus tick and illegally trading other stocks in which he (Frey) is the specialist.
I wish it to be known that Pat Schettino initiated his lawsuit against me with the knowledge and approval of Joel Lovett, Vice Chairman of the AMEX; Richard Syron, Chairman of the AMEX; and Steven Lister, Senior Vice President of Compliance, (who according to the FBI accepted bribes to forego disciplinary action against white collar criminals and the Italian Mafia). The American Stock Exchange wished Schettino's crimes to be covered up.
http://www.wallstreetscandals.com/NEW.011204/PriceWaterhouse-Goldman-2.html
File No. S7-24-99 Comments
To Whom It May Concern:
I am a retired member of the Wall Street Community after spending years in the
Operation & Compliance (as both a senior member and director of both
departments) sides of NASD member firms. This included the oversight of the
trading activities of numerous branches, registered representatives, and the
actual Trading Departments of the last two firms I worked for. As part of these
activities I have spent numerous hours reviewing trading operations and
compliance as well as immeasurable amounts of contact with both NASD and SEC
regulatory officials.
I am writing this to you regarding the above referenced matter as I feel
compelled to offer my comments on the subject at hand.
It is my persona belief that it is of the utmost importance to maintain, and
strive for, the concept of "fair markets". To that extent I believe that it is
absolutely necessary that you level the playing field for the investing public
with regard to the trading strategy of short selling.
It is time to create, and enforce, a single set of short-selling rules which
will apply to specialists, market makers, broker/dealers, and the investing
public. As such, I urge you to remove what I believe to be the inequitable and
discriminatory regulations that restrict the public investor's ability to
short-sell stocks, while providing preferential treatment only
for the market makers and broker/dealers.
While I understand that most novice investors do not understand, or appreciate,
the critical check-and-balance afforded by the action of short selling in the
exercise of free markets. Since the industry itself makes no effort whatsoever
to educate the public with regard to short selling (this is one of the more
sophisticated investing strategies that they fail on, much less the proper use
of margin and/or the trading of options), the public is left to draw the
erroneous conclusion that it is short sellers who should be blamed when a stock
goes down in price.
Regrettably, this lack of understanding applies most directly to the new
generation of "do-it-yourself" investors spawned by the proliferation of access
to information and gossip enabled by the internet. Many treat the internet as a
tool to generate "momentum" for stocks as though it is a football game. Rapid
runups are easily fabricated for reasons having nothing whatever to do with the
value of the underlying security. Furthermore, as I know the SEC actively is
monitoring "chat rooms" on various internet investing websites this should be
quite apparent to regulatory officials. It is extremely disheartening when you
see this in those rooms dedicated to the trading (loosely defined in some
occasions) of stocks that trade on the NASDAQ Small Cap and/or OTCBB markets.
In these cases the promoters, and/or the issuers paid posters who hype the
stock, use the specter of short sellers to soothe the long stock holders who are
being materially damaged when the insiders in these stocks liquidate their
shares into the buying of the unsuspecting public. For example, most OTCBB
investors on these sites are completely unaware that, in the US, you cannot
short sell an OTCBB stock, yet this blaming of the short sellers routinely
occurs. A better educated public would not be so susceptible to this tactic.
However, on the flip side, market makers and broker/dealers have rigged the game
so they can play by a different set of rules than the general public and, to
date, this ha been protected by the regulatory bodies. These market makers and
broker/dealers have done this for no other reason than to line their own
pockets, under the sham of maintaining "fairness" in the market. Every day,
market pros short sell IPO's, short sell on downticks, and short sell without
regard to the availability of certificates, all things done at the expense of
individual investors, who do not have the right to do the same. They do it
quietly, without regulation, and without a requirement for disclosure; often in
direct contradiction to the public "recommendations" of analysts
from the very same firms which I believe is another area that the regulatory
bodies should be aware of (for example look at the recent action in AMZN where
outlandish price targets were placed on the stock creating a price run right
before the stock pre-announced a financial warning). The public will be best
served by administering the markets so that every investor wishing to place
their own money in an "at-risk" trade be allowed to do so under the same rules.
Therefore, I urge you to eliminate current restrictions on short selling, and
allow the public to sell short by the same rules as market makers.
I thank you for your time and consideration and would be more than happy to
discuss this with anyone on your staff.
Sincerely,
J. Bernard LoVerde, Jr.
http://www.sec.gov/rules/concept/s72499/loverde1.txt
By Allan Sloan
Dec. 8 issue - On Wall Street, there are big, well-connected fish. And then there are regular, little investors, who are the fish food. Exhibit A? The case of fund manager Gary Pilgrim, perhaps the most startling example of alleged abuse of investors to come out of the mutual-fund scandal. It’s a tale of how insiders can grow fat from their stake in a fund even as regular investors are being stripped to the bone.
It turns out that Pilgrim made rich profits from investing in his PBHG Growth Fund while shareholders lost big. PBHG Growth dropped 65 percent from March of 2000 through November of 2001, the period covered in suits filed by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. That’s a loss of 45 percent a year. But during that same period, according to NEWSWEEK’s calculations based on information in the suits, Pilgrim made 49 percent a year on his stake in PBHG Growth. His profit: $3.9 million.
How can this be? Unlike regular sucker investors, Pilgrim owned his stake by investing through an outsider: a hedge fund called Appalachian Trail. Appalachian profited by betting against Growth. NEWSWEEK has learned that Appalachian, which regulators say bought and sold Growth a total of 240 times during this period, made most or all of its profit by betting that the value of the fund’s stock portfolio would fall. Regular investors, by contrast, profited only if Growth’s investments increased in value. Pilgrim, as the fund’s manager, had a legal and moral fiduciary obligation to look after his investors’ money and place their interests ahead of his own. But instead, he seems to have profited from his investors’ misfortune. It’s as if a captain ran his ship into an iceberg, however inadvertently, then jumped into a private lifeboat and collected on his passengers’ life-insurance policies. Pilgrim’s lawyer had no comment on the regulators’ suits or on NEWSWEEK’s analysis. His defense, people involved in the case say, will apparently be that he was a passive investor in Appalachian and didn’t help it bet against Growth.
The Pilgrim story is part of the almost-daily revelations about mutual-fund misdeeds that are driving home a message we can no longer ignore: even when we hire professional managers to look after our money and give us a diversified portfolio, we can get eaten alive. We thought mutual funds were boring but safe, compared with individual stocks. Now we’re finding out that many funds weren’t trustworthy. Hardly a comforting thought, considering that, with the decline in traditional pension plans and the increasingly troubled status of Social Security, most of us have no choice but to use mutual funds to help us retire. Funds are also the only realistic option for saving for our kids’ college education. “Mutual funds have become the bank of necessity for middle Americans,” says Massachusetts Secretary of State William Galvin. “But what they’re discovering is that the mutual funds have screwed them.”
We knew mutual funds weren’t cheap, once you added up all their fees and expenses that on average chew up a quarter of your return. But it never occurred to us that many of them were corrupt. We now see that in at least some cases (Janus and Bank of America, among others), fund companies let outsiders skim their funds—with techniques like so-called market timing—in return for other, more lucrative business.
For an example of how market timing works, let’s revisit Appalachian Trail and see how it profited from investing in money-losing PBHG Growth. It didn’t simply buy and sell the fund—it used so-called derivatives to make its money and limit its risk. Whenever Appalachian bought Growth shares, it also bought securities from Wall Street investment houses that mimicked the fund’s portfolio. The investment houses collected from Appalachian if this “shadow portfolio” rose in value; Appalachian collected if the shadow portfolio fell. Appalachian’s lawyers declined to comment.
For reasons that aren’t clear, the shadow portfolio fell more quickly than PBHG Growth’s asset value did during some down days in the stock market. Thus, Appalachian made more money on its shadow-portfolio bet than it lost on its Growth shares. So Appalachian would sell both its fund shares and its shadow portfolio and pocket a profit. It made a total of 120 buy-sell round trips in a mere 21 months, according to the suits. That’s far more than the limit of four round trips a year that PBHG Growth imposed on other investors. But what if PBHG Growth’s portfolio rose, as it did almost half the time? In that case, the profits on Appalachian’s fund shares offset the loss on the shadow portfolio. So heads, Appalachian won. Tails, it didn’t lose. In all, according to the SEC, Appalachian made $13 million from its trades in Growth.
Transactions like this explain how hedge funds—unregulated investment pools—have managed to show steady annual returns of more than 20 percent by “timing” mutual funds during years when the stock market was falling sharply. Of course, “timing” is really just a euphemism for the well-connected big fish skimming profits at the expense of small-fry mutual-fund investors. Hedge funds have been involved in most of the allegations of wrong-doing, which first surfaced in September when New York’s Spitzer brought a case against four fund companies and a big hedge fund, Canary Capital. Galvin, the Massachusetts secretary of state, says, “Letting hedge funds buy shares in mutual funds is like putting a shark in a goldfish tank.”
The SEC, which is supposed to regulate mutual funds, has been scrambling to catch up with Spitzer and Galvin, and has vowed changes. But the SEC has a big credibility gap. It didn’t pick up on clear signals, such as academic literature discussing the profits that investors could make exploiting flaws in mutual-fund pricing, that something was amiss in fund-land. Not to mention the fact that many Wall Street trading desks—notoriously gossipy places—had to know that the Appalachians of the world were messing with mutual funds. Had a source not perched at Spitzer’s door and chirped about Canary Capital, this scandal might never have surfaced.
There are now all sorts of bills and SEC proposals designed to reassure Americans that someone will look after their mutual-fund money. But these proposed safeguards are long on legalisms, and will be difficult to implement. Take the idea that mutual funds should have independent directors looking after shareholders’ interests. There are more than 8,000 funds. Can you imagine finding five directors—40,000 in all—per fund? Or how much this will cost in legal bills and consultants’ fees, all of which would come from fund shareholders? Spitzer has a much simpler idea. First, prohibit hedge funds from investing in mutual funds, a no-brainer. Second, don’t let a company run both hedge funds and mutual funds. And third, forget about finding thousands of new directors and just hold fund managers to their existing fiduciary obligations. “The rules don’t need to be changed,” he said. “They need to be enforced.”
The government could make one other simple fix if it really wants to look out for the average investor’s best interests: limit the proportion of a 401(k) plan that employees can invest in their company’s stock. That would limit their upside, but also prevent them from being wiped out. It would bar workers from the investment equivalent of drunken driving. We’ve all heard of Enron victims whose 401(k)s vanished when Enron vaporized. But two thirds of what these unfortunates lost was their own mistake. They had to hold some Enron stock, because that’s what the company put into their 401(k) accounts as a match: 50 cents of Enron stock for each dollar. But employees didn’t have to invest their own money in Enron stock, too. Many did, and lost everything. The best investor in Congress, Sen. Jon Corzine, a New Jersey Democrat, formerly head of Goldman Sachs, tried to fix this problem by imposing a 20 percent limit on employer stock in 401(k)s. But Corzine’s proposal ran into a brick wall in Congress for limiting investors’ freedom of choice. “I couldn’t get past first base,” he says.
Look, professional investors are always going to do better than amateurs—just as fishing pros generally catch lots more than recreational anglers do. But if we adopt a few new rules and enforce the ones we have, average people will have a fighting chance, instead of being fed to predators.
http://msnbc.msn.com/Default.aspx?id=3606191&p1=0
http://www.stockhouse.com.au/bullboards/viewmessage.asp?no=7216129&t=0&all=0&TableID=1
Financial institutions drowning in rules..
Regulatory malpractice
By Richard W. Rahn
In today's parlance, George Washington was a victim of medical malpractice. When he became ill, he was bled by his doctors, which almost certainly hastened his death. Like Washington, the financial industry and its customers are now slowly being bled, which will be fatal for some.
The "doctors" in this case are a group of politicians, tax and law enforcement officials, who are operating without the constraint of national boundaries or economic sense.
People around the globe are justifiably concerned about terrorism and ordinary criminality. A certain international political class has used this anxiety to argue that since criminals and terrorists use money, all monetary movements and holdings must be monitored. Yes, it is useful to be able to trace the money trail of al Qaeda operatives. But does that mean all citizens of every country should be subject to having all their financial privacy destroyed? Furthermore, is it cost-effective to monitor almost everyone, or would both public and private law enforcement dollars be more wisely spent monitoring the activities of those individuals or groups known or strongly suspected of engaging in terrorist or criminal activities?
The problem is there are now literally dozens of organizations issuing rules and regulations that apply not only to financial institutions but to all "money service providers," including such activities as pawn shops, used car dealers and real estate agents. The agencies within the U.S. government issuing the new financial rules and regulations include the Internal Revenue Service, the FBI, the Justice Department, the Financial Crimes Enforcement Network (FinCen) and the Federal Reserve.
In addition, U.S. financial institutions and other businesses engaged in operations outside the U.S. or those involved in international transactions are also faced with a barrage of new rules and regulations from many foreign governments, plus the European Union, and from international institutions such as the Organization for Economic Cooperation and Development (OECD), the Financial Action Task Force (FATF) and the U.N.
Millions of businesses are subject to at least some of these rules and regulations, and it is close to impossible to inform them of their obligations. Even the largest international banks, with huge staffs of lawyers and anticrime enforcement personnel, are unable to fully work through this ever-expanding morass of regulation.
Smaller banks and businesses are at a competitive disadvantage because of the disproportionate effect of these regulatory costs. Some of the regulators are aiming at terrorists, others at ordinary criminals, and some at tax avoiders or evaders. Most of the regulations are directed at "money launderers," even though the term has a very elastic definition.
Many of these new rules and regulations are overlapping, some are contradictory, some violate basic civil liberties and many are costly to administer and do not meet reasonable cost-benefit tests. Yet the Bush administration just announced a doubling in the budget for FinCen, as well as budget increases for many of the other financial rulemaking bodies.
The reason we should care is that all of these extra, and in many cases totally unnecessary, costs are passed along to consumers of financial services as higher fees and more expensive and fewer choices in financial products. This directly translates into job losses not only in financial industries but in all businesses that rely on some outside financing.
In addition, it will make it more difficult for low-income people, the young and recent immigrants to open bank accounts. We are now seeing, for the first time in our nation's history, a rise in the portion of our citizens without banking relationships. Costly regulations that force more people into the cash economy not only make life more dangerous for those who cannot open bank accounts, but also have the perverse effect of making it more difficult for law enforcement to trace funds of criminals.
There is little evidence all the new rules and paperwork are having any appreciable effect on crime or terrorism, because there is an almost infinite number of ways to "launder" money, and organized terrorists and criminals can almost always find ways around the regulations. On the other hand, there is considerable evidence of damage to our pocketbooks and civil liberties from these regulations.
The U.S. government should expand the jurisdiction of the "Office of Information and Regulatory Affairs" (OIRA) to include the IRS and the other financial and law enforcement agencies that issue financial regulations, and insist financial regulations meet strict cost-benefit and civil liberties' tests.
In addition, an international organization is needed to apply the same strict cost-benefit and civil liberties' tests to all proposed regulations emanating from international bodies like the OECD, FATF, and the U.N., as well as those from governments that affect nonresident institutions.
If financial institutions and their customers are weakened or bled to death by regulatory malpractice, the war against real criminals and terrorists will only be made more difficult.
Richard W. Rahn is a senior fellow of the Discovery Institute and an adjunct scholar of the Cato Institute.
http://washingtontimes.com/commentary/20040317-082622-7954r.htm
"Nobody, but nobody, sues the SEC and wins," Arrogrance:
Universal Express Sues SEC for Alleged Harassment
By Judith Burns
Dow Jones Newswires
WASHINGTON -- Universal Express Inc.(NASDAQ-OTCBB:USXP) (USXP), a tiny Florida firm, is suing the Securities and Exchange Commission, claiming it has been subject to "retaliatory harassment" for criticizing SEC inaction on abusive short selling.
Universal Express, of Boca Raton, Fla., said the SEC has issued subpoenas " each and every time the company issues a press release." It claims the SEC is violating its right to free speech and due process and is engaged in a conspiracy to intentionally interfere with its business.
The lawsuit, recently filed in U.S. District Court for the Southern District of Florida, seeks compensatory and punitive damages, recovery of legal fees, and a permanent injunction to stop the SEC from issuing subpoenas to Universal Express and its business partners.
"We will be moving to dismiss the complaint," said SEC associate general counsel Richard Humes. "It lacks merit."
Free speech claims against the SEC generally fail. Earlier this year, a federal judge in Maryland refused to dismiss SEC charges against Agora Inc., a Baltimore publisher that claimed the SEC was violating its First Amendment right to free speech.
Courts are reluctant to stop SEC investigations as well. Robert Brennan, the former high-flying head of First Jersey Securities, and the penny-stock promotion firm Blinder Robinson & Co. are among those who have lost lawsuits seeking to stop SEC probes.
"Nobody, but nobody, sues the SEC and wins," said Stephen Crimmins, a partner at the Washington, D.C., law firm of Pepper Hamilton LLP and former SEC deputy chief litigation counsel.
Mr. Crimmins doesn't think a federal judge will believe claims of SEC retaliation. "The idea of a vendetta is absurd," he said. "It really doesn't happen."
Arthur Tifford, a Boca Raton, attorney representing Universal Express, disputes that, saying the SEC has issued 15 subpoenas against the firm in recent months, distracting its executives and killing deals with other companies.
"All of it is being done vindictively," Mr. Tifford said.
Universal Express, which provides services to private postal companies, has been a vocal critic of the SEC, complaining it has failed to stop stock manipulations through "naked" short sales.
Short selling, which produces profits when stock prices fall, is legal. Unlike legitimate short sellers, who sell borrowed shares in hopes of replacing them at a lower price, "naked" short sellers conduct sales without borrowing stock.
The SEC floated a proposal last fall to combat abusive short selling but it has yet to act on it. Universal Express said inaction has hurt small companies whose shares are most vulnerable to manipulation while protecting "influential" brokerage firms that could lose billions covering naked short positions.
Universal Express, whose shares trade in the over-the-counter Bulletin Board, said it has been burned by short sellers and was rebuffed when it complained to the SEC in 1998. It had more success suing short sellers, with two Florida jury trials awarding it $526 million in judgments. It also has campaigned to limit short sales to those holding stock certificates and enlisted microcap companies to abandon trading through the Depository Trust Co. At the DTC's request, the SEC halted that exodus last June.
In its lawsuit, Universal Express said SEC subpoenas began in June. A second subpoena came in August and a third in September after Universal Express declared war on naked short selling in a release that asked if jurors can see the damage it causes, "why can't the SEC?"
Mr. Tifford said the SEC demanded that Universal Express prove it was the victim of naked short selling. The company turned over documents and issued a new press release complaining of SEC intimidation. Another subpoena followed seeking documents on the company's ability to collect on its legal judgment. The flurry of press releases and subpoenas continued through the fall, with the SEC demanding years of canceled checks, deposit slips, and wire transfers, the complaint states.
After Universal Express announced plans in October to purchase North American Airlines, the SEC quickly subpoenaed the New York charter company's financial records. Universal Express sued for breach of contract when the deal was scrapped in November. In a countersuit, North American Airlines claimed Universal Express couldn't finance the deal and only announced it to lift its stock price.
"They said the money was on its way," said Kenneth Kelly, a New York attorney who represents North American Airlines. "It never came."
Mr. Kelly confirmed that North American Airlines received an SEC subpoena but said it was "very easy" to produce the information sought by SEC lawyers. Universal Express said the soured deal shows SEC subpoenas may cause " irreparable damage."
Along with filing the lawsuit, Universal Express says it has complained to SEC Chairman William Donaldson, New York Attorney General Eliot Spitzer and members of Congress, and asked the Justice Department to open a formal probe of the SEC. Mr. Tifford said the requests have gone unanswered.
- Judith Burns, Dow Jones Newswires; 202-862-6692; Judith.Burns@dowjones.com
"When the public is damaged by those entrusted to protect, it is time for the public to lynch those in charge and take justice into their own hands."
Meanwhile Big Brother and their Financiers Bigger by the Day
The Securities and Exchange Commission staff and New York Attorney
General Eliot Spitzer have announced settlement agreements in principle
with Bank of America over matters related to improper late day trading
and market timing of mutual funds. Bank of America agreed to pay $250
million in total disgorgement and restitution, of which $25 million would
go to shareholders of the affiliated Nations Funds, subject to further
discussions with the Nations Funds Board of Trustees, and the remainder
would be available to contribute to the reimbursement of shareholders
of other funds which, in the words of Bank of America, "were harmed by
the activities of others using Bank of America systems." The settlement
agreement allows Bank of America to seek recompense from the hedge
funds and other investors that used its systems to engage in market timing
and late trading activities, and Bank of America said that it intends
to do so. Bank of America also agreed to pay fines of $125 million, to
reduce mutual fund management fees by $80 million over five years, and
to exit the securities clearing business by the end of 2004. The
settlement is subject to final documentation and approval by the SEC.
Bank of America also agreed that eight members of the Nations Funds
Board will resign or otherwise leave the Board in the course of the next
year. The Board reportedly approved a measure that exempted a mutual
fund timer from a redemption fee that was implemented to discourage
market timing. According to reports in the Boston Globe, the Trustees were
taken by surprise by the agreement and have not committed to leaving
the Board.
Simultaneously, the SEC staff and Spitzer announced settlement
agreements in principle with subsidiaries of FleetBoston Financial Corporation
for allegedly allowing preferred customers to engage in short-term and
excessive trading. FleetBoston agreed to pay $70 million in
restitution, to pay an additional $70 million in penalties, and to reduce mutual
fund management fees by $80 million over five years. Final settlement
is contingent upon review and approval by the SEC. The settlements
were announced March 15, two days before the shareholders of Bank of
America and FleetBoston Financial, in separate votes, approved a merger of
the two companies.
The settlement documents are not yet available, but a number of press
releases and news reports are online. For the Boston Globe 3/17/04
article, see
http://www.boston.com/business/globe/articles/2004/03/17/pressure_to_quit_riles_trustees/
The Spitzer press release is at
http://www.oag.state.ny.us/press/2004/mar/mar15c_04.html
The SEC press release for the Bank of America settlement is at
http://www.sec.gov/news/press/2004-33.htm
and the SEC press release for the FleetBoston Financial settlement is
at
http://www.sec.gov/news/press/2004-34.htm
And the Bank of America press release is at
http://biz.yahoo.com/prnews/040315/clm063_1.html
Tell where the $87M went ~ or go directly to jail..
The clock is running on the alleged mastermind behind a collapsed Aventura investment firm. David H. Siegel faces jail time unless he provides evidence the money's gone..
BY ELAINE WALKER
ewalker@herald.com
A federal judge has given David H. Siegel until Friday afternoon to start talking about what happened to the $87 million in missing funds from the American Financial Group of Aventura.
If not, Siegel is going to jail.
The order, issued by U.S. District Judge José E. Martínez, represents the long-awaited sanctions in response to contempt-of-court charges originally issued in October against the investment firm's former vice president.
It's the first sign of movement in a case that has been at a virtual impasse since the fall.
At the time, the judge found Siegel in contempt for failing to return investors' assets but said he was concerned that throwing the Fort Lauderdale man in jail might violate his Fifth Amendment rights.
Siegel has offered to submit a sworn affidavit stating that he does not have any direct or indirect control over offshore assets. Martínez has said that wouldn't be enough.
''Nor can his assertion of his Fifth Amendment privilege be used as a sword to establish his lack of ability to comply,'' the judge wrote in the order, which he issued on Monday.
Siegel sent a letter to the office of Arthur Rice, the court-appointed receiver, on Wednesday, informing him that he was prepared to appear in the office at 11 a.m. Friday to begin providing sworn testimony.
The letter said Siegel would also file with the court a detailed financial affidavit and a declaration that he does not possess any assets outside the United States.
But he will take these actions under protest that his Fifth Amendment rights are being violated.
''I am concerned that the U.S. attorney may attempt to use my answers to your questions against me in a future criminal proceeding,'' wrote Siegel, who is representing himself after having failed to pay his former attorney, Joseph DeMaria.
Siegel says the American Financial Group records in Rice's possession will provide the evidence needed to clear him of the contempt charges.
''He's going to be surprised at what he finds,'' Siegel said. ``If he had done his work in the first place, we wouldn't be in this position. There's no merit to the contempt citation.''
But Rice called Siegel's assertions ``full of baloney.''
''He jumbled this up and moved money from one account to the other with the intent of making it impossible to find where the money went,'' Rice said. ``He should have been cooperating a year ago. It shouldn't have had to come to this.''
The Securities and Exchange Commission first charged AFG and Siegel in July 2002 with misappropriating investors' money, saying he was liable for the $87 million fraud.
AFG used money from mostly foreign investors to make loans backed by restricted stock in thinly traded public companies.
Siegel has maintained that AFG was a business failure.
The receiver, the SEC and investors are thrilled with the news that Siegel will finally be forced to start talking or find himself in a jail cell.
''The judge did the right thing,'' said attorney Luis Konski, who serves as counsel for the unsecured creditors in the AFG bankruptcy case and represents individual investors. ``We're all waiting with bated breath to see if Siegel shows up.''
Said attorney Elise Johnson, senior trial counsel for the SEC: ``If he has valuable information, we're all ears. He doesn't have to state what happened to the money; he just has to prove that he doesn't have it anymore.''
But the receiver and the SEC are concerned about the possibility that Siegel could leave the country before Friday. They have filed an emergency motion asking the court to require Siegel to immediately surrender his passport.
Said Lisa Schiller, who represents Rice in the civil case against AFG: ``With the threat of incarceration, he becomes much more of a flight risk than ever.''
http://www.miami.com/mld/miamiherald/business/8212037.htm
CHANCES ARE CHOICEPOINT IS WATCHING YOU..
Watching people on behalf of the government..
By Shane Harris
sharris@govexec.com
Watching people on behalf of Uncle Sam.
rriving in Windward, a planned neighborhood tucked inside the Atlanta suburb of Alpharetta, the first things you notice are the trees. Strategically placed in thickets, they shield residents from unsightly views of the Georgia 400 toll road, which pumps traffic out of the bustling city to the south and into the affluent northern enclaves. The trees divide the 3,400-acre development into sections, comprising office parks, strip malls, chain restaurants and subdivisions of single family homes costing from $200,000 to $2 million.
At the center of this idyllic landscape sits the corporate headquarters for ChoicePoint Inc. - a company that is central to the federal government's efforts to give all of America the kind of safe and secure world that Windward symbolizes.
ChoicePoint's business is the gathering and selling of information about people. Huge electronic files the firm compiles contain far more data about Americans than is available at any government office. In fact, it's illegal for a government agency to collect most of the data ChoicePoint maintains on private citizens. Thus an unusual alliance has grown between government, whose appetite for information about potential security risks has risen, and a company whose acumen in assembling personal information has made it the supplier of choice for many federal agencies.
Demand for data on individuals is on the rise throughout American society, and ChoicePoint serves many markets. Insurance companies use its data to manage risk, deciding to whom they should offer policies. Many corporations now commission background checks before hiring new employees. Children's sports leagues require such checks of coaches.
Last October, Business 2.0 magazine listed ChoicePoint among the top 100 fastest-growing technology companies in America. The company's revenues in 2003 totaled nearly $800 million, a 9 percent increase over 2002. Revenues in the company's Business and Government Services division totaled $340 million.
For years, the Federal Bureau of Investigation, the Internal Revenue Service, the Defense Department, the Social Security Administration and about three dozen other federal agencies have called on ChoicePoint to identify tax evaders by uncovering hidden assets, root out medical benefits fraud and help track down criminal suspects. ChoicePoint won accolades in 2003 for leading federal and local officials to the Washington snipers, by mining name and license plate data the company owns to identify the suspects.
But it was the Sept. 11 terrorist attacks that made the company's capabilities most valuable to government. ChoicePoint performed more than 112,000 background checks on airline passenger screeners for the Transportation Security Administration. The company works with the TSA on a project to pre-screen certain airline passengers. ChoicePoint also works with the Homeland Security Department on a program to issue identity cards to haulers of dangerous chemicals. And, entering a previously untapped market, ChoicePoint now works on behalf of U.S. intelligence agencies, running data on people of interest to America's clandestine services.
ChoicePoint's intention, as its chief executive, Derek Smith, wrote in a letter to shareholders last year, is "to create a safer, more secure society." That's a lofty goal. But it's one that ChoicePoint, along with the government agencies it serves, believes it can achieve.
PICTURES OF YOU
ChoicePoint is not the only company that collects personal data. But its competitors cannot match ChoicePoint's talent for piecing together vast swaths of data into a chronological picture of someone's life.
As you move through life, you leave traces of yourself that never disappear. You register a car, apply for insurance, apply for a job, get a blood test, open a bank or credit card account, buy a home, move into an apartment, get arrested, get paroled, buy a boat, file a tax return, get married, get divorced, have a baby, get a library card. These movements leave marks in the form of records. A record might be a seemingly innocuous bit of information you wrote on a form - your phone number, date of birth, where you went to college - or a more telling nugget you surrendered to a customer survey, like why you bought that 2004 Jeep Grand Cherokee, or why you take trips to Ireland.
ChoicePoint and other collectors scoop up these pieces of information and preserve them electronically. They buy the data - sometimes from each other - or obtain it from public sources, such as court and property records. Then, when their customers ask, ChoicePoint blends the pieces into a picture of you. Where you've lived. The cars you drive. The people you know - neighbors, school friends, ex-spouses. The more records, the bigger the picture. ChoicePoint owns an astounding 19 billion records, about 65 times as many pieces of information as there are people in the United States. As a result, ChoicePoint knows more about most people than the federal government does.
But knowledge itself is useless. It must be applied. And ChoicePoint uses it to separate dangerous people from trusted ones - a job that, executives say, is at the core of homeland security. In his letter to shareholders, Smith referred to official warnings that prompted citizens to hoard duct tape and plastic sheeting in preparation for a chemical attack. "While there's no harm in buying [those] supplies . . . physical barriers and color-coded terror alerts are not the tools that are going to protect us against the threats we face today," he wrote.
"Information used appropriately," Smith continued, "can help proactively identify those individuals and organizations who pose a threat." The government agrees, and has spent billions of dollars since the Sept. 11 attacks trying to better analyze the sparse data it owns. But information, applied appropriately, does something else. Once threatening people are identified, Smith writes, that "allow[s] us to understand and manage the rights and privileges they are granted within our society."
The Constitution guarantees some privacy, but not anonymity, Smith has said repeatedly. The courts concur. People have no right to lie about who they are, or to request credentials that convey rights and privileges - such as driver's licenses or permits - without proving their identities. The people who wish to remain anonymous trouble Smith the most. "It is the anonymous person," he writes, "or small group of people, who represent the greatest risks - economic, physical or emotional - facing us today."
In an interview with business magazine Georgia Trend in 2002, Smith said ChoicePoint conducted a survey showing that 25 percent of pizza delivery drivers recently had spent time in jail. "What pizza do you like?" Smith asked his interviewer. "At what price? Are you willing to take the risk associated with dealing with a company that doesn't screen their drivers?" Smith declined Government Executive's request for an interview.
IN THE DARK
ChoicePoint has startling anecdotes that reveal how little the government knows about people crossing its path. Last year, a U.S. intelligence agency gave the company a list of "people of interest," says Jim Zimbardi, ChoicePoint's vice president of strategic sales, and its point man on government work. The agency, which he won't reveal, wanted to know everything Choice-Point knew about the people. ChoicePoint's report told the agency something it didn't yet realize: Some of them had already entered the United States.
ChoicePoint doesn't need such chilling tales to make it indispensable to the government. An FBI official, who asked not to be identified to avoid the appearance of publicly endorsing ChoicePoint, says, "The success of an investigation is often directly proportional to the information [from ChoicePoint] we can gather on suspects." The company's National Criminal File contains more than 63 million conviction records and other data, making it more complete than the FBI's own files.
How powerful is this data? Another FBI official, who also requested anonymity to avoid an endorsement, paints this scenario. Say the FBI is pursuing a suspect, and agents believe he fled the country. His ChoicePoint record contains a travel agency form he filled out before planning a trip to Ireland years ago. The form asked why the man wanted to make the trip. He wrote, "Visiting relative."
"Now, if it turns out you like to travel to Ireland because you have an uncle who lives there," the agent asks, "where do you think we're going to look?"
But what's less obvious to the agent is when ChoicePoint records can and cannot be searched, particularly before the commission of a crime. Can the FBI run anyone's name through ChoicePoint, at any time? Agents aren't supposed to run random searches, the official says, even though many have access to ChoicePoint data on their desktop computers. But asked if any laws expressly forbid it, the agent waffles. "Well, it might be an ethical issue," he says.
ChoicePoint's Zimbardi says the FBI keeps a 3-inch-thick binder of regulations covering ChoicePoint searches. But then he adds that he's never seen the binder; he's only heard of it.
Privacy laws are quite clear on what the FBI may collect on citizens. But ChoicePoint blurs the line. Technically, its data is only a product the FBI has purchased. But with Zimbardi's acknowledgement that Choice-Point has examined "persons of interest," clearly the lines between what can and cannot be known are getting blurrier.
It's also unclear who decides what qualifies as a legitimate search. Zimbardi considers a hypothetical scenario. Say a U.S. intelligence agency presents a list of 5,000 names. Officials say, "We can't tell you why we need to know about these people, but we need to know everything you have." Would ChoicePoint comply and take the government's word that the search was warranted? "Yes," Zimbardi says, without hesitating.
Intelligence agencies are new customers for ChoicePoint. But the practice of intelligence isn't. The point is to spot risks early. That's ChoicePoint's basic business. And that business isn't simply growing; it's evolving. In its seven-year life, ChoicePoint has acquired 42 companies; an average of one every two months. Some it buys for the data they own. Others are purchased to absorb new customers and enter new markets. And sometimes, ChoicePoint buys a company to get its analytic technology, magnifying its ability to connect its 19 billion-and-counting dots of information.
As ChoicePoint collects more data, and grows more sophisticated in its ability to make connections among pieces of the data, its pictures of people become more compelling. Yet sometimes, the portraits are flawed.
BLURRED PICTURES
Mary Boris never pictured herself as a potential serial arsonist. But ChoicePoint did.
In February 2000, Boris learned her insurance provider wouldn't renew coverage of her home, her only major asset. According to a nationwide claims report database - owned and operated by Choice-Point - Boris had filed four fire-related claims in a short period of time. Boris panicked. She'd only made claims for hail damage and flooding caused by a leaking washing machine. Without insurance, she risked financial devastation if a catastrophe occurred.
Boris asked ChoicePoint to clear her name. The database in which her information appeared, known as the Comprehensive Loss Underwriting Exchange, is the industry standard for underwriting-related data, and every insurance company uses it to judge a policyholder's risk level. Boris spent months trying to resolve the error. ChoicePoint said her insurance carrier was at fault, since it supplied the claim data in the first place. Boris wanted ChoicePoint to simply expunge her inaccurate CLUE record. At one point, the fire claims disappeared, but then, mysteriously, they showed up again.
"I felt helpless," Boris says. So, rather than wait for ChoicePoint to assist her, she sued the company. Boris accused ChoicePoint of violating the Fair Credit Reporting Act, which gives citizens specific rights for contesting information compiled about them. She asked a jury for punitive damages and a compensatory award for the "mental anguish and anxiety" she suffered trying to prove her innocence.
A jury awarded Boris $250,000 in punitive damages, as well as $197,000 for her suffering. The judge later reduced that award to $100,000, saying Boris had offered limited evidence of her distress, but he added that Choice-Point behaved with a "generally uncaring attitude," and that the jury reasonably concluded the company bore the responsibility for correcting Boris' CLUE report. Boris' attorney says the report now is clean.
Boris is one of thousands of people ChoicePoint has labeled as something they're not. In 1998, the state of Florida hired DBT Online Inc., a ChoicePoint subsidiary, to identify convicted felons who, by law, officials must purge from the rolls of eligible voters. In the heat of the 2000 presidential election vote recount, it came to light that ChoicePoint had incorrectly fingered about 8,000 people as felons.
Press investigations found numerous flaws with the data. For example, the online journal Salon reported that a voter named Christine got tagged as a felon because a "Christopher" with the same last name had a conviction. In Orange County, some of the data the company supplied was almost 20 years old. Some county officials accepted ChoicePoint data at face value, but others refused to use it. One election official, Linda Howell of Madison County, threw the felon list out when she saw her name on it. Howell isn't a convicted felon.
Many news organizations have documented voter roll errors affecting thousands of people. Given that George Bush's official margin of victory in Florida was 537 votes, and that most of those DBT identified as felons were registered Democrats, a more accurate list could have affected the election's outcome.
James Lee, ChoicePoint's marketing director, says the company refers anyone contesting the accuracy of his or her data to the party that provided it. But when it comes to federal counterterrorism initiatives, accuracy is imperative. Fear of false positives (that a system would incorrectly label someone a potential terrorist) or false negatives (that a system would overlook a real danger) has undercut every personal profiling initiative the government has instituted since the Sept. 11 attacks. But that's not holding ChoicePoint back.
TWO CLASSES
In the growing library of books dissecting how and why the Sept. 11 attacks happened, perhaps none offers a more exhaustive account of the government's problems verifying people's identities than the 723-page After (Simon & Schuster, 2003), penned by attorney and former journalist Steven Brill, the founder of media commentary magazine Brill's Content.
In the epilogue to After, in which he proposes ways to prevent another Sept. 11, Brill writes that government and the private sector should implement "some kind of credible but voluntary nationally accepted identification card," which would give its holders access to fast lanes at airline security checkpoints, public buildings and sporting and performance arenas. No more waiting in line for lengthy body searches. Pre-screened card holders would be deemed nonthreatening.
Following the release of the book, Brill founded Verified Identity Card Inc. The first people he called, Brill says now, were Derek Smith and Jim Zimbardi of ChoicePoint. They agreed to join forces. ChoicePoint wants to be able to check card applicants' names against the government's terrorist watch lists, to which ChoicePoint currently has access when working with federal agencies. TransCore, which manufactures the E-Z Pass device that motorists use when zipping through electronic tollbooths, also joined the consortium, as did the Washington-based Civitas Group, a homeland security venture capital firm whose members include Sandy Berger, President Clinton's national security adviser.
Brill sees his card - which may not be a new card but simply a chip embedded in the holder's credit card - as an invention of necessity. Checking everyone who boards a plane or enters a large office building, like Rockefeller Center in New York, where Brill keeps his offices, wastes time and money, he says. The government shouldn't try implementing its own card system, he argues, because most places people frequent are privately owned. Businesses are better-suited to this task, and can do it more effectively, he argues.
Checking everyone also creates needless redundancy. Brill recalls the day that Berger - whom he calls "a close friend of mine" - came to Brill's offices to discuss the card project, but got stuck in a security line in the lobby. By the nature of his former job, Berger received the highest security clearance, Brill says. Yet, he waited in line behind a deli employee bearing the sandwiches Berger and Brill were about to eat.
The Brill-ChoicePoint card would ensure Berger didn't have to wait like that again. But it apparently would also create two new classes of people: Trusted and untrusted. Asked if that's the case, Brill says, "I wouldn't say trusted versus untrusted. I'd say, trusted versus not-yet-trusted."
ChoicePoint will distinguish between the two. This is familiar territory. As Smith wrote, information lets its owners grant people privileges and rights within society. There's no precedent for companies - or government - assuming this authority on the massive scale that a national identity card or many of ChoicePoint's security strategies envision. Brill writes in After that the government should "push the debate" about these programs. But the debate isn't occurring on a large scale. There's barely a vocabulary for it.
Privacy and civil liberties advocates have battled the government for years over alleged violations of privacy laws and the Fourth Amendment. But those statutes never foresaw that privately run corporations would have more power to know the details of people's lives than government. Bush administration officials stress that privacy sits at the center of all of their homeland security initiatives. But they repeatedly warn of the imminent threat of terrorism, and depict likely attackers as shadowy and difficult to understand.
ChoicePoint has found its niche discerning what is hard to grasp. And for that reason, the company and its data will grow more and more valuable to the government.
http://www.govexec.com/features/0304/0304s1.htm
Scottrade client advisement PAYD) 3/16/2004
Trading On PAYD
Please be advised that as of 3/9/04 Scottrade is not accepting trading on symbol PAYD (PAID INC) due to settlement and clearing issues. The issuer requires that the stock be registered in client name instead of "street name," which makes it ineligible for being held by the Depository Trust Corporation, the predominant settlement facility in the U.S. This has produced numerous issues regarding the settlement of both buy and sell transactions in PAYD.
http://finance.yahoo.com/q?s=PAYD.OB
StockGate: Short Days Numbered, 13 and Counting?
March 18, 2004. (FinancialWire) It’s 13 market days and counting to the second deadline set by the NASD for U.S. marketmakers and brokerages such as Charles Schwab (NYSE: SCH), to cut the lifelines of naked short-sellers and begin for the first time, by their own admittances in seeking the implementation delay of the new ahort-selling market regulations to April 1, to balance their certificate accounts.
Meanwhile, back at the ranch, it’s business as usual as companies like Energy Producers (OTCBB: EPGI) and World Wide Connect have had to deal with continued errors by the Depository Trust and Clearing Corp., Paid, Inc. (OTCBB: PAYD) still has apparent problems in identifying its holders despite having given the transfer agents and brokerages a second deadline for share exchanges, yet another company, Sports Resorts International, Inc. (NASDAQ: SPRI), has filed suit against brokers for alleged naked short selling.
Finally, several additional brokers and market-makers have had “wrist slaps” over their failures to make affirmative determinations, leaving such companies with the clear message from the NASD that it considers such events, while devastating to shareholders and developing companies, as technical oversights that can be purchased at will.
The continuing nationwide scandal has been dubbed “Stockgate.”
It’s like calling speeding tickets “speeding licenses,” leaving the offender free to speed again until pulled over by another traffic officer to “renew” the “license” to speed. In effect, such wrist-slaps are simply “naked shorting licenses,” and can continue indefinitely, treated by the offender simply as a “cost of doing business.”
Recently, Energy Producers, Inc. and World Wide Connect, Inc. (OTC: WWCT) announced an error by the Depository Trust Company in the electronic reorganization of International Group Holdings, Inc. (OTC: IGHI)
The companies said that several brokerage firms “called both concerned and confused as to what their clients, who previously held shares of IGHI, now owned.”
When World Wide Connect, Inc. reorganized their shares through a one for nine reverse split, the company said that DTC erroneously converted the old IGHI shares into WWCT free trading shares when they should have been converted into EGPI's newly issued restricted common stock.
“Because DTC reports their positions electronically any brokerage firm looking up a position for their clients who were previous owners of IGHI stock now see that the shares were converted into WWCT, when in fact, it should have shown that the IGHI shares were converted into restricted EGPI shares. Due to recent trading activities in WWCT it is with great concern by both companies that people may be selling a position in WWCT that they don't actually own.”
Earlier, Paid, Inc. said that its mandatory name change, CUSIP number change, trading symbol change and stock certificate change went haywire when “the industry treated the announcements solely as a name and CUSIP change without a mandatory exchange of stock certificates.”
And Donald J. Williamson, the largest shareholder of Sports Resorts International, Inc. and its CEO, filed a lawsuit in the United States District Court, State of Nevada, against various brokerage firms and market makers alleging they have engaged in unlawful "naked short sales" of shares of SPRI stock.
Among the parties named as defendants in the lawsuit are Goldman, Sachs & Co.; Archipelago Holdings, LLC; Knight Securities, LP; M. H. Myerson & Co., Inc.; and Westminister Securities Corp.
Recent wrist slaps have involved Falcon Research, Inc., fined $10,000, SG Cowen Securities Corporation, fined $230,000, and Sterne, Agee & Leach, Inc., fined $35,000.
Recently, leading market makers and brokers named in various lawsuits and other actions, including FleetBoston (NYSE: FBF), Goldman, Sachs & Co. (NYSE: GS), H. Myerson & Co., Inc. (NASDAQ:MHMY), Olde / H&R Block (NYSE: HRB), Charles Schwab (NYSE: SCH), Toronto-Dominion’s (NYSE: TD), TD Waterhouse Group and vFinance, Inc. (OTCBB: VFIN). A.G. Edwards, Inc. (NYSE: AGE), Ameritrade Holding Corp. (NASDAQ:AMTD), Deutsche Bank AG (NYSE: DB), and ETrade Group, Inc. (NYSE: ET), were given a “reprieve” until April 1 to comply with new short-selling market regulations imposed by the NASD after the SEC had “sat on” the NASD request to plug material loopholes for almost 2-1/2 years.
For some in the industry, the fact that the new date coincides with “April Fool” was not lost.
The NASD noticed its members that it is “delaying the effective date of amendments to Rule 3370 (Prompt Receipt and Delivery of Securitiesthe "Affirmative Determination" Rule) approved by the SEC in November 2003,1 until April 1, 2004.
“The amendments expand the scope of the affirmative determination requirements to include orders received from broker/dealers that are not members of NASD ("non-member broker/dealers"). The effective date of the amendments originally was March 8, 2004,” said the notice.
The proposed and now delayed rule is on the web at http://www.nasdr.com/2610_2004.asp#04-03
The rule itself, while welcomed by small companies and their shareholders in the U.S., nevertheless raised an outcry because the NASD’s request to put it into effect had set on a shelf at the SEC since 2001.
Meanwhile, CBS Marketwatch, a venture between Marketwatch (NASDAQ: MKTW) and Viacom’s (NYSE: V) CBS unit, has suggested that victims of securities fraud may be able to file for theft claims on tax returns instead of capital losses.
The scandal has embroiled hundreds of companies and dozens of brokers and marketmakers, in a web of internaitional intrigue, manipulative short-selling and cross-border accusations and denials.
Comments on Regulation SHO ended January 5, and may be viewed at http://www.sec.gov/rules/proposed/s72303.shtml .
Some 122 companies, including 13 brokers, such as FleetBoston (NYSE: FBF), Goldman, Sachs & Co. (NYSE: GS), H. Myerson & Co., Inc. (NASDAQ:MHMY), Olde / H&R Block (NYSE: HRB), Charles Schwab (NYSE: SCH), Toronto-Dominion’s (NYSE: TD), TD Waterhouse Group and vFinance, Inc. (OTCBB: VFIN). A.G. Edwards, Inc. (NYSE: AGE), Ameritrade Holding Corp. (NASDAQ:AMTD), Deutsche Bank AG (NYSE: DB), and ETrade Group, Inc. (NYSE: ET), have been embroiled for over a year in a raging controversy
The remaining 109 companies among the 122 named to date have issued press releases or been named in the media as having been victimized, or as taking various actions, either alone or in concert with other companies, to oppose manipulative trading in the form of illegal naked short selling. The actions have ranged from lawsuits to withdrawals and threatened withdrawals from the electronic trading system managed by the Depository Trust & Clearing Corp., to withdrawals from toxic financings, to the issuance of dividends or name changes designed to squeeze manipulators, to joining associations or networks or to contacting regulatory authorities to provide documentation of abuses or otherwise complain.
The complete list of those 108 companies include Advanced Viral Research Corp. (OTCBB: ADVR), AdZone Research, Inc. (OTCBB: ADZR), Amazon Natural Treasures (OTC: ANTD), America's Senior Financial Services (OTCBB: AMSE), American Ammunition, Inc. (OTCBB: AAMI), AngelCiti Entertainment (OTCBB: AGLC), ATSI Communications, Inc. (OTC: ATSC), Federal Agricultural Mortgage / Farmer Mac (NYSE: AGM) Allied Capital (NYSE: ALD), American Motorcycle (OTC: AMCYV), American International Industries (OTCBB: AMIN), Ameri-Dream (OTC: AMDR), Adirondack Pure Springs Mt. Water Co. (OTCBB: APSW), ATSI Communications, Inc. (OTC: ATSC) Bluebook International (OTCBB: BBIC), Blue Industries (OTCBB: BLIIV), Bentley Communications (OTCBB: BTLY), BIFS Technologies Corporation (OTCBB: BIFT), Biocurex (OTCBB: BOCX). Broadleaf Capital Partners, Inc. (OTCBB: BDLF), Chattem, Inc. (NASDAQ:CHTT), Critical Home Care (OTCBB: CCLH), Composite Holdings (OTC: COHIA), CyberDigital, Inc. (OTCBB: CYBD). Diamond International Group (OTCBB: DMND), Dobson Communications Corp. (NASDAQ:DCEL), Eagle Tech Communications (OTC: EATC), Edgetech Services (OTCBB: EDGH);
Also, Endovasc Ltd. (OTCBB: EVSC), Enviro-Energy Corporation (OTCBB: ENGY), Environmental Products & Technologies (OTC: EPTC), Environmental Solutions Worldwide, Inc. (OTCBB: ESWW), EPIXTAR Corp. (OTCBB: EPXR), eResearchTechnologies, Inc. (NASDAQ:ERES), Flight Safety Technologies (OTCBB: FLST), Freddie Mac (NYSE: FRE), FreeStar Technologies (OTCBB: FSRCE), Front Porch Digital,
Inc. (OTCBB: FPDI), Geotec Thermal Generators, Inc. (OTCBB: GETC), Genesis Intermedia (OTC: GENI), GeneMax Corp. (OTCBB: GMXX), Global Explorations Inc (OTC: GXXL), Global Path (OTCBB: GBPI), GloTech Industries, Inc. (OTCBB: GTHI), Green Dolphin Systems (OTCBB: GLDS), Group Management (OTCBB: GPMT), Hop-On (OTC: HPON), H-Quotient, Inc., (OTCBB: HQNT), Hyperdynamics Corp. (OTCBB: HYPD), International Biochem (OTCBB: IBCL), Intergold Corp. (OTCBB: IGCO), International Broadcasting Corporation (OTCBB: IBCS), InternetStudios, Inc. (OTCBB: ISTO), ITIS Holdings (OTCBB: ITHH), Investco Corp. (OTCBB: IVCO), Lair Holdings (OTC: LAIR), Lifeline BioTechnologies Inc. (OTC: LBTT), Life Energy & Technology (OTCBB: LETH), MBIA (NYSE: MBI);
Also, MegaMania Interactive (OTC: MNIA), MetaSource Group, Inc. (OTCBB: MTSR), Midastrade.com (OTC: MIDS), Make Your Move (OTCBB: MKMV), Medinah Minerals (OTC: MDMN), MSM Jewelry Corp. (OTC: MSMC), Nanopierce Technologies, Inc. (OTCBB: NPCT), Nutra Pharmaceutical (OTCBB: NPHC), Nutek (OTCBB: NUTK), Navigator Ventures (OTC: NVGV), Orbit E-Commerce, Inc. (OTCBB: OECI), Pitts & Spitts (OTC: PSPP), Sales OnLine Direct (OTCBB: PAID), Pacel Corp. (OTCBB: PACC), PayStar Corporation (OTC: PYST), Petrogen Corp. (OTCBB: PTGC), Pinnacle Business Management (OTC: PCBM), Premier Development & Investment, Inc. (OTCBB: PDVN), PrimeHoldings.com, Inc. (OTC: PRIM), Phlo Corporation (OTCBB: PHLC), Resourcing Solutions (OTC: RESG), Reed Holdings (OTC: RDHC), Rocky Mountain Energy Corp. (OTCBB: RMECE), RTIN Holdings (OTCBB: RTNHE), Saflink Corp. (NASDAQ:SFLK), Safe Travel Care (OTCBB: SFTVV), Sedona Corp. (OTCBB: SDNA);
Also, Sionix Corp. (OTCBB: SINX), Sonoran Energy (OTCBB: SNRN), Starmax Technologies (OTC: SMXIF), Storage Suites America (OTC: SSUA), Suncomm Technologies (OTC: STEH), Sports Resorts International (NASDAQ:SPRI), Technology Logistics (OTC: TLOS), Swiss Medica, Inc. (OTCBB: SWME), Ten Stix, Inc. (OTCBB: TNTI), Tidelands Oil (OTCBB: TIDE), Titan Construction (OTC: TTCS), Trezac Corp. (OTCBB: TRZAV), Universal Express, Inc. (OTCBB: USXP), Valesc Holdings, Inc. (OTCBB: VLSHV), Vega Atlantic (OTCBB: VGAC), Viragen (AMEX: VRA), Viragen International (OTCBB: VGNI), Vista Continental Corporation, (OTCBB: VICC), Viva International (OTCBB: VIVI), Vtex Energy (OTCBB: VXENE) and Wizzard Software (OTCBB: WIZD), WorldTradeShow.com (OTC: WTSW) and Y3K Secure Enterprise Software, Inc. (OTCBB: YTHK).
Earlier in 2003, the SEC fined Rhino Advisors, Inc., $1 million for its representation of Amro International in the financing and manipulation of Sedona Corp. Amro, also known as AMRO, was registered in Panama, a secretive offshore haven, but was not named in the SEC settlement. Another 60 public companies may have been manipulated by the fined Rhino Advisors and its indicted principals, or its funding apparatus, Amro.
These include:
All American Food Group Inc (OTC: AAFGQ), Amanda Co Inc (OTC: AMNA), Antra Holdings (OTC: RECD), Aquis Communications Group Inc (OTCBB: AQUIS), Avanir Pharmaceuticals (AMEX: AVN), Bionutrics Inc (OTC: BNRX), Brilliant Digital Entertainment Inc (AMEX: BDE), Bravo! Foods International Corp. (OTCBB: BRVOE), Butler National Corp (NASDAQ: BUTL), Calypte Biomedical Corp (OTCBB: CYPT), Chemtrak Inc/DE (OTC: CMTR), Clicknsettle Com Inc (OTCBB: CLIK), Corporate Vision Inc (OTC: CVIA), Crown Laboratories Inc/DE (OTC: CLWB), Dental Medical Diagnostic Systems Inc (OTC: DMDS), Detour Media Group Inc (OTC: DTRM),
Also, Digital Privacy Inc/DE (OTC: DGPV), Senior Services Inc (OTC: DISS), International Inc (OTC: DYNX), Endovasc Ltd Inc (OTCBB: EVSC), Esynch Corp/CA (OTCBB: ESYN), Focus Enhancements Inc (NASDAQ: FSCE), Frederick Brewing Co (OTC: FRBW), Greystone Digital Technology Inc (OTC: GSTN), Havana Republic Inc/FL (OTCBB: HVNR), Henley Healthcare Inc (OTC: HENL), Hollywood Media Corp (NASDAQ: HOLL), Ibiz Technology Corp (OTCBB: IBZT), Diagnostic Systems Inc/FL (OTCBB: IMDS), Imaging Technologies (OTCBB: IMTO), Integrated Surgical Systems Inc (OTCBB: RDOC),
Also, Interferon Sciences Inc (OTC: IFSC), Interiors Inc (OTC: ITRNA), Laminaire Corp (OTC: THMZ), Medisys Technologies Inc (OTC: SCEP), Milestone Scientific Inc/NJ (AMEX: MS), Nevada Manhattan Group Inc (OTC: NVMH), Innovations Inc (OTCBB: NTGE), Systems Group (OTC: OSYM), Pacific Systems Control Technology Inc (OTCBB: PFSY), Professional Transportation Group Ltd Inc (OTC: TRUC), Rnethealth Inc (OTC: RNTT),
Also, Sand Technology Inc (NASDAQ: SNDT), Sedona Corp (OTCBB: SDNA), Silverado Foods Inc (OTC: SVFO), Stockgroup Information Systems (OTCBB: SWEB) Surgilight Inc (OTC: SRGL), Tasty Fries Inc (OTCBB: TFRY), Tech Laboratories Inc (OTCBB: TCHL), Teltran International Group Ltd (OTC: TLTG), Titan Motorcycle Co of America Inc (OTC: TMOTQ), Trans Energy Inc (OTCBB: TSRG), Motorcycle Co (OTC: UMCC), Universal Communication Systems Inc (OTCBB: UCSY), Medical Systems Inc (OTC: UMSI), Vianet Technologies Inc (OTC: VNTK),Viragen Inc (AMEX: VRA), Webcatalyst Inc (OTC: WBCL), Worldwide Wireless Networks Inc (OTCBB: WWWNQ), and ZAP (OTCBB: ZAPZ).
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Stock Market Scams
by Christopher Mayer
[June 6, 2001]
An important part of the argument for free markets is the idea that the market is self-regulating. In other words, a free market would develop its own ways of protecting consumers and enforcing fair play. This development is one of the more intriguing aspects of a free market. In the absence of a government authority or agency, private groups emerge that efficiently provide services that might normally be provided by governments.
Given the ubiquitous nature of government in today’s world, the opportunity to witness this development is somewhat rare. The flurry of government regulatory bodies would seem to crowd out any entrepreneurial efforts in this area. Who wants to compete with the Securities and Exchange Commission, for example? When the SEC gives its blessing to a process, stamping it with approval, what incentive do investors have to seek out something more? And certainly, they do not have the option of something less, since participation in SEC rules is not a voluntary choice.
Therefore, when someone comes along and succeeds in showing us how they were able to provide a service to investors that far exceeds what a government agency (in this case, the SEC) can do, it deserves our attention. One of the market’s basic forces, self-interest, spurred this entrepreneur in a direction that benefits investors enormously and, in the process, enriches his own enterprise. As Mises tirelessly explained, profit and social gain are not antagonists in life’s dramas; they indelibly form the fabric of a progressing economy.
The entrepreneur in question is Manuel Asensio and the company he founded: Asensio & Company. In his new book Sold Short: Uncovering Deception in the Markets, Asensio invites readers along for a fascinating tour of recent stock promotions and stock frauds that went on undetected by the SEC and that cost investors millions. Asensio has made it his business to uncover these deceptions and to profit thereby. In his self-interested pursuit of profit, he provides tremendous benefits for all investors, who don’t even have to pay him for his services.
How can this be? Make a profit and provide a service for free? Asensio profits from uncovering stock fraud by performing transactions that are much-reviled on Wall Street. Asensio is a professional short seller. He sells stock that he does not own and promises to buy the stock back at a later date. This is no different conceptually from what any merchant does when he sells something and delivers it later. In both cases, a profit is made when the sales price is greater than the entrepreneur's cost to deliver the goods.
So, Asensio sells the stock of some company that he has determined to be a promotion—that is, a stock that owes its valuation primarily to the dissemination of misleading or false information. Asensio writes, "A stock promotion . . . is a stock whose price is not based on fundamentals—on the company’s actual sales and profits and an assessment of the future potential of its business—but solely on the ability of its promoters to conjure up schemes to sell its shares." These companies form the primary field for Asensio’s short selling campaigns.
After the stock is sold, Asensio makes his case public, and, if and when the stock takes a dive, he buys it back for pennies on the dollar, pocketing the difference. Sometimes, he doesn’t have to buy the stock back at all because it becomes totally worthless and the company ceases to exist.
Earlier, it was noted that investors do not have to pay Asensio for his research, and this is largely true. Anybody can go to his Web site and see his recent reports. It only helps Asensio’s cause to have his reports widely disseminated. However, the investor that holds a stock that becomes one of Asensio’s targets does "pay" in the sense that the value of the investment is worth much less than before Asensio came along.
Ultimately, someone would have had to bear the brunt of the loss from promotional stocks, assuming that such things cannot go on forever. So even here, it is probably better for the investor to know now. As Asensio notes, "A bum stock is like a straying partner: You may not want to hear about it, but you need to know."
Critics will undoubtedly say that such practices are subject to abuse and that there is nothing to prevent anyone from disseminating negative information about a company that is false. Certainly, this has happened and will continue to happen, whether there is a government watchdog or not. Asensio notes such past events, such as the fake news item in 1999 that damaged PairGain Technologies, and the college student who, in August 2000, circulated a phony story about Emulex that caused its stock to crater.
In a libertarian society, there would be no law against saying false things. While the morality of such acts can surely be questioned, the legal right to say them must be defended. As Rothbard wrote in The Ethics of Liberty, "For in that libertarian society, since everyone would know that false stories are legal, there would be far more skepticism on the part of the reading or listening public, who would insist on far more proof and would believe fewer derogatory stories than they do now." The same principle would apply to the stock market.
A free market in securities would be like a free market in any other good or service. The participants would have to consider a variety of information, including the quality and source of that information. When a consumer buys a car, he typically does a lot of upfront work before a purchase is made. Different cars are test-driven; various publications are consulted; and friends, family, and other people all contribute in forming the consumer’s opinion.
Also, people don’t generally rush out and sell their cars when someone disseminates negative information. Why should it be any different in the stock market? Any new information should be checked out and investigated. The purchase and sale of any stock should come only after much thinking and research. If consumers are unwilling or unable to perform such due diligence when it comes to their own hard-earned money, then they can take their chances in entrusting its care to some other party, which should still involve quite a bit of upfront work. Alternatively, they do not have to invest in the market at all.
There is a general desire to try to make life easier. Fine, but there is no way in which government agencies can wave wands and do away with criminal activity. So why not explore ways to improve the market without a government watchdog? Markets have been heavily regulated for quite some time now, and it has not prevented the stock promotions that fill volumes of financial history, nor has it prevented investors from losing money. A free-market alternative would not completely prevent these things either, but it would provide gains in efficiency and provide the added benefit that society no longer has to bear the costs of maintaining a plethora of government regulatory bodies that it does not endorse or need, much less understand.
Asensio gives us a model of what the regulator–entrepreneur of the stock market might look like. Asensio’s firm scours the investment world in search of stock promotions. His firm performs extensive research before issuing its sell recommendations. In the process, Asensio has uncovered numerous cases of outright fraud.
Many of the frauds run deep. These promoters have savvy lawyers and close working relationships with the SEC, to keep the company out of trouble long enough for the principals to make a lot of money. In his book, Asensio asks rhetorically, "How can any state regulator watch all these deals and check every fact?" Quite obviously, especially after reading Asensio’s book, no regulator can.
And even if they could, the investor might not want to trust the SEC (or any regulator) entirely. As Asensio explains, "One of the principles that allows us to sell short and publicly disseminate opinions comes from the Supreme Court decision Ray Dirks v. the SEC in the early 1980s.
"The SEC had censured Dirks in 1973 for issuing reports to his clients about an incipient scandal at Equity Funding—a scandal that Dirks is credited with uncovering. That’s right. The SEC sided with the then-almighty NYSE, which didn’t want its members uncovering fraud." The Supreme Court overturned the censure, but one has to wonder what the SEC was thinking.
In addition to compromised regulators, short sellers are also hampered by antiquated regulations. According to Asensio, these regulations were adopted in 1934, when the crash of 1929 was still a vivid memory. "They appeared in response to accusations that short sellers had caused the crash by manipulating the market." In reality, these regulations hamper the ability of the market to efficiently price securities.
For example, one of these regulations "force[s] short sellers to go through the pointless ritual of ‘borrowing’ stock to short." Ironically, this has the effect of aiding stock promoters, who register shares in cash accounts or offshore accounts, making them difficult or impossible to borrow. There are several other rules, all of which have the effect of hampering short sellers.
Asensio is not unaware of his role in the market from the point of view discussed here. He has a short section in his book titled "A Free Market Solution to Persistent Stock Fraud." He writes, "I’d like short sellers to be free to work, win or lose, independently of sometimes compromised regulators and sleazy lawyers. . . . I believe more than ever that, in the end, the free market system is capable of weeding out misinformation by itself."
-----------
Christopher Mayer is a commercial lender for Provident Bank in the suburbs of Washington, D.C.
SEC Internally Debates
'Trade Through' Rule
By DEBORAH SOLOMON
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- As the Securities and Exchange Commission prepares to consider changes to rules underlying the nation's stock markets, there is internal debate within the agency about how radically to overhaul a regulation that some say advantages the New York Stock Exchange.
The SEC Tuesday plans to consider proposals that could alter how stocks are quoted, what fees markets can charge for access to quotes and how investors trade securities. The agency is trying mitigate disparities in the way it regulates different markets. Pressure for changes is growing and some lawmakers say Congress could legislate if the SEC's changes don't go far enough.
At a special House Financial Service Committee hearing held in New York Friday, the heads of several electronic marketplaces criticized current SEC rules as anticompetitive, saying they favor the NYSE and its use of human traders known as "specialists."
In particular, they want the SEC to eliminate the "trade through" rule, which requires that markets always get investors the best price, even if it means going to a competing market to fill the order. The NYSE's competitors said it unfairly gives an advantage to the Big Board, which often posts superior stock prices but tends to fill orders more slowly as it allows human brokers to compete to find the best price for customers.
The SEC is expected to consider changes to the rule Tuesday, including a proposal that could let investors opt out of complying with the rule.
John Thain, the NYSE's new chief executive, has tried to fend off potential SEC changes by agreeing to automatically match some investors' stock orders electronically. The Big Board has come under fire because of alleged abusive trading practices by specialists and an outsize retirement package awarded to Dick Grasso, the former NYSE chairman and CEO. Five specialist firms recently agreed to pay $240 million to settle SEC charges that they disadvantaged investors.
Mr. Thain told the House panel Friday that the Big Board is working to prevent potential future abuses and is implementing technology to "respond to the requests we have received from some customers for faster speed of execution even if it means foregoing price improvement that often occurs."
But market representatives responded that the settlement proves the NYSE's specialist system is flawed and that the NYSE's electronic plans don't go far enough to foster true competition among markets.
Ed Nicoll, chief executive of Instinet GroupInc., an electronic marketplace, questioned the NYSE's plan to electronically automate trades, saying the existing program has a loophole that could render moot the best-price automated matching efforts. He also said the NYSE needs to make its specialists' trading behavior more transparent to the public.
Some lawmakers, including committee chairman Rep. Richard Baker (R., La.), are siding with the NYSE's competitors, calling on the SEC to eliminate the trade-through rule.
Some SEC commissioners, including Republican Paul Atkins, want the agency to eliminate the rule or, at the very least, offer an "opt out" provision to investors who want their orders executed on the fastest market, regardless of price. But SEC Chairman William Donaldson has expressed some reservations about an opt-out provision and wants feedback from the public about what effect it would have on investors and the overall market, according to people familiar with the matter.
SEC staff plan to recommend that the SEC consider both a modification and the opt-out clause. The modification would allow markets, in some cases, to ignore a superior price if getting that price would slow down execution. Under the staff recommendation, markets could trade through the better price as long as the price it gets is within two or three cents.
The SEC will also consider banning the quoting of stocks in increments beyond one penny, capping the fees that some electronic markets charge for access to stock quotes and adjusting the formula used for distributing market-data revenue -- money that markets collect based on how many trades they report.
French Bank Fined $13 Million by Fed and NY State
The Federal Reserve Board and New York State Banking Department today announced the issuance of a joint Order to Cease and Desist and Order of Assessment of a Civil Money Penalty and Monetary Payment against Credit Agricole, S.A., Paris, France, and its affiliates in Paris, Credit Agricole Indosuez and Credit Lyonnais, S.A., and its offices and affiliates in New York, the New York branches of Credit Agricole Indosuez and Credit Lyonnais, S.A. The Order assesses fines totaling $13 million.
The Order addresses deficiencies in the operational controls, risk management, and compliance with laws and regulations by the New York branch of Credit Agricole Indosuez. The Order resolves allegations that Credit Agricole, S.A., Credit Agricole Indosuez, and the New York branch of Credit Agricole Indosuez failed to fully comply with a Written Agreement entered into with the Federal Reserve and the New York State Banking Department in November 2000; failed to maintain accurate and complete books and records for the operations of the New York branch of Credit Agricole Indosuez; and violated New York State law relating to the banks' obligation to maintain accurate books and records and to submit reports to the New York State Banking Department.
The joint Order includes Credit Lyonnais, S.A., and the New York branch of Credit Lyonnais, S.A., because Credit Agricole, S.A., plans to reorganize its U.S. operations and consolidate certain business operations of its affiliates' New York branches through the New York branch of Credit Lyonnais, S.A.
Credit Agricole, S.A., and its affiliates, without admitting to any allegations, consented to the issuance of the Order.
Credit Agricole, S.A., Credit Agricole Indosuez, and the New York branch of Credit Agricole Indosuez were assessed $10 million in fines under the joint Order. They will pay $5 million to the U.S. Department of the Treasury (through the Board of Governors) and $5 million to the state of New York under applicable federal and state laws.
Credit Agricole, S.A., also agreed to pay a $3 million fine to the Board of Governors to resolve allegations that Credit Agricole, S.A., acquired certain shares of Credit Lyonnais, S.A., and Credit Lyonnais Securities (USA), Inc., in 2002, without prior Federal Reserve approval as required by the Bank Holding Company Act. The Board will remit this fine to the U.S. Department of the Treasury.
http://www.federalreserve.gov/boarddocs/press/enforcement/2004/20040310/
For a schedule of upcoming postings to the Board's web site,
go to http://www.federalreserve.gov/calendar.htm
For a list of items posted to the Board's web site over the past two weeks, go to http://www.federalreserve.gov/whatsnew.htm
Concept Release: Securities Transactions Settlement
SECURITIES AND EXCHANGE COMMISSION
17 CFR PART 240
[RELEASE NO. 33-8398; 34-49405; IC-26384; FILE NO. S7-13-04]
RIN 3235-AJ19
AGENCY: Securities and Exchange Commission.
ACTION: Concept release; Request for comment.
SUMMARY: The Securities and Exchange Commission ("Commission") is seeking comment on methods to improve the safety and operational efficiency of the U.S. clearance and settlement system and to help the U.S. securities industry achieve straight-through processing. First, the Commission is seeking comment on whether the Commission should adopt a new rule or the self-regulatory organizations should be required to amend their existing rules to require the completion of the confirmation and affirmation process on trade date ("T+0") when a broker-dealer provides delivery-versus-payment or receive-versus-payment privileges to a customer. Second, the Commission is seeking comment on the benefits and costs associated with implementing a settlement cycle for most broker-dealer transactions that is shorter than three days ("T+3"). Third, the Commission is seeking comment on reducing the use of physical securities.
http://www.sec.gov/rules/concept/33-8398.htm
COMMISSION FILES SUBPOENA ENFORCEMENT ACTION AGAINST ATTORNEY FOR THE HARTCOURT COMPANIES, INC.
SECURITIES AND EXCHANGE COMMISSION v. JOHN A. FURUTANI, Civil Action No. CV 04-1775-GAF (MANx) (C.D. Cal.)
On March 16, 2004, the Securities and Exchange Commission filed an application with the United States District Court for the Central District of California for an order to enforce an investigative subpoena served on John A. Furutani, an attorney representing The Hartcourt Companies, Inc., a Utah corporation headquartered in Pasadena, California. Furutani is an attorney at the law offices of Furutani & Peters, LLP, which is also located in Pasadena. The Commission's subpoena sought documents and testimony from Furutani concerning, among other things, whether he sold Hartcourt securities while in possession of material nonpublic information. Furutani refused to fully comply with the Commission's subpoena based on several objections, including the attorney-client privilege and attorney work-product doctrine.
The Commission alleges that Furutani sold at least 40,000 shares of Hartcourt common stock between May 8, 2003, when the Commission staff informed him of its intention to file a complaint against Hartcourt, and May 27, 2003, when the complaint was actually filed in SEC v. The Hartcourt Companies, Inc., Civil Action No. 02-3698-LGB (PLAx) (C.D. Cal.). In its application, the Commission asserts that the attorney-client privilege and work-product doctrine do not protect the documents and testimonial responses sought by the Commission and that none of Furutani's other objections provide a valid justification for his failure to comply. The Commission requested that the Court order Furutani to show cause why he should not comply with the subpoena. A hearing on the Commission's application has not yet been scheduled.
http://www.sec.gov/litigation/litreleases/lr18626.htm
Pacific Exchange: NYSE ignores rule, hurts investors
Daniel S. Levine
The Pacific Exchange is charging that the New York Stock Exchange routinely
ignores a regulation to direct orders to the market with the best price,
something it says costs investors millions of dollars a year.
At issue is a rule that dates back to 1975 when regulators sought to improve
connections between stock markets. It aims to ensure customers get the best
available price when they buy or sell stock by prohibiting an exchange from
"trading through" -- that is, ignoring a better price on a competing
exchange. The rule was intended to protect customers, but smaller exchanges
today argue that in practice it simply protects the New York Stock
Exchange's dominance.
"The rules do not say you can never trade through anyone's price," said
Alden Adkins, senior vice president of regulation for the Pacific Exchange.
"What's not OK is for them to do it systemically, which is what we believe
they do. They have trading systems and a trading floor designed to
effectively ignore just about every other market."
Archipelago, the electronic market that is a regulated facility of the
Pacific Exchange, said that it documented the New York Stock Exchange
trading through its prices 7,500 times in a week. It calculates that cost
customers about $5 million a year.
"To us, it's a big concern," said Adkins. "Our listed volume as opposed to
our Nasdaq volume continues to be low in part because people are afraid to
put orders in our book because they may get traded through by the New York
and indeed that happens."
Though Archipelago and the Pacific Exchange have long complained to both the
New York Stock Exchange and the U.S. Securities Exchange Commission, they
say there has been no response to their complaints.
A spokesman for the New York Stock Exchange said while 7,500 trades a week
may sound like a lot, it represents a small fraction of the millions of
transactions handled in a week at its exchange.
"We do access their market, but so much of the time we can't get our order
executed because the price they have advertised is often times not there,"
the spokesman said. "If there is a legitimate trade-through grievance, we
will satisfy that complaint and go back and fix it."
A showdown over the issue now looms in a newly proposed rule from the SEC
that would alter the long-standing trade-through rule and free automated
exchanges such as Archipelago from its requirements. The rule change would
likely put pressure on the New York Stock Exchange to increase the
automation on its floor, which still in part relies on the decision-making
of specialists, who match buy-and-sell orders. It would also likely put
other markets on a more level playing field against the dominant New York
market.
Terrence Hendershott, a professor at the Haas School of Business who has
studied the trade-through rule and its effects on electronic markets, said
it does not seem that the New York Stock Exchange has systems in place to
guarantee their investors will get the better price if better prices exist
someplace else. With the emergence of automated trading, he said, what might
have seemed like a trivial dispute takes on a much greater significance.
"The larger picture about how we actually foster competition and whether or
not the New York Stock Exchange is abusing its monopoly position are very
serious ones," he said. "Even if the amounts are small, if the SEC removed
the rule or made the NYSE honor it, it might have a dramatic effect."
A spokesman for the New York Stock Exchange said its officials had not yet
reviewed the 364-page proposed rule. The exchange has long defended the
trade-through rule, but what position it takes on the SEC proposal may
depend on whether it can get itself classified as a so-called "fast" market,
a designation given to automated exchanges. Automated executions occur
almost instantaneously, but trades involving specialists can take up to 30
seconds to occur -- a relative eternity for some traders.
The New York Stock Exchange does have a system called NYSE Direct+, an
optional automated execution system of so-called limit order up to 1,099
shares. That system accounts for about 7 percent of the exchange's total
volume and the exchange said it is working to expand that to become a fast
market.
"Any provision that eliminates or impedes investors' rights to the best
price would be a concern," said the exchange spokesman. "Best price should
remain paramount, but we've yet to see the details of the SEC's
recommendations, which we will fully assess."
Daniel S. Levine covers economic development for the San Francisco Business
Times.
During a trial, in a small Missouri town, the local prosecuting attorney called his first witness to the stand. She was sworn in, asked if she would tell the truth, the whole truth and nothing but the truth, on the Bible, so help her God. The witness was a proper well-dressed elderly lady, the Grandmother type, well spoken and poised.
The prosecuting attorney approached the woman and asked, "Mrs. Jones, do you know me?'" She responded, "Why, yes I do know you, Mr. Williams. I've known you since you were a young boy and frankly, you've been a big disappointment to me. You lie, cheat on your wife, manipulate people and talk badly about them behind their backs. You think you're a rising big shot when you haven't the sense to realize you never will amount to anything more than a two-bit paper-pushing shyster. Yes, I know you quite well."
The lawyer was stunned. He couldn't even think for a few minutes. Then, slowly backed away, fearing the looks on the judge and jurors' faces, not to mention the court reporter who documented every word. Not knowing what else to do, he pointed across the room and asked, "Mrs. Jones, do you know the defense attorney?"
She again replied, "Why, yes, I do. I've known Mr. Bradley since he was a youngster, too. He's lazy, bigoted, has a bad drinking problem. The man can't build or keep a normal relationship with anyone and his law practice is one of the worst in the entire state. Not to mention he cheated on his wife with three different women. Yes, I know him."
The defense attorney almost fainted and was seen slipping downward in his chair, looking at the floor. Laughter mixed with gasps, thundered throughout the courtroom and the audience was on the verge of chaos.
At this point, the judge brought the courtroom to silence, called both counselors to the bench, and in a very quiet voice said: "If either of you morons asks her if she knows me, you're going to jail."
OTC FIRST ALERT - NEW Public Company of the Month
Symbol: FMNJ
Market: OTC
Sector: FMNJ is a gold exploration and mining company
The BULL Market in Metals is Just BEGINNING!! "Which is the better buy
now, technology or mining stocks? Surprise, the winner is mining
stocks. Mining stocks have more momentum. Mining companies are in the early
stages of a growth cycle as demand for nickel, copper and gold
increases." - Jim Jubak, a senior markets editor for MSN Money
Franklin Mining, Inc. (OTC: FMNJ) is a gold exploration and mining
company FMNJ has a long 138-year history beginning in the late 1860s with
the gold strikes in central Colorado - (formerly as Franklin Mining Co.
and Franklin Consolidated Mining Co.)
Due to the recent stable and rocketing Gold prices, FMNJ is again
gearing up, acquiring and developing two initial mining properties: the
Franklin Mines and Mills in Colorado and the El Alacran Deposit in
Colombia. These mining projects have major Gold ore body potential, which is
indicated by exploration results and drilling results.
The Franklin Mines and Mills in Colorado have multiple claims, existing
permits, and a crushing and flotation mill on site. It has a history
of producing gold, silver, lead, zinc and copper, and the potential to
become a small - to medium producer of high-grade gold, silver and base
metals.
Geologist Gifford A Dieterle has summarized the mineral valuations of
the Franklin Mines as follows:
* Proven/probable Gold mining potential is 58,680 oz, which at $390/oz
it equates to over $22.8 million; the Silver potential is 1,255,572 oz,
which at $6 oz it equates to over $7.5 million
These valuations only take into account the current Gold and Silver
values that can actually be sampled, additional gold and silver may be
discovered as mining resumes.
"...Gold ascends to $500 an ounce..." this is a prediction made for
gold in the year of 2004 - Byron Wien, a US Senior Investment Strategist
with Morgan Stanley.
The El Alacran Deposit project includes three exploration licenses
totaling 1,265 hectares of known gold, copper and silver resources.
Geologist Robert P. Shaw has summarized calculations of gold and copper
resources as follows:
* Proven Gold underground mining potential is 96,280 oz, which at
$390/oz it equates to over $37 million; the proven Copper potential is
84,532,577 lbs, which at $1.00/lb it equates to over $84 million.
* Possible Gold open pit mining potential is 41,324oz, which at
$390/oz it equates to over $16 million.
* Possible/probable Gold underground mining potential is 206,610 oz,
which at $390/oz it equates to over $80 million; the Copper potential is
216,341,000 lbs, which at $1.00/lb it equates to over $216 million
The El Alacran ore zones are not constricted, appear to repeat
systematically and are open at depth, which offers possibilities for the
exploration, discovery and long-term development of potentially large-scale
Gold and Copper resources. Silver is also indicated and probably
significant but calculations are premature at this time.
FINAL CONSIDERATIONS
We are still a long way from gold being overvalued and, in the
meantime, there is an awful lot of money to be made in this sector, especially
in mineral exploration companies." - Paul Van Eeden
The mining potential that FMNJ could extract from these two mines is
over $465 million. However that is not enough for FMNJ.
FMNJ is continuing to drive ahead and is currently investigating other
mineral properties and active precious metal mines in North and South
America to:
1. Successfully grow its asset base
2. Revitalize its operations
3. Producing low cost precious and base metals
4. To generate a substantial return to its investors!
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Snow: GSE Regulator Needs Receivership Powers
The new regulator for Fannie Mae and Freddie Mac needs receivership powers to ensure that investors understand that their corporate debt is not guaranteed by the U.S. government, according to Treasury Secretary John Snow.
Invitation to Comment
Charlottesville, VA, March 11, 2004 - - The global Association for Investment Management and Research and the National Investor Relations Institute have jointly forged proposed ethical guidelines governing the relationship between corporate issuers and the securities analysts who cover them.
The two professional associations, which represent both sides of an important communication channel between public companies and investors, agree in their proposed best-practice guidelines that analysts must remain objective, conduct thorough and diligent research, and never bias their research reports in an effort to make companies happy or to receive better information or access.
At the same time, they also agree that corporate issuers must not discriminate among the analysts who cover them based on the analysts’ research or recommendations, past or present. They also should never deny to analysts either information or access to company representatives in an attempt to influence their research. Nor should issuers exert pressure on analysts through other business relationships, such as investment banking.
AIMR and NIRI developed the best-practice guidelines through a Joint Task Force on Corporate Issuer and Analyst Relations, with participants from Europe, Canada and the United States, that began work in June 2003. Task force members include analysts and investor relations professionals, with people from standard-setting and regulatory organizations sitting in as observers. The guidelines have now been released for an international public comment period, ending May 31, before they are finalized later this year. The complete guidelines and accompanying explanation may be viewed at www.aimr.org/standards.
Samuel Jones, CFA, who served as co-chair of the AIMR-NIRI Joint Task Force, said, “Our guiding principles for developing these standards were based on the view of both AIMR and NIRI that information is the lifeblood of efficient, effective and fair capital markets. Investors need transparent information that is fairly and consistently disclosed if they are to make good investment decisions and allocate their capital appropriately.”
(Jones is senior vice president and chief investment officer at Trillium Asset Management in Boston.)
Thomas A. Bowman, CFA, president and CEO of AIMR, commented, “Investors’ interests must be front and center in all matters guiding the relationship between public company executives and research analysts. Both exist to serve the best interest of investors, although in different roles and from different perspectives. So it is important that corporate issuers respect an analyst’s duty to ask hard questions, point out potential risks to investors, and make fair, unbiased assessments based on facts and their own forecasts.
“But at the same time,” Bowman said, “analysts have a responsibility to be skilled and competent in conducting their research – to differentiate between fact and opinion, and to be fair and impartial in their analysis of companies. Analysts must not let outside pressures threaten their impartiality and influence their research conclusions or recommendations.”
The joint guidelines also address the ethical issues inherent in issuer-paid research, stating that such research may be appropriate when companies engage qualified analysts who are committed to producing objective and thorough research, and when analysts fully disclose in the research report the nature and extent of the compensation they received for their work, among other things.
Overview of Best Practices for Governing the Analyst/Corporate Issuer Relationship:
Standard I: Information Flow
Analysts, Investors, and Corporate Issuers must not disrupt or threaten to disrupt the free flow of information between corporations, investors, and analysts in an attempt to inappropriately influence the behavior of those with whom they are communicating.
Standard II: Analyst Conduct
A. Analysts must issue objective research and recommendations that have a reasonable and adequate basis supported by thorough, diligent, and appropriate research and investigation.
B. Analysts must distinguish between fact and opinion and must ensure that the information contained in their reports is clear and complete.
C. Analysts must not bias or threaten to use their research reports or recommendations in an effort to improve their relationship with Corporate Issuers.
Standard III: Corporate Communication and Access
A. Corporate Issuers must not:
1. discriminate among recipients of information disclosed by the issuer based on the recipient’s prior research, opinions, recommendations, earnings estimates, or conclusions;
2. deny or threaten to deny information or access to company representatives in an attempt to influence the research, recommendations, or actions of analysts and investment professionals; or
3. attempt to influence the research, recommendations, or actions of analysts or investment professionals by exerting pressure through other business relationships.
B. Corporate Issuers must provide access to corporate management, officers, or knowledgeable company officials to qualified persons or entities, including analysts and investors. Corporate Issuers must establish and adhere to policies that set forth how the company will respond to requests for access and under what circumstances and to whom companies will grant access to corporate management and officers. These policies should be disclosed to analysts and investors upon request.
The policies should address:
1. How the company defines access,
2. How the company prioritizes requests for access or information,
3. How the company will respond to each request, and,
4. Under what circumstances and to whom different types or levels of access will be granted.
Standard IV: Reviewing Analyst Reports and/or Models
A. Prior to publication of their reports, Analysts may request that Corporate Issuers review for factual accuracy only those portions of an Analyst’s research report that do not contain or disclose conclusions, recommendations, valuations, or price targets.
B. Corporate Issuers may review for factual accuracy only those portions of an Analyst’s research report that do not contain or disclose the conclusions, recommendations, valuations, or price targets, prior to publication and with the permission of the Analyst. Corporate Issuers must not explicitly or implicitly request information that would disclose the conclusions, recommendations, valuations, or price targets, or comment on these matters. A Corporate Issuer is only permitted to comment on historical or forward-looking information that is in the public domain.
Standard V: Issuer Paid Research Reports
A. When engaging in research paid for by the Corporate Issuer, Analysts must:
1. Only accept cash compensation for their work and must not accept any compensation contingent on the content or conclusions of the research or the resulting impact on share price.
2. Disclose in the report:
· The nature and extent of the compensation received for drafting the report.
· The nature and extent of any personal, professional, or financial relationship they, their firm or its parent, subsidiaries, agents, or trading entities may have with the subject-company, its personnel, parent, subsidiaries, or agents.
· Their credentials, including professional designations and experience that qualifies them to produce the report.
· Any matters which could reasonably be expected to impair their objectivity in drafting the report.
3. Certify that the analysis or recommendations, if any, contained in the report represent the true opinion of the author or authors.
B. When hiring Analysts to produce research for their company, Corporate Issuers must:
1. Engage qualified Analysts who are committed to producing objective and thorough research that fully discloses any matters which could reasonably be expected to impair their objectivity.
2. Pay for the research in cash and only in a manner that does not influence or seek to influence the content and conclusions of the research.
3. Not attempt explicitly or implicitly to influence the research, recommendations, or behavior of Analysts or otherwise pressure Analysts to produce research or recommendations favorable to the Corporate Issuer.
4. Ensure that the disclosures required of the analyst in Standard IV(A) are included in the research report, that are published or distributed, in whole or in part, by the Corporate Issuer
About AIMR:
AIMR is the global, non-profit professional association that administers the Chartered Financial Analyst® curriculum and examination program worldwide and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. AIMR has almost 70,000 members in 116 countries. Its membership includes the world’s more than 55,000 CFA charterholders, as well as 127 affiliated professional societies and chapters in 46 countries. AIMR is headquartered in Charlottesville, Va., with additional offices in London and Hong Kong. More information may be found at www.aimr.org or by calling 1-800-247-8132 or 1-434-951-5499.
About NIRI:
NIRI is the professional association of corporate officers and investor relations consultants responsible for communications among corporate management, shareholders, security analysts and other financial publics. NIRI's 4,700 members represent over 2,500 publicly held companies in the United States. As its mission states, "NIRI is dedicated to advancing the practice of investor relations and the professional competency and stature of its members."
How appropriate for post number 666
http://www.investorshub.com/boards/read_msg.asp?message_id=2616008
No wonder the Harken Investigation was muffled....
US Justice Department investigates Shell shortfall
WASHINGTON (AFP) - The US Justice Department (news - web sites) is investigating whether Anglo-Dutch oil giant Shell violated any laws by failing to disclose a significant shortfall in its reserves of oil and natural gas, The New York Times said.
The investigation, which a person involved in it told the daily was opened in recent days, follows similar probes launched by the Security and Exchange Commission and by Britain's Financial Services Authority, according to US and British press reports.
News of the Justice Department probe came as Shell prepared to shake up its global management structure following its decision to oust chairman Philip Watts, who took the blame for the firm's overestimation
Shell has this year been embroiled in controversy after admitting in January that it had overestimated its reserves of petrol and natural gas by more than a fifth -- 3.9 billion barrels.
The disclosure sent the firm's shares tumbling and forced the board to sack Watts and launch an internal review, and is now reported to be considering merging its Dutch and British management structures.
Watching and waiting for oil prices to plummet as dollar soars as a hedge against further fallout as oil industry scandals unfold
FBI pushes for broadband wiretap powers
ISPs, Net phone services would all have to rewire
By Ben Charny
Updated: 6:01 p.m. ET March 12, 2004A far-reaching proposal from the FBI, made public Friday, would require all broadband Internet providers, including cable modem and DSL companies, to rewire their networks to support easy wiretapping by police.
The FBI's request to the Federal Communications Commission aims to give police ready access to any form of Internet-based communications. If approved as drafted, the proposal could dramatically expand the scope of the agency's wiretap powers, raise costs for cable broadband companies and complicate Internet product development.
Legal experts said the 85-page filing includes language that could be interpreted as forcing companies to build backdoors into everything from instant messaging and voice over Internet Protocol (VoIP) programs to Microsoft's Xbox Live gaming service. The introduction of new services that did not support a back door for police would be outlawed, and companies would be given 15 months to make sure existing services comply.
"The importance and the urgency of this task cannot be overstated," says the proposal, which is also backed by the U.S. Department of Justice and the Drug Enforcement Administration.
"The ability of federal, state and local law enforcement to carry out critical electronic surveillance is being compromised today."
Because the eavesdropping scheme has the support of the Bush administration, the FCC is expected to take it very seriously. Last month, FCC Chairman Michael Powell stressed that "law enforcement access to IP-enabled communications is essential" and police must have "access to communications infrastructure they need to protect our nation."
The request from federal police comes almost a year after representatives from the FBI's Electronic Surveillance Technology Section approached the FCC and asked that broadband providers be required to provide more efficient, standardized surveillance facilities. Such new rules were necessary, the FBI argued, because terrorists could otherwise frustrate legitimate wiretaps by placing phone calls over the Internet.
"It is a very big deal and will be very costly for the Internet and the deployment of new technologies," said Stewart Baker, who represents Internet providers as a partner at the Steptoe and Johnson law firm. "Law enforcement is very serious about it. There is a lot of emotion behind this. They have stories that they're very convinced about in which they have not achieved access to communications and in which wiretaps have failed."
Broadband in the mix
Broadband providers say the FBI's request would, for the first time, force cable providers that sell broadband to come under the jurisdiction of 1994's Communications Assistance for Law Enforcement Act (CALEA), which further defined the already existing statutory obligations of telecommunications carriers to help police conduct electronic surveillance. Telephone companies that use their networks to sell broadband have already been following CALEA rules.
"For cable companies, it's all new," said Bellsouth spokesman Bill McCloskey.
Several cable providers, including Comcast Communications, Time Warner Cable and Cablevision had no immediate comment on the FBI's request.
The FBI proposal would also force Vonage, 8x8, AT&T and other prominent providers of broadband telephone services to comply with CALEA. Executives from these companies have said in the past that they all intend to comply with any request law enforcement makes, if technically possible.
Broadband phone service providers say they are already creating a code of conduct to cover some of the same issues addressed by the FBI, but on a voluntary basis, according to Jeff Pulver, founder of Free World Dialup.
"We have our chance right now to prove to law enforcement that we can do this on a voluntary basis," Pulver said. "If we mandate and make rules, it will just complicate things."
Under CALEA, police must still follow legal procedures when wiretapping Internet communications. Depending on the situation, such wiretaps do not always require court approval, in part because of changes to wiretapping laws made by the USA Patriot Act.
A Verizon representative said Friday that the company has already complied with at least one law enforcement request to tap a DSL line.
This week's proposal surprised privacy advocates by reaching beyond broadband providers to target companies that offer communications applications such as instant messaging clients.
"I don't think it's a reasonable claim," said Marc Rotenberg, director of the Electronic Privacy Information Center. "The FCC should seriously consider where the FBI believes its authority ... to regulate new technologies would end. What about Bluetooth and USB?"
Baker agrees that the FBI's proposal means that IP-based services such as chat programs and videoconferencing "that are 'switched' in any fashion would be treated as telephony."
If the FCC agrees, Baker said, "you would have to vet your designs with law enforcement before providing your service. There will be a queue. There will be politics involved. It would completely change the way services are introduced on the Internet."
As encryption becomes glued into more and more VoIP and instant messaging systems like PSST, X-IM and CryptIM, eavesdropping methods like the FBI's Carnivore system (also called DCS1000) become less useful. Both Free World Dialup's Pulver, and Niklas Zennstrom, founder of Skype, said last month that their services currently offer no easy wiretap route for police because VoIP calls travel along the Internet in tens of thousands of packets, each sometimes taking completely different routes.
Skype has become a hot-button in the debate by automatically encrypting all calls that take place through the peer-to-peer voice application.
The origins of this debate date back to when the FBI persuaded Congress to enact the controversial CALEA. Louis Freeh, FBI director at the time, testified in 1994 that emerging technologies such as call forwarding, call waiting and cellular phones had frustrated surveillance efforts.
Congress responded to the FBI's concern by requiring that telecommunications services rewire their networks to provide police with guaranteed access for wiretaps. Legislators also granted the FCC substantial leeway in defining what types of companies must comply. So far, the FCC has interpreted CALEA's wiretap-ready requirements to cover only traditional analog and wireless telephone service, leaving broadband and Internet applications in a regulatory gray area.
Under the FBI's proposal, Internet companies would bear "sole financial responsibility for development and implementation of CALEA solutions" but would be authorized to raise prices to cover their costs.
Copyright ©1995-2004 CNET Networks, Inc. All rights reserved.
http://www.msnbc.msn.com/id/4515410/
So what else is new? The SEC has been doing this with their advanced technology for years without any consent of the public.
This one's interesting, g!
It would seem that 'shareholder audits' could be quite lucrative and a natural addition to the services offered by stock promoters who work for the purported victim companies of height-challenged nudists.
But haven't US courts essentially ruled that companies have no standing to bring suit for short-selling abuses? Weren't the NUTK and GMXX lawsuits dismissed on that basis?
NanoSignal Corp. (OTCBB:NNOS) announced today that in advance of the newly enacted short selling rule adopted by the NASD (which goes into effect April 1, 2004), that its Board of Directors have engaged the services of Morrow & Co., Inc., 445 Park Avenue, 5th Floor, New York, NY with the mandate to conduct a forensic shareholder audit to determine the extent of naked short selling in NNOS. For more information on Morrow & Co., Inc. go to www.morrowco.com. This action was with the approval of the majority shareholders.
Scott A. Ervin, CEO stated, "management believes that there is a significant and growing naked short position in NNOS due to 'naked short selling' in both the United States and Canada. We have asked Morrow & Co., Inc. to provide us with ongoing stock surveillance to monitor short selling. We will take all remedial actions recommended to us to stop naked short selling."
Naked short selling occurs whereby short-sellers sell stock short without properly borrowing the stock first. The NASD amendment has been seen by some as a measure to stop "naked short-selling" that has resulted in unwarranted selling pressure on many stocks like NNOS. The complete text of the NASD Notice delaying the amendment until April 1, 2004 appears below.
"NASD Notice to Members 04-08
Effective Date of Amendments to NASD Rule 3370 (Affirmative Determination Requirements) Extended to April 1, 2004
Executive Summary
NASD is delaying the effective date of amendments to Rule 3370 (Prompt Receipt and Delivery of Securities -- the "Affirmative Determination" Rule) approved by the SEC in November 2003, until April 1, 2004. The amendments expand the scope of the affirmative determination requirements to include orders received from broker/dealers that are not members of NASD ("non-member broker/dealers"). The effective date of the amendments originally was February 20, 2004. NASD understands that some members need to make significant technological changes to their systems to comply with the new requirements; therefore, NASD is extending the effective date to provide members with additional time to make such changes.
Questions/Further Information
Questions concerning this Notice may be directed to Gary L. Goldsholle, Associate General Counsel, Regulatory Policy and Oversight, NASD, at 202-728-8104; or Patricia M. Albrecht, Assistant General Counsel, Regulatory Policy and Oversight, NASD, at 202-728-8026.
Discussion
As further detailed in Notice to Members 04-03, the SEC recently approved amendments to Rule 3370 to require that, prior to accepting a short sale order from a non-member broker/dealer, a member make an affirmative determination that the member will receive delivery of the security from the non-member broker/dealer or that the member can borrow the security on behalf of the non-member broker/dealer for delivery by the settlement date. In addition, the amendments provide exemptions for certain proprietary orders of a non-member broker/dealer if those proprietary orders meet the same conditions for exemptions applicable to proprietary orders of member firms, and the following two conditions are satisfied: (1) the non-member broker/dealer must be registered with the SEC; and (2) if using the market maker exemption, the non-member broker/dealer is registered or qualified as a market maker in the securities and is selling such securities in connection with bona fide market making.
As approved, the effective date of the amendments was February 20, 2004; however, NASD is delaying the effective date of these provisions until April 1, 2004. NASD understands that some members will need to make significant technological changes to their systems to comply with the new requirements. NASD believes that delaying the effective date of these amendments until April 1, 2004, will provide members the additional time necessary to make changes to their systems. Endnotes: 1 File No. SR-NASD-2001-85; SEC Release No. 34-48788 (Nov. 14, 2003); Rule, to go into effect on February 19, 2004, is delayed until April 1, 2004; 68 F.R. 65978 (Nov. 24, 2003); 2 See Notice to Members 04-03 (January 2004)."
The results of the forensic shareholder's audit will be posted on the Company's website for review by all shareholders and members of the public. The Company will take all appropriate actions following the audit based upon the recommendations of its experts.
Forward Looking Statement
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the lead-in "Looking Forward." These statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results may vary materially from those in the forward-looking statements as a result of the effectiveness of management's strategies and decisions, general economic and business conditions, new or modified statutory or regulatory requirements, and changing price and market conditions. No assurance can be given that these are all the factors that could cause actual results to vary materially from the forward-looking statements.
CONTACT:Princeton Research, Inc. J. Michael King, 702-650-3000 (Investor Relations)
SOURCE: NanoSignal Corp.
03/12/2004 00:54 EASTERN
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Regulatory Actions
This page provides links to releases concerning SEC rulemaking activity, including concept releases, proposed rules, final rules, interpretive releases, and policy statements. It also links to announcements concerning SRO rulemaking, PCAOB rulemaking, instructions for Exchange Act Exemptive Applications, other Commission notices, and public petitions for rulemaking submitted to the SEC. http://www.sec.gov/rules.shtml
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The Division of Enforcement investigates possible violations of securities laws, recommends Commission action when appropriate, either in a federal court or before an administrative law judge, and negotiates settlements http://www.sec.gov/divisions/enforce.shtml
Enforcement Actions #msg-17969541
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Recent Press Releases #msg-18794230
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What does it mean when an "E" is added to a stock's ticker (courtesy of Generic): #msg-31755048
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