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Hope you guys watched CBC news, they had a program on T.V. this Sunday stating that the Canadian Watchdog is a joke.
People who invested $2,000,000 lost all their investments because the people who are suppose to protect the investors are the same people that you are investing in.
This is for real!!!
Take a look
Also CBC is talking about the US watchdog compared to the Candian one and they stated that on the average the USA is cathing at least 10 times the number of crooks.
In the last couple of years Canada has convicted 2 people by the RCMP who are useless!!!!!!!!!! yes thats right
Compared to 1200 in the USA
If anyone can find the transcript of this broadcast it should be posted !
Don't invest in the Canadian stock market its a JOKE!!!
Did you know that David gets 7 times the salary of Mr. Cox ?
Did you know that the same people that work for the Watch dog are the same people that use to work for these huge investor firms, which means conflict of interest and how can you expect the watch dog to expedite the people they know as friends ?
Quite simple its undefined ;)
Just like the CMKX shares ha ha ha
They went poooof just like our money
Yes Citigroup...
Securities and Exchange CommissionComment regarding ntle l0B-21Mr. Christopher CoxDear Mr. Cox:Thank you for finally addressing the naked short selling issue in a public forum. It is avery needed regulation. The one thing that was missing however, was exactly how youintend to punish the offenders. You see, it is simply "" tle cost of doing business forthese thieves"" Until the SEC has ""teeth"" as you stated, and puts tlle criminals injail,instead of slapping their wrist, you will get no-where, and the investor community willcontinue to be destroyed, little by little.I say little by littte, as stated by your representative 1% daily are the FTD's. When youadd that to the number of trading days in a year, it totals over 400 Billion dollars. And,who put the money in who's pocket, and who escaped paying taxes.May I point out one case in particuiar. That of BMCS,Tech Medics. The CEO hasbeen deoosed numerous times by the SEC. Theis not under investigation, butthe insidels of the past are under investigation, and I amthat approximately 4 Millionhas barely been able to keepdollars has been spent by your office. In particular, thegoing, as Market Malers manipulate the stock on a dtVERT, HILL,NITE, areall in the mix. The NASD has been aware of illeealand the SEC knows this as well.issued,by the Transfer Agen!The CEO of BMCS has,testified to the SEC. andmaterial. In fact sir, is it not true that 5 differentincluding ilomeland Security. This has taken over twoI am told that several mencompanies, including CMKM Diamonds, CMKX. These same men, I am told, testifiedunder oath, that they were only involved with BMCS, but in fact they were not. Theywere deeply involved with CMKX. I saw this with my own eyes, as the cunent CEO ofCMKX showed me the trading records of the same men. These records showed trading,and transfers to many trusts of CMKX stock. Trusts, that I am sure your oiEce is awareof.My question is. When will enough be enough. How much evidence do you need. Whenwill the SEC step in and indict these men, and repay the {rauded shareholders ofthesetwo companies, as well as others that went through First plobal Transfer Agent. Afterall, a gigantic FTD exists with CMKX, and BMCS has p{oven to you without a shadowofa doubt, the manipulation, and SARS activity of the clmpany. Even today as youannounce l0B-21, BMCS reported 6 SARS trades . Yout]people have said this activity isbeing watched daily. I am a long time shareholder of both companies. I hold rnycertificates. And sir, it is not funny in the least that I am $300,000 down.FeTewsEP 17 2000
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The proprietary system that Market Makers built to handle trades over l0 million sharesis anotler loophole you have not addressed. ACT dqes qot report it to the BIG REPORT,and kicks it out. Jefties admitted it in a letter which I have a copy of, and also admittedI 1 1 Billion shares of CMKX, which were handled ex-clearing, but were not rcpofted tothe tape. Why have you allowed this unbelieveable munterfeit ttrding, Where is theenforcement. Sir, if Jefties admitted this, then can you funagine how many shares werehandled the same way by NITE, who traded well over 35% of the entire market volumein one little Diamond stock in ONE day. And, I am swe you know that NITE sold theirderivitives to CITIBANK. I am sure you know that NEVWEST SECURITIES soldBillions of illegal shares of CMKX through over 30 Trusts with one of these men incontrol.'Ihese men, who you have pictures of, and who you know of their location, shouldimmediately be bmught to justice. The stockholders in BMCS are a small group, butwith big hearts, the company has two products that worki and have a difinate market. TheCMKX group are a mighty force 40,000 at least, and wil| never go away. Whether largeor small, they should be treated with equality. BMCS shpuld have every illegal sharebought back in the market place. And the Market Maker$ made to cease and desist. Itmatters not what press release comes out, they pound it {own regardless. In spite ofbuying pressure at the asking price, the Market Makers l{wer the ask with no bidsshowing. And, CMKX, even fiough a revoked stock by $reir own choice, is still a publiccompany, and yourthese bonafied, certificated, battered shareholders, sit ant wait forjustice.I have the names of these men. and I am in the process of formulating a letter to go toevery Senator, and Congressman, so hopefrrlly something can be done so my children canhave America back. Disgorgement, and jailtime, for thes{ criminals is wananted.Subsequently,help by your offrce, to reorganize with leg{1 shares, or a federal cail to buyback all the illegal shares, is warranted. Or perhaps a faii firnds payment beforereorganization is warranted.These are FACTS sir. Not rumor or enuendo. Conduct your job for the American peoplein these two companies, and hundreds of others accordinfly. Ifthese are not t}te facts,then why did you spend the money and the time. It had ti: have your approval. Yourrepresentatives came to Dallas and checked out the comfany BMCS thoroughly. Theyknow the appraised value. It's time for ftansparency and vindication for the people whohave been stolen from, and lied to.Finally, Patrick Byrne, Senator Bennett, and many others are fighting this issue also asyou rue aware. It really is simple. If you steal, you go to jail. Isn't that right Mr. Cox.Would you expect a fine, for robbing a 7-1 1. Or would you expect jailtime. There is nodifference. Imigine that these two companies and others make up a town, or city. Yourjob is to police and keep the peace, abide by the law, or else. So far, your white chollarcrime protection answer is a slap on the wrist. Please step up, and do it now. Imigine thissir, A man works for Loewe's, today he sells $600,000 worth of hrmber, but he works
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Page 3
behind the register, and he failed to report $6,000 and gave it to his best friend, whodidn't even have to put up a deposit. Get the message. Good grief marL do yourjob.-,./-\
Did you try this one ? 703,000,000,000 / 0 = :)
Maybe if Citygroup came clean with regards to CMKX and cleaned house (fired people that deserve to go and pay CMKX shareholders for the mess they caused us) that would put some confidence into the people that still own that DOG !
http://cmkxtrek.blogspot.com/2008/11/cmkx-cmkm-diamonds-inc-citigroup-demise_22.html
Has anyone considered writing a How to for dummies book? "A guaranteed way to ROB for Millions of $$$ on Illegal stock trades and return a few dollars but not go to Jail !!! "
Sounds like a great deal! Don't you agree ?
You make Millions of dollars in Illegal Sales and in return you give back pocket change. I think we should all get in on it.
Fannie Mae Gets NYSE Delisting Notice
TSC Staff
11/18/08 - 05:41 PM EST
WASHINGTON -- Fannie Mae on Tuesday said it received notice from the New York Stock Exchange that its stock failed to satisfy price-related requirements, and may lose its listing on the exchange.
In a regulatory filing, Fannie Mae said the notice arrived Wednesday. The NYSE requires that the average closing price of a stock remain above $1 per share. Fannie Mae stock, which a year ago was trading as high as $40.45, closed at 47 cents Tuesday.
NICE :)))
Fannie says Daaaaa I think we should do something now ha ha ha
Acca is full of ... with the promise of info....
www.cmkm.info
Information Will Be Available On This Website November 15 Or Earlier.
If anyone feels like giving ACCA some words of advice...
He is full of it:
cmkm.info@domainsbyproxy.com
Domain ID:D24541401-LRMS
Domain Name:CMKM.INFO
Created On:21-Apr-2008 23:48:00 UTC
Last Updated On:21-Jun-2008 20:33:23 UTC
Expiration Date:21-Apr-2009 23:48:00 UTC
Sponsoring Registrar:GoDaddy.com Inc. (R171-LRMS)
Status:CLIENT DELETE PROHIBITED
Status:CLIENT RENEW PROHIBITED
Status:CLIENT TRANSFER PROHIBITED
Status:CLIENT UPDATE PROHIBITED
Registrant ID:GODA-046691004
Registrant Name:Registration Private
Registrant Organization:Domains by Proxy, Inc.
Registrant Street1:DomainsByProxy.com
Registrant Street2:15111 N. Hayden Rd., Ste 160, PMB 353
Registrant Street3:
Registrant City:Scottsdale
Registrant State/Province:Arizona
Registrant Postal Code:85260
Registrant Country:US
Registrant Phone:+1.4806242599
Registrant Phone Ext.:
Registrant FAX:+1.4806242598
Registrant FAX Ext.:
Registrant Email:
Admin ID:GODA-246691004
Admin Name:Registration Private
Admin Organization:Domains by Proxy, Inc.
Admin Street1:DomainsByProxy.com
Admin Street2:15111 N. Hayden Rd., Ste 160, PMB 353
Admin Street3:
Admin City:Scottsdale
Admin State/Province:Arizona
Admin Postal Code:85260
Admin Country:US
Admin Phone:+1.4806242599
Admin Phone Ext.:
Admin FAX:+1.4806242598
Admin FAX Ext.:
Lets remember that at some point even a dog will snap.
I certainly hope they are doing something legit, but only time will tell.
Maybe if people asked the new PRESIDENT of the USA to show some courage and look into the way CMKX has been handled and the corruption in the stock market perhaps this game would be put to a stop!
News !!!
According to sources this web site is supposed to be for share holders' reference when they "receive their packages."
we'll have to wait & see on that one...
http://www.cmkm.info/
I'll update you guys when I get more facts.
Bloomberg is listening !!!!!!!!!!!!!!!!!!!
« Thread Started Today at 3:00pm »
I thought this was worth a new thread. As I stated earlier I E mailed Christine Harper at Bloomberg news service about the Wallstreet execs. getting bonuses with the bailout money and got a call from Bob Avery at Bloomberg who interviewed me for over 45 mins. about the state of the US in general as well as the Wall Street mess. I mentioned that I owned a penny stock that was being called the most naked shorted stock in Wall Street history and Bob said, " You mean CMKM Diamonds?" So the word is out. Look for the story on Bloomberg later today or tomorrow. Make some noise people..We are in the right and need to be heard not be A HEARD. Haney KK.
SEC is Failing us Over and Over!!!
Check this out it proves UC has been doing this over and over, why is the SEC unable to track this. They are as useless as the tits on a bull!!! Sorry but its the truth.
The SEC's failure should have them all resign and a new entity should be set up that can track and control everything from a single point. Yes their failure is the failure of the Congress and funding bull is no excuse. Someone must pay UP!!!
Return our stolen MONEY because you have failed.
Just like a stolen car must be returned to their original owner.
http://www.pinksheets.com/otciq/ajax/showFinancialReportById.pdf?id=17953
Urban has been busy doing the same thing to multiple companies, but its the SEC that has failed to prevent this.
"The reverse stock splits were due to irregularities found in the audit of previous Corbel
Holdings shares and shareholders. The Company in conducting an audit of the
shareholders uncovered that there had been nearly 50 million common shares illegally
issued, stolen and/or forged certificates and/or common shares placed into the retail
market place without the prerequisite legal opinion releasing any restrictions on the
shares or qualifying exemption from registration of those shares. This alleged criminal
activity has caused the Company not to be able to become a Reporting Company until the
SEC and other regulatory agencies bring charges against those involved. Under the
Sarbanes-Oxley Act, the CEO of the Company must certify under oath and penalties of
perjury that the shareholder list complies with all regulations. At this time, this cannot be
done until the SEC and other regulatory agencies bring civil and criminal charges against
those who allegedly have broken the law and their shares are deleted from the
shareholder list. Note: neither the Company, nor any of the current officers and/or
directors have had anything to do with the prior previous management and ownership
irregularities. Also, the Company has not been informed that it is the subject of any
investigation. The Company officers have been noticed by the SEC that they may be
used as victim/witnesses for the SEC in their complaints against those who have
allegedly committed civil and criminal violations.
The two reverse splits effectively reduced the holdings of those nearly 50 million
common shares illegally issued, stolen, forged and/or placed into the retail market place
to 250,000 shares.
Since March, 2005, the Board of Directors on behalf of the shareholders of the Company
have filed over 36,000 pages of evidence with various regulatory agencies including but
not limited to the Securities & Exchange Commission-Enforcement Divisions, Fort
Worth, Texas, Los Angeles, CA and Washington, DC, FINCEN, FINRA (formerly
NASD) Washington, DC, the Texas Securities Commission, the Nevada Attorney
General, the U.S. Treasury Dept., the U.S. Dept of Justice, the Florida Banking
Commission with formal complaints regarding the nearly 50 million shares in question.
Each member of the board has given sworn testimony and/or had personal conversations
with members of the SEC Enforcement Division.
As a result of the Company’s filing of various formal complaints the Securities and
Exchange Commission brought a civil complaint in April, 2008 in the U.S. District
Court, Las Vegas, NV Case No. 2:08-cv-00437-LRH-RJJ, captioned SEC vs. CMKM
Diamond, Inc., URBAN CASAVANT, JOHN EDWARDS, GINGER GUTIERREZ,
AMES KINNEY, ANTHONY TOMASSO, KATHLEEN TOMASSO, 1ST GLOBAL
STOCK TRANSFER LLC, HELEN BAGLEY, NEVWEST SECURITIES
CORPORATION, DARYL ANDERSON, SERGEY RUMYANTSEV, ANTHONY
SANTOS, and BRIAN DVORAK. The CMKM shareholders directly involved in BMCS
are John Edwards, Anthony Tomasso, Kathleen Tomasso. Additional third parties are 1st"
Like I said Gold :)
Gold is where the money is right now.
Bob M----------- !!!
Lengthy tribute to BOB, this is only a fraction
The purchase helped reduce Hughes’ tax burden from interest income generated by selling his stock in Trans World Airlines for $546.5 million.
Hughes then ordered Maheu to find him more hotel-casinos to buy to further shelter his windfall. Soon after, Maheu bought for Hughes the Sands, the Castaways, the Frontier, the Silver Slipper and the Landmark.
When Hughes and Maheu were finished buying, Hughes’ Nevada empire was valued at $300 million and included nearly every vacant lot along the Las Vegas Strip and 25,000 acres of prime real estate where the Hughes-built Summerlin master-planned community is now.
In 1969 and 1970, years when Hughes was seeking federal approval for airline acquisitions, Maheu delivered two bundles of $50,000 each in cash to Charles G. “Bebe” Rebozo, a Nixon confidante, as a supposed campaign contribution.
Nixon was paranoid about being linked to any gift from Hughes because in 1956, Hughes made a controversial $205,000 loan to Nixon’s brother Donald. Details of the loan were leaked during the 1960 presidential campaign and Nixon believed it cost him the election to John F. Kennedy.
Watergate burglars attempted to break into Greenspun’s safe at the Sun offices to get the Maheu-Hughes memos about that gift. They damaged the safe’s door but never broke it open.
Nixon also was concerned that Maheu had told one of his former employees, then-Democratic National Committee Chairman Larry O’Brien, about the cash donations from Hughes. O’Brien’s Watergate office was broken into, but the burglars were caught.
Maheu’s other business dealings included lobbying on behalf of Hughes to conserve Southern Nevada’s precious water resources and stop nuclear weapons testing at the Nevada Test Site.
Twice Hughes sent Maheu to Washington with briefcases containing $1 million in cash to secure promises from President Lyndon B. Johnson and Nixon to end nuclear testing in Southern Nevada.
But as Hughes became a bedraggled hermit, a rift developed between Maheu and Hughes’ caregivers, who answered to Hughes Corp. executive Bill Gay, with whom Maheu did not always see eye to eye.
(Hughes’ caregivers and aides were nicknamed the “Mormon Mafia” because the majority were members of the Church of Jesus Christ of Latter-day Saints.)
Maheu was fired by Hughes Corp. in 1970 and started his own consulting business, Robert A. Maheu and Associates.
In November 1970, Hughes was taken in a van by his caregivers from the Desert Inn to Nellis Air Force Base, where they boarded a jet for the Bahamas. Hughes never returned to Las Vegas.
After Hughes left town, many of Hughes’ memos to Maheu wound up on the front page of the Sun, accompanied by definitive stories about the reclusive billionaire and his mysterious ways.
“In Bob’s darkest days following the Hughes shake-up he had one true friend — that was my father, Hank Greenspun,” Brian Greenspun said. “And Bob returned that friendship to my family for the rest of his life.”
Hughes died April 5, 1976, aboard a plane from Mexico to his hometown of Houston at age 70. Though the official cause was kidney failure, Maheu maintained till the end that Hughes died of neglect.
“My heart still bleeds for what happened to Howard Hughes,” Maheu said in 2004. “I often said after I got off the phone with him that I just finished talking to the poorest man in the world. He was so unhappy.”
Maheu’s remains will be cremated and his ashes will be interred alongside those of his wife, Eve, at the family plot in Waterville.
Other Maheu survivors include his son Robert Maheu of Newport Beach, Calif.; daughters-in-law Rosemary Maheu of Las Vegas and Jane Maheu of San Diego; 10 grandchildren and six great-grandchildren. He was preceded in death by his daughter Christine.
Sun reporter Mary Manning contributed to this report.
Yes UC and others are going to Squeel !
http://convert.neevia.com/prods/51c01715-5f9b-4859-93fa-157c00cf9c8c.cvn/CMKM%2520062%5B1%5D.pdf
Try this SEC Game LOL You'll love it!!!
http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/four-degrees-of-hank-paulson.aspx
Ha ha ha S U R E
Plus just because Overstock is being shorted heavily with fails doesn't mean the fails aren't covered within 5 days of the fails.
Buy GOLD to diversify your portfolio in this crazy mess.
If you think this is a good thing, think again !
Next year the prices of everything will double, tripple, or more...
either way you go its bad
Nothing more then a patch on a TIRE.
As for what is taking place with CMKX my source is good so keep your ears open and sooner than you realize it will be public information. Keep the faith.
It involves a certain stock we own, but its not CMKX... LOL
I wish I could share the insider information with you guys but things are looking good for CMKX.
There is a legal battle taking place right now, but outside the courts.
I don't want to mess this up for the shareholders but trust me we are winning !!!
Ask around and you'll see what I'm talking about.
CMKX To DA MOON.
Isn't it amazing that no one checks the Birth Certificate before people are allowed to apply for such a responsible position. Corruption and a JOKE if they have not checked that!
Maybe the bigger the clown the better it is ?
On Sept. 16, the Federal Reserve Board agreed to lend AIG $85 billion, using the company's assets as collateral. The loan is expected to be repaid from the proceeds of the asset sales. Interest on the line of credit is steep, and the government took a 79.9% stake in the company.
Unbelievable yet the same people who got AIG into this mess are allowed to continue to keep doing what they did.
I guess its only USA Government MONEY right ? lol
This one is better...
http://www.brasschecktv.com/page/187.html
AIG Executives Blow $440,000 After Getting Bailout
Maybe the problem is that people are not put in jail for using company money to have SPA treatments, etc.... I'm betting they were the VIP SPA treatments if you know what I mean. lol
Spoke to David Kotz this morning about:
« Thread Started Yesterday at 10:33pm »
--------------------------------------------------------------------------------
a myriad of concerns I/we have re: SEC action or lack thereof. Kotz articulated a
clear sense of concern about what was shared and stated that he would open up an
investigation immediately. Coincidentally, M. White p honed my office some two hours
later. We need to keep up the pressure on this front IMO.
JF~
Good morning Mr. Kotz,
Per our earlier discussion, I have provided you a few email (below) that will lend
some insight into the concerns I raised this morning. I have been following/involved
in this CMKM case for far too long and simply want justice served. Thank you for
taking the time to speak with me and do not hesitate to give me a ring should you
have any further questions.
Sincerely,
----- Original Message -----
Congressman Shays, (Chris)
I have hesitated to contact you for some time and have been working with Senator
Dodd due to the nature of my concern and his role as Chairman of the Senate Banking
Committee. At this juncture, I could surely use your help in highlighting a case of
grandiose fraud that has resulted in 50,000+ investors being bilke
d out of 1/4 of a billion dollars. This situation involves many of the very toxic
ingredients that have led to our markets current plight.
It would be greatly appreciated if you can lend some advice and/or forward my
concerns to the appropriate venue to allow for a review of the disturbing case of
fraud highlighted below. Traditionally, the Securities and Exchange Commission would
be such a place but as you read the information to follow you will understand that
they are part of the concern in the case I highlight. I and many other of my fellow
shareholders are miffed20as to why there has yet to be any hint of a criminal
investigation on any front and why S.E.C. officials worked so diligently to at first
sweep the matter under the rug then only to file a civil complaint that is most
narrow in it's scope. One specific concern stems from the fact that there is a
former lead S.E.C. Enforcement Division Attorney (Roger Glenn) who served as the
corporate lawyer for CMKM in 2004and signed off on opinion letters that led to 300+
billion restricted shares to become free trading. This former S.E.C. official is now
a partner in a well known firm has not been named in the S.E.C.'s civil complaint?
Current CMKM attorney David Koch provided the following in the most recent civil
complaint heard by Judge Denton in the District Court of Nevada. "In fact, Mr. Glenn
did nothing to help the company resolve its SEC problems. It has been discovered in
the last few weeks that Mr. Glenn actually wrote legal=2
0opinions authorizing billions of free trading stock and assisting the company to
increase its authorized shares from 500 billion to 800 billion shares. The only
information released to the public about Mr. Glenn was his hiring to help with SEC
reporting problems."
One other interesting note involving the CMKM case involves the former chairman of
their board of directors; his name was none other than former F.B.I. and C.I.A.
operative Robert Maheu.
I have provided four email that I sent to Senator Dodd and Senator Reid to provide
you a bit of background into=2 0my concerns.
Mr. Kotz said all of Mr. Aguirre’s supervisors had denied that his attempt to
question Mr. Mack was behind his dismissal, but the inspector general found
otherwise. “There was a connection between the20decision to terminate Aguirre and
his seeking to take Mack’s testimony,” the report stated.
After members of Congress criticized the S.E.C., the commission eventually took Mr.
Mack’s testimony — several days after the statute of limitations had passed. In
taking that testimony, Mr. Kotz said the commission “seems to have ‘gone through
the motions.’ ”
Can't belive the new CEO messed up already.
It seems like the News broadcast was not recorded.
Has anyone heard it last Friday ?
If yes could you summarize some of the main parts for us.
URL to all CMKX RADIO News is:
http://www.sunshinemall.com
CMKX Radio Station! Yeeeeeeeeeeeeees lol
http://toginet.net/podplayer/player.asp?podcast=CMKM Diamonds Radio
Mark will host a CEO Chat the first Friday of each month from 9-10AM Central Time, which will air live on Toginet.com. Mark will take questions for the second half of each show. The toll-free caller number is 1-877-864-4969. Click here to launch the CMKM Radio Player with the latest CEO Chat, and where earlier Chats can be accessed as well. Podcasts of each show will be added to the Player at midnight CST the day of the show.
A quick note to answer a couple of concerns from shareholders. In reference to information sent out by Bud Burrell, Bud was a middleman to put that info into the hands of certain officials in the hope that the CMKX situation will continue to receive the attention it deserves. In light of the national events of the last couple of weeks, it is crucial that our story be heard by the right people. Any official documents were sent directly to the person who requested them, but the information should never have been leaked publicly. Bud nor anyone else not directly involved in investigations has knowledge of any individual's or companies' names that are a focus of our investigations.
It would be beyond detrimental to our investigation to release any detailed information to anyone not directly involved in either researching or investigating potential claims that CMKM might take against those who defrauded the Company and its shareholders. There are two choices here, either release ALL information to shareholders to be publicly reposted on message boards and compromise our legal position, or do what is best for the Company. Given those choices, I will always take the course of action that is best for CMKM Diamonds, Inc., which in turn is ultimately what will best benefit the Company's shareholders.
On a separate note, I am currently in New York, and will be available only on a limited basis for the next few days. I have received numerous phone calls about recent events, and I apologize if I haven't had time to return some calls. Things are very hectic, and the Company is making excellent progress in its efforts, but this is a marathon, not a sprint. Please be patient with us as we concentrate our efforts on the task at hand.
The CEO Chat is still scheduled for 9-10 AM CST on Friday, October 3, 2008. Please send your comments and questions to questions@cmkmdiamondsinc.com and I will address them as best I can at that time.
Mark Faulk,
CEO
Best thing I've ever seen on the internet. ha ha ha
So true !
Bush tried his best ! I give him that much...
This is just the beginning of what is about to cause a domino effect and you can blame it all on the nucleheads running the show.
All I can say is buy buy buy G O L D LOL
My grandfather is a Judge and these are his words...
the biggest crooks in the world are your Bank and your local priest. I never understood that...
S.E.C. Concedes Oversight Flaws Fueled Collapse
By STEPHEN LABATON
Published: September 26, 2008
WASHINGTON — The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down.
http://www.nytimes.com/2008/09/27/business/27sec.html?_r=1&adxnnl=1&oref=slogin&partner=rssnyt&emc=rss&adxnnlx=1222693337-BOUq6W0XCmCISK7EQSIfgA
We are facing a full-scale meltdown of the financial system and liquidity is drying up. Imagine not being able to withdraw cash from the banks to buy food. This, in financial terms, is what’s happening. There is no way this bailout can’t happen.
Its unbelievable !!! The USA is about to have another 1929 crash if this doesn't go through !!!
By Louise Armitstead
Last Updated: 10:23PM BST 27 Sep 2008
It has already become an iconic moment. On Thursday, Henry 'Hank’ Paulson, the US Treasury Secretary and a man with a personal fortune estimated at $700m (£380m), bent down on one knee before the most powerful woman in Congress, Nancy Pelosi, and begged her to save his plan to rescue Wall Street.
It didn’t work. Ten days after America announced a $700bn bailout for its stricken banks, weary financiers on both sides of the Atlantic went home for the weekend convinced their futures were in the hands of a group of American politicians whose priority was an election in a month, not the markets on Monday.
President Bush repeatedly pleaded with Congress to back the deal. “This sucker could go down,” Bush told them, apparently referring to the teetering US economy.
Congressional staff worked until 2am on Saturday morning and resumed again at 7am in an attempt to reach an agreement on the bailout – which could be the most extensive peacetime state intervention in the financial system since the Great Depression – by the time the markets open in Asia tomorrow.
However, Congressmen were under intense pressure to reject the bailout, which would allow the US government to buy toxic housing-related investments from banks.
A source close to the meetings said: “American Congressmen are being lobbied by voters at a scale of nearly 100 to 1 to vote against this bailout. It could be politically lethal to be seen as the ones taking the side of Wall Street against the people.”
Not, screamed Wall Street, as dangerous as the impact on financial markets if it were not granted. Last week Warren Buffett, America’s richest man and most famous investor with a huge retail following, tried to impress the importance: “This is sort of an economic Pearl Harbor we’re going through. I’m sure we didn’t want to go to war in 1941. There are times when events force a timetable on you and force action. If they think about it for three weeks, it will be very different and more difficult.”
Bob Diamond, boss of Barclays Capital and new owner of Lehman Brothers in America, told The Sunday Telegraph: “The reality is that the world needs a functioning financial system and it’s up to everyone involved to make sure this happens.”
Another senior banker said: “I don’t think people realise how serious this is. We are facing a full-scale meltdown of the financial system and liquidity is drying up. Imagine not being able to withdraw cash from the banks to buy food. This, in financial terms, is what’s happening. There is no way this bailout can’t happen. It’s about confidence and the blow would be huge.”
Bankers pointed to the events of last week as proof. While the markets had soared last Friday on news of the bailout, within days the uncertainty surrounding it had again unleashed fresh fear into the markets.
Overnight last Sunday, Morgan Stanley and Goldman Sachs were converted from independent to ordinary regulated banks, adding shocking emphasis to the depth of the crisis: Wall Street as it had long been known ceased to exist.
Then as politicians wrangled, the interbank lending market froze.
On Thursday, regulators seized control of Washington Mutual, making it the biggest banking failure in US history. Then shares in Wachovia, the fourth largest bank in the US, fell 27 per cent on Friday. In the panic, fresh doubts were poured on the future of Morgan Stanley as its credit default swap rate widened dramatically, a sign of extreme distress.
By now all eyes were fixed on the bailout as the market’s only hope.
Yet this weekend, City pessimists argued that Paulson’s plan might not work, even if it does get through Congress. They said confidence in the banks was shattered beyond repair when Paulson let Lehman Brothers fail and that no amount of US taxpayer money set aside to buy toxic assets from banks will get banks to start lending to one another again. Neither will it get investors to start buying bank shares again.
Instead, they argued, investors and banks themselves will keep scouting for – and steering clear of – institutions perceived to be the weakest links in the financial system. This self-fulfilling process could well lead to a 1930s-style domino effect of failing banks.
“I think Paulson has gone for the wrong model,” a senior London banker said on Friday. “The model he chose was the one used to bail out bankrupt US building societies in the 1980s. The model he should have chosen was used to inject government funds directly into banks in the 1930s.”
Others argued, the panic was being overblown by self-important bankers who ought to take responsibility for their own mistakes during what Gordon Brown has condemned as the “age of irresponsibility”. They pointed to the fact that plenty of banks have managed the downturn perfectly well and are now in a position of strength.
Barclays, which made write-downs early in the crisis, has bought Lehman Brothers’ US operations from administration in a move that propelled the British bank up the table of global powerhouses.
This weekend, Diamond said: “All banks have assets they’d prefer not to have on their balance sheets. If you’d asked me a month ago if we were going to buy an investment bank, the answer would be very, very unlikely. This unique opportunity came very quickly. Opportunities only come along in crises.”
Similarly, Deutsche Bank has quietly made four acquisitions over the summer.
But even the strong banks recognised the importance of the US bailout to the wider economy.
Michael Cohrs, head of global banking at Deutsche Bank said: “Our losses, while modest are not acceptable. But we continuing to work hard to ensure we are in the best shape to cope with this crisis. Ensuring stability in the US markets is important for us all. The bailout will not solve the problems but if doesn’t happen it will be yet another negative. There’s a psychology to a crisis and more bad news compounds the problems.”
Last week was meant to be a fresh start. After the collapse of Lehman, the fire sale of Merrill Lynch and HBOS and the nationalisation of AIG, news of the Fed’s planned bailout announced on Thursday was supposed to be the bottom line. On Friday soaring markets reflected a new optimism in the financial system .
Instead, on Monday morning, the two last remaining investment banks, Morgan Stanley and Goldman Sachs, admitted they had been forced to seek humbling rescue measures too.
The most prestigious titans of finance had relinquished their independent status and became standard, regulated banks. Wall Street as it has long been known ceased to exist.
Morgan Stanley then rapidly announced talks to sell a stake to Mitsubishi UFJ Financial while it emerged that Warren Buffett had bought a stake in Goldman on very favourable terms.
One rival said: “The real shock was Goldman. If Goldman were in trouble, we all were.”
It was a reality Goldman’s chief executive Lloyd Blankfein had been fighting for nearly two weeks.
On Friday, September 12 Blankfein joined 30 other bosses for a crisis meeting called by the Fed in New York. They had been told that Lehman was in big trouble and would probably collapse if a buyer could not be found .
Blankfein was considered a leader of the pack, not just because he was the boss of Wall Street’s smartest bank, but he was old chums with the chairmen of the meeting, Paulson, from the US Treasurer’s Goldman days.
He was also on the 'strong side’ of the room – among those considered to have best withstood the financial maelstrom of the past year .
While Bear Stearns went bust and others haemorrhaged unprecedented losses, Goldman adopted the lofty role of adviser and stabiliser.
Yet it was in this meeting that a new reality was realised. The dire problems of Lehman, AIG and Merrill made it clear that this was no longer about weak or strong institutions but about a huge crisis of confidence from which none of them were safe.
One Goldman insider said: “In days after that meeting the atmosphere in the bank changed very quickly from the normal bravado to horror. The worst part was when our share price hit 80p. It was truly frightening.”
More threatening for the bank’s senior management was the distinct possibility that credit rating agencies would downgrade Goldman. The move would mean the cost of borrowing money would soar, putting severe pressure on the lifeblood of the bank.
Arch-rival Morgan Stanley was similarly panicked and abandoned all pretence, loudly searching for a buyer or an investor.
In the middle of the mayhem, Blankfein turned to Buffett, the one man in America who commanded both capital and, more importantly, confidence.
Initially, Buffett said he wasn’t interested. For six months he had rejected similar pleas for help from a raft of other embattled financial institutions, starting with Bear Stearns in March. But on Tuesday last week, his position changed. Just before lunch, Buffett said he was sitting with his feet on his desk in Omaha sipping a Cherry Coke and nibbling at some mixed nuts when he received a desperate call from Byron Trott, head of Goldman in Chicago and charged by Blankfein to secure a deal.
Blankfein knew Buffett – sources say the pair had been introduced by Paulson. But Buffett was close to Trott, whom he had once described in an investment letter as a “rare investment banker who puts himself in his client’s shoes . . . I trust him completely”.
In this phone call Trott simply asked Buffett to name the terms under which he would invest in Goldman and the bank would try to hammer out a deal. Hours later, Buffett’s Berkshire Hathaway had pledged to invest $5bn in Goldman. He also received the right to buy $5bn worth of Goldman shares at $115 per share.
Later Buffett said: “The price was right, the people were right, the terms were right and I decided to write a cheque.” He joked he had lots of cash which had to be spent. “Otherwise, it’s a bit like saving up sex for your old age – at some point you’ve got to use it.”
Within hours, the 'Buffett effect’ had sent Goldman shares soaring and netted him millions of dollars in paper profit.
But it was clear that Buffett recognised the situation was bigger than a single deal or a single bank. The next day he went on CNBC, the American cable channel, to stress the importance of the proposed bailout, and said the financial system was in grave danger and could take “years and years to repair”.
Although America listened to its most admired investor, he still failed to satisfy their increasingly angry question: why?
The financial system was structured after the 1929 Wall Street Crash and in the light of the Great Depression that followed.
Beforehand the banks had been run as an old boys’ club: when problems arose, the weakest institutions were helped along by the strongest, mostly to save their collective good names.
As the Great Depression set in, greedy bankers were blamed for taking too much risk and jeopardising the world economy.
Even so it was accepted that investment banking played a crucial role in the economy .
Peter Hahn of CASS business school said: “Investment banks were, as they are now, crucial for facilitating business and disseminating wealth. As security traders they allow company owners to sell part of their shares, freeing up money to spend and invest while allowing other to share in the growth of their company. To this day, countries with no securities system often have a big concentration of wealth in a few families – in the Middle East, for instance.”
Even so the US government decided the system needed to be properly controlled .
The Securities Act of 1933 brought standardisation to the securities industry, in particular disclosure to the equity and bonds markets, while the SEC was created as the watchdog. In addition, the Glass-Steagall Act divided firms into commercial banks, who took deposits and offered loans to companies, and securities firms that traded on the markets and kept their risks entirely separate from retail savers.
As such, firms such as Goldman Sachs were not really banks but securities dealers.
Hahn said: “In return for the privilege of being able to raise deposits from the public, the banks were heavily regulated and as such grew with a reputation of prudence, safety, watched by the strongest government institutions. The securities banks with their higher risks were kept away from savings.”
But in the following decades and with the onset of globalisation, the burgeoning financial system began to outgrow this structure.
The UK, for instance, had developed in a broadly two-tier sense. The merchant banks, such as Barings, Schroders, Hambros, were small but offered everything from deposits to securities trading to the rich while the clearing banks developed for mass savings.
American securities banks were quick to see the advantage of the more integrated and efficient rules in London.
Hahn said after Big Bang, the integrated system in London allowed for far greater competition and securities trading was “far more efficient and cheaper than New York”.
In 1990 the Rule 144A was passed to introduce competition into securities market and started the erosion of the Glass-Steagall Act by allowing institutional trading of unlisted and unregistered securities. The next big landmark was 1998 – Travellers Group bought Citicorp to add to Salomon Brothers creating an integrated bank which swept away the separation.
By now American regulators were more interested in formulating international banking rules being drawn up in Basel.
But when these rules were introduced, they were aimed at retail banks leaving the burgeoning investment banks to grow relatively unchecked. One expert said: “The only real monitors were credit rating agencies, dominated by Moody’s and Standard & Poor. These were ill-equipped to understand the radically changing products.”
Another oversight was the US insurance market where there has never been a national regulator only state ones.
One insurance expert said: “Essentially insurance went unchecked by professionals. It all worked fine for small players. But huge firms like AIG were becoming international. How was the New York State insurance guy supposed to understand a credit default instrument sold in London?”
Last week experts said that, in hindsight, the lax rules allowed the financial system to completely reinvent itself given a strong enough catalyst. This came in the form of the telecoms and media boom at the turn of the millennium.
A senior London banker said: “During the tech bubble the value of securities was rising so fast that it no longer became good enough for investment banks to just trade on behalf of clients, they wanted to own the securities too. Margins were particularly small in the debt markets – you could do a £10bn eurobond trade for BT and take away a tiny margin. Banks bought debt but also started creating more complicated financial instruments and derivatives that became part of financing. Hybrid capital was born and the 'off-balance sheet vehicles’ were designed to hold the risk.”
The risk systems at the credit rating agencies were not sophisticated enough to keep up and, despite their complexity, many were given AAA ratings. As well as the bank, insurance companies, which were searching for yield enhancing products to match their increasingly liabilities due in part to the ageing population, started lapping them up.
Experts argue that it was at this time that renumeration policies also started encouraging huge risk appetites at the banks.
Peter Hahn : “Bank bosses have been incentivised like tech bosses. If you’re a shareholder in Intel, you want the management to pull all the stops into developing the next chip because if they don’t and Samsung produces a better chip which captures the market, Intel could be bust. If it does go bust, it doesn’t effect anyone else.
“The difference with a bank is a boss can say: 'you want me to make more profits? No problem, I can just go out and buy more risk and deal with the problems later’.” One top UK investor agrees: “At RBS, Fred Goodwin was paid a bonus for doing the ABN deal. Actually, the board should have said, by doing the deal you have radically increased the risk profile of the bank, you’ll get the bonus when the acquisition has proved itself. The pay structure has rewarded risk taking rather than solid, tangible success.”
The hubris reached its zenith with the development of sub-prime mortgages in the US. The ease of originating loans was matched by a hunger to take them on and package them within the banks. Cheap credit flooded the markets and was eagerly taken up by the soaring ambitions of corporates, private equity firms and hedge funds.
One banker said: “The cycle was bound to turn eventually but since it did last summer, it’s the structural problems that have proved to be the real danger.”
Every day for the past two weeks, bosses at the investment banks in London and New York have been meeting to discuss the future of their businesses.
One said: “Large parts of the system are simply gone. Today the wholesale funding market is broken. Securitisation is shut, the bond markets are difficult and costly and other creditors are unreliable.”
Without the funding, the independent investment banks who relied on it must find another source. It is expected that Goldman and Morgan Stanley will buy big retail banks in the US to secure a deposit base.
A far higher level of regulation also seems likely, both from central banks and legislators.
One banker said: “We must accept large-scale intervention. The ban on short-selling is just an example. Perfectly ordinary practices will be banned or regulated into expediency until the system is back to health. This will hit banks, hedge funds, private equity firms and then have a knock-on effect on accountants and lawyers.
“We’re entering a whole new world. The question is, when it is safe to start building it?”
Who said what about the financial meltdown
US Treasury Secretary Hank Paulson on why the $700bn bailout package must be passed: “We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial wellbeing, the viability of businesses both small and large, and the very health of our economy.”
Federal Reserve chairman Ben Bernanke: “Action by Congress is urgently required to stabilise the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy.”
George W Bush : “Our entire economy is in danger.”
Democratic Congressman Mike McNulty on the rush to approve the bailout fund: “We have been told repeatedly by this administration that the economy is fundamentally sound and then, all of a sudden, they say the economy is going to collapse. That is unacceptable.”
Warren Buffett, after investment in Goldman Sachs: “You can’t keep money around for ever. It’s like saving sex for your old age.”
Dominique Strauss-Kahn, head of the IMF: “The consequences for some financial institutions are still in front of us.”
Brokers are in Deeeeeeeeeeeeeeeeeeeep !!!! LOL
Corporate Updates
9-25-08
Update on Questionable Brokerage and Clearing Firm Activity
CMKM Diamonds, Inc. has received letters from a broker requesting that larger CMKX certificates be broken down into several smaller certs. The written request contained the notation "FOR FAILS PHY". The broker confirmed that the request was to cover a fails to deliver in the stock.
In a separate incident, one major brokerage firm requested the transfer of a bulk certificate from another major brokerage firm. This request was dated June 29, 2008, over two and a half years after the Company was delisted and no longer trading.
The Company also has in its possession a letter where a clearing firm discusses the cost effectiveness of obtaining stock so that they could issue certificates to their clients, saying "Given the price of the stock, it may be more reasonable for us to go out and buy the shares to cover the short." This letter is dated almost two years after the Company was delisted and its shares no longer trading.
In a CMKM Diamonds press release dated April 20, 2007, it was confirmed that the Company "halted the transfer of a large bulk certificate to a major brokerage from a third party". The Company is continuing its investigation of this and other questionable brokerage activity.
Mark Faulk,
CEO
http://www.cmkmdiamondsinc.com/corp_...
Not unless there is better enforcement and I think the SEC is finally realizing its failure and is tightening thing up.
Yes Janice they are LOL
" he claimed he didn't actually know how many fails there was. OOOOPS
Then they convinced everyone to pull their certs costing shareholders even more "
If you think thats something wait till the new CEO gets warmed up. In case you don't know they are in the process of shooting a documentary that will be aired on T.V.!
Who knows maybe 60 minutes will show it.
He can sell ice to an eskimo :)
Sorry to break this to you pantherj but you have no idea how public CMKX is going to get. So yes it is going to be trouble with a capital " T ".
One thing that we all know the new CEO for is media attention!
Think about it.
This is just the beginning !!! Watch as others begin to come forward...
Pay attention to how the four brokers mentioned were some of the biggest shorters/parents of subsidiaries of the biggest shorters involved in cmkx.
Ooops did I say CMKX yes !!! Yes LOL
This Pinky is going to be bad NEWS with a capital T !
Testimony Concerning Turmoil in U.S. Credit Markets: Recent Actions Regarding Government Sponsored Entities, Investment Banks and Other Financial Institutions
by Chairman Christopher Cox
U.S. Securities and Exchange Commission
Before the Committee on Banking, Housing, and Urban Affairs, United States Senate
September 23, 2008
Chairman Dodd, Ranking Member Shelby, and Members of the Committee, thank you for inviting me here today to discuss the turmoil in the U.S. credit markets and the efforts of the Securities and Exchange Commission, in concert with the Department of the Treasury, the Federal Reserve, and other regulators to protect investors and our markets. I should say at the outset that my testimony is on my own behalf as Chairman of the SEC, and does not necessarily represent the views of the Commission or individual Commissioners.
Last week, by unanimous decision of the Commission and with the support of the Secretary of the Treasury and the Federal Reserve, the SEC took temporary emergency action to ban short selling in financial securities. We took this action in close coordination with regulators around the world. At the same time, the Commission unanimously approved two additional measures to ease the crisis of confidence in the markets that threatened the viability of all financial firms, and which potentially threatened the ability of our markets to function in a fair and orderly manner. The first makes it easier for issuers to repurchase their own shares on the open market, which provides an important source of liquidity in times of market volatility. The second requires weekly reporting to the SEC by hedge funds and other large investment managers of their daily short positions — just as long positions are currently reported quarterly on Form 13F.
All of these actions relying upon the Commission's Emergency Authority under Section 12(k) of the Securities Exchange Act remain in effect until October 2, and are intended to stabilize the markets until the legislation you are crafting becomes law and takes effect.
The Commission's recent actions followed on the heels of new market-wide SEC rules that more strictly enforce the ban on abusive naked short selling contained in Regulation SHO. These new rules require a hard T+3 close-out; they eliminate the options market maker exception in Regulation SHO; and they have put in place a new anti-fraud rule expressly targeting fraudulent activity in short-selling transactions.
First and foremost, the SEC is a law enforcement agency, and we have devoted an extraordinary level of enforcement resources to hold accountable those whose violations of the law have contributed to the subprime crisis and the loss of confidence in our markets. We have over 50 pending law enforcement investigations in the subprime area. Our Office of Compliance Inspections and Examinations has initiated examinations of the effectiveness of broker-dealers' controls to prevent the spread of false information intended to manipulate securities prices. The Division of Enforcement has undertaken a sweeping investigation into market manipulation of financial institutions, focused on broker-dealers and institutional investors with significant trading activity in financial issuers and with positions in credit default swaps. The reason for this aggressive enforcement investigation is the significant opportunities that exist for manipulation in the $58 trillion CDS market, which is completely lacking in transparency and completely unregulated.
Our subprime enforcement efforts fall primarily into three broad categories: first, subprime lenders; second, investment banks, credit rating agencies, insurers and others involved in the securitization process; and third, banks and broker-dealers who sold mortgage-backed investments to the public.
We are investigating whether mortgage lenders properly accounted for the loans in their portfolios, and whether they established appropriate loan loss reserves. In connection with the sale of mortgage-backed securities and collateralized debt obligations, we are investigating the role of the various parties involved in the securitization process. Among other things, we are focused on whether lenders adequately disclosed the risk profiles of underlying loans, whether they valued their portfolios appropriately, and whether they made adequate risk disclosures to investors. We are also investigating whether investment banks and broker-dealers defrauded retail customers by making false representations, or by putting investors into unsuitable mortgage-backed investments.
Last month, the Enforcement Division, working with state regulators from around the country, entered into agreements that when finalized will be the largest settlements in the history of the SEC, in behalf of investors who bought auction rate securities from Merrill Lynch, Wachovia, UBS and Citigroup. The terms of these agreements would provide complete recovery for individual investors. Our Enforcement Division is continuing to investigate other firms.
Recently the Commission brought enforcement actions against two portfolio managers of Bear Stearns Asset Management, whose hedge funds collapsed in June of last year. We allege that they deceived their investors and institutional counterparties about the financial state of the hedge funds, and in particular the hedge funds' over-exposure to subprime mortgage-backed securities. The collapse of the funds caused investor losses of over $1.8 billion.
The Commission is likewise using our regulatory authority to ensure that the market continues to function in a fair and orderly manner. Last week, the Commission's Office of Chief Accountant provided guidance to clarify the accounting treatment of banks' efforts to support their money market mutual funds. The guidance clarified how banks should treat, for purposes of their balance sheets, the financial support they provide to money market funds within the same financial services complex. This will help assure banks that assistance to money market funds does not automatically trigger adverse accounting results. Clarity on this subject is important to protect investors in money market funds.
In the past week, the SEC, working with the Federal Reserve, oversaw the sale of substantially all of the assets of Lehman Brothers, Inc., to Barclays Capital. This quick result, following the Lehman bankruptcy, has brought immediate and significant benefits to Lehman's brokerage customers and the capital markets. The hundreds of thousands of Lehman's customer accounts can now be transferred, instead of going through a lengthy brokerage liquidation process that could take weeks and impair customer access to cash and securities. The transfer of most retail accounts, which hold over one hundred billion dollars in assets, is expected to be completed within days.
The problems that each of these actions has addressed have their roots in the subprime mortgage crisis — which itself was caused by a failure of lending standards. The most recent dislocations have included the taxpayer rescues of Fannie Mae, Freddie Mac, and AIG, as well as the failure of Lehman Brothers and IndyMac. Financial institutions in every regulated sector have been damaged, and every one of those investment banks, traditional banks, and thrifts has been vulnerable to the effects of this toxic mortgage contagion.
The SEC's own program of voluntary supervision for investment bank holding companies, the Consolidated Supervised Entity program, was put in place by the Commission in 2004. It borrowed capital and liquidity measurement approaches from the commercial banking world — with unfortunate results similar to those experienced in the commercial bank sector. Within this framework, prior to the spring of 2008, neither commercial bank nor investment bank risk models contemplated the scenario of total mortgage market meltdown that gave rise to, for example, the failure of Fannie Mae and Freddie Mac, as well as IndyMac and 11 other banks and thrifts this year.
The creators of the Consolidated Supervised Entity program in 2004 had designed it to operate on the well-established bank holding company model used by regulators not only in the United States but around the globe. They decided that the CSE rules would permit the parent holding company to calculate its capital adequacy using an approach consistent with either of the Basel standards, adopted by the Basel Committee on Banking Supervision. But the market-wide failure to appreciate and measure the risk of mortgage-related assets, including structured credit products, has shown that neither the Basel I nor Basel II standards as then in force were adequate. Each had serious need of improvement.
As a result, since March 2008, the SEC and other groups in which we participate have focused on improving standards for capital, liquidity, and risk management in both commercial and investment banking. Following the sale of Bear Stearns, groups such as the Senior Supervisors Group, the Financial Stability Forum, the International Organization of Securities Commissions, and the Basel Committee all pointed to the need to strengthen and improve these standards.
In the meantime, beginning immediately in the wake of the Bear Stearns sale to JPMorgan Chase, the Division of Trading and Markets, working with the Federal Reserve, implemented substantially more rigorous approaches to supervision of liquidity levels and liquidity risk management. They have developed scenarios that are of much shorter duration and that are much more severe, including denial of access to secured as well as unsecured funding. Those more stringent scenarios assume no access to the Fed's discount window or other liquidity facilities, although in fact such facilities are now available to the major investment banks. As a matter of prudence, investment banks are urged to maintain capital and liquidity at levels far above what would be required under the standards themselves.
But beyond highlighting the inadequacy of the pre-Bear Stearns CSE program capital and liquidity requirements, the last six months — during which the SEC and the Federal Reserve have worked collaboratively with each of the CSE firms pursuant to our Memorandum of Understanding — have made abundantly clear that voluntary regulation doesn't work. There is simply no provision in the law that authorizes the CSE program, or requires investment bank holding companies to compute capital measures or to maintain liquidity on a consolidated basis, or to submit to SEC requirements regarding leverage. This is a fundamental flaw in the statutory scheme that must be addressed, as I have reported to the Congress on prior occasions.
Because the SEC's direct statutory authority did not extend beyond the registered broker dealer to the rest of the enterprise, the CSE program was purely voluntary — something an investment banking conglomerate could choose to do, or not, as it saw fit. With each of the remaining major investment banks now constituted within a bank holding company, it remains for the Congress to codify or amend as you see fit the Memorandum of Understanding between the SEC and the Federal Reserve, so that functional regulation can work.
The failure of the Gramm-Leach-Bliley Act to give regulatory authority over investment bank holding companies to any agency of government was, based on the experience of the last several months, a costly mistake. There is another similar regulatory hole that must be immediately addressed to avoid similar consequences. The $58 trillion notional market in credit default swaps — double the amount outstanding in 2006 — is regulated by no one. Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market. This is an area that our Enforcement Division is focused on using our antifraud authority, even though swaps are not defined as securities, because of concerns that CDS offer outsized incentives to market participants to see an issuer referenced in a CDS default or experience another credit event.
Economically, a CDS buyer is tantamount to a short seller of the bond underlying the CDS. Whereas a person who owns a bond profits when its issuer is in a position to repay the bond, a short seller profits when, among other things, the bond goes into default. Importantly, CDS buyers do not have to own the bond or other debt instrument upon which a CDS contract is based. This means CDS buyers can "naked short" the debt of companies without restriction. This potential for unfettered naked shorting and the lack of regulation in this market are cause for great concern. As the Congress considers fundamental reform of the financial system, I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets.
Mr. Chairman, I appreciate this opportunity to discuss the current market turmoil, the policy choices that Congress now faces, and the SEC's actions to maintain orderly markets and protect investors in this crisis.
http://www.sec.gov/news/testimony/2008/ts092308cc.htm