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North American Energy Summit
features leaders from three countries;
Results-oriented agenda draws diverse interests
FOR IMMEDIATE RELEASE
March 3, 2004
Contacts: Karen Deike or Kevin Riordan (303) 623-9378
Denver -- The North American Energy Summit to be held April 14 – 16 in Albuquerque, N.M. will feature state, provincial, tribal and national leaders from three countries and involve diverse interests in seeking to develop a secure, affordable and environmentally responsible energy system.
Organizing the event is the Western Governors’ Association, under the leadership of New Mexico Gov. Bill Richardson, WGA Chairman, and Colorado Gov. Bill Owens, WGA Vice Chairman. Co-sponsors include the U.S. Department of Energy and Council of Energy Resource Tribes. Public Service Company of New Mexico (PNM) is chairing the host committee and the William and Flora Hewlett Foundation is also providing support.
“This will be a results-driven Summit,” said Richardson, WGA Chairman. “Key leaders from the U.S., Canada and Mexico will offer their perspectives on the challenges we face in developing a reliable energy system that protects our environment and is affordable for citizens and businesses. We expect hundreds of Summit participants to roll up their sleeves, work out their differences and make doable recommendations to meet those challenges head on.”
Gov. Owens said, “Our counterparts in Canada and Mexico are as interested as we are in developing integrated, robust energy systems. Our efforts at the Summit should lead to actions that will benefit our citizens, our economies, our energy industries and our environment. I look forward to the discussions and to moving forward on this important initiative.”
Governors and premiers expected to attend and invited speakers include:
Govs. Richardson, Owens, Janet Napolitano (Ariz.), Frank Murkowski (Alaska), Dave Freudenthal (Wyo.), John Hoeven (N.D.), and Mike Rounds (S.D.)
Sen. Pete Domenici, N.M., Chairman of the U.S. Senate Energy and Natural Resources Committee; and Sen. Jeff Bingaman, Ranking Minority Member of the energy committee (invited);
Kyle E. McSlarrow, Deputy Secretary, U.S. Department of Energy;
Canadian Premiers Ralph Klein, Alberta; Gary Doer, Manitoba; and Joseph L. Handley, Northwest Territories;
Chris Devers, Pauma Band of Mission Indians and Chair, Council of Energy Resource Tribes;
Mexican Governor Enrique Martínez of Coahuila (invited);
John Efford, Minister of Natural Resources Canada (invited);
Felipe Calderón Hinojosa, Secretaría de Energía de Mexico (invited);
Patrick Wood, Chairman, Federal Energy Regulatory Commission;
Mario Molina, Nobel Laureate for his work in atmospheric chemistry; Professor, Massachusetts Institute of Technology; and
Jeff Sterba, Chairman and CEO, Public Service Company of New Mexico.
Summit attendees participating in breakout sessions will offer recommendations and action items on the following topics: capitalizing on renewable energy resources; improving energy efficiency; determining the future of nuclear energy and fossil fuels; providing a reliable and efficient electricity grid; financing infrastructure and making it more secure; and achieving needed international collaboration.
Also on tap for the Summit is the Energy Futures Expo, which will feature cutting-edge technologies, systems and alternative-fuel vehicles that are advancing efforts to achieve a secure and affordable energy future. The Expo will be open to the public, educators and children at specific times during the Summit.
Registered attendees may also attend Pre-Summit activities, including a workshop entitled, Financing the Future of Energy, co-sponsored by Nth Power and Wilson Sonsini Goodrich and Rosati. Gov. Richardson and Nancy Floyd, Managing Director of Nth Power, will deliver keynote addresses. Workshop attendees will participate in separate discussion groups to formulate actionable recommendations for promoting venture capital investment in clean energy companies and clean energy project finance.
Pre-Summit tours are also being offered. They include: solar facilities at Sandia National Laboratories; the Lee Ranch coal mine and the Escalante coal-fired power plant; the New Mexico Wind Energy Center; and a combined trip to Santa Fe and the world-class archaeological site at Bandelier National Monument.
The Summit is expected to be well attended and interested individuals should register by early March to ensure their participation and hotel accommodations. The Summit agenda, a list of panelists for each breakout session, and online registration for the Summit and Pre-Summit events can be found on the Web at www.westgov.org.
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The Western Governors' Association is an independent, nonprofit organization representing the governors of 18 states and three U.S.-flag islands in the Pacific. Through their Association, the governors identify and address key policy and governance issues in natural resources, the environment, human services, economic development, international relations and public management.
NASD Restates The Obvious
By Bill Singer - Contributing Columnist
The NASDs recent announcement of heightened broker supervision is based on a critical study whose own statistics speak for themselves.
September 8, 2003 - The National Association of Securities Dealers, Inc. ("NASD"), a self-regulatory organization ("SRO") charged with monitoring Wall Street, recently issued a press release announcing that "NASD Proposes Heightened Supervision for Brokers with a History of Customer Complaints, Investigations or Regulatory Actions." Essentially, the NASD's seeks to require
Securities firms to adopt heightened supervision plans for registered brokers who, within the last five years, have had
three or more customer complaints and arbitrations,
three or more regulatory actions or investigations, or
two or more terminations or internal firm reviews involving wrongdoing. Supervisors to approve the plan in writing and acknowledge responsibility for the execution of the plan. (August 28, 2003).
Okay, so call me a cynic. But isn't it amazing how these critical studies and rule proposals always seem to get announced on some quiet news day before a holiday . . . like the Thursday before Labor Day, for example. Apparently, the driving force behind the NASD's proposal is a study of the 663,000 brokers registered with SRO that disclosed the following data for the last five years (I've noted the percentages in parentheses):
2,751 (.41 %) have three or more customer complaints and arbitrations,
216 (.03 %) have been subject to three or more investigations or regulatory actions, and
1,198 (.18 %) have been subject to two or more terminations or internal reviews based on allegations of wrongdoing.
The statistics speak for themselves --- a range of potential miscreants who account of between three-hundredths of one percent to four-tenths of one percent of all stockbrokers registered with NASD. Consequently, the overwhelming majority of registered persons have not garnered the attention of claimants' attorneys or industry regulators. Good news, but, notwithstanding, the raw numbers still indicate that as many as 2,751 individuals have had at least three customer complaints/arbitrations within the past five years.
Okay, so what does one of Wall Street's cops make of the data? Well, NASD Chairman/CEO Robert Glauber says that
Investors face higher risk dealing with a broker who has a long regulatory record. Securities firms must respond to that risk with enhanced controls. Putting heightened supervision plans in writing and holding supervisors accountable will ensure that these plans are a part of the compliance and management process that is critical to investor protection.
Let's carefully analyze the above three sentences by Mr. Glauber.
Investors face higher risk dealing with a broker who has a long regulatory record.
Great sound bite, but I wonder if it doesn't cause more harm than good. Here's my point. The public faces a high risk when dealing with a broker with a long regulatory record. Would be foolish not to admit the obvious. However, on what basis does Mr. Glauber extrapolate that a "high" risk becomes a "high-er" one? Higher than what? The following supposed upright citizens of Wall Street paid a collective $1.4 billion settlement for conflicts of interest: Bear Stearns, CSFB, Goldman, J.P. Morgan, Lehman, Merrill Lynch, Morgan Stanley, Piper Jaffray, SSB, and UBS. If a public investor dealt with any individual from those ten NASD member firms during the past five years, how much less risk did you incur than if you had merely invested with some stockbroker (from any other broker-dealer) with at least two terminations during the same period? Would Jack Grubman or Henry Blodgett have satisfied any of the NASD's five-year warning criteria --- I don't think so. And what about all those high-flying NASDAQ stocks (that's right, the NASDAQ that the NASD itself used to own it? Was it less risky to invest in some of those $100 plus stocks that are now trading for pennies and whose CEOs face criminal charges?
The danger of the Glauber quote is that it perpetuates a now discredited myth that it's only the stereotypical boiler-room with its fast talking kids and its Rolex-wearing, custom-suited, Porsche-driving owners who defraud the public. It also fails to address one of Wall Street's dirty, little secrets: For years the regulatory community has meted out two forms of justice --- one for the smaller firms and one for the larger firms. The big broker-dealers rarely found themselves subjected to the same intense investigations as their smaller competitors. And when it came time to handing out punishment, well, you go read the headlines; historically, they often got slaps on the wrist.
No, Mr. Glauber, it wasn't your cited recidivists who besmirched Wall Street's reputation this last round. Fact is, it was the best and the brightest, the biggest and the richest. Fact is, it was the star performers and favored sons of Wall Street --- or at least that's the type of billing you regulators gave them for years.
Securities firms must respond to that risk with enhanced controls.
Now there is an exercise is profundity. What the hell is self regulation about anyway? We need a 2003 press release to remind broker-dealers that they need to respond to warning signs of misconduct? Is this the sorry state to which industry regulation has finally fallen --- we issue SRO press releases restating the obvious? And if we really, really need to remind broker-dealers of this basic obligation of self-regulation, then we need to overhaul the entire system of Wall Street's regulation. Frankly, my mother stopped telling me years ago to look both ways before I crossed the street.
Putting heightened supervision plans in writing and holding supervisors accountable will ensure that these plans are a part of the compliance and management process that is critical to investor protection.
Folks, Wall Street already requires that every broker-dealer prepare and maintain extensive written supervisory procedures --- or WSPs as we industry pros call them. Further, haven't we all finally learned that more written documents, written procedures, written rules, and written regulations never solve any serious problems? In my opinion, the NASD Press Release and the Chairman's remarks underscore the real problem with Wall Street --- ineffective regulation. Regulation that lacks vision. Regulation that seems to be conducted in the press on quiet news days. Regulation by autopsy--- after the crimes are committed. And now, regulation by the obvious. Gee, what a profound proposal coming out of the NASD: Let's carefully supervise those individuals with problems and make sure that we have written procedures to accomplish the same.
Folks, wake up and don't be mislead. You need to be suspicious and wary of any individual and any firm that's trying to get your hard earned money to invest on Wall Street. The Harvard-educated stockbroker with an unblemished record who works at one of the household-name broker-dealers could defraud you of every penny in your account. There is no security to be found in an unblemished record or with a popular broker-dealer that runs expensive television ads. You shouldn't let your vigilance relax because the company whose stock you own was just featured in the newspapers.
The NASD asks you to buy into some fantasy that if the brokerage firms would only watch the bad guys more carefully, then you could sleep better at night. In the final analysis, I fear that Mr. Glauber and his colleagues simply fail to understand the lessons of these past few years. A fish stinks from the head down. It wasn't that the brokerage industry failed to implement better supervisory policies. It wasn't that supervisors weren't trying to do their jobs. It wasn't that every stockbroker has stepped out of an audition line from central casting and is looking to rip off the public. No, it's actually more basic. The regulators failed. They coddled the major, national firms and sent the wrong message to those organizations and to the public investor. And the regulators are back at it again.
http://www.axcessnews.com/commentary_0908.shtml
The Borg Attacks Wall Street! Humans on the run!
By Bill Singer - Contributing Columnist
I don't get it and probably never will. You know, the little guy gets hammered and the big guy gets treated with kit gloves, the same old double standard that always seems to apply.
November 19, 2003 - Okay, let me put it bluntly. I don't get it. Never did. Still don't. Likely never will. And I've hated the practice for as long as I understood it --- and will continue to. What am I talking about? Simply, the double standard that always seems to apply for smaller businesses regulated by government or so-called quasi-governmental regulators. You know what I mean --- all things being the same, the little guy gets hammered and the big guy gets the kid gloves.
Consider this November 17, 2003, headline on the United States Securities and Exchange Commission's (SEC's) website: "SEC Charges Morgan Stanley With Inadequate Disclosure in Mutual Fund Sales Morgan Stanley Pays $50 Million To Settle SEC Action."
In commenting on the settlement, the release criticizes
Morgan Stanley's firm-wide failure to adequately disclose to customers at the point of sale the greater costs associated with large purchases of certain B shares and the potential greater returns associated with A shares made the brokers better off and their customers worse off . . .
Equally impressive is the November 17th headline on the NASD's website that trumpets: "NASD Charges Morgan Stanley with Giving Preferential Treatment to Certain Mutual Funds in Exchange for Brokerage Commission Payments." Virtually, parroting the SEC, the NASD announces that it sanctioned Morgan Stanley DW Inc. for
giving preferential treatment to certain mutual fund companies in return for millions of dollars in brokerage commissions. This is the second action brought by NASD against the firm for mutual fund violations in the last two months and is part of NASD's broader effort to crack down on sales practice abuses in this area. In conjunction with a related action filed by the Securities and Exchange Commission (SEC), Morgan Stanley agreed to resolve the NASD and SEC actions by paying $50 million in civil penalties and surrendered profits.
Now $50 million in fines is admittedly no chicken feed. However, for a global financial services firm of Morgan Stanley DW's stature, it's not going to bankrupt the company either.
Consider this October 16, 2003, Press Release from NASD proclaiming that "NASD Charges Long Island Firm, its President, and Two Former Managers as a Result of Fraudulent "Boiler Room" Sales Practices: Eleven Others Barred in Related Conduct". The salient facts in this matter were that a small firm, --- described by NASD as an unsavory "boiler room" --- its President, and a former branch manager were charged with engaging in high-pressure sales practices that defrauded investors of $8 million. NASD also permanently barred 11 other individuals involved in the misconduct.
Interesting. The small firm engages in Fraudulent "Boiler Room" Sales Practices but the giant Morgan Stanley DW was only involved in Inadequate Disclosure or Preferential Treatment. My, oh my, ain't words wonderful --- and particularly in such skilled hands! Just imagine. A small firm engages in $8 million worth of fraud and over a dozen human beings are barred. You know --- flesh and blood, breathing, earthlings. And then this other humongous firm pays a $50 million fine for inadequate or preferential practices but nary a homo sapien was suspended as a result. You see, it's sort of like the Matrix movie or the Terminator --- there are we humans and there are the monolithic machines (the latter apparently run larger firms because the regulators don't seem to name any individuals). Oh sure, maybe in a few more weeks or months the SEC or NASD will suspend a bunch of folks at Morgan. But it will probably be in a less highly-publicized press release. And that release will likely take pains to play down the affiliation of the bad boy with his former august firm. And that release may get issued on a quiet Friday news day or an equally dull holiday eve. Regardless, it just didn't make it into today's much ballyhooed press conferences.
So, what's the point? Simple. Wall Street's regulators don't realize how dangerous and unfair their large-firm preference is. The watchdogs diminish the import of misconduct at major firms by euphemizing whatever was done. You can almost see them sitting around a table --- much like my wife and I do on Sundays with the crossword puzzle . . . honey, what's a twelve-letter word for fraud? Worse, the regulators lessen the public's concern for improper conduct at larger firms by giving the impression that it happened solely on a computer or as the result of some non-human action. Meanwhile, the SEC and the SROs make life miserable for smaller firms by giving the equally false impression to the investing public that fraud only occurs at modest sized broker-dealers --- or that you can't trust the salesforce or management of your local stockbroker. Frankly, it's unfair and it stinks. But, like what else is new about regulating Wall Street?
http://www.axcessnews.com/commentary_1119.shtml
Reading Toe Tags on Wall Street
By Bill Singer - Contributing Columnist
I don't think the SEC and the NYSE are entitled to kudos for the specialists settlements announced today. They're supposed to try to prevent crime. They're doing a lousy job of it.
March 30, 2003 - Once again, Wall Street's ever-vigilant regulators have polished their trumpets and herald a "Settlement Reached With Five Specialist Firms for Violating Federal Securities Laws and NYSE Regulations Firms Will Pay More Than $240 Million in Penalties and Disgorgement." Yes, that's what the U.S. Securities and Exchange Commission and the New York Stock Exchange announced on March 30, 2004. The five settling specialist firms (Bear Wagner Specialists LLC; Fleet Specialist, Inc.; LaBranche & Co., LLC; Spear, Leeds & Kellogg Specialists LLC; and Van der Moolen Specialists USA, LLC.) will pay a total of $241,823,257 in penalties and disgorgement, consisting of $87,735,635 in civil money penalties and $154,087,622 in disgorgement, and implement steps to improve their compliance procedures and systems. You apparently have to be doing a lot of mischief in order to be making enough moolah to pay a quarter of a billion in fines - crime certainly seems to pay.
And to whom do we taken-advantage-of investors owe our gratitude? Well, our caped crusader and super-hero were the New York Stock Exchange and the SEC. And what did those hard-working regulators find? Well, between 1999 and 2003, the five specialist firms violated federal securities laws and NYSE rules by executing orders for their dealer accounts ahead of executable public customer or "agency" orders. Through these transactions, the firms violated their basic obligation to match executable public customer buy and sell orders and not to fill customer orders through trades from the firm's own account when those customer orders could be matched with other customer orders. Through this conduct, the firms improperly profited from trading opportunities; disadvantaged customer orders, which either received inferior prices or went unexecuted altogether; and breached their duty to serve as agents to public customer orders.
Barry W. Rashkover, Associate Director of the SEC's Northeast Regional Office, said, "This landmark settlement underscores the obligation of exchange specialists to serve public customer orders over the specialist's own proprietary interests. The settlement is excellent news for injured customers. Because of the Distribution Fund, they will be the ultimate beneficiaries of the firms' sizeable payments." We are also promised that the investigation is continuing. And, gee, there's even the possibility that some human beings might be named and more charges brought. Oh, and did I tell you that there's even a rumor that the SEC might even bring charges against the NYSE itself?
With all due respect to the Mr. Rashkovers of the world, this ain't no landmark settlement, it's not underscoring anything, there's no excellent news, and I doubt most of us investors will truly realize any meaningful monetary compensation. I mean can we stop with all the bureaucratic doublespeak already? What's landmark is that the charged misconduct has been going on for years under the noses of Wall Street's regulators. What today's press release underscores is that the securities cops are a dollar short and a day late, again. The excellent news is what . . . I keep missing that one. We're supposed to be happy that there's yet more misconduct and malfeasance uncovered on Wall Street?
Here's my point. The misconduct charged in the recent SEC action dates back to 1999 . . . that's five years ago! And it's not like the august joint task force of the SEC and the NEW YORK STOCK EXCHANGE (did I make the name of the latter clear enough?) was absolutely unfamiliar with the comings and goings of the specialists on the NYSE (again, please note the name of the second member of the joint task force). You've all read about the NYSE lately, you know, that's the employer that paid former Chariman Grasso the big bucks to efficiently run the Exchange. Oh, and by the way, you all do recall that the current SEC Chairman Donaldson is one and the same as the former NYSE Chairman Donaldson? Plus the NYSE was helping to investigate something it was very familiar with - itself. Not exactly a set of facts calculated to stump the SEC and NYSE. Or so you'd think.
I could go on and on, but I've done so in the past. I don't think the SEC and the NYSE are entitled to kudos for reading the toe tags on corpses and telling us who the body is. That's not their job - or, at least, that's not what they should be bragging about. They're supposed to try to prevent crime. They're doing a lousy job of it. Frankly, the size of the fines is a mere smokescreen. I guarantee you that the specialist firms survive. I promise you that the NYSE will be open for business tomorrow.
Discordant Notes Copyright 2004 by Bill Singer. Reprinted by permission, Bill Singer. All rights reserved.
http://www.axcessnews.com/commentary_033004.shtml
I am now, but its no different than the third party creating a third party to third party a third partier so that the original third party has no way of being discovered that it is a third party.
For example: U.S. Counter Intelligence Unit C3PO sets up brainwashing operation for Saudi Intel to set up Saudi Brain Unit (SBU) to establish dupes of religious dupes to dupe an extended religious dupe to lead another group of dupes to initiate an attack against the US so that the original C3PO (read Counter 3 Political Operatives) can then increase its military budget by several trillion to fight "terrorism".
Low pay squeezes FBI agents — and perhaps U.S. security
By Kevin Johnson and Toni Locy, USA TODAY
FRANKLIN PARK, N.J. — He is a law school graduate and a former Marine captain who seems to be living his career dream: to be an FBI agent, protecting the United States from terrorists and other criminals.
An FBI agent assigned to New York City lives in a rented room 42 miles away in New Jersey.
By Todd Plitt, USA TODAY
But when the 34-year-old Long Island native leaves his New York City office, he returns to a life he says he never bargained for: a spartan rented room here, 42 miles south of the city. Assigned to one of the world's most expensive cities with a salary of just $48,000 — and with more than $106,000 in student loans to pay off and credit-card debts near $10,000 — he says it's all he can afford.
"I took an oath when I joined the FBI," says the agent, who has been with the FBI for four years and who asked not to be identified. "I never thought it would also include a vow of poverty."
His story is similar to those of dozens of FBI agents whose dire financial situations have created what bureau officials acknowledge is a growing threat to national security.
Advocates for FBI agents have long complained to Congress that agents aren't paid enough. But now there are signs that an increasing number of agents assigned to the bureau's most critical counterterrorism divisions — in New York, Los Angeles, San Francisco, Boston and San Diego — are racking up debts that FBI officials say could make them vulnerable to corruption, including cash offers to spy against the United States.
It's a situation that has raised questions about whether the FBI is adequately screening agents' finances at a time when the bureau is expanding rapidly to try to prevent terrorism. It also has led FBI officials to reassess their practice of frequently assigning the bureau's newest and lowest-paid agents to big-city offices where the cost of living is high — and where agents often handle some of the government's most sensitive intelligence reports.
The base salary for new FBI agents is about $39,700, plus overtime. Agents in big cities get a few thousand dollars more. With several years' experience, agents can make a little more than $90,000. Supervisors' pay ranges from about $72,000 to about $106,000.
Aside from minor cost-of-living increases, agents' salaries have been roughly the same for more than a decade. During that time, two former counterintelligence agents who had worked in the New York office and who had complained about their finances, Earl Pitts and Robert Hanssen, were convicted of selling secrets to the Russians.
FBI officials acknowledge that concerns over agents' financial problems have increased as the bureau has hired more than 2,200 agents since the Sept. 11 attacks.
Many of the new agents have given up more lucrative jobs in the private sector to heed the call of public service, often without fully understanding the financial strains they could face. Unlike young cops or federal agents in high-cost cities who often room together to save money at the start of their careers, many of the new FBI agents have been in the workforce for several years and have families.
In a survey of 10 major bureau offices late last year, the FBI Agents Association, a group that represents about 7,700 of the bureau's 11,000 agents, received testimonials from more than 80 agents who said their financial situations were dangerously unstable.
Like the New York agent who lives in Franklin Park, none of the agents agreed to be identified by name for this story. Several cited their sensitive assignments; others said they feared increased scrutiny from supervisors if their financial problems became well-known.
But the association's survey and interviews with six agents assigned to New York, Washington and San Diego suggest that agents' increasing anxiety over their families' welfare is affecting their work:
• After a year on the job, a Los Angeles agent says he is considering whether to quit the bureau. The agent, who makes $49,000 a year, says he and his wife have faced "overwhelming" financial stress since they moved to the Los Angeles area from Minnesota, where the median home price is roughly half that of the $382,000 median in Los Angeles County.
Like other agents, he says his family's situation has been made worse by his spouse's inability to find work. The agent says his family has used up savings to meet expenses.
"My wife and I are struggling," he says.
• In Boston, an agent who makes $46,800 a year says she has fallen behind on mortgage payments, and says her unemployed husband is considering filing for public assistance. She says that several of her FBI colleagues, desperate to trim debts, have cashed out of their retirement accounts.
• An agent in the New York office says that when she was transferred there after graduating from the FBI Academy in Virginia in September 2002, it quickly became apparent that she would not be able to afford to take her 14-year-old daughter with her. The agent, 33, says the girl is staying with grandparents in Virginia.
• A married San Diego agent with three children says that relatives have been supplementing his $57,000 salary to help keep his family afloat. The agent, 31, who left an $80,000-a-year job in Miami to join the FBI nearly two years ago, says he knew he would have to take a pay cut. But he says he did not realize that he would be sent to a city where the cost of living is so much higher.
(Salary-comparison formulas used by real estate firms indicate that someone making $80,000 in Miami would need to make about $127,000 in San Diego to have roughly the same lifestyle.)
Despite the help from relatives, the agent says, his family has resorted to paying for everyday expenses with credit cards. He says he's not sure how much longer he can stay with the FBI.
Redeployment plan
Top FBI officials in Washington say they are troubled by such reports, which have led them to begin developing a multimillion-dollar plan to redeploy agents. The plan, which could be in place in 2006, would divert new agents to more affordable postings among the bureau's 56 U.S. field offices.
FBI vs. police pay
How FBI agents' annual salaries compare with those of police officers in selected big-city departments:
Agency Pay
FBI Agents start at about $39,700 plus overtime. After five years, agents can make about $72,000 plus overtime; more experienced agents can make a little more than $90,000. Base pay for supervisors ranges from about $72,000 to about $106,000.
New York City police Rookie cops make about $44,000 with overtime, shift differentials and holiday pay. After five years, officers typically make about $70,000.
Los Angeles police Rookies start at $47,710. After a year, they make $51,573. Officers with more experience can make up to $71,451 in base pay. Most detectives' and supervisors' salaries range from $67,588 to $149,459. Figures do not include overtime.
Chicago police Rookies make about $37,000; that increases to nearly $48,000 after one year and to $50,538 six months later. Figures do not include overtime.
Houston police Rookies make $28,169. After one year, that rises to $31,439. Officers with more experience make up to $43,672. Supervisors' salaries range from $43,800 to $72,248. Figures do not include overtime.
The officials say they want to try to reduce the financial trauma for young agents, guard against potential security risks and give agents more work experience before they are assigned to larger offices.
Assistant FBI Director Mark Bullock, who oversees administrative functions, says the plan probably would cause upheaval throughout the FBI. He says hundreds of agents would be transferred at the same time to make sure that larger offices remain adequately staffed.
"This is a serious concern for the FBI," Bullock says. "This ultimately impacts investigations."
Before he joined the FBI, the San Diego agent managed a household appliance store in Miami.
The agent, who works on public-corruption and drug cases, says he knew his FBI salary would be at least 30% less than the $80,000 he made in Miami. But he was drawn to public service, and he believed that with his wife's salary as a teacher, the family could get by.
But the financial formula the agent devised for his family was shattered when he was assigned to San Diego after graduating from the FBI Academy. After a long search for an affordable house, the family — with a healthy down payment from the sale of their Miami home — bought a $379,000 house that is nearly a two-hour drive from the FBI's office in San Diego.
Then it took almost a year for the agent's wife to find work. By then, the family's savings were gone, and their credit cards were nearly maxed out. With his family's debts approaching $20,000 last year, the agent cashed out of his FBI retirement plan for $8,000 and accepted $6,000 from his parents.
"Nobody forced me to take this job; I'm still here because I want to be here," the agent says. But "it's not fair to put my family through this much longer. Right now, I'm paying to be part of the bureau."
The agent says he could not fathom resorting to corruption to get more money. But other agents say that many of their co-workers are increasingly desperate.
"There is a saying that money makes the blind man see and the cripple walk," says a colleague of the Franklin Park agent who works in counterterrorism in the FBI's New York office.
Getting out early
For decades, it has been rare for FBI agents to leave the bureau before they were eligible for retirement, at 20 years of service or age 57. Now, Bullock says, talk of resigning is becoming more common among agents.
The last significant pay increase for FBI agents was in 1988, when Congress approved raises that included extra pay for agents in high-cost, urban areas. Agents in New York City, where the bureau was having trouble filling vacancies, got a 25% increase.
Even so, 2003 government salary tables show that some FBI agents who make $47,222 in New York aren't paid much more than the $44,617 their peers make in Richmond, Va., where housing costs are less than half what they are in the New York area.
Some local police agencies near New York City pay rookie officers more than the FBI pays its new agents. In the Suffolk County Police Department, on Long Island, new cops make $50,000.
"I dread going up to the New York office," says Glenn Kelly, executive director of the FBI Agents Association. "They are in dire straits."
The association has no authority to enter into labor agreements on salary issues, but it has long campaigned for higher salaries. It supports a plan before Congress that would eliminate caps on overtime pay for agents and on the extra pay given to agents in high-cost areas.
The FBI backs the plan but has not lobbied for it. The bureau is awaiting a report by the Office of Personnel Management, which is examining pay scales for federal law enforcement officers.
During the Cold War, most agents who betrayed the United States did so "for philosophical reasons," says Sen. Bob Graham, D-Fla., a former chairman of the Senate Intelligence Committee. "Our most recent cases, such as Hanssen, have been for money. I'm aware and concerned."
Dale Watson, a former director of counterterrorism for the FBI, agrees that agents' low salaries pose a security risk.
"We signed up knowing we weren't gonna get rich," says Watson, an executive at a security company. "But it used to be the FBI was a career that nobody left. It ain't that way any more."
Locy reported from Washington, Johnson from Franklin Park before leaving for his current assignment in Baghdad.
I'll pass on reading it...based on this review alone the policy promoted in it has already failed:
Some observers see the global political landscape as a complex amalgam of divergent worldviews, shades of gray that usually move in harmony but sometimes collide with violent results. David Frum and Richard Perle, authors of An End to Evil think it's a great deal simpler than that: the United States is good, those who pose a threat, current or future, are evil and must be neutralized or destroyed. Frum, the former speechwriter for George W. Bush credited with coining the term "axis of evil," and Perle, a former assistant Secretary of Defense who was still serving on the Defense Policy Board at the time this book was published, advocate an aggressive, activist approach to stomping out terrorism both within America's borders and in other countries as well. Their plan, described with forceful and urgent language, calls for the United States to overthrow the government of Iran, abandon support of a Palestinian state, blockade North Korea, use strong-arm tactics with Syria and China, disregard much of Europe as allies, and sever ties with Saudi Arabia. Domestically, the authors say, several federal agencies need to be overhauled, a national ID card system needs to be put in place, and the government and its citizens need to realize the gravity of the terrorist threat and step up the effort, as the title indicates, to end evil. Frum and Perle place blame for American ineffectiveness in the fight against terrorism on some political targets one would expect (Congressional Democrats, Bill Clinton) but also point fingers at the present-day intelligence community and even the State Department. It's a broad-ranging political opinion book--one might even use the words "screed" or "manifesto." Perhaps because it tries to cover so much ground, the individually compelling arguments don't hold together as coherently as one might hope. Still, for those who believe that the threat of terrorism is immense and that not nearly enough is being done about it, Frum and Perle offer a stirring call to arms. --Charlie Williams
Arafat dismisses Israel's assassination threats
Mohammed Daraghmeh
Associated Press
Apr. 4, 2004 12:00 AM
RAMALLAH, West Bank - Palestinian leader Yasser Arafat on Saturday brushed off Israeli threats to kill him, as U.S. and other world leaders criticized Israel's prime minister for suggesting an act that could plunge the region deeper into chaos.
Prime Minister Ariel Sharon said in interviews published a day earlier that two of his archfoes, Arafat and a Lebanese guerrilla leader Hassan Nasrallah, should not feel beyond the reach of assassination by Israeli forces.
http://www.azcentral.com/news/articles/0404mideast04.html
A ploy for what? - A changing Qaeda seen on 5 continents
By Bryan Bender, Globe Staff, 4/5/2004
WASHINGTON - Foiled attacks last week by suspected followers of Osama bin Laden in Britain and the Philippines and a deadly string of bombings in Uzbekistan demonstrate that the Al Qaeda terrorist network has grown larger and looser, making it far more difficult to track than when bin Laden sat at the head of an army of terrorists, US intelligence officials say.
Al Qaeda has morphed into splinter groups on at least five continents, the officials said. Penetrating the new network will be more difficult than unraveling the old network, which took half a decade and at least four deadly attacks, according to a new report from the National Commission on Terrorist Attacks Upon the United States, a bipartisan group investigating the Sept. 11, 2001, terror attacks.
"The Al Qaeda of today is different from the Al Qaeda of 2001,'' Representative Adam Schiff, a California Democrat and a member of a House subcommittee on terrorism, said last week.
"Like a virus, Al Qaeda has evolved and adapted to the US-led war against it,'' Schiff added. "We may have made remarkable inroads in destroying the Al Qaeda of 2001, [but] are we making progress against the Al Qaeda of 2004?''
New revelations from the 9/11 commission show just how little the United States knew about Al Qaeda before the 2001 attacks: Between 1992 and 1997, bin Laden's network assassinated a rabbi in New York, exploded a truck bomb in the basement of the World Trade Center, trained guerrillas in Somalia to kill US soldiers, and attacked a US military barracks in Riyadh, Saudi Arabia.
Still, no US intelligence agency even knew of Al Qaeda, let alone that a Saudi millionaire was commanding a low-level war against the United States, until the 1998 bombings of two US embassies in Africa, Clinton administration officials testified before the 9/11 commission.
But now that the United States is hunting Al Qaeda, the network no longer exists in the form that it took years to identify, according to US and foreign intelligence officials.
More than two years after the Sept. 11 attacks, the US-led war against Al Qaeda has eliminated 70 percent of the network's leadership and captured or killed 3,400 of its members, according to CIA statistics. Yet since the 2001 attacks, more than a dozen bombings across the world have been linked to Al Qaeda subgroups, many of which are not counted in the CIA statistics.
``Literally scores of groups are present around the world today,'' Cofer Black, the State Department's chief of counterterrorism, told a House panel Thursday, saying that bin Laden is no longer in charge ``the way we think of it.''
``Some groups have gravitated to Al Qaeda in recent years, where before such linkages did not exist,'' he added.
These groups include the Salafist Group for Call and Combat in Algeria, Salifiya Jihadia in Morocco, Jemaah Islamiya in Indonesia, and the Islamic Movement of Uzbekistan. Many of the groups, such as the shadowy Abu Hafs Martyrs Brigade, which has taken responsibility for a series of attacks including the bombing of two synagogues last November in Istanbul, remain mysteries to US intelligence, officials said on the condition of anonymity.
The struggle to identify Al Qaeda commanders in the 1990s, a process spelled out in the new memoir of former counterterrorism chief Richard A. Clarke, demonstrates the difficulty in going after what is now a much less organized, but still deadly, movement, according to intelligence officials.
Early on, only a few in Washington knew of bin Laden from his days fighting the Soviet invasion in Afghanistan. Those who did thought he was a financier of terrorist activities, not the head of an international network of thousands of trained operatives.
Al Qaeda, which translates to ``the base,'' grew out of the Afghan Services Bureau, ostensibly a humanitarian organization made up of veterans of the war in Afghanistan in the 1980s. Bin Laden transformed his base in Afghanistan into a network that linked returning Afghan war veterans in Algeria, Chechnya, Bosnia, Egypt, and the Philippines.
Officials now believe that the first Al Qaeda member to be arrested in the United States was El Sayyid Nosair, who shot to death Rabbi Meir Kahane, the firebrand leader of the Jewish Defense League, in New York in 1990.
Clarke revealed in his book that federal agents found materials about the Afghan Services Bureau in Nosair's apartment, but the documents were not translated for years. Bin Laden later paid Nosair's legal bills.
In 1992, Al Qaeda operatives bombed a hotel in Yemen, although US Air Force personnel staying there were tipped off by Yemeni officials beforehand. Still, ``CIA had not been able to figure out who had bombed the hotel,'' Clarke wrote.
The United States also did not connect the dots when bin Laden foot soldiers bombed the World Trade Center in 1993.
``Osama bin Laden had formed Al Qaeda three years earlier,'' Clarke recounted. ``Not only had no one in the CIA or FBI ever heard of it, apparently they had never heard of bin Laden, either. His name never came up in our meetings in 1993 as a suspect in the World Trade Center attack.''
But there were signs. Ramzi Yousef, the leader of the cell that attacked the World Trade Center, called bin Laden from New York. Another operative, Ahmed Ajaj, carried a manual with Al Qaeda stamped on it. The financier of the attack was Yousef's uncle, Khalid Shaikh Mohammed, who would plan the Sept. 11 attacks.
``We now know that three of the key planners and players were Al Qaeda,'' John Lehman, a member of the 9/11 commission, said last month of the 1993 World Trade Center attack.
Also in 1993, Al Qaeda helped destabilize the US peacekeeping mission in Somalia. ``Although the CIA did not know it ... evidence later emerged and was included in the US indictment of bin Laden that Al Qaeda had been sending advisors to [Somalia] and had helped to engineer the shoot-down of the US helicopters,'' Clarke wrote.
In 1995, a US military facility in Riyadh was bombed, killing five Americans, and again the United States did not suspect bin Laden. The Saudis were more suspicious, but also missed the signs.
``We knew he was trouble as early as 1993,'' said a senior Saudi government official who asked not to be named. ``He was doing mischief in Egypt and Yemen. But we didn't know the extent of his network.''
The official said that after the 1995 Riyadh bombing, ``our investigators were convinced it was bin Laden who did it, but the US didn't share that view.''
US leaders, who suspected either Iraq or Iran, complained that the Saudis captured four terrorists but beheaded them before they could be interrogated, according to Clarke and the Saudi official.
It wasn't until 1997 that American intelligence agencies knew bin Laden was the primary organizer of all the attacks - and only then after a bin Laden confidant simply walked into a US embassy in a foreign country and gave up the goods, according to a staff report of the 9/11 commission released in late March.
That organization, commanded from the top down by bin Laden and his top lieutenants, is a shadow of its former self. But the attacks of recent years - in Spain, Turkey, Morocco, Indonesia, Iraq, Tunisia, Saudi Arabia, and elsewhere - indicate there is a growing threat from a looser network Clarke likens to a mythical hydra.
Last week, 10 people - eight Britons and two men living in Canada - were arrested in a suspected plot to bomb London. A series of police raids in London netted half a ton of fertilizer that could be used to construct a huge bomb. Meanwhile, a terrorist bombing on the scale of the Madrid attacks was averted in Manilla with the arrest last week of four members of Abu Sayyef, an Al Qaeda splinter group, and the seizure of 36 kilos of TNT, officials said.
Also last week, a series of suicide attacks by Al Qaeda-linked terrorists in Uzbekistan killed 47 people. And yesterday, Spaniards were bracing for another possible Al Qaeda attack, after railroad workers found a bomb Friday along the high-speed tracks between Madrid and Seville.
"Osama bin Laden and [his deputy Ayman] al-Zawahri for the past two years have been tied up with saving their skins, and yet Al Qaeda has come back with even more vengeance,'' noted Nadeem Ayub Khan, a former Pakistani intelligence official. "This Al Qaeda movement is much wider than that one individual. Al Qaeda is now a global phenomenon.''
The Saudi official, a veteran of counterterrorism issues, said the good news is that these groups are less professional than the corporate Al Qaeda and are not as well positioned to pull off large-scale attacks like Sept. 11.
However, "the bad news,'' according to Black, the counterterrorism official, is that what is left of Al Qaeda is "reaching out, trying to co-opt the missions of other terrorist groups.''
"Identifying and acting against the leadership, capabilities, and operational plans of these groups poses a serious challenge now and for years to come,'' he said.
Globe correspondent Victoria Burnett contributed from Islamabad. Bryan Bender can be reached at bender@globe.com.
"Get Ready for World War IV"
It would appear that Sharon will be eliminated first:
A cloud over Sharon
4/3/2004
THE RECOMMENDATION from Israel's state prosecutor, Edna Arbel, to Attorney General Menachem Mazuz that he indict Prime Minister Ariel Sharon for fraud and breach of trust is bound to have dramatic consequences. A change of leadership in the Likud Party and the government may ensue, and the shake-up will likely lead to fresh elections.
http://www.boston.com/news/globe/editorial_opinion/editorials/articles/2004/04/03/a_cloud_over_sharo...
The East now swings with an ever greater troubled mind:
Experts Wonder if $8.2 Billion in Afghan Aid is Sufficient to Break the Country’s Vicious Cycle
Camelia Entekhabi-Fard
International donors have pledged $8.2 billion over three years to foster Afghanistan’s reconstruction. Afghan President Hamid Karzai has pronounced himself satisfied with the international aid commitment, despite the fact that it is less than one-third of the amount that he sought heading into the March 31-April 1 Berlin donors’ conference.
Uzbek Government Dismisses Link Between Terrorism and Poverty
Uzbekistan’s government appears to be digging in its heels as it responds to the Islamic radical violence. Uzbek Foreign Minister Sadyk Safayev was dismissive of a link between recent violence in Tashkent and socio-economic discontent in the country. Safayev also insisted that the government’s firm response was fostering the "social and psychological consolidation" of Uzbek society.
Uzbek Events Could Prompt Geopolitical Shift
Esmer Islamov and Sergei Blagov
The March militant attacks in Uzbekistan have potentially profound geopolitical ramifications. Since the September 11 terrorist tragedy, Tashkent has served as the United States’ key strategic partner in Central Asia. There are indications, however, that the four-day bout of violence in Tashkent could hasten a move by President Islam Karimov’s administration to improve relations with Russia.
Uzbek Officials: Preliminary Results of Investigation into Violence May be Ready in Four Days
Esmer Islamov
Uzbek officials sought to bring a quick conclusion to uncertainty following four days of violence that rocked the capital Tashkent. Law-enforcement authorities pressed ahead with a massive dragnet operation to hunt down suspected Islamic radicals. Officials also indicated that the preliminary results of an investigation into the armed clashes may be ready within four days. Political observers and human rights activists, meanwhile, warned that the government may to use the crisis to drastically expand a clampdown on individual freedom in the country.
http://www.eurasianet.org/departments/insight/index.shtml
Which book is that? It would appear that the issue of Iran is being discussed broadly in EurAsian media:
Since US forces toppled Saddam Hussein’s regime, Iran has quietly worked to expand its influence in Shi’a-dominated areas of Iraq. Tehran views the strengthening of cultural and religious ties among adherents of the Shi’a branch of Islam as a vital national interest.
http://www.eurasianet.org/departments/insight/articles/eav090303.shtml#
Mid East peace has been an elusive dream of many dead political leaders...at least since 1948...
It would appear that more troops are now needed to defend against the Iranian movement across the border...the powderkeg appears to be being fueled by Iranian militants who see America as the "Evil One".
Has Iran Secretly declared war on the United States?
http://worldnetdaily.com/news/article.asp?ARTICLE_ID=37883
Withdrawal does not appear to be an option under this administration....only escalation... Intelligence officials are hardly able to keep up with the growing fire that has been lit across the globe...
http://www.investorshub.com/boards/read_msg.asp?message_id=2769159
The foothold is there, the problem is that the foot is in deeper than the knees in the desert sands.
Iran has armed and trained some 40,000 Shiite Iraqi fighters – most of whom are former prisoners of war captured during the Iran-Iraq war – and sent them to Iraq to foment an Islamic revolution, Joseph Farah's G2 Bulletin reports.
http://www.wnd.com/news/article.asp?ARTICLE_ID=32256
There is word that Iran is martialling its forces and 10,000 Iranians a day are preparing to flood into Iraq...
http://www.investorshub.com/boards/read_msg.asp?message_id=2776393
Why would it be a neocon dream if this conflict became a regional one?
http://www.investorshub.com/boards/read_msg.asp?message_id=2770291
Sovereign Immunity: Individual Liability of Public Officials
The doctrine of sovereign immunity protects the State from suit unless it consents to be sued. Although the State of North Carolina has adopted a limited waiver of sovereign immunity, public officials may not be held personally liable for mere negligence in the performance of governmental duties involving the exercise of judgment and discretion. A public official may be held personally liable, however, it the official's "act, or failure to act, was corrupt or malicious." Smith v. State, 289 N.C. 303, 222 S.E.2d 412, 430 (1976) (quoting Smith v. Hefner, 235 N.C. 1, 68 S.E.2d 783, 787 (1952).
http://www.nlrg.com/lawlet/civ2_may.htm
I. WHAT IS SOVEREIGN IMMUNITY?
The topic of sovereign immunity is too varied and too large to be fully covered here. This broad topic has become even more volatile because of the efforts of Senator Slade Gorton (R-WA) to alter or abrogate tribes' sovereign immunity in various legislative proposals, as well as the efforts of other members of Congress to counteract those proposals. Accordingly, this paper endeavors to set out major principles on the sovereign immunity of the United States and of Indian tribes and to apply those principles to current federal legislation concerning Indian tribes.
A. Historical Roots.
Sovereign immunity is an expression of the lawmaking power of government and reflects judgments concerning how public resources should be distributed. As Alexander Hamilton famously observed: "t is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent. This is the general sense, and the general practice of mankind; and the exemption, as one of the attributes of sovereignty, is now enjoyed by the government of every State in the Union."(1)
The inability of courts to enforce a judgment was a basis for the doctrine of sovereign immunity noted in Chisholm v. Georgia.(2) That case held a state liable to suit by a citizen of another state or foreign country and created such a shock that the Eleventh Amendment was at once proposed and adopted. Sovereign immunity is also justified on the "logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends."(3) A further basis for the doctrine is avoidance of interference with governmental functions and with the government's control of its instrumentalities, funds and property.(4)
B. The Public Treasury or Domain.
The doctrine of sovereign immunity is critically important where it truly applies--to suits against the sovereign. But how does one determine if a suit is against the sovereign? The simple answer is that a suit is against the sovereign if "the judgment sought would expend itself on the public treasury or domain."(5)
In many cases the rule can be difficult to apply because the sovereign acts through human individuals, and these agents are often the named defendants. Sovereign immunity does not prevent suits challenging the acts of individuals who violate federal or other applicable law. For this reason, a careful distinction must be drawn between suits against officers of a government and suits against the government itself. Although sovereign immunity provides limited protection of the public treasury or domain, it does not generally protect the officers of the sovereign.
http://www.msaj.com/papers/doc0831.htm
Is Iran going to declare war on the United States? EM
SOVEREIGN IMMUNITY - A doctrine precluding the institution of a suit against the sovereign [government] without its consent. Though commonly believed to be rooted in English law, it is actually rooted in the inherent nature of power and the ability of those who hold power to shield themselves.
In England it was predicated on the concept that "the sovereign can do no wrong", a concept developed and enforced by - guess who? However, since the American revolution explictedly rejected this interesting idea, the American rulers had to come up with another rationale to protect their power. One they came up with is that the "sovereign is exempt from suit [on the] practical ground that there can be no legal right against the authority that makes the law on which the right depends." 205 U.S. 349, 353.
"[S]tatutes waiving the sovereign immunity of the United States must be`construed strictly in favor of the sovereign." McMahon v. United States, 342 U.S. 25, 27 (1951).
11 U.S.C. S 106, "Waiver of Sovereign Immunity," provides:
(a) A governmental unit is deemed to have waived sovereign immunity with respect to any claim against such governmental unit that is property of the estate and that arose out of the same transaction or occurrence out of which such governmental unit's claim arose.
The interest served by federal sovereign immunity (the United States' freedom from paying damages without Congressional consent)
Federal sovereign immunity is readily distinguishable from the states' immunity under the Eleventh Amendment and foreign governments' immunity under the Foreign Sovereign Immunities Act. The latter two doctrines allow one sovereign entity the right to avoid, altogether, being subjected to litigation in another sovereign's courts. Pullman Constr., 23 F.3d at 1169. Similar sovereignty concerns are not implicated by the maintenance of suit against the United States in federal court. Federal sovereign immunity has had such broad exceptions carved out of it that, as Pullman Construction concluded, "Congress, on behalf of the United States, has surrendered any comparable right not to be a litigant in its own courts." Id. In the present day, federal sovereign immunity serves merely to channel litigation into the appropriate avenue for redress, ensuring that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Pullman Constr. at 1168 (quoting Art. I, section 9, cl. 7).
Federal sovereign immunity is a defense to liability rather than a right to be free from trial.
The Supreme Court has ruled that in a case involving the government's sovereign immunity the statute in question must be strictly construed in favor of the sovereign and may not be enlarged beyond the waiver its language expressly requires. See United States v. Nordic Village, Inc., 503 U.S. 30, 33-35 (1992).
Of quasi-horses, quasi-donkeys, quasi-governmental
entities, and self-regulatory organizations
By Bill Singer
In Part I of this series, I set forth the proposition that the courts have promulgated a heads-I-win-tails-you-lose standard for the self-regulatory organizations (SROs). When registered persons sue the SROs, the courts effectively shield the regulators with quasi-governmental absolute immunity. However, when those same registered persons assert their Fifth Amendment right against self-incrimination before those same SROs, the courts sustain the regulators’ refusals to recognize that right by finding that the regulators are private entities not capable of government action. Forgetting for the moment the issue of whether an SRO can “incriminate” anyone, the simple fact remains that at any given point in time, the courts are capable of deeming SROs both private entities and governmental (or quasi-governmental) entities.
The proposition is simple: can an entity at any given point in time be both governmental and private? I believe that the commonsense answer is “no.” You’re either an official organ of the government or you are a private enterprise. The United States Senate is not a private sector equivalent of Macy’s. Microsoft is not the governmental equivalent of the United States Department of Justice. We intuit the differences even in the absence of an ability to succinctly explain them. However, in the world of finance, at the fringes of local government and its constituents, we often find hybrids of governmental/private sector cloning. Bonds are issued by government-sanctioned organizations, which, in turn, function competitively in the private sector. Municipalities and counties license private businesses to operate on government property. These almost private, almost public manifestations are frequently referred to as “quasi-governmental” --- they’re almost like a government entity but not quite. Nonetheless, the fact is clear: such entities are not private, are not governmental, but, rather, a third, quite different mutation.
Quasi-Private --- a term not used
Interestingly, we never seem to use the term “quasi-private.” The reason for the disparity is obvious. There are few legal concerns when a hybrid entity takes on the characteristics of the private sector, provided that such a business does not use its government ties to engage in anticompetitive practices. However, when a hybrid entity has some government-like powers, when it operates within the prerogatives of a sovereign, we must be careful. Thus, quasi governmental isn’t merely a description it is a warning.
Quasi-governmental rights
Given that the courts have recognized the existence of quasi-governmental entities, one should ask why there have not been similar judicial efforts to recognize that individuals subject to regulation by those hybrid actors must have quasi-governmental rights. If I am called as a witness before a government agency conducting a civil investigation, I am entitled to constitutional and statutory civil due process protections. If I am a target/subject in a criminal investigation, I am entitled to similar criminal due process protections. But when the arena is one of a mixed metaphor, there is a danger.
SRO investigations and subsequent disciplinary proceedings all too often occur within some distant shadows, outside the pale of federal, state, or administrative practice. The SROs arrogate to themselves the right to do what they want, when they want --- even to the extent that they proclaim that as private entities they are not subject to constitutional due process obligations. In diluting the impact of such extraordinary powers, the defenders of the SRO system routinely assure its critics that the SROs are subject to governmental oversight by the SEC, which must approve their rules and regulations. I’ve never found that explanation comforting. If the SROs are “subject” to governmental oversight, then why aren’t they obligated to afford witnesses and respondents federally guaranteed due process rights?
A criminal justice process by any other name
When a lawyer represents an individual before an SRO, that individual is technically involved in a “civil” proceeding. There is not supposed to be a government agency on the other side of the table. Your adversary is not supposed to be a state or federal prosecutor. Your client does stand accused of a “crime.” But, in reality, everything about the process smacks of a government investigation, a criminal prosecution, and a verdict that may deprive the respondent of his career and imposes a substantial fine.
Consider the following. Your client is ordered to appear before an SRO to give on-the-record (OTR) testimony; at the same time, he or she is the subject of a state or federal grand jury investigation. As to the ongoing, parallel criminal investigation, you are concerned that the self-incriminating testimony that cannot be forced from your client by prosecutors will be compelled by the SROs under threat of fine and suspension --- and any material so obtained will likely be provided to the prosecutors by the SROs. That which prosecutors cannot legally obtain directly, they can obtain indirectly from the SROs --- and, as demonstrated in the previous article, the path between those two actors is well worn and well tended. No one needs a road map or directions.
This problem also surfaces in the absence of ongoing parallel criminal investigations or proceedings. Among the more common examples of this issue would be the client who received some cash compensation over the years but didn’t declare the payments for tax purposes. The mere admission of receiving such payment could result in an Internal Revenue Service inquiry, with an attendant criminal prosecution. The false denial of such payments could expose the witness to a subsequent criminal prosecution for perjury. Under the circumstances, an experienced practitioner might counsel the client to assert the Fifth Amendment right against self-incrimination.
Fifth Amendment RIGHT against self-incrimination
It is important to remember that the assertion of the Fifth Amendment is a constitutional right deemed so basic to the fabric of our society that the framers of the Constitution included it within the Bill of Rights. Historically, we have viewed efforts to coerce criminal convictions as repugnant to our national sense of fairplay and decency. Those who defend the present system of Fifth Amendment non-recognition by SROs frequently argue that such regulators are not government entities capable of pursuing criminal justice agendas and they do not have the power to convict anyone of a crime. But that of course begs the question: Since the courts deem SROs to be quasi-governmental, are they actually quasi-criminal justice organizations conducting quasi-criminal investigations and adjudicating quasi-criminal indictments?
A legitimate argument against recognizing the Fifth Amendment in SRO proceedings would be to note that in any typical civil proceeding the assertion of the right against self-incrimination still permits the judge or jury to draw a negative inference. Note, however, that the proper application is that the trier of fact “may” draw a negative inference. The negative inference is not mandatory. Further, it is not the act of refusing to answer that is deemed criminal or tortious, but, rather, one may infer from the invocation that the underlying misconduct occurred. A legal nicety, yes --- but an important one within our system of justice. Similarly, the assertion of the Fifth within the context of a criminal trial is sacrosanct and deemed a constitutional right not properly permitting a negative inference nor probative of guilt. Simply put, in the United States you cannot be convicted of a crime if the only evidence against you is your refusal to incriminate yourself.
Is the assertion of a constitutional right “unethical”?
What comes as a surprise to lawyers unfamiliar with practice before the SROs is that those organizations do not recognize the Fifth Amendment assertion and routinely initiate disciplinary proceedings solely based upon the mere refusal to testify. Again, let me underscore that point. You can be charged with a violation of an SRO rule merely for declining to incriminate yourself. And the result of such a violation will likely be the loss of your right to pursue a career in the securities industry, with many additional ramifications arising from the loss of your industry registrations. The SROs not only deem the refusal to incriminate oneself as a proper basis for imposing a fine and suspension, but also deem the invocation of your constitutional right to be an unethical practice.
In Department of Enforcement v. Mario J. Coniglione, registered representative Coniglione asserted his Fifth Amendment right against self-incrimination during an NASD Regulation (NASDR) on-the-record interview (OTR). Prior to that invocation, his counsel asserted his belief that the NASD is a governmental agency and that his client was entitled to assert the Fifth Amendment. The NASDR staff informed him that:
[Y]our testimony has been requested in this matter pursuant to Procedural Rule 8210. Rule 8210 requires any person associated with an NASD member to provide all information requested by the staff. Therefore please be advised that failure to answer any of our questions, ... [or] to provide any information requested by the staff during this meeting ... could be inconsistent with Rule 8210 and could be the basis for the initiation of sanctions, including a bar, censure, suspension and/or fine.
The NASDR staff then asked Coniglione questions relating to his prior employment with a member firm. He refused to answer each and every question asked of him, replying only, "I respectfully rely on my Fifth Amendment right and decline to answer this question." Counsel for NASDR informed him that:
NASD and NASD Regulation is not a government entity, so ... you have an obligation to answer all of the Staff's questions .... I remind you if you continue to refuse to answer the questions for whatever reason, whatever grounds, we will seek disciplinary action for your failure to answer.
Based on Respondent's continued refusal to respond to any of the NASDR staff's questions, the NASDR staff concluded the interview. As a result he was charged with violations of NASD Procedural Rule 8210 and NASD Conduct Rule 2110. Conduct Rule 2110 imposes ethical standards upon the members and their associated persons to observe “high standards of commercial honor and just and equitable principles of trade.” Consequently, Coniglione was charged with engaging in unethical behavior by invoking his constitutional right against self-incrimination.. His unwillingness to incriminate himself constituted the sole basis for the disciplinary proceeding and subsequent disbarment.
In analyzing the bases for granting NASDR’s motion for summary disposition, the Hearing Officer concluded that a violation of Rule 8210 is also a violation of Rule 2110. He further commented that the Securities and Exchange Commission ("SEC") has stated that
[w]e have repeatedly stressed the importance of cooperation in NASD investigations. We have also emphasized that the failure to provide information undermines the NASD's ability to carry out its self-regulatory functions.... Failures to comply are serious violations because they subvert the NASD's ability to carry out its regulatory responsibilities." In re Joseph Patrick Hannan, Exchange Act Rel. No. 40438 (September 14, 1998) (omitting citations noted therein).
Hearing Officer Carleton reiterated that the Fifth Amendment prohibits only governmental action, and that the NASD is a private entity He then cited the NASD Sanction Guidelines ("Guidelines"), which provide that in the case of a failure to respond, "a bar should be standard." Consequently, Coniglione was barred for asserting his Fifth Amendment rights and refusing to answer the Staff’s questions.
If, in fact, the NASD is a quasi-governmental entity, how is it that Coniglione was barred for invoking his Fifth Amendment right? If he invoked that right in a criminal proceeding in any court in the United States, no negative inference could be drawn and any finding of guilt would be predicated upon the evidence introduced against him. If he invoked that right in a civil proceeding in any court in the United States, a negative inference could be drawn, but any finding of liability would still be predicated upon the evidence introduced against him. Should the fact that the NASD is a quasi-governmental entity serve to deprive Coniglione of those rights he would have had before a government entity? Furthermore, assuming that the NASD now argues it is a private entity, why does that fact render the assertion of one’s constitutional rights as being “unethical?”
Brady in a non-criminal environment . . . does it make sense?
In a recent NASDR enforcement proceeding, OHO Order 01-13,[ii] Hearing Officer Andrew H. Perkins ruled on the Department of Enforcement’s (DOE’s) obligations to produce various documents, which Respondents claimed contained exculpatory evidence and were discoverable under NASD Code of Procedure Rule 9251, and specifically under the doctrine enunciated by the Supreme Court in Brady v. Maryland, 373 U.S. 83 (1963), as incorporated under Rule 9251(b)(2). NASD Code of Procedure Rule 9251. Inspection and Copying of Documents in Possession of Staff, sets forth requirements as to documents that must be made available for inspection and copying by the Departments of Enforcement and Market Regulation, and similarly sets forth those standards under which such production may be withheld. As Hearing Officer Perkins notes:
The Department’s right to withhold documents under Rule 9251(b)(1) is itself limited by Rule 9251(b)(2), which states: “Nothing in subparagraph (b)(1) authorizes the Department of Enforcement . . . to withhold a document, or a part thereof, that contains material exculpatory evidence.” “This provision is intended to be consistent with the doctrine enunciated in Brady.” Notice of Filing of Proposed Rule Change, Exchange Act Release No. 38,455, 1997 SEC LEXIS 959, at *14 n. 99 (Apr. 24, 1997) However, the NASD has not provided guidance on how Brady, a criminal law doctrine, is to [be] applied in NASD disciplinary proceedings. Hence, to set a standard for its application, it is necessary to review the origins of Brady and the manner in which it has been applied in other proceedings.
In explaining the origin of the Brady Doctrine, Hearing Officer Perkins observes that
Ultimately, Brady and its progeny are concerned with the “special role played by the American prosecutor in the search for truth in criminal trials.” Strickler v. Greene, 527 U.S. 263, 281 (1999). As the Supreme Court explained in Strickler,
The United States Attorney is “the representative not of an ordinary party to controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in criminal prosecution is not that it shall win a case, but that justice shall be done.”
(Id.) quoting Berger v. United States, 295 U.S. 78l, 88 (1935).
However, Brady arises out of consideration of the special role that American prosecutors play within the criminal justice system. The Supreme Court further acknowledged that such prosecutors are not mere parties in litigation but representatives of a sovereign. Which of course brings us back to a series of interesting questions. Is the NASD a quasi-prosecutor? Are NASD enforcement proceedings enmeshed in a quasi-criminal justice system? Is the NASD a quasi-sovereign, i.e., a government-like power?
Even Hearing Officer Perkins seems somewhat uneasy in applying Brady to the NASD’s proceedings. He candidly notes:
Given the Supreme Court’s concern with the special role prosecutors play in the American criminal justice system, it is not surprising to find that Brady has not been applied to administrative proceedings. Because administrative proceedings are civil in nature, the same constitutional concerns are not present. Indeed as the SEC has recognized, there is no constitutional requirement that administrative agencies apply Brady . . . Nevertheless, some agencies have incorporated the principles set forth in Brady into their procedural rules, See, e.g., SEC Rule 230(b)(2). ..
Where does all this leave us? The Brady Ruleis invoked in criminal proceedings to constrain government prosecutors --- but we find this rule referenced within the procedural rules of an SRO, a quasi-governmental or private entity. Even within the context of the example Hearing Officer Perkins cites of an agency that incorporates Brady into its procedural rules, the referenced agency (the SEC) is an arm of a sovereign, i.e., a commission of the United States Government.
I submit that the incorporation of Brady into the NASD’s procedural rules underscores the reality of the SROs’ true nature. SROs are more governmental than private. Their disciplinary proceedings are more criminal prosecutions than civil suits. The results of SRO hearings are not the rendering of a civil award imposing civil damages to be paid to the prevailing civil litigant. To the contrary, SROs impose “sanctions,” which are generally suspensions from association and fines; and such sums of money that are routinely collected do not go to benefit the alleged victims of securities fraud (other than disgorgement) but normally wind up in the coffers of the SRO itself --- again, more in keeping with criminal fines than civil damages.
The protections afforded to the respondents trapped within this quasi system are inadequate and unfair. Individuals enmeshed in a quasi-governmental prosecution by the SROs are routinely barred from their livelihoods because they assert a constitutional right. That they may ultimately be guilty of underlying misconduct is besides the point --- due process is not intended to be viewed as an inconvenience but as a protection. Concededly, the SROs are not criminal prosecutors acting pursuant to indictments, putting citizens in jail. The NASD is not a sovereign government. The NYSE is not empowered to issue grand jury indictments. But that distinction may well be lost upon any citizen who happens to be employed in the securities industry when ordered to appear at an SRO, subjected to interrogation, forced to answer every question or be fined and/or barred for failing to do so.
In closing, I offer the following definition from Encyclopedia.com:
mule
hybrid offspring of a male donkey (see ass) and a female horse, bred as a work animal. The name is also sometimes applied to the hinny, the offspring of a male horse and female donkey; hinnies are considered inferior to mules. . . They lack the speed of horses, but are more surefooted and have great powers of endurance. Like donkeys, they are of a cautious and temperamental disposition and require expert handling to perform well. Both sexes are sterile. . .
Engaging in a tremendous amount of professional restraint, I will avoid the quick and easy jokes as to the parents of the SROs (and I will particularly avoid any reference to any parenthetical references). But isn’t it interesting that the world of science doesn’t resort to the inartful classification of these animals by calling them quasi-horses or quasi-donkeys? Mules are neither donkeys nor horses, they are mules. Now if only we could so classify SROs and instill within them the better virtues of their parents.
Bill Singeris the regulatory partner of the securities industry law firm of Singer Frumento LLP in New York. This article represents the personal views of Mr. Singer. He may be reached at bsinger@singerfru.com. © 2001 Bill Singer.
--------------------------------------------------------------------------------
Department of Enforcement v. Mario J. Coniglione, Disciplinary Proceeding No. C10000140 (May 14, 2001, Hearing Officer Gary A. Carleton) http://www.nasdr.com/pdf-text/oho_dec01_18.txt ; also see, Department of Enforcement v. Vincent P. Coniglione, Disciplinary Proceeding No. C10000116 (May 2, 2001, Hearing Officer Andrew H. Perkins) http://www.nasdr.com/pdf-text/oho_dec01_11.txt
[ii] ORDER DENYING RESPONDENTS’ MOTION TO COMPEL THE PRODUCTION OF DOCUMENTS AND FOR A LIST OF WITHHELD DOCUMENTS, OHO Order 01-13 (CAF000045) (May 17, 2001, Hearing Officer Andrew J. Perkins), http://www.nasdr.com/pdf-text/01_13oho.txt
America's budget is in crisis. Thanks to Bush's tax cuts and military spending, which have contributed to budget deficits of US$500 billion per year, the US will have to raise taxes and limit budget spending, whether or not Bush is re-elected. The annual military budget, which has increased by US$150 billion since Bush took office, will need to be cut in coming years to get the budget under control.
The US is borrowing massively from abroad. Asia's central banks have bought hundreds of billions of dollars in US securities. Japan alone has foreign exchange reserves of around US$750 billion, much of that in US treasury bills. China, Hong Kong, India, Korea, Singapore and Taiwan together have another US$1.1 trillion or so in reported foreign exchange reserves. In short, the US is in deep and growing debt to Asia. Only massive buying of treasury bills by Asian central banks has prevented the dollar from falling even more precipitously than it has.
The rest of the world is catching up. America's big technological lead will narrow relative to Brazil, China, India and other major economic regions of the developing world. China will have an economy larger than the US economy within 25 years -- potentially 50 percent larger by 2050. India, considerably poorer on average than China, will also close the wealth gap. By 2050, India will conceivably have an economy the size of America's, with four times the population and roughly one-fourth of the average income level per person.
Court Freezes More Than $2 Million of Assets Linked to Suspicious Purchases of Call Options of InVision Technology Inc.
SEC, In Emergency Federal Court Action, Obtains Order Freezing Call Options of InVision Technologies and Proceeds From Sales of InVision Call Options Purchased Through Foreign Banks Days Before $900 Million Merger Announcement
On March 16, 2004 the U.S. District Court for the Southern District of New York entered a Temporary Restraining Order freezing the accounts of certain Unknown Purchasers of the Call Options of InVision Technologies (the "Unknown Purchasers") prohibiting the Unknown Purchasers from obtaining the options or the proceeds from the sale of the options. The Commission alleges that the Unknown Purchasers engaged in illegal insider trading in the last six business days before the March 15, 2004 announcement that GE Infrastructure, a subsidiary of General Electric Company, intended to acquire InVision, a manufacturer of explosive-detection systems, for $50 per share in cash for all outstanding InVision shares.
The Commission's Complaint also alleges:
During the period from March 6, 2004 through March 12, 2004, the Unknown Purchasers purchased a total of 4575 out-of-the-money March 45 and April 45 call options for the shares of InVision. The Unknown Purchasers placed their purchase orders through UBS affiliates in Zurich and London and through UPB Private Bank, Geneva which, in turn, forwarded the purchase orders to UBS Securities LLC, a broker-dealer headquartered in Stamford, Connecticut, for execution.
The transaction was announced before the opening of the market on Monday March 15, 2004. When InVision opened for trading on March 15, the price of InVision's common stock increased by nearly 20% from the Friday closing price, opening at approximately $49.30 per share, an increase of over $8 per share from its closing price on Friday, March 12. As a result, the value of the Unknown Purchasers call options increased by about $1.7 million.
Also on March 15, the Unknown Purchasers sold most of the call options, realizing profits of about $1.27 million. Including the unrealized profits from the call options not sold, the total realized and unrealized profits are about $1.7 million.
In the pending lawsuit, the Commission alleges that the unknown defendants engaged in illegal insider trading in violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5. The complaint seeks permanent injunctive relief, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.
The Court's Temporary Restraining Order prohibits the removal of the InVision call options, or the proceeds, from the sales of the InVision call options from the U.S. brokerage accounts or other entities in which the securities or funds may be. In addition, the Order requires the Unknown Purchasers to identify themselves, imposes an expedited discovery schedule and prohibits the defendants from destroying documents.
The Commission acknowledges the assistance of the International Stock Exchange in this matter.
SEC Complaint in this matter
http://www.sec.gov/litigation/litreleases/lr18627.htm
COMMISSION OBTAINS PRELIMINARY INJUNCTION AND SECOND TEMPORARY RESTRAINING ORDER IN CONNECTION WITH SUSPICIOUS PURCHASES OF INVISION TECHNOLOGY, INC. CALL OPTIONS
Orders Placed from Foreign Accounts Just Ahead of Acquisition Announcement; $2.7 Million in Resulting Proceeds Now Frozen
On April 2, 2004, the U.S. District Court for the Southern District of New York issued a Preliminary Injunction continuing a freeze of about $2.7 million in the accounts of certain Unknown Purchasers of the Call Options of InVision Technologies. The Commission's Complaint alleges that the frozen funds result from suspicious trading in call options of InVision Technologies, Inc. in the days immediately prior to a March 15, 2004, joint announcement by General Electric Company (GE) and InVision, a manufacturer of explosive-detection systems, that GE had agreed to acquire InVision in an all-cash transaction valued at approximately $900 million, or $50 per share of InVision common stock. The Preliminary Injunction was issued in the Commission's previously filed civil injunctive action, Securities and Exchange Commission v. One or More Unknown Purchasers of Call Options for the Common Stock of InVision Technologies, Inc., 04 Civ. 02037 (WHP) (S.D.N.Y.) (filed March 16, 2004).
The frozen proceeds are being held in accounts of UBS Securities LLC, a U.S. brokerage firm and resulted from InVision call option purchase orders that came to UBS Securities through certain of its European affiliates. In addition to the freeze provisions, the Preliminary Injunction continues the Temporary Restraining Order's provisions requiring those who purchased the InVision call options through the UBS Securities accounts to identify themselves, and prohibiting the defendants from destroying documents. To date, no defendant has come forward to contact the Commission staff or the District Court.
Additionally, on March 31, 2004, the Commission amended its complaint in the civil injunctive action to include additional suspicious trading in InVision call options immediately ahead of the joint GE/InVision announcement. The additional trading took place in accounts of Deutsche Bank Securities Inc., a U.S. brokerage firm, and resulted from purchase orders for InVision call options placed through a Deutsche Bank Securities European affiliate. These trades included orders to buy 1,000 April 45 InVision call options on March 12, 2004, the trading day immediately prior to the GE/InVision joint announcement, at prices ranging between $1.25 and $1.50 per contract. The positions were sold the next trading day, at an average price of $4.25 per contract, for a one-trading-day profit of approximately $286,728. On March 31, 2004, the District Court issued a second Temporary Restraining Order in the Commission's action, this time ordering a freeze of proceeds from the InVision option trading in the Deutsche Bank Securities accounts, requiring those who purchased those InVision call options to identify themselves, establishing an expedited discovery schedule and prohibiting the defendants from destroying documents. The District Court has scheduled a hearing for April 8, 2004, to determine whether this Temporary Restraining Order should be converted to a Preliminary Injunction.
The Commission acknowledges the assistance of the International Securities Exchange, the United Kingdom's Financial Services Authority and the Italian Commissione Nazionale per le Societa e la Borsa in the investigation of this matter.
See also Litigation Release No. 18627 (March 17, 2004).
http://www.sec.gov/litigation/litreleases/lr18657.htm
Stock fraud spurs regulators to look online
Last modified: June 21, 2000, 6:35 PM PDT
By Gwendolyn Mariano
Staff Writer, CNET News.com
Just when it seemed stock manipulation suits were out of fashion, the Internet put the problem in the spotlight for securities regulators.
The California Department of Corporations this week settled a lawsuit against an investor for violation of the California investment laws concerning "false and misleading" information posted on the Internet--one of the first such cases to be resolved, but likely not the last.
"You don't see cases like these very often anymore," said Bruce Vanyo, a securities litigator at the law firm Wilson Sonsini Goodrich & Rosati who was not involved in the case. "They're a relic of 70 years ago. You typically don't catch anyone doing it. But this settlement shows that the Internet can be used and abused in affecting stock prices."
The lawsuit is the latest effort by the department to police stock fraud on the Internet. Since last year, it has set up an Internet Compliance and Enforcement Team, which has been cracking down on online scams.
Victor Idrovo of Manhattan Beach, Calif., allegedly posted "false or misleading" messages on Yahoo's Finance message board and "intended to affect the offer, purchase, and sale" of the stock of Metro-Goldwyn-Mayer by using the name of Frank Mancuso, the former chairman and CEO of MGM.
In settling the suit, which was filed last week in Los Angeles County Superior Court, state securities regulators obtained an injunction, a retraction, a fine and costs.
"This case sends a message that people should be more prudent about what they post online regardless of their anonymity," said Marc Crandall, the department's lead counsel of Internet compliance and enforcement.
On April 19 and Oct. 19, Idrovo allegedly claimed to be the former MGM head and wrote messages indicating stock price predications. He also relayed a message from Kirk Kerkorian, the majority shareholder for MGM.
With a headline reading, "Kirk say a minimum of $24 a share," the first message read: "This bad boy is heading north. See you at 22 by the end of the month, if not sooner."
The actual stock was much lower at that time, and the message was an attempt to "talk the stock up," according to Crandall.
But the message that caused uproar, Crandall said, came Oct. 19--when the stock was on its way down.
With a headline reading, "Let the selling begin," the message read: "Down over 2 today and the rites (sic) have not even been issued. If you wait much longer you will lose any amount you might have made with the rites (sic)."
Crandall said the message implied that the former MGM head was suggesting that investors sell all the stock because it was falling.
Although Idrovo's lawyer declined to comment on the lawsuit, Idrovo had stipulated to the injunction and penalties without admitting or denying the allegations.
Idrovo was a frequent trader with a pattern of both long- and short-selling MGM stock through several online brokerage accounts.
"A case against someone who spoofs an identity without authenticity and says something in the name of someone else, I think that's no great reach to find him guilty of something," said Charles Merrill, an Internet lawyer for McCarter & English in Newark, N.J.
Although lawyers are seeing a crackdown on Internet fraud by government regulators, legal cases such as these are sending wake-up calls to Internet users and providers as well as potential online con artists.
"People are really starting to get the picture that these actions are going to be taken seriously and made a high priority," said William D. Briendel, an attorney specializing in securities litigation for Greenberg Traurig. "I think when you have extensive, high-profile prosecutions by the regulators that seems to act as a deterrent."
Briendel said government regulators are not only developing new technology to identify fraudulent schemes on the Internet, but they are also enlisting providers as allies to help track down con artists through the use of subpoenas.
In December, the first Internet stock-fraud case was filed by the Securities and Exchange Commission against three men who were charged with manipulating a stock through Internet chat rooms.
RECENT INCIDENTS & HEADLINES
These updates are based on a collection of reporting from websites and the media.
MIDEAST AND NORTH AFRICA
Iraq
US Marines today closed all roads into Fallujah, the site of last week's slayings of four US civilian contractors and the mutilations of their bodies. Firefights erupted as the Marines raided several houses, sources said, leaving one Marine and five Iraqis dead. There also are reports of clashes in Baghdad and Najaf between coalition forces and Shiites.
Israel
Israeli security forces were placed on high alert ahead of the Passover holiday as troops shot dead a militant and wounded seven other Palestinians in the northern West Bank. The government, meanwhile, kept up its campaign of intimidation against Palestinian leader Yasser Arafat, accusing him of being a bigger obstacle to peace than assassinated Hamas chief Sheikh Ahmed Yassin. Security was being especially tightened around Jewish settlements in the West Bank after the killing of a Jewish resident of the northern West Bank settlement of Avnei Hefetz early Saturday. The attack was carried out by a member of the radical Islamic movement Hamas, 18-year-old Ramzi Fakhri Arda, who was himself shot dead by troops stationed nearby.
Jordan
Reports emerging on 1 April 2004 indicate that Jordanian authorities have increased security at government offices, hotels and public facilities and are conducting an intensive search for a vehicle laden with explosives. The measures are a result of information obtained in a security operation on 30 March, during which security forces seized explosives and arrested several suspected members of a terrorist cell who were allegedly planning to stage attacks in Jordan. Authorities are looking for at least three other suspects and have published their pictures and names on local media, asking for the public's assistance in locating them. Authorities have not revealed the intended targets and timing of the planned attacks.
SOUTHEAST ASIA
Thailand
Reports emerged on 31 March 2004 that a group of heavily armed men raided a quarry in Libon, which is located in the southern Thai province of Yala in an area 40 mi/70 km from the Malaysian border, and stole 2,900 lbs of ammonium nitrate, 170 blasting caps and 58 sticks of dynamite. The government has put security forces on high alert in the southern provinces of Yala, Pattani, Narathiwat, Songkhla and Satun. The country's interior minister voiced concern that attackers involved in the surge in violence in southern Thailand may attempt to conduct attacks in the popular tourist area of Hat Yai. Authorities warned that there is a heightened possibility that attacks may occur during the upcoming Songkran Water Festival between 13 and 16 April 2004.
Philippines
On 30 March 2004, Philippine President Gloria Macapagal Arroyo announced that security forces seized approximately 80 lbs. of TNT and arrested four suspects in Metro Manila, reportedly thwarting terror attacks against malls and trains in the capital. Arroyo claims that the arrests and seizure of explosives prevented a "Madrid-level attack." Authorities believe that the four suspects are members of the Abu Sayyaf Group (ASG), a quasi-separatist/criminal group, and that the suspects reportedly received training from members of the Jemaah Islamiah (JI) terrorist group. According to police officials, the men had been under police surveillance since the beginning of March 2004. Following their arrests, authorities report that the men have claimed responsibility for the blast and subsequent fire aboard a ferry in Manila Bay on 27 February 2004.
Bangladesh
Thousands of business owners in Dhaka staged a protest on 1 April 2004 to demand that the government take serious action to suppress criminal activity in the city. In recent days, traders went on strike to protest over this issue as well. The protests come after a number of reported attacks directed at businessmen in recent weeks and months. No serious violence was reported during the 1 April event.
EUROPE
United Kingdom
Police officers in London carried out anti-terror raids throughout southern London on 30 March 2004. A force composed of at least 700 officers divided into five groups raided 24 houses early on 30 March. Eight British terror suspects of Pakistani descent were arrested. Officials also recovered approximately 500 lbs. of ammonium nitrate. Two suspects were arrested in Uxbridge, west London, and a further three in Crawley south of London. One suspect was detained in Ilford, east of London, and two others in Horley and Slough, south and west of London respectively. The ammonium nitrate was recovered from a mini-storage unit in west London.
Spain
Spanish police have found an explosive device on a high-speed railway between Madrid and Seville last week, Interior Minister Angel Acebes said. A rail employee raised the alert after seeing a suspicious package on the line half an hour outside Madrid and at least 10 trains have been halted. Spain's rail system is particularly busy ahead of the Easter holidays.
Spain was rocked by a series of bombs on passenger trains in Madrid on 11 March which killed 191 and injured hundreds. Police are pursuing suspected Islamic militants for those attacks.
The explosives were similar to those used in the 11 March attack.
Bombs have also been found on train tracks in France and Moscow in recent weeks. Moscow rail officials discovered a grenade rigged to explode when the next train passed on the main rail line northwest of Moscow on 1 April 2004 near the Monino rail station. The device was disarmed successfully.
Greece
United States athletes will have increased security on their flights to the Athens Olympics and an evacuation strategy in case of a major terrorist attack, the media reported Thursday.
The U.S. Olympic Committee's security chief told the media that the U.S. team would receive additional protection from Greek and international authorities during the games because the United States - along with Israel, Britain, Spain and others - is at a higher risk of terrorist threats. Armed air marshals on flights carrying athletes were likely, but no further detail was provided.
AMERICAS
Bolivia
An angry miner with dynamite strapped to his chest blew himself up in Bolivia's congress Tuesday, killing two police officers and wounding 10 others, authorities said. La Paz Police Chief Guido Arandia said the suicide bomber — whose demand for early retirement benefits underscored the grievances of many low-paid miners in Bolivia — stormed into congress around midday and went to a part of the building away from the congressional chambers. The miner detonated his vest laced with at least five sticks of dynamite as congressional security police tried to negotiate. Arandia said he killed himself and fatally wounded Col. Marbel Flores, head of the congressional security police, and an officer who wasn't immediately identified. Col. Carlos Za, head of the country's intelligence service, was critically injured.
Dominican Republic
Dominican Air Force troops took control of six major airports Wednesday when air traffic controllers threatened to strike in demand of wage increases.
President Hipólito Mejía ordered a government decree giving the Civil Aeronautics Department the right to ``preserve and guarantee the security of civil aviation operations in the country."
Bolívar de León, president of the Dominican Association of Air Traffic Controllers union, condemned the takeover, saying at no point did employees make concrete plans to abandon their jobs. The troops arrived at airports in capital Santo Domingo, Santiago, Puerto Plata, Barahona, Punta Cana and La Romana. They told some 300 air traffic controllers and technicians to leave, then took over their duties. How long the troops would be in the airports wasn't clear.
For the past two weeks, the air traffic controllers union has been pushing the Aviation Department, which oversees the airports, to double their wages. Currently air traffic controllers make between $340 and $1,136 a month.
Argentina
On 1 April 2004, approximately 130,000 demonstrators rallied in Buenos Aires demanding an end to the country's increasing crime rate. Similar demonstrations took place in smaller cities across the country. The demonstrators urged the government to re-organize the police force and impose tougher sentences on criminals. Argentina, and particularly Buenos Aires, has seen a sharp increase in the number of kidnappings for ransom targeting local businessmen and ordinary citizens.
Brazil
On 30 March 2004, a strike initiated by the Brazilian Federal Police entered its 21st day. Federal Police have been demanding higher salaries that they claim the government owes them from previous negotiations. The strike by the Federal Police, who are in charge of immigration and customs in Brazil, has caused long delays for people coming in and out of the country of up to four hours. Airline companies operating out of the Antonio Carlos Jobim International Airport in Rio de Janeiro have reportedly been asking customers to arrive at the airport five hours ahead of time to ensure that the flights are not delayed due to people having to wait up to four hours in customs/immigration lines. Federal Police have put approximately 80 percent of their work force on strike. There has been no word from the government on any ongoing negotiations with the Federal Police.
AFRICA
Sudan
Reports emerged on 30 March 2004 that government officials arrested at least 10 military officers in connection with a possible coup attempt. It is not clear from reports when the arrests occurred. Officials believe that the officers arrested belong to the Islamic opposition Popular Congress and that the coup attempt was related to an ongoing armed insurgency in the western region of Darfur. In addition to the military arrests, six ranking opposition politicians were also detained, according to Popular Congress sources. Further details regarding the allegations of a coup attempt are not available at this time.
RECENT INCIDENTS & HEADLINES
These updates are based on a collection of reporting from websites and the media.
MIDEAST AND NORTH AFRICA
Iraq
US Marines today closed all roads into Fallujah, the site of last week's slayings of four US civilian contractors and the mutilations of their bodies. Firefights erupted as the Marines raided several houses, sources said, leaving one Marine and five Iraqis dead. There also are reports of clashes in Baghdad and Najaf between coalition forces and Shiites.
Israel
Israeli security forces were placed on high alert ahead of the Passover holiday as troops shot dead a militant and wounded seven other Palestinians in the northern West Bank. The government, meanwhile, kept up its campaign of intimidation against Palestinian leader Yasser Arafat, accusing him of being a bigger obstacle to peace than assassinated Hamas chief Sheikh Ahmed Yassin. Security was being especially tightened around Jewish settlements in the West Bank after the killing of a Jewish resident of the northern West Bank settlement of Avnei Hefetz early Saturday. The attack was carried out by a member of the radical Islamic movement Hamas, 18-year-old Ramzi Fakhri Arda, who was himself shot dead by troops stationed nearby.
Jordan
Reports emerging on 1 April 2004 indicate that Jordanian authorities have increased security at government offices, hotels and public facilities and are conducting an intensive search for a vehicle laden with explosives. The measures are a result of information obtained in a security operation on 30 March, during which security forces seized explosives and arrested several suspected members of a terrorist cell who were allegedly planning to stage attacks in Jordan. Authorities are looking for at least three other suspects and have published their pictures and names on local media, asking for the public's assistance in locating them. Authorities have not revealed the intended targets and timing of the planned attacks.
SOUTHEAST ASIA
Thailand
Reports emerged on 31 March 2004 that a group of heavily armed men raided a quarry in Libon, which is located in the southern Thai province of Yala in an area 40 mi/70 km from the Malaysian border, and stole 2,900 lbs of ammonium nitrate, 170 blasting caps and 58 sticks of dynamite. The government has put security forces on high alert in the southern provinces of Yala, Pattani, Narathiwat, Songkhla and Satun. The country's interior minister voiced concern that attackers involved in the surge in violence in southern Thailand may attempt to conduct attacks in the popular tourist area of Hat Yai. Authorities warned that there is a heightened possibility that attacks may occur during the upcoming Songkran Water Festival between 13 and 16 April 2004.
Philippines
On 30 March 2004, Philippine President Gloria Macapagal Arroyo announced that security forces seized approximately 80 lbs. of TNT and arrested four suspects in Metro Manila, reportedly thwarting terror attacks against malls and trains in the capital. Arroyo claims that the arrests and seizure of explosives prevented a "Madrid-level attack." Authorities believe that the four suspects are members of the Abu Sayyaf Group (ASG), a quasi-separatist/criminal group, and that the suspects reportedly received training from members of the Jemaah Islamiah (JI) terrorist group. According to police officials, the men had been under police surveillance since the beginning of March 2004. Following their arrests, authorities report that the men have claimed responsibility for the blast and subsequent fire aboard a ferry in Manila Bay on 27 February 2004.
Bangladesh
Thousands of business owners in Dhaka staged a protest on 1 April 2004 to demand that the government take serious action to suppress criminal activity in the city. In recent days, traders went on strike to protest over this issue as well. The protests come after a number of reported attacks directed at businessmen in recent weeks and months. No serious violence was reported during the 1 April event.
EUROPE
United Kingdom
Police officers in London carried out anti-terror raids throughout southern London on 30 March 2004. A force composed of at least 700 officers divided into five groups raided 24 houses early on 30 March. Eight British terror suspects of Pakistani descent were arrested. Officials also recovered approximately 500 lbs. of ammonium nitrate. Two suspects were arrested in Uxbridge, west London, and a further three in Crawley south of London. One suspect was detained in Ilford, east of London, and two others in Horley and Slough, south and west of London respectively. The ammonium nitrate was recovered from a mini-storage unit in west London.
Spain
Spanish police have found an explosive device on a high-speed railway between Madrid and Seville last week, Interior Minister Angel Acebes said. A rail employee raised the alert after seeing a suspicious package on the line half an hour outside Madrid and at least 10 trains have been halted. Spain's rail system is particularly busy ahead of the Easter holidays.
Spain was rocked by a series of bombs on passenger trains in Madrid on 11 March which killed 191 and injured hundreds. Police are pursuing suspected Islamic militants for those attacks.
The explosives were similar to those used in the 11 March attack.
Bombs have also been found on train tracks in France and Moscow in recent weeks. Moscow rail officials discovered a grenade rigged to explode when the next train passed on the main rail line northwest of Moscow on 1 April 2004 near the Monino rail station. The device was disarmed successfully.
Greece
United States athletes will have increased security on their flights to the Athens Olympics and an evacuation strategy in case of a major terrorist attack, the media reported Thursday.
The U.S. Olympic Committee's security chief told the media that the U.S. team would receive additional protection from Greek and international authorities during the games because the United States - along with Israel, Britain, Spain and others - is at a higher risk of terrorist threats. Armed air marshals on flights carrying athletes were likely, but no further detail was provided.
AMERICAS
Bolivia
An angry miner with dynamite strapped to his chest blew himself up in Bolivia's congress Tuesday, killing two police officers and wounding 10 others, authorities said. La Paz Police Chief Guido Arandia said the suicide bomber — whose demand for early retirement benefits underscored the grievances of many low-paid miners in Bolivia — stormed into congress around midday and went to a part of the building away from the congressional chambers. The miner detonated his vest laced with at least five sticks of dynamite as congressional security police tried to negotiate. Arandia said he killed himself and fatally wounded Col. Marbel Flores, head of the congressional security police, and an officer who wasn't immediately identified. Col. Carlos Za, head of the country's intelligence service, was critically injured.
Dominican Republic
Dominican Air Force troops took control of six major airports Wednesday when air traffic controllers threatened to strike in demand of wage increases.
President Hipólito Mejía ordered a government decree giving the Civil Aeronautics Department the right to ``preserve and guarantee the security of civil aviation operations in the country."
Bolívar de León, president of the Dominican Association of Air Traffic Controllers union, condemned the takeover, saying at no point did employees make concrete plans to abandon their jobs. The troops arrived at airports in capital Santo Domingo, Santiago, Puerto Plata, Barahona, Punta Cana and La Romana. They told some 300 air traffic controllers and technicians to leave, then took over their duties. How long the troops would be in the airports wasn't clear.
For the past two weeks, the air traffic controllers union has been pushing the Aviation Department, which oversees the airports, to double their wages. Currently air traffic controllers make between $340 and $1,136 a month.
Argentina
On 1 April 2004, approximately 130,000 demonstrators rallied in Buenos Aires demanding an end to the country's increasing crime rate. Similar demonstrations took place in smaller cities across the country. The demonstrators urged the government to re-organize the police force and impose tougher sentences on criminals. Argentina, and particularly Buenos Aires, has seen a sharp increase in the number of kidnappings for ransom targeting local businessmen and ordinary citizens.
Brazil
On 30 March 2004, a strike initiated by the Brazilian Federal Police entered its 21st day. Federal Police have been demanding higher salaries that they claim the government owes them from previous negotiations. The strike by the Federal Police, who are in charge of immigration and customs in Brazil, has caused long delays for people coming in and out of the country of up to four hours. Airline companies operating out of the Antonio Carlos Jobim International Airport in Rio de Janeiro have reportedly been asking customers to arrive at the airport five hours ahead of time to ensure that the flights are not delayed due to people having to wait up to four hours in customs/immigration lines. Federal Police have put approximately 80 percent of their work force on strike. There has been no word from the government on any ongoing negotiations with the Federal Police.
AFRICA
Sudan
Reports emerged on 30 March 2004 that government officials arrested at least 10 military officers in connection with a possible coup attempt. It is not clear from reports when the arrests occurred. Officials believe that the officers arrested belong to the Islamic opposition Popular Congress and that the coup attempt was related to an ongoing armed insurgency in the western region of Darfur. In addition to the military arrests, six ranking opposition politicians were also detained, according to Popular Congress sources. Further details regarding the allegations of a coup attempt are not available at this time.
The Department of Homeland Security Terrorist Threat Level remains at the “Orange” alert, or “High” alert level. This level is designated when the government believes that there is a high risk of terrorist attacks.
Bomb threats against three U.S. passenger jets and two Amtrak trains triggered extensive security checks on Tuesday but no explosives were found, authorities said. Security officials, aided in some cases by sniffer dogs, took hours to sweep through the planes operated by Northwest Airlines. But the searches, of passengers and luggage as well as the airliners themselves, ended without incident. The aircraft included one that arrived at Detroit's Metropolitan Airport on a flight from Miami, according to a spokeswoman for Northwest.
Meanwhile, US law enforcement and intelligence officials are urging heightened vigilance over the nationa’s rail and road networks, fearing terrorist attacks during the upcoming summer months.
U.S. officials have received intelligence indicating terrorists might attempt to slip into the United States using cultural, arts or sports visas, according to the FBI. The bureau issued a bulletin to 18,000 state and local law enforcement agencies nationwide warning about the potential misuse of P-visas, one of several types granted by the State Department for people visiting the United States for artistic, cultural or athletic purposes. "Recent intelligence indicates that terrorist groups may be interested in exploiting cultural visa programs to infiltrate operatives and support network into the United States," says the bulletin, described Thursday to The Associated Press by a federal law enforcement official.
The US will require fingerprints from virtually all foreign visitors from September, in a massive expansion of a program designed to keep terrorists out of the US. The US Homeland Security Department announced on Friday it would end the exemption from the US-Visit scheme for the 27 visa-waiver countries, which include western Europe and Japan. US officials had told their European counterparts they were considering such an expansion, which could raise new tensions between the US and Europe over travel and data privacy issues.
The month of April commemorates several Christian and Jewish holidays. Law Enforcement and Intelligence Professionals caution that terrorists could target religious ceremonies and institutions in response to these celebrations. Al Qaeda and other associated Islamic terrorist groups have launched a holy war against Jews, Christians, Hindus, and even moderate Muslims. Houses of worship and religious institution remain targets in the current threat of terrorists targeting "soft targets". Such sites may be vulnerable during periods of religious significance.
Christian Holidays
Holy Thursday: April 8, 2004
Good Friday: April 9, 2004
Holy Saturday: April 10, 2004
Easter Sunday: April 11, 2004
Jewish Holidays
Passover: Sundown April 5 - Sundown April 13, 2004
The head of counterterrorism for the Boston FBI office said last week that he briefed former National Security Council officials Richard Clarke and Roger Cressey in June 2000 about his investigation into possible links between Al Qaeda and Algerian natural gas tankers, but that the two never mentioned they had intelligence reports about the issue. But Cressey countered that keeping FBI field offices apprised of what other federal agencies knew was not their job. He is the former deputy counterterrorism chief who said this week that in the late 1990s more than a dozen stowaways on the liquefied natural gas tankers had Al Qaeda ties and that Boston was a "logistical hub" for the terrorist network prior to the 2001 attacks on New York and Washington.
Guernsey: "Offshore" Has Lost Much of its Meaning
12 January 2004
Article by Gerry Williams
I firmly believe that Guernsey has lost its "offshore" name. The simple fact is that the tags "offshore" and "onshore" were lost many years ago.
The recent implementation of laws enforcing the licensing of trust companies in Guernsey has helped raise standards across the board, creating common standards, such as the four-eyes process, to which all trust providers have to comply. Even though this has meant we have had to restructure some of our operations, this raising of the bar is definitely good for us, the business and the clients.
The Guernsey Financial Services Commission has clearly listened to the outside world and I am more than comfortable with the levels of regulation that have been introduced. The island and other financial centres in a similar position should use this to their advantage in terms of business development, as it offers significant comfort to both existing and potential clients within our industry.
Admittedly, there are inevitable additional costs to this sector as a direct result of increased regulatory demands. However, the plus side of the re-enforced positive message which the island can give the world is of far greater importance.
I accept that the regulations have and will continue to have direct effects on the profile within the local industry. We have had to carefully restructure our operational delivery platform, as I am sure many others have, to enhance our risk management and audit function. Also there has been a degree of rationalisation and consolidation within the industry – again I am sure that we have not yet seen the end of this trend. It is inevitable that some of the smaller companies will find it more difficult to put in place the appropriate level of resource to ensure they are fully compliant with the new regulations, so some mergers and take-overs will happen as a matter of course.
In this very competitive environment, it will be the smaller trust companies that may struggle to justify and support the costs required by the new levels of due diligence. As a result, the period of consolidation is expected to continue in the trust industry.
The finance world has been subject to a series of investigations over the last few years, and I feel that well-regulated jurisdictions like Guernsey have come through this process virtually unscathed. Nonetheless these winds of change impelled us to open offices in Switzerland and the UK. Though the world is now a much smaller place, by having a wider presence, one can better meet the needs of the client.
Nonetheless, it is in Guernsey that I believe one can find the optimum environment to conduct trust business. I have worked in many other jurisdictions, such as The Bahamas, Jersey, the Isle of Man and Cayman, however my preference is Guernsey. It is a relatively small place and you can talk to the practitioners and have your views heard by the Guernsey Financial Services Commission with ease – not always possible in other places I have worked. There is a comprehensive financial and legal infrastructure, and basically both clients and practitioners alike consider the jurisdiction to be a pleasant, simple and efficient place from which to conduct business.
With a similar amount of time spent in the trust business, I am well placed to assert that the key to successful trust management is understanding what they are – a structure that takes advantage of the distinction between legal ownership and beneficial ownership - and what that allows clients to achieve. This can include estate planning, avoiding disruption on death, tax minimisation, structures that protect the mentally or physically weak, the protection and continuation of family businesses, pension schemes and much more.
This reality has not changed for the hundreds of years that trusts have been employed. What has changed, I would point out, is the way in which the trust is structured, as it can be a very flexible entity, depending on the needs and requirements of the client.
However, making sure that whatever is created is still fully compliant with regulations is the modern challenge for international trust companies. Guernsey’s removal from the various blacklists that were created undeniably helps in this. The trust arena remains a fascinating business, and one that will continue to flourish. The goal of trust businesses should be to make oneself adaptable enough to be able to react to whatever the market changes may be, which at present are quite difficult to foresee. Nonetheless, it is necessary to remain flexible and fleet of foot, and to take advantage of those changes, as and when they emerge.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Yes, Message Boards Are Used to Manipulate Stocks -- By the Pros
By Don Luskin
Special to TheStreet.com
Originally posted at 4:42 PM ET 8/30/00 on RealMoney.com
There are serious market manipulations happening in some online stock discussion boards. But I disagree with Jim Cramer's assertion that they are a cancer on the markets, and I think the solutions to the worst abuses are straightforward.
In the spirit of full disclosure, I must mention that my company, MetaMarkets.com, hosts discussion boards on its Web site, and we consider boards a valuable component of our business model and customer proposition. TheStreet.com hosts boards as well. So we're all in this together, right?
Whatever may be wrong with online stock discussion boards, what's good about them is that they give ordinary nonprofessional investors the platform from which to make their views known to a wide audience. Boards create a level playing field, breaking the oligopoly on stock market punditry once enjoyed by Wall Street analysts and the media.
Some nonprofessionals post research and opinions on discussion boards that are as insightful and thoughtful as any I've ever seen -- I never cease to be amazed at what ordinary people know. The majority of posts are mediocre and harmless, just like reports by Wall Street analysts and most financial journalists. And a minority -- sometimes a noisy minority -- post messages that are thoughtless, abusive or manipulative. No question about it: There are people who "talk their books" on discussion boards in the hope of influencing stock prices.
But the worst abuses on discussion boards -- the serious manipulations that have real economic consequences -- are committed by professionals. It's the professionals who talk the biggest books, and who stand to make the biggest bucks from manipulations. And because they post anonymously, they think they can get away with it.
The veil of anonymity is what makes these manipulations possible. It is anonymity that prevents the readers of discussion boards from understanding the self-interested motives of abusive professional posters. And it's anonymity that emboldens the professional abusers by making them feel invulnerable to prosecution under the existing securities laws that make their manipulations blatantly criminal.
So job one in cleaning up online discussion boards must be to rip away the veil of anonymity from the professional. And the regulatory authorities -- the Securities and Exchange Commission and the National Association of Securities Dealers -- are the ones in the perfect position to do the ripping. It could be done with the stroke of a pen.
All the SEC and the NASD would have to do is promulgate a rule that defines anonymous expression of opinions on stocks by the brokers, fund managers and investment advisers whom they regulate as manipulative on the face of it. It wouldn't matter whether a message was true, false or anywhere in between. The mere fact of its anonymity would cause it to be deemed manipulative. Any message poster would be obliged to post his or her name, affiliation and position in the security being discussed, just as reputable Wall Street securities analysts typically do now when publishing a printed report.
According to a bulletin posted on the NASD's Web site, posting on discussion boards by registered brokers "without identifying themselves as a such, is not specifically a violation of NASD rules." It's time to create a new rule, and make it apply universally to brokers, fund managers and investment advisers.
Requiring professionals to identify themselves on discussion boards would create a simple, objective, cut-and-dried basis for enforcement action -- so it would significantly raise the stakes on the professional manipulators. Without the veil of anonymity, most of the manipulation would stop overnight.
While no one is exempt from the antifraud provisions of the securities laws, in 1985 the U.S. Supreme Court in Lowe vs. SEC affirmed the free speech rights of ordinary people and the media to talk about stocks without regulation. But the laws are clear that the speech of professionals who meet the registration requirements of the SEC or the NASD are subject to regulation. So removing the veil of anonymity from professionals presents no Constitutional issue, and lives squarely within the current framework of regulatory jurisdictions.
The worst solution to the problem of manipulation on discussion boards is to shift the responsibility for enforcement from the regulators to the board sponsors. The host of an online discussion board is no more in a position to monitor and assure the quality of every posted message than a "common carrier" such as AT&T is to monitor every utterance made over its telephone network.
There is a long legal tradition of the exemption of common carriers from such unbearable burdens. Section 509(c)(1) of the Communications Decency Act, passed by Congress in 1996, states: "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." Parts of the act were overturned by the Supreme Court, but this section still stands. At least two federal court decisions have enforced this statute in favor of America Online. This is analogous to the court rulings that have absolved newspapers and magazines from undue burdens in quality-assuring letters to the editor.
The responsibility of message-board operators should begin and end with an obligation to cooperate with regulators when they seek to enforce the securities laws
Let's be clear here: No amount of regulation will thwart someone hellbent on breaking the law. And securities fraud has been around for as long as there have been securities, and it has nothing particularly to do with the Internet. The case uppermost in all our minds now -- the Emulex (EMLX:Nasdaq - news) hoax -- had nothing to do with message boards. Quite the contrary, it relied on the unwitting cooperation of traditional media to work. The best brands in financial news were helpless to answer the question: Is it real, or is it Emulex?
Discussion boards are valuable forums for sharing information and debating stocks and markets. The simple adaptation of regulations I have proposed would stop most of the worst abuses. But let's not do anything draconian that might have the effect of inhibiting the freewheeling, empowering nature of online discussion boards. Let's not destroy the village in order to save it.
--------------------------------------------------------------------------------
Don Luskin is President and CEO of MetaMarkets.com, and a portfolio manager of OpenFund. At time of publication, OpenFund had no positions in any of the securities mentioned in this column, although holdings can change at any time. Luskin appreciates your feedback and invites you to send it to Don Luskin .
Truth over Rowbacks
A Times policy-shift is subtle but significant.
Something happened at the New York Times last week — a small thing, perhaps, but fundamental and potent — that may forever diminish the privileges and power of the liberal media elite.
What happened is that the Times has been forced to deal with its fox-guarding-the-henhouse policy of letting its op-ed columnists handle corrections of their own errors. That policy of institutionalized unaccountability has led, just as you would expect, to lots of errors and almost no corrections, and to the illusion of infallibility for the likes of Paul Krugman.
Think how much less influential liberal icons like Krugman and Maureen Dowd will be when their errors must be admitted and corrected. Think how the threat of that will restrain them from making errors in the first place. And, most important, think how much less powerful their rhetoric will be when it can no longer rely of errors which, to be blunt, are frequently not "errors" at all — but rather deliberate distortions, misquotations, and downright lies.
The Times's policy-shift is subtle but significant. In a memo last week, editorial-page editor Gail Collins declared,
while their opinions are their own, the columnists are obviously required to be factually accurate. If one of them makes an error, he or she is expected to promptly correct it in the column. After some experimentation at different ways of making corrections, we now encourage a uniform approach, with the correction made at the bottom of the piece.
What does this mean, exactly? It means that no longer can columnist corrections come in the form of what Times “public editor” Daniel Okrent calls a “rowback” — the correct restatement of the error in a subsequent column, without reference to the original error or any admission that there even was an error in the first place. Columnists (and reporters, for that matter) love rowbacks — they can comfort themselves by setting the record straight, but without having to admit the error.
Here's an example. I pointed out in a Krugman Truth Squad piece last year that Krugman's November 4 column had foreshortened the following quotation by Republican representative George Nethercutt — excising the critical final five words and making it seem as though Nethercutt were indifferent to the deaths of American soldiers:
But it's, it's, it's a bigger and better and more important story than losing a couple of soldiers every day, which, which heaven forbid, is awful.
Outed by the Truth Squad, Krugman ran a rowback in his November 11 column:
Some say that Representative George Nethercutt's remark that progress in Iraq is a more important story than deaths of American soldiers was redeemed by his postscript, “which, heaven forbid, is awful.” Your call.
Pretty slick, eh? No admission of the shameful distortion in the first column. That's down the memory hole. Instead, the correct restatement of the quotation is used as a way to take another slap at Nethercutt, and at Krugman's critics at the same time.
Under Gail Collins's new policy, however, it will have to read something like this:
Correction: In my November 4 column, I foreshortened a statement by Representative George Nethercutt, omitting a phrase in which he said of the death of American soldiers in Iraq, “which, heaven forbid, is awful.” Without that phrase, the misleading impression was given that Mr. Nethercutt is indifferent to the death of American soldiers. I regret any misunderstanding.
Will Collins really make Krugman — and Dowd and all the rest — change their self-serving ways? Maybe. In her memo, she writes,
They are expected to correct every error. Anyone who refused to fulfill this critical obligation would not be a columnist for The New York Times very long.
Strong words. And in his Sunday column, Dan Okrent put Collins in a position in which she's going to have to take the heat if her new policy isn't followed. Okrent wrote that
it's [Collins's] assertion of responsibility that matters most. Critics might say her statement of policy is very gently phrased, but when I asked her if there was wiggle room, she was unequivocal: “It is my obligation to make sure no misstatements of fact on the editorial pages go uncorrected.”
It must be said, though, that Collins has never been anything more than a dutiful Times apparatchik when it comes to defending the illusion of her columnists’ infallibility. On my blog, The Conspiracy to Keep You Poor and Stupid, I've twice documented (here and here) what amount to nothing less than blatant Collins cover-ups of Krugman errors.
The trick, now, is to keep the pressure up — here, at the Krugman Truth Squad, at The National Debate blog, and even at The Nation, where David Corn has urged correction of what he thinks are unadmitted errors by conservative Times columnist William Safire. It has been nothing but pressure from people like these — combined with the arrival of in-house watch-dog Okrent — that moved things this far at the calcified and self-satisfied New York Times.
So, Miss Collins . . .
. . . if your columnists "are expected to correct every error," we need to see a prompt correction of Paul Krugman's misquotation of Vice President Dick Cheney in his column last Tuesday.
As Krugman Truth Squad member Carol Vitucci pointed out, Krugman quoted Cheney saying that former terrorism czar Richard Clarke was "out of the loop." In fact, Cheney told Rush Limbaugh in a radio interview that Clarke "wasn't in the loop."
A tiny difference — perhaps no difference at all when it comes to essential meaning. Or, as Krugman Truth Squad member Mike Hertzberg pointed out to me, maybe there's all the difference in the world:
The correct quote is that Clarke “wasn't in the loop, frankly, on a lot of this stuff” (emphasis added). That's a qualified “wasn't in the loop,” not a global one. It's an admission that Clarke was in the loop on some stuff, but not on other stuff. This suggests not as wide a chasm between Cheney and Rice as the Times and others have reported.
Either way, it's an error. And it's a misquotation of the Vice President of the United States. And an honest correction at the end of some future Krugman column would be just as effective as anything else in punching through his veneer of infallibility.
So far, there's been no correction, and the misquotation was even repeated last Thursday in a Times news story by Elizabeth Bumiller. Apparently Timesmen and Timeswomen find it more satisfactory to get their quotes from Paul Krugman, rather than going to original source material — especially when reading the transcript requires going to such distasteful places as Rush Limbaugh's site or the White House site.
On Friday, however, in a Times house editorial, the quote was suddenly printed correctly, with no mention of the two prior misquotations. A rowback! Collins had not at publication time replied to my e-mail regarding this. She's in deep on this one now — hopefully she hasn't opted for silence.
Still, I think, truth has an ally in Dan Okrent. His moral sanction will be more valuable than anything else in keeping pressure on the Times. He was sending a message in his column Sunday when he quoted me and wrote about the work of the Krugman Truth Squad on National Review Online. He's letting the Times know that he's listening to even its most hated critics — and that the so-called "newspaper of record" isn't the only arbiter of truth.
When Okrent's 18-month term as "public editor" is over, let's hope that no one has any illusions anymore that the Times is, indeed, the newspaper of record. Stripped of that undeserved imprimatur, its power to unfairly influence public debate will be greatly diminished. The most powerful tool of the liberal media elite will be cut down to size — at last.
— Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your comments at don@trendmacro.com.
Close Minded
To Don's dismay, the mutual fund establishment continues to run scared from more fund disclosure.
On August 31, 1999, Dave Nadig and I, and the team at MetaMarkets.com, started managing the world's first "interactive mutual fund." It was the first fund ever to display all its portfolio holdings updated in real time -- to show and explain all trades as soon as they are completed -- to publish ongoing commentary and research about stocks and the market by the fund's managers -- and to invite fund shareholders and the public to interact with the fund's managers online.
We did it because we wanted to demonstrate that there's a new and better way for mutual funds to talk to their shareholders, their shareholders' advisers, and the public. We were fed up with the fact the the mutual fund industry constantly warns you that "past performance is no guarantee of future returns" -- but then reveals virtually nothing useful or timely about funds except their past performance. Yes, our intention has always been to make money with this innovation, by recognizing an unmet need in the marketplace. But at the same time, it's a crusade for us. We think that showing people how their money is invested is the right thing to do.
So it's with more than a little bit of frustration that we read yesterday that the Investment Company Institute, the lobbying organization of the mutual fund industry, announced that it had provided the Securities and Exchange Commission "...with information demonstrating that average investors are much more likely to be harmed than helped if all mutual funds are required to reveal their portfolio holdings more than the current, twice-a-year requirement."
The ICI's submission is the latest shot fired in a war that we started in May, 2000, when we sent an open letter to the ICI's president, Matthew Fink, calling for greater mutual fund disclosure. The letter was cosigned by several others, including Mark Rekenthaler of Morningstar. When Dave Nadig went to Washington to discuss it with the ICI's SEC Rules Committee, he was given the bum's rush. But the issue wouldn't go away. And now, a little more than a year later, it's under SEC review and the ICI is scared enough to go public with the Commission to try to head it off at the pass.
The centerpiece of the ICI's submission to the SEC is a study conducted by University of Maryland finance professor Russ Wermers. The ICI summarizes the study as concluding that "...more frequent disclosure could potentially raise fund-trading costs by increasing the risk that outsiders would anticipate fund trades and trade ahead of funds. Such 'front running' can increase the price that funds pay to purchase securities and lower the price funds receive when they sell. ...abusive trading activities would become more widespread and would adversely affect fund performance."
What, are you surprised? You shouldn't be: this is neither the first nor the last time that a study performed by an academic, financed by a lobbying organization, has arrived at precisely the conclusions that the lobbying organization has already espoused.
The ICI cites a survey of the ICI's member mutual fund companies, showing that "...some mutual funds have determined that more frequent disclosure creates an unacceptable risk of facilitating abusive practices that would harm their shareholders. In addition, members responding to the survey reported virtually no demand for more portfolio holdings disclosure from their shareholders."
Yet at the same time, the same survey shows that "...many funds already disclose portfolio holdings information more than twice a year" -- twice a year being the current regulatory minimum for disclosure.
How is that possible? How can "many funds" do something that "creates an unacceptable risk" and for which there is "virtually no demand"? It can only be that -- among the thousands of mutual funds in America -- there is room for difference of opinion as to whether more frequent disclosure is risky, and as to whether there is demand for it.
Obviously, we at MetaMarkets.com believe there is demand for it -- and for more of it. We believe that based on the very positive public and media response we've gotten to our own modest initiatives in this area over the last two years. And we believe it based on two overwhelmingly conclusive Harris Polls conducted for us -- one, in 2000, of individual investors, and another, in 2001, of investment advisors. But let it never be said that the ICI let itself be confused by the facts: our polls are simply waved away by the ICI in their letter to Paul Roye, director of the SEC’s Division of Investment Management, as being "of dubious value."
On the one hand I utterly disapprove of the ICI's scorched earth approach to an idea that has great merit, and an issue that deserves nuanced consideration. But on the other hand, I respect that the ICI is doing its most important job for its members -- protecting them from new regulations, in an industry that is perhaps more regulated than any industry other than nuclear power generation.
Throughout our crusade for more mutual fund disclosure, we have never advocated that it be mandated by regulation. Quite the contrary -- we see our own efforts as a shining example of a free market response to a legitimate consumer need, a classic attempt to "do well by doing good." And ours is just one of an infinite number of ways to meet that need. There are thousands of mutual funds out there, and there should be just as many different approaches to serving the needs of shareholders, with many different levels of disclosure, and with many different forms of disclosure. As far as I'm concerned, the regulations should be relaxed to permit mutual funds to make no disclosure. Why not? Let's see if there's a market for it.
So here's hoping that the ICI's efforts will succeed in squelching new regulations -- but not in squelching new innovations!
-=-=-=-=-
Don Luskin
MetaMarkets.com
AFL-CIO joins the disclosure debate Post rated (max 5)
By Duff Ferguson (rating 3.84) on 21:22 08.23.00
The open disclosure debate got a powerful shot in the arm this week as news leaked out that the AFL-CIO, a powerful collection of 68 national and international labor unions representing an incredible 13 million Americans, is preparing to join the fight for more open disclosure in the mutual fund industry. Even we at MetaMarkets.com are amazed how the incendiary message of our May letter to the ICI and Dave Nadig’s straight-talking June ICI testimony has stretched far beyond the clubby mutual industry to the world of the working-class salaryman.
Here’s the latest list of organizations out there following our lead and beating the bongos for more open disclosure:
-- MetaMarkets.com
-- Morningstar
-- National Association of Investment Clubs
-- IPS Funds
-- On24.com
-- LionShares.com
-- Idayo.com
-- FundDemocracy.com
-- The Consumer Federation of America
-- Financial Planning Association
-- AFL-CIO
On the horizon, former SEC official and devoted fund industry thorn-in-the-side Mercer Bullard (founder of FundDemocracy.com) is gathering together an impressive crowd for an October disclosure symposium in Washington. Besides our own Dave Nadig, speakers will include Paul Roye, director of the SEC's Division of Investment Management, Morningstar’s CEO Don Phillips, and Harold Evensky, the much quoted head of Florida financial planning firm Evensky Brown & Katz. You’d think all of us here at MetaMarkets.com would be smiling!
But we’re not.
In his June testimony, Dave warned the ICI’s SEC Rules Committee what would happen if the industry didn’t listen to investors' call for more information and respond quickly with decisive action. Our original message was simple: investors deserve to know what is going on with their money, and we (meaning the fund industry) should be smart enough to give investors what they want before the SEC has to step in and force change on us with increased regulations for all.
And, sure enough, that is now the direction that this whole debate is taking…fast.
Mercer Bullard, the Financial Planning Association, and the Consumer Federation of America have all filed petitions with the SEC demanding mandatory increased disclosure. The AFL-CIO can’t be far behind.
Don’t get me wrong – investors deserve their information, and if this is the only way it can happen then so be it. But how simple it would have been for the ICI to recommend immediate industry-wide research into investor disclosure needs! How hard would it have been for this influential trade organization to recommend that all funds move to at least quarterly full holdings disclosure right away, since almost all fund companies already report quarterly full holdings to Morningstar anyway?
Instead the industry fell back on tired, paternalistic arguments, saying it knew what was best for its shareholders when it could have just listened to them. But anyone who takes a look at the MetaMarkets.com site can see that talking to shareholders directly is not such a radical concept!
As Peter Leyden said back in May: “The world is heading for more and more transparency and so businesses had better start adapting to it. Those that move quickly and even facilitate it will thrive. Those that resist it or subvert it will suffer in the long term…”
We’ll keep urging the industry to act now – it could still take this issue and use it to show how shareholder-friendly it can be. It may not be too late. But the clock is running out, and the chances for the industry to grab the open disclosure ball and run with it are quickly disappearing.
http://www.metamarkets.com/
http://www.morningstar.com/
http://www.better-investing.org/
http://www.ipsfunds.com/
http://www.on24.com/
http://www.lionshares.com/
http://www.idayo.com/
http://www.funddemocracy.com/
http://www.consumerfed.org/
http://www.aflcio.org/
Intellectual Ammo
Debating firepower from the team
By Dave Nadig (rating 3.84) on 11:58 05.17.00
This week the entire mutual fund industry meets in Washington DC at the Investment Company Institute to discuss the critical issues of the day. The ICI helps determine policy for the entire mutual fund world, yet unbelievably, disclosure is not on the agenda. We at MetaMarkets.com, in conjunction with some of our colleagues and competitors, feel compelled to advance this issue, and have thus wrote this letter to the President of the Organization. Representatives from Morningstar, IPS Millenium, the National Association of Investment Clubs, and On24 have joined us. As always, we appreciate your comments.
--------------------------------------------------------------------------------
May 17, 2000
Mr. Matthew Fink
President
Investment Company Institute
1401 H Street, NW
Washington, DC, 20005
Dear Matt:
This year, as we come together at the ICI's General Membership Meeting to celebrate the sixtieth anniversary of the establishment of the mutual fund, our industry is entrusted with the care of $7 trillion invested in over 10,000 funds. Even as we marvel at this tremendous long term success, we should also feel a sense of shame that investors, advisers, and third-party watchdogs have only a pittance of information available to them if they are interested in knowing exactly what fund managers are doing with this huge pool of assets.
According to TheStreet.com, an astonishing 18 of the top 25 fund management companies only allow outsiders - including their fund shareholders - to examine the full composition of their funds a meager two times per year. And what are shareholders actually shown? A report with information that is often several months out of date by the time it reaches their mailbox. In today's wired, information-rich world, this is unacceptable.
The existing system puts investors at a strong disadvantage in two ways:
Inadequate information makes for poor investment decision making
Shareholders relying on outdated information to make investment decisions are shooting blind. This is true also for the advisers, reporters, and rating companies that shareholders trust to help guide them to appropriate investments - how can these professionals lend accurate, useful insight when their data reflects weeks or months-old information? Portfolios can change rapidly and radically in terms of holdings, risk exposure, cash position, and sector weightings in today's swift moving markets Yet there is little means for the shareholder to learn of the dynamic state of his or her funds beyond checking a price in the morning paper.
Inadequate disclosure invites misleading portfolio management activity
The industry should take pride in its reputation for strong self-regulation and the absence of major scandal, but the fact remains that current policies leave mile-wide cover for misleading activity. Certainly the largest fund companies, with millions invested in their powerful brands, have much to lose if scandal erupts. But as recently as September 1999, one of the largest fund companies was fined by the SEC for failing to disclose the impact of aggressive portfolio strategy and IPOs on the performance of a fund in the early days of that fund's life - an all-too common strategy that would be difficult to obscure if more frequent disclosure were the rule.
And what of the hundreds of smaller fund companies purveying product in our industry? No reporters are calling them to inquire about portfolio moves, and rating companies are physically unable to dig beyond their stated semi-annual data - what resources does the individual have to make sure for themselves that their investments are appropriate? So-called "window dressing" is well known to be the result of money managers' desire to obscure their true strategy. Why is the fund industry not acting pro-actively to address this hot-button issue now through more aggressive disclosure policies?
Clearly, if abuses exist, they are not pandemic in the fund industry. But what message are we sending if we are unwilling to consider change that will help minimize the possibility of such activity?
The existing disclosure policy, which only mandates full exposure bi-annually, is a fund industry anachronism that is overdue for retirement. In 1940 (or even 1985), when ordinary mail was the only means available to send information to shareholders, infrequent disclosure was a practical necessity to keep fund expenses under control. But today, the rise of the Internet as an investment, research, and connectivity tool for individuals has rendered this policy obsolete.
Unfortunately, the industry has been sluggish in its recognition of the potential of the Internet to facilitate more open disclosure, apparently choosing instead to wait until regulator or shareholder pressure forces a change. Below are the most commonly voiced arguments against more open disclosure:
"Shareholders don't want or need more detail."
This paternalistic attitude results from the sad fact that, until recently, no one thought to actually ask shareholders their opinion. Montgomery Funds did - their 1999 survey of 2,500 online investors found that 97% would be interested in a fund that provided more up-to-date portfolio information. An ongoing poll by TheStreet.com has found that 76% of respondees favor the idea of funds releasing portfolio holdings more often.
Regardless of whether or not the average shareholder actually pores meticulously over portfolio holdings (and there are many that do), freer access to information is still badly needed. The community that utilizes this information is much wider than just the individual shareholder - the media, rating companies, regulators, and financial advisers all rely on it to rank fund performance and risk characteristics. What use is an analysis that is assembled on the basis of stale or incomplete information? The potential for nasty surprises is huge, and it creates an open opportunity for lawsuits and an environment of distrust.
"If given too much up-to-date information, shareholders will adopt a short term trading mentality that is antithetical to the long-term holding periods commonly associated with mutual funds."
Similar arguments were put forth in the 1980s by those who opposed giving 401(k) plan participants more information about their investments, as well as daily access to trading between those investments. Actual experience has now shown that 401(k) participants tend to trade less when given more information, even if they also have more opportunities to trade.
"Frequent disclosure will give away my strategy to my competitors, and opportunistic traders will be able to guess my next move and profit by 'getting in front' of my trades."
This contention is true for a certain sector of the industry, particularly for big funds that invest in small companies. Large block trades can move stock prices, creating opportunities for "front-running" if certain strategies are revealed too early. However, we must find a better balance between the legitimate need for short-term anonymity and the rights of shareholders. The industry may not be ready for full real-time disclosure, but quarterly disclosure is surely a reasonable first step.
In the words of John Rekenthaler, Morningstar's research director, "Quarterly online [disclosure] is a reasonable idea. Relatively few funds have massive turnover from quarter to quarter. [But] the reality is that for 99% of the fund managers out there, you could have the information monthly."
Today in our industry we have examples of funds that reveal their holdings at least daily, including one that reveals its trades and holdings right up to the minute. Why is there no serious discussion on an industry level to see how these innovations can be applied more widely? Compared to this level of openness, twice yearly exposure is absurdly conservative.
"The extra administration costs involved in reporting the information will increase fund expenses and create extra costs for investors."
In the age of the Internet, this argument no longer holds water. Almost every fund company has a website on which detail could be made broadly and cheaply available as often as they chose. Since not everyone is yet online, the industry could continue to mail twice-yearly to shareholders to keep costs down, while revealing more frequent disclosure online. Indeed, many fund companies have adopted individual policies for the disclosure of top holdings at set intervals, and have thus already been bearing the costs. The incremental cost of this strategy would be practically nothing, yet a consistent, industry wide policy would yield immediate benefits for the investor and the watchdog community.
Where Do We Go From Here?
In view of the obvious potential benefits for investors, as well as the very real danger of an erosion of trust in the industry if the open disclosure issue is not addressed head on, the ICI should establish a committee immediately to examine disclosure policy, focusing on the following points:
What is an acceptable minimum portfolio disclosure standard for the entire industry? Are we ready for monthly full holdings disclosure, or is quarterly the best first step?
What exactly should be disclosed and with what time-lag should it be revealed?
How should this disclosure be carried out (printed or online), and what format should it take?
What will the timetable be for rolling out this new policy?
Today's shareholders are evolving rapidly in terms of the level of information and access they expect with their investments. We need to make the choice now to evolve along with them or fail to serve their needs into the future. Investors have been wise to trust mutual funds as their investment vehicle of choice for meeting their long term wealth-building goals, but we must continue to earn that trust by having the confidence to show our hands more openly. If we have nothing to hide, we should not hide. We should demonstrate our integrity to shareholders by committing as an industry to pushing the disclosure envelope pro-actively as hard as we prudently can.
In the final analysis, we can never forget that it is the shareholder's own money that we are managing, and it is therefore their right to have as much information as possible about how it is being cared for. It is the industry's duty as the guardian of these assets to discard its traditional policy and immediately put serious consideration into what new level of disclosure is feasible today.
Sincerely,
Donald L. Luskin
President, CEO, and Co-Founder
MetaMarkets.com H. Davis Nadig
Executive VP and Co-Founder
MetaMarkets.com
Co-Signers:
John Rekenthaler
Research Director
Morningstar, Inc. Robert Loest, Ph.D., CFA
Portfolio Manager
IPS Funds
Thomas O'Hara
Chairman, Board of Trustees
National Association of Investment Clubs
Mitch Ratcliffe
VP, Editor-in-Chief
On24, Inc.
Glenn Tanner
Managing Director
General Manager
LionShares.com, a Division of Worldly Information Network
http://metamarkets.com/disclosure/07_harris_summary.pdf
http://metamarkets.com/disclosure/0529_harris_advisor_exec_sum.pdf
MetaMarkets.com: A Requiem
Don & Dave sum up what we've all achieved together on MetaMarkets.com
"My soul would be an outlaw."
Repent, Harlequin! Said the Ticktockman, Harlan Ellison
"Trust thyself: Every heart vibrates to that iron string."
Self Reliance, Ralph Waldo Emerson
"Opportunity is missed by most people because it is dressed in overalls and looks like work."
Thomas Edison
"Rules serve best when broken."
Time Enough For Love, Robert Heinlein
Nearly two years ago to the day, we embarked on a great adventure. On August 31st, 1999, the first fund managed by the MetaMarkets.com investment team was started: OpenFund. Today we mark the end of the journey.
Our goal was not modest - to revolutionize the way mutual funds deal with their customers - completely in the open, and in real time. At the same time, we set out to pioneer a new kind of investment journalism - coming from the heart of a real investment management process. We vowed to expose every part of the process, warts and all. Those of you who've been with us from the beginning watched as we invested those first dollars in the fund (largely from friends and family to whom we will be forever grateful). A few weeks ago, you had the dubious privilege of seeing the fund's final unwinding trades.
Along the way, we kept our heads up, stuck to our principles, and kept lit the torch of mutual fund transparency. We stirred the pot, so much so that the Investment Company Institute felt it necessary to dedicate its entire research effort to proving that mutual fund transparency is hazardous to your health - yet on the horizon are new SEC rules moving the entire industry closer to the standards we have pioneered.
But we are not an immovable object in the wake of what has been a nearly irresistible force, in the form of a savage bear market. And so, we find ourselves - as a company - faced with the task of winding up our affairs.
One of the biggest and best surprises in this process has been you - the MetaMarkets.com community. This is a community of which there have never been leaders, as such - only many, many enthusiastic partners. Around our grand vision, a group of investors - novice and professional alike - coalesced. For every article we wrote (each and every day for over 500 market days), we learned something from the community. Through the contributions of the MetaMarkets Think Tank, our compatriots on the investment team, and total strangers, we leave enriched. And for that, we thank you.
But every ending is a beginning. While this site may fade, our interest in the markets won't. Nor can the muse that brings us to the keyboard each morning be easily muted. Some of us whom you've come to rely on for commentary - or just a good laugh - will be carrying on at Trend Macrolytics . Others of us will surely move on to different paths. We hope you'll track us down - we'd love to hear from you.
The best is yet to be.
Don Luskin & Dave Nadig
August 17, 2001
Death Tolls for the Man-made Megadeaths of the Twentieth Century
http://users.erols.com/mwhite28/warstatx.htm
30 Worst Atrocities of the 20th Century
http://users.erols.com/mwhite28/demowar.htm
When the 80 missing Nukes from the old USSR secular states turn up in the hands of terrorists who seek revenge against the British, Americans, Isreali's and their supporters, it will leave the Hemoclysm at the doorstep of the Bush/Blair/Sharon Administrations.
"It's very possible, therefore, that future historians will consider these events to be mere episodes of a single massive upheaval -- the "Hemoclysm", to give it a name (Greek for "blood flood") -- which took the lives of some 155 million people. All in all, over 80% of the deaths caused by Twentieth Century atrocities occurred in the Hemoclysm."
http://users.erols.com/mwhite28/atrox.htm
http://users.erols.com/mwhite28/war-list.htm
History tends to repeat itself. Be prepared for the worst is yet to come!
First Amendment timeline
Significant historical events, court cases, and ideas that have shaped our current system of constitutional First Amendment jurisprudence:
1641
The Massachusetts General Court drafts the first broad statement of American liberties, the Massachusetts Body of Liberties. The document includes a right to petition and a statement about due process.
1663
Rhode Island grants religious freedom.
1689
Publication of John Locke's Letter Concerning Toleration. It provides the philosophical basis for George Mason's proposed Article Sixteen of the Virginia Declaration of Rights of 1776, which deals with religion. Mason's proposal provides that "all Men should enjoy the fullest toleration in the exercise of religion."
1708
Connecticut passes first dissenter statute and allows "full liberty of worship" to Anglicans and Baptists.
1735
Libel trial of New York publisher John Peter Zenger for published criticism of the Royal Governor of New York. Zenger is defended by Andrew Hamilton and acquitted. His trial establishes the principle that truth is a defense to libel and that a jury may determine whether a publication is defamatory or seditious.
1771
The State of Virginia jails 50 Baptist worshipers for preaching the Gospel contrary to the Anglican Book of Common Prayer.
1774
Eighteen Baptists are jailed in Massachusetts for refusing to pay taxes that support the Congregational church.
1776
Virginia's House of Burgesses passes the Virginia Declaration of Rights. The Virginia Declaration is the first bill of rights to be included in a state constitution in America.
1777
Thomas Jefferson completes his first draft of a Virginia state bill for religious freedom, which states:
"No man shall be forced to frequent or support any religious worship, place, or ministry whatsoever."
The bill later becomes the famous Virginia Statute for Religious Freedom.
1776
The Continental Congress adopts the final draft of the Declaration of Independence on July 4.
1786
The Virginia legislature adopts the Ordinance of Religious Freedom, which disestablishes the Anglican Church as the official church and prohibits harassment based on religious differences.
1787
Congress passes the Northwest Ordinance. Though primarily a law establishing government guidelines for colonization of new territory, it also provides that "religion, morality and knowledge being necessary also to good government and the happiness of mankind, schools and the means of education shall forever be encouraged."
1791
On December 15, Virginia becomes the 11th state to approve the first 10 amendments to the Constitution, the Bill of Rights.
1796
Andrew Jackson opposes the inclusion of the word "God" in Tennessee's constitution.
1798
President John Adams oversees the passage of the Alien and Sedition Acts. In response, James Madison issues the "Virginia Resolution" and Thomas Jefferson introduces the "Kentucky Resolution" to give states the power to declare the Alien and Sedition Acts null and void.
On September 12, newspaper editor Benjamin Franklin Bache, the grandson of Benjamin Franklin, is arrested under the Sedition Act for libeling President John Adams.
19th Century
The 19th century witnesses a Supreme Court hostile to many claims of freedom of speech and assembly. Fewer than 12 First Amendment cases come before the court between 1791 and 1889, according to First Amendment scholar Michael Gibson. This is due to the prevailing view among federal judges that the Bill of Rights does not apply to state actions.
1801
Congress lets the Sedition Act of 1798 expire, and President Thomas Jefferson pardons all person convicted under the Act. The act had punished those who uttered or published "false, scandalous, and malicious" writings against the government.
1836
The U.S. House of Representatives adopts gag rules preventing discussion of antislavery proposals. The House repeals the rules in 1844.
1859
John Stuart Mill publishes the essay "On Liberty." The essay expands John Milton's argument that if speech is free and the search for knowledge unfettered, then eventually the truth will rise to the surface.
1863
General Ambrose Burnside of the Union Army orders the suspension of the publication of the Chicago Times, pursuant to the right of a commander to silence public expression of ideas and information deemed harmful to the military effort. President Lincoln rescinds Burnside's order three days later.
1864
General John A. Dix, a Union commander, orders the New York Journal of Commerce and the New York World closed after both papers publish a forged presidential proclamation purporting to order another draft of 400,000 men. Publication of the papers resumes two days later.
1868
The Fourteenth Amendment to the Constitution is ratified. The amendment, in part, requires that no State shall deprive "any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."
1891
The 100th anniversary of the Bill of Rights.
20th Century
Free-speech claims form a substantive and integral part of the early 20th-century First Amendment cases before the U.S. Supreme Court. This may well be due to the extraordinary social upheavals of the era: massive late-19th-century immigration movements, World War I and the spread of socialism in the U.S.
1907
In Patterson v. Colorado—its first free-press case—the U.S. Supreme Court determines it does not have jurisdiction to review the "contempt" conviction of U. S. senator and Denver newspaper publisher Thomas Patterson for articles and a cartoon that criticized the state supreme court. The Court writes that "what constitutes contempt, as well as the time during which it may be committed, is a matter of local law." Leaving undecided the question of whether First Amendment guarantees are applicable to the states via the Fourteenth Amendment, the Court holds that the free-speech and press guarantees only guard against prior restraint and do not prevent "subsequent punishment."
1917
Congress passes the Espionage Act, making it a crime "to willfully cause or attempt to cause insubordination, disloyalty, mutiny, or refusal of duty, in the military or naval forces of the United States," or to "willfully obstruct the recruiting or enlistment service" of the United States."
1917
The Civil Liberties Bureau, a forerunner of the American Civil Liberties Union (ACLU), is formed to oppose the Espionage Act.
1918
Congress passes the Sedition Act, which forbids spoken or printed criticism of the U.S. government, the Constitution or the flag.
1919
In Schenck v. U.S., U.S. Supreme Court Justice Holmes sets forth his clear-and-present-danger test: "whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress has the right to prevent." Schenck and others had been accused of urging draftees to oppose the draft and "not submit to intimidation." Justice Holmes also writes that not all speech is protected by the First Amendment, citing the now-famous example of falsely crying "fire" in a crowded theater.
1919
In Debs v. U.S., the U.S. Supreme Court upholds the conviction of socialist and presidential candidate Eugene V. Debs under the Espionage Act for making speeches opposing World War I. Justice Holmes claims to apply the "clear and present danger" test; however, he phrases it as requiring that Debs' words have a "natural tendency and reasonably probable effect" of obstructing recruitment.
1920
Founding of the American Civil Liberties Union (ACLU).
1921
Congress repeals the Sedition Acts.
1925
In Gitlow v. New York, the U.S. Supreme Court upholds under the New York criminal anarchy statute Gitlow's conviction for writing and distributing "The Left Wing Manifesto." The Court concludes, however, that the free-speech clause of the First Amendment applies to the states through the due-process clause of the Fourteenth Amendment.
1925
The "Scopes Monkey Trial" occurs in Dayton, Tenn. School-teacher John Thomas Scopes is found guilty of violating a Tennessee law which prohibits teaching the theory of evolution in public schools. The case pits famed orator William Jennings Bryan against defense attorney Clarence Darrow.
1926
H.L. Mencken is arrested for distributing copies of American Mercury. Censorship groups in Boston declare the periodical obscene.
1928
In People of State of New York ex rel. Bryant v. Zimmerman, the U.S. Supreme Court upholds a New York law which mandates that organizations requiring their members to take oaths file certain organizational documents with the secretary of state. The Court writes: "There can be no doubt that under that power the state may prescribe and apply to associations having an oath-bound membership any reasonable regulation calculated to confine their purposes and activities within limits which are consistent with the rights of others and public welfare."
1931
In Stromberg v. California, the U.S. Supreme Court reverses the state court conviction of a 19-year-old female member of the Young Communist League, who violated a state law prohibiting the display of a red flag as "an emblem of opposition to the United States government." Legal commentators cite this case as the first in which the Court recognizes that protected speech may be nonverbal, or a form of symbolic expression.
1931
In Near v. Minnesota, the U.S. Supreme Court invalidates a permanent injunction against the publisher of The Saturday Press. The Court rules that the Minnesota statute granting state judges the power to enjoin as a nuisance any "malicious, scandalous and defamatory newspaper, magazine or other periodical" is "the essence of censorship." The Court concluded that the primary aim of the First Amendment was to prevent prior restraints of the press.
1933
President Franklin D. Roosevelt pardons those convicted under the Espionage and Sedition Acts.
1933
California repeals its Red Flag Law, ruled unconstitutional in Stromberg.
1936
In Grosjean v. American Press Co., the U.S. Supreme Court invalidates a state tax on newspaper advertising applied to papers with a circulation exceeding 20,000 copies per week as a violation of the First Amendment. The Court finds the tax unconstitutional because "it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled ..."
1937
In DeJonge v. Oregon, the U.S. Supreme Court reverses the conviction of an individual under a state criminal syndicalism law for participation in a Communist party political meeting. The Court writes that "peaceable assembly for lawful discussion cannot be made a crime. The holding of meetings for peaceable political action cannot be proscribed."
1938
Life magazine is banned in the U.S. for publishing pictures from the public health film The Birth of a Baby.
1939
Georgia, Massachusetts and Connecticut finally ratify the Bill of Rights.
1940
Congress passes the Smith Act, or the Alien Registration Act of 1940, which makes it a crime to advocate the violent overthrow of the government.
1940
In Thornhill v. Alabama, the U.S. Supreme Court strikes down an Alabama law prohibiting loitering and picketing "without a just cause or legal excuse" near businesses. The Court writes: "The freedom of speech and of the press guaranteed by the Constitution embraces at the least the liberty to discuss publicly and truthfully all matters of public concern without previous restraint or fear of subsequent punishment."
1940
In Cantwell v. Connecticut, the U.S. Supreme Court holds for the first time that the due-process clause of the Fourteenth Amendment makes the free-exercise clause of the First Amendment applicable to states.
1941
Congress authorizes President Franklin D. Roosevelt to create the Office of Censorship.
1942
The U.S. Supreme Court determines "fighting words" are not protected by the First Amendment. In Chaplinsky v. New Hampshire, the Court defines "fighting words" as "those which by their very utterance inflict injury or tend to incite an immediate breach of peace." The Court states that such words are "no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality."
1943
In West Virginia State Bd. of Educ. v. Barnette, the U.S. Supreme Court rules that a West Virginia requirement to salute the flag violates the free-speech clause of the First Amendment.
1943
In National Broadcasting Co. v. United States, the U.S. Supreme Court states that no one has a First Amendment right to a radio license or to monopolize a radio frequency.
1947
In Everson v. Board of Education, the U.S. Supreme Court upholds a state program which reimburses parents for money spent on transporting their children to parochial schools. The Court finds that the state provision of free bus transportation to all school children amounts only to a general service benefit and safeguards children rather than aiding religion.
1949
In Terminiello v. Chicago, the U.S. Supreme Court limits the scope of the "fighting words" doctrine. Writing for the majority, Justice Douglas says that the "function of free speech … is to invite dispute. It may indeed best serve its high purpose when it induces a condition of unrest, creates dissatisfaction with conditions as they are, or even stirs people to anger."
1951
In Dennis v. United States, the U.S. Supreme Court upholds the convictions of 12 Communist Party members convicted under the Smith Act of 1940. The Court finds that the Smith Act, a measure banning speech which advocates the violent overthrow of the federal government, is not in undue conflict with the First Amendment.
1957
The U.S. Supreme Court determines that "obscenity is not within the area of constitutionally protected speech or press." In Roth v. United States, the Court defines obscenity as "material which deals with sex in a manner appealing to prurient interest." The mere portrayal of sex, however, in art, literature, scientific works and similar forums "is not itself sufficient reason to deny material the constitutional protection of freedom of speech and press," the Court states. Additionally, the Court notes that speech is obscene when "to the average person applying contemporary community standards, the dominant theme of the material taken as a whole appeals to prurient interests."
1958
The U.S. Supreme Court allows the NAACP of Alabama to withhold its membership list from Alabama lawmakers. In NAACP v. Alabama, the Court states that the demand by Alabama officials for the NAACP to provide them a membership list violates members' associational rights.
1959
The U.S. Supreme Court upholds the conviction of a college professor who refuses, on First Amendment grounds, to answer questions before the House Un-American Activities Committee. In Barenblatt v. United States, the Court states that, where "First Amendment rights are asserted to bar governmental interrogation, resolution of the issue always involves a balancing by the courts of the competing private and public interests at stake." The Court concludes that the investigation is for a valid legislative purpose and that "investigatory power in this domain is not to be denied Congress solely because the field of education is involved."
1962
The U.S. Supreme Court rules that a state-composed, non-denominational prayer violates the the Establishment Clause of the First Amendment. In Engel v. Vitale, the Court states that such a prayer represents government sponsorship of religion.
1963
The U.S. Supreme Court finds that a South Carolina policy denying unemployment compensation to a Seventh Day Adventist refusing to work on Saturdays is in violation of the Free Exercise Clause of the First Amendment. In Sherbert v. Verner, the Court determines that a law which has the unintended effect of burdening religious beliefs will be upheld only when it is the least restrictive means of accomplishing a compelling state objective.
1964
In New York Times v. Sullivan, the U.S. Supreme Court overturns a libel judgment against The New York Times. The Court rules that public officials may not recover damages for a defamatory falsehood relating to their conduct unless they prove the statement was made with actual malice. The Court defines actual malice as "with knowledge that it was false or with reckless disregard of whether it was false or not."
1966
The U.S. Supreme Court invalidates a Massachusetts court decision which found the 1750 book, A Woman of Pleasure, obscene. In Memoirs v. Massachusetts, Justice Brennan writes that a book which possesses the requisite prurient appeal to be declared obscene cannot be banned unless it is found to be utterly without redeeming social value.
1966
In Elfbrant v. Russell, the U.S. Supreme Court invalidates an Arizona statute requiring the dismissal of any state employee who knowingly becomes a member of the Communist Party or any party whose intentions include overthrowing the U.S. government.
1966
In Sheppard v. Maxwell, the U.S. Supreme Court reverses the murder conviction of Dr. Sam Sheppard because the trial judge failed to quell publicity surrounding the trial.
1967
In United States v. O'Brien, the U.S. Supreme Court upholds the conviction of O'Brien, an anti-war protester accused of violating a federal statute prohibiting the public destruction of draft cards. O'Brien claims that the burning of draft cards is "symbolic speech" protected by the First Amendment. The Court concludes that conduct combining "speech" and "non-speech" elements can be regulated if the following four requirements are met: (1) the regulation is within the constitutional power of the government; (2) it furthers an "important or substantial" government interest; (3) the interest is "unrelated to suppression of free expression;" and (4) "incidental restriction" on First Amendment freedoms is "no greater than is essential to the furtherance" of the government interest. The Court concludes that all requirements were satisfied in this case.
1968
In Epperson v. Arkansas, the U.S. Supreme Court invalidates an Arkansas statute prohibiting public school teachers from teaching evolution. The Court finds that the statute violates the Establishment Clause because it bans the teaching of evolution solely on religious grounds.
1969
The rights of public school students suspended for wearing black armbands to school in protest of the Vietnam War are vindicated by the U.S. Supreme Court. In Tinker v. Des Moines Independent School District, the U.S. Supreme Court rules that the prohibition violates the students' First Amendment rights. Justice Abe Fortas writes that students do not "shed their constitutional rights to freedom of speech or expression at the schoolhouse gate."
1969
In Brandenburg v. Ohio, the U.S. Supreme Court rules that speech advocating the use of force or crime is not protected if (1) the advocacy is "directed to inciting or producing imminent lawless action" and (2) the advocacy is also "likely to incite or produce such action."
1969
In Stanley v. Georgia, the U.S. Supreme Court rules that the First and Fourteenth Amendments protect a person's "private possession of obscene matter" from criminal prosecution. The Court notes that the state, although possessing broad authority to regulate obscene material, cannot punish private possession of such in an individual's own home.
1969
In Red Lion Broadcasting Co. v. Federal Communication Commission, the U.S. Supreme Court finds that Congress and the FCC did not violate the First Amendment when they required a radio or television station to allow response time to persons subjected to personal attacks and political editorializing on air.
1970
In Walz v. Tax Commission, the U.S. Supreme Court finds that a state law exempting the property or income of religious organizations from taxation does not violate the Establishment Clause. The Court states that history has revealed no danger that such exemptions will give rise to either a religious effect or an entanglement of government and religion.
1971
In New York Times v. United States, the U.S. Supreme Court allows continued publication of the Pentagon Papers. The Court holds that the central purpose of the First Amendment is to "prohibit the widespread practice of governmental suppression of embarrassing information." This case establishes that the press has almost absolute immunity from pre-publication restraints.
1971
In Cohen v. California, the U.S. Supreme Court reverses the breach-of-peace conviction of an individual who wore a jacket with the words "F--- the Draft" into a courthouse. The Court concludes that offensive and profane speech are protected by the First Amendment.
1971
In Lemon v. Kurtzman, the U.S. Supreme Court establishes a three-part test to determine whether a governmental action violates the Establishment Clause. The test specifies that (1) the action must have a secular purpose; (2) its primary effect must neither advance nor inhibit religion; and (3) there must be no excessive government entanglement.
1972
The U.S. Supreme Court rules in Branzburg v. Hayes that the First Amendment does not exempt reporters from "performing the citizen's normal duty of appearing and furnishing information relevant to the grand jury's task." The Court rejects a reporter's claim that the flow of information available to the press will be seriously curtailed if reporters are forced to release the names of confidential sources for use in a government investigation.
1972
In Wisconsin v. Yoder, the U.S. Supreme Court rules that the state of Wisconsin cannot require Amish children to attend school beyond the eighth grade.
1972
In Lloyd Corp. v. Tanner, the U.S. Supreme Court rules that owners of a shopping center may bar anti-war activists from distributing leaflets at the center. The Court finds that citizens do not have a First Amendment right to express themsleves on privately-owned property.
1973
The U.S. Supreme Court in Miller v. California defines the test for determining if speech is obscene: (1) whether the "average person applying contemporary community standards" would find that the work, taken as a whole, appeals to the prurient interest, (2) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law, and (3) whether the work, taken as a whole, lacks serious literary, artistic, political or scientific value.
1973
The U.S. Supreme Court rules in Paris Adult Theatre I v. Slaton that a state may constitutionally prohibit exhibitions or displays of obscenity, even if access to the exhibitions is limited to consenting adults.
1974
In Miami Herald Publishing Co. v. Tornillo, the U.S. Supreme Court invalidates a state law requiring newspapers to give free reply space to political candidates the newspapers criticize. The Court rules that the right of newspaper editors to choose what they wish to print or not to print cannot be infringed to allow public access to the print media.
1976
In Buckley v. Valeo, the U.S. Supreme Court rules that certain provisions of the Federal Election Campaign Act of 1976, which limits expenditures to political campaigns, violate the First Amendment.
1976
The U.S. Supreme Court rules that the First Amendment does not apply to privately owned shopping centers. In Hudgens v. National Labor Relations Board, the Court holds that as long as the state does not encourage, aid or command the suppression of free speech, the First Amendment is not subverted by the actions of shopping-center owners.
1976
The U.S. Supreme Court finds that an appropriately defined zoning ordinace barring the location of an "adult movie theatre" within 100 feet of any two other "regulated uses," does not violate the First Amendment-even if the theater is not showing obscene material. In Young v. American Mini Theaters, the Court concludes that the ordinance is not a prior restraint and is a proper use of the city's zoning authority.
1976
The U.S. Supreme Court rules that the public has a First Amendment right to the free flow of truthful information about lawful commercial activities. In Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, the Court invalidates a Virginia law prohibiting the advertisement of prescription drug prices.
1977
In Abood v. Detroit Board of Education, the U.S. Supreme Court declares that a state may require a public employee to pay dues to organizations such as unions and state bars, as long as the money is used for purposes such as collective bargaining and contract and grievance hearings. The Court notes that, pursuant to the First Amendment, state workers may not be forced to give to political candidates or to fund political messages unrelated to their employee organization's bargaining function.
1978
The Illinois Supreme Court rules in NSPA v. Skokie that the National Socialist Party of America (NSPA), a neo-Nazi group, can march through Skokie, Ill., a community inhabited by a number of Holocaust survivors.
1978
The U.S. Supreme Court upholds the power of the FCC to regulate indecent speech broadcast over the air. In FCC v. Pacifica, the Court allows FCC regulation because the broadcast media are a "uniquely pervasive presence" and easily accessible to children. The Court, however, does make clear that, although the government can constitutionally regulate indecent speech in the broadcast media, it does not have power to enforce a total ban on such speech.
1980
In Central Hudson Gas & Electric Corporation v. Public Service Commission, the U.S. Supreme Court sets forth a four-part test for determining when commercial speech may or may not be regulated by states. The test states that: (1) the commercial speech must not be misleading or involve illegal activity, (2) the government interest advanced by the regulation must be substantial, (3) the regulation must directly advance the asserted government interest, (4) the government regulation must not be more extensive than is necessary to serve the governmental interest at stake.
1982
The U.S. Supreme Court rules in Board of Education v. Pico that school officials may not remove books from school libraries because they disagree with the ideas contained in the books.
1984
Congress passes the Equal Access Act. The federal law prohibits secondary schools that are receiving federal financial assistance from denying equal access to student groups on the basis of religious, political or philosophical beliefs or because of the content of their speech.
1985
In Wallace v. Jaffree, the U.S. Supreme Court invalidates an Alabama law authorizing a one-minute silent period at the start of each school day "for meditation or voluntary prayer." The Court finds that the law was enacted to endorse religion, thus violating the Establishment Clause.
1986
The U.S. Supreme Court rules in Witters v. Washington Dept. of Services for the Blind that a vocational rehabilitation-assistance program which awards grants and scholarships to students does not violate the Establishment Clause, even if some recipients use the funds to attend religious schools.
Also in 1986: Bethel School District v. Fraser. This case was said to set back the Tinker case. Bethel School District in Spanaway, Wash., suspended 17-year-old Matthew Fraser, an honors student, for two days after what was considered a lewd spring election campaign speech at a school assembly with 600 students present. His candidate won. However, the courts held that the manner of speech, delivered before a captive audience, rather than the content, was disruptive and contrary to the values the school intended to promote.
1987
In Edwards v. Aquillard, the U.S. Supreme Court invalidates a Louisiana statute that bars the teaching of evolution in public schools unless the teaching is accompanied by instruction about creationism.
1988
In Hazelwood School District v. Kuhlmeier, the U.S. Supreme Court rules that school officials may exercise editorial control over content of school-sponsored student publications if they do so in a way that is reasonably related to legitimate pedagogical concerns.
1989
Congress passes the Flag Protection Act. The act punishes anyone who "knowingly mutilates, defaces, physically defiles, burns, maintains on the floor or ground, or tramples upon any U.S. flag ..."
1989
In Texas. v. Johnson, the U.S. Supreme Court rules that burning the American flag is a constitutionally protected form of free speech.
1990
The U.S. Supreme Court in U.S. v. Eichman invalidates the Flag Protection Act of 1989. The Court finds that the statute violates free speech.
1990
The Equal Access Act is found constitutional by the U.S. Supreme Court in Board of Education of Westside Community Schools v. Mergens.
1990
In Employment Division v. Smith, the U.S. Supreme Court rules that "the right of free exercise does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law proscribes ... conduct that his religion prescribes ... "
1991
In Simon & Schuster, Inc. v. Members of the New York State Crime Victims Board, the U.S. Supreme Court invalidates the New York "Son of Sam" law that requires convicted persons to turn over to the state proceeds from any work describing their crimes. Justice O'Connor finds that the law is overbroad and that it regulates speech based on content.
1991
The bicentennial anniversary of the ratification of the Bill of Rights.
1992
The U.S. Supreme Court determines in Lee v. Weisman that an administrative policy allowing religious invocations at public high-school graduation ceremonies violates the Establishment Clause.
1992
In R.A.V. v. City of St. Paul, the U.S. Supreme Court invalidates a Minnesota hate-speech statute, saying it violates the First Amendment.
1993
In Zobrest v. Catalina Foothills School District, the U.S. Supreme Court finds that the Establishment Clause is not subverted when a public school district provides a sign-language interpreter to a deaf student attending a parochial school within the district's boundaries. The Court states that it has "consistently held that government programs that neutrally provide benefits to a broad class of citizens defined without reference to religion are not readily subject to an Establishment Clause challenge because sectarian institutions may also receive an attenuate financial benefit."
1993
Congress passes the Religious Freedom Restoration Act (RFRA)
1994
The U.S. Supreme Court rules in Board of Educ. of Kiryas Joel Village School District v. Grumet that a 1989 New York law creating a separate school district for a small religious village violates the Establishment Clause.
1994
In Rosenberger v. Rectors of the University of Virginia, the U.S. Supreme Court invalidates a policy denying funds to a Christian student newspaper on free-speech and Establishment Clause grounds. The Court finds that, once a public university chooses to fund some student viewpoints, it may not choose which viewpoints to fund.
1996
The U.S. Supreme Court in 44 Liquormart, Inc. v. State of Rhode Island, invalidates a state law forbidding all advertising of liquor prices.
1997
The U.S. Supreme Court in Reno v. ACLU rules that the federal Communications Decency Act of 1996 is unconstitutional. The Court concludes that the Act, which makes it a crime to put adult-oriented material on the Internet where a child may find it, is too vague and tramples on the free-speech rights of adults.
1997
The U.S. Supreme Court finds in Boerne v. Flores that the Religious Freedom Restoration Act is unconstitutional.
1998
The Child Online Protection Act (COPA), which attaches federal criminal liability to the online transmission for commercial purposes of material considered harmful to minors, is enacted by Congress. Challengers attack the law on First Amendment grounds, and a federal appeals court upholds a lower court injunction against enforcement of COPA in June of 1999.
1998
The U.S. Supreme Court rules in National Endowment for the Arts v. Finley that a federal statute requiring the NEA to consider general standards of decency before awarding grant monies to artists does not infringe on First Amendment rights.
1998
In Arkansas Educational Television Commission v. Forbes, the U.S. Supreme Court holds that a public television station may exclude a legally qualified candidate from participating in a station-sponsored debate if the station concludes that the excluded individual is not a politically viable candidate. The Court declares the station-sponsored debate to be a non-public forum, ruling that exclusion of the candidate for reasonable and viewpoint-neutral reasons is allowed.
1998
President Clinton revises his 1995 "Guidelines on Religious Expression in Public Schools" in an effort to promote public understanding of the fact that the First Amendment provides for religious expression by students simultaneously forbidding government-sponsored religion. The 1998 guidelines are mailed to every school superintendent in the country.
1999
The U.S. Supreme Court in Wilson v. Layne and Hanlon v. Berger rules unanimously that law enforcement officials violate privacy rights protected by the Fourth Amendment when they allow media on ride-alongs into a home when making an arrest or conducting a search. Though the consolidated cases more squarely address 4th Amendment issues, the newsgathering technique of "ride-along" is at the heart of the dispute.
1999
The U.S. Court of Appeals for the 4th Circuit hears Food Lion v. Capital Cities/ABC Inc. in which the press is found liable for information gathered in an undercover investigation; Food Lion does not question the veracity of the information but rather the newsgathering methods used to obtain it. The 4th Circuit characterizes Food Lion's attempt to claim millions of dollars in punitive damages without proving the falsity of the news report as an unacceptable "end-run around First Amendment strictures" and reduces the damages awarded by the jury to a mere $2.
1999
President Clinton orders the Department of Education to mail guidelines on religious liberty to all public schools. The mass mailing emphasizes once again the administration's commitment to providing schools with guidance about the proper role of religion in the schools under current law.
2000
In Boy Scouts of America v. Dale, the U.S. Supreme Court rules that application of a public accommodation law to force the Boy Scouts to accept a gay scoutmaster is a violation of the private organization's freedom of association guaranteed by the First Amendment.
2000
The U.S. Supreme Court in Mitchell v. Helms finds that a federal program allowing states to lend educational material and equipment to both public and private schools does not violate the establishment clause of the First Amendment.
2000
In Santa Fe Independent School District v. Doe, the U.S. Supreme Court rules that a school district's policy permitting student-led, student-initiated prayer at football games violates the establishment clause of the First Amendment.
About the First Amendment
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
— The First Amendment to the U.S. Constitution
The First Amendment was written because at America's inception, citizens demanded a guarantee of their basic freedoms.
Our blueprint for personal freedom and the hallmark of an open society, the First Amendment protects freedom of speech, press, religion, assembly and petition.
Without the First Amendment, religious minorities could be persecuted, the government might well establish a national religion, protesters could be silenced, the press could not criticize government, and citizens could not mobilize for social change.
When the U.S. Constitution was signed on Sept. 17, 1787, it did not contain the essential freedoms now outlined in the Bill of Rights, because many of the Framers viewed their inclusion as unnecessary. However, after vigorous debate, the Bill of Rights was adopted. The first freedoms guaranteed in this historic document were articulated in the 45 words written by James Madison that we have come to know as the First Amendment.
The Bill of Rights — the first 10 amendments to the Constitution — went into effect on Dec. 15, 1791, when the state of Virginia ratified it, giving the bill the majority of ratifying states required to protect citizens from the power of the federal government.
The First Amendment ensures that "if there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or force citizens to confess by word or act their faith therein," as Justice Robert Jackson wrote in the 1943 case West Virginia v. Barnette.
And as Justice William Brennan wrote in New York Times v. Sullivan in 1964, the First Amendment provides that "debate on public issues ... [should be] ... uninhibited, robust, and wide-open."
However, Americans vigorously dispute the application of the First Amendment.
Most people believe in the right to free speech, but debate whether it should cover flag-burning, hard-core rap and heavy-metal lyrics, tobacco advertising, hate speech, pornography, nude dancing, solicitation and various forms of symbolic speech. Many would agree to limiting some forms of free expression, as seen in the First Amendment Center's State of the First Amendment survey reports (see section by that name).
Most people, at some level, recognize the necessity of religious liberty and toleration, but some balk when a religious tenet of a minority religion conflicts with a generally applicable law or with their own religious faith. Many Americans see the need to separate the state from the church to some extent, but decry the banning of school-sponsored prayer from public schools and the removal of the Ten Commandments from public buildings.
Further, courts wrestle daily with First Amendment controversies and constitutional clashes, as evidenced by the free-press vs. fair-trial debate and the dilemma of First Amendment liberty principles vs. the equality values of the 14th Amendment.
Such difficulties are the price of freedom of speech and religion in a tolerant, open society.
CIA Leaks Still Being Investigated
http://news.findlaw.com/hdocs/docs/cia/demwalker12604ltr.pdf
'Playing into their hands'
Our "war" on terror breeds terrorists, and a vicious cycle of violence
George Soros
The Bush administration is in the habit of waging personal vendettas against those who criticize its policies, but bit by bit the evidence is accumulating that the invasion of Iraq was among the worst blunders in U.S. history.
If the administration cannot recognize and admit its mistakes, it cannot correct its policies.
War is a false and misleading metaphor in the context of combating terrorism. The metaphor suited the purposes of the administration because it invoked our military might. But military actions require an identifiable target, preferably a state. As a result, the war on terrorism has been directed primarily against states like Afghanistan that are harboring terrorists, not at pursuing the terrorists themselves.
Imagine for a moment that Sept. 11 had been treated as a crime against humanity. We would have pursued Osama bin Laden in Afghanistan (hopefully with more success), but we would not have invaded Iraq. Nor would we today have our military struggling to perform police work in full combat gear, getting soldiers killed in the process.
This does not mean that we should not use military means to capture and bring terrorists to justice when appropriate. But to protect ourselves against terrorism, we need precautionary measures, awareness and intelligence gathering — all of which ultimately depend on the support of the populations among which terrorists operate. Declaring war on the very people we need to enlist against terrorism is a huge mistake. We are bound to create some innocent victims, and the more of them there are, the greater the resentment and the better the chances that some victims will turn into the next perpetrators.
On Sept. 11, the United States was the victim of a heinous crime, and the whole world expressed spontaneous and genuine sympathy. Since then, though we Americans are loath to admit it, the war on terrorism has claimed more innocent civilians in Afghanistan and Iraq than were lost in the attacks on the World Trade Center and Pentagon. The comparison is rarely made in the U.S.: American lives are valued differently from the lives of foreigners, but the distinction is less obvious to people abroad.
The war on terrorism as pursued by the Bush administration is more likely to bring about a permanent state of war than an end to terrorism. Terrorists are invisible; therefore, they will never disappear. They will continue to provide a convenient pretext for the pursuit of American supremacy by military means. That, in turn, will continue to generate resistance, setting up a vicious circle of escalating violence.
The important thing to remember about terrorism is that it is a reflexive phenomenon. Its impact and development depend on the actions and reactions of the victims. If the victims react by turning into perpetrators, terrorism triumphs in the sense of engendering more and more violence. That is what the fanatically militant Islamists who perpetrated the Sept. 11 attacks must have hoped to achieve. By allowing a "war" on terrorism to become our principal preoccupation, we are playing straight into the terrorists' hands: They — not we — are setting our priorities.
The United States is the most powerful country on Earth. While it cannot impose its will on the world, nothing much can be done in the way of international cooperation without its leadership or at least active participation.
The United States has a greater degree of discretion in deciding the shape of the world than anybody else. Other countries don't have a choice: They must respond to U.S. policy. This imposes a unique responsibility on the United States: Our nation must concern itself with the well-being of the world. The United States is the only country that can take the lead in addressing problems that require collective action: preserving peace, assuring economic progress, protecting the environment and so on. Fighting terrorism and controlling weapons of mass destruction also fall into this category.
By using the war on terror as a pretext for asserting our military supremacy, we are embarking on an escalating spiral of terrorist/counterterrorist violence. If instead we were to set an example of cooperative behavior, we could not only alleviate poverty, misery and injustice in the world, but also gain support for defending ourselves against terrorism. We will be the greatest beneficiaries if we do so.
http://www.latimes.com/news/opinion/commentary/la-op-soros4apr04,1,3248486.story
Letter from White House Counsel Alberto Gonzales Page 1 of 2
Re: Public Testimony Under Oath From
National Security Advisor Condoleezza Rice
Before the 9/11 Commission
(March 30, 2004)
http://news.findlaw.com/hdocs/docs/whouse/wh911c33004ltr.html
http://news.findlaw.com/hdocs/docs/whouse/wh911c33004ltr2.html