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jmrsage1: Nothing surprising. Think about it, the press all claimed Patrick Bryrne was a whacko even suggesting naked shorting was a problem. Today if they are honest they are forced to admit Patrick was correct and they were the ones who were wrong. Looking forward to the trial later this year complete with RICO charges.
http://www.deepcapture.com/tag/matt-taibbi/
dahbmw: Relax and take a break. I know it is frustrating being trapped but understand that the day will come when the doors will be unlocked here for the good guys and the bad guys as well as for TM himself. If anyone deserves to be frustrated it is he.
None of us are in control of this situation and it will happen when the time is right and not until. We BCIT shareholders are the equivalent of a pimple on an elephant's butt in comparison to the fraud that needs to be cleansed from our markets. Try reading the deepcapture serial expose and perhaps you will begin to sense the size and scope of the fraud and understand what a small part of it we are. Go BCIT!!!
Have a link? Penson claimed that but that does not surprise me.
This is worth a reread and contemplation. Think about the names mentioned as well as the acts committed by those mentioned. IMHO it holds the keys to the kingdom of all that is wrong with our markets as they presently operate!
Penson Financial, the Mafia, and Naked Short Selling
http://www.marketrap.com/article/view_article/91158/penson-worldwide-inc-pnsn-rolling-stone-the-mafia-and-naked-short-selling
Tags: Adler Coleman, Hanover Sterling, Mafia, Matt Taibbi, naked short selling, organized crime, Penson Financial, Rolling Stone, SEC
As should be clear from the contents of Deep Capture, the world of illegal naked short selling is a weird one, populated by sociopathic billionaires, slick lobbyists, famous felons, bent regulators, crooked law firms, corporate spies, message board maniacs, sinister banks, shifty private investigators, mendacious professors, professional dissemblers, propagandists, grifters, thugs, liars, and the Mafia.
Things become all the more weird when you consider that regulators and law enforcement do almost nothing to stop naked short selling, even though a growing number of prominent people – everyone from U.S. Senators to George Soros – insist that criminal naked short sellers helped take down Bear Stearns, Lehman Brothers, and the American financial system. Then there’s the weird fact that anybody who tries to shed light on this weird state of affairs is quickly subjected to smear campaigns that are…weird.
Anyway, message to Matt Taibbi: Welcome to our world.
Taibbi, as many people know, is the star reporter who published a major expose about naked short selling in the most recent issue of Rolling Stone magazine. In addition, he has published a few blogs providing more evidence to support his claim that illegal naked short selling is a big deal and it’s pretty “hilarious,” as he puts it, that the government hasn’t prosecuted the people who might have helped crash the financial system.
In one of his blogs (which you can read here), Taibbi posts a video that seems to show a day trader conducting a short sale of stock in an unnamed big bank through a brokerage called Penson Financial. The SEC says that short sellers have to have “reasonable grounds” that they can locate actual stock to deliver to their buyers. As Taibbi rightly points out, this is a “very funny piece of regulatory policy – asking greedy ass financial companies to determine what to them is a ‘reasonable’ effort to follow the rules. “
At any rate, if you believe what you see in Taibbi’s video, Penson Financial gave that day trader a phony “locate” on quite a few of the unnamed big bank’s shares. In fact, the video seems to show Penson Financial confirming that it had “located” many billions of the unnamed big bank’s shares – altogether, five times as many shares as were then in circulation. In other words, it seems that if this trader had had the inclination and the funds, Penson would have accepted a massive naked short sale, helping the trader flood the market with billions upon billions of shares that simply did not exist.
This is rather important, because Deep Capture has reviewed evidence showing that little Penson Financial and one other relatively unknown firm were by far the biggest traders in financial stocks in the first nine months of last year, handling more than 80 percent of volume. To repeat, Penson Financial, a little firm in Dallas, Texas, and one other relatively small firm handled by far the biggest volume of trading in the stock of all those big banks that collapsed last year, leading to the worst financial crisis since the Great Depression. When it came to clearing trades in financial stocks, Penson was bigger than Goldman, bigger than Merrill, bigger than every major brokerage on Wall Street.
We do not know for certain that the trading through Penson was naked short selling. We know only that naked short selling accounted for much of the overall trading last fall in companies like Lehman Brothers. And we know that a preponderance of the overall trading went through Penson. Perhaps Penson carefully weeded out the naked short sellers, in which case it handled almost all of the trading in financial stocks except for naked short selling. But if Taibbi’s video is any indication, Penson was certainly willing to locate stock that did not exist.
If I have anything to add to Taibbi’s terrific reporting, it is this: Penson Financial’s vice president in charge of stock clearing (that is, the head of the division that appears to have located stock that did not exist) is a man named Christopher Sandel. From 1985 to 1995, Sandel was a top executive at Adler Coleman, best known for being the clearing firm to the Genovese Mafia family.
Adler Coleman famously went bust when its top customer, the Genovese-controlled brokerage Hanover Sterling, self-imploded in one of the greatest naked short selling scandals of all time. Several traders tied to the Gambino crime family were charged with naked short selling companies that were underwritten by Hanover. That the Genovese Mafia brokers at Hanover were not charged in this case seems odd, because the most likely scenario is that the Genovese underwrote hapless companies, pumped their stock prices, and then called in the Gambinos to vaporize the companies, with everybody profiting on the way down.
Anyway, when some of America’s biggest financial companies collapsed under a barrage of short selling last fall, an enormous chunk of that trading was being cleared by a fellow who used to work for a company that seemed to specialize in clearing trades for the Mafia. Should this concern us? Might the Mafia have played some role in the collapse of the financial system? If I were more heavily armed, I would venture an opinion.
Now, of course, there is a concerted effort to portray Taibbi as a sucker, and his video as a fake. One blogger who has suggested as much is Gary Weiss, a former BusinessWeek reporter. As we have documented elsewhere on Deep Capture, Gary Weiss is a corrupt pseudo-journalist whose sources have included naked short sellers with ties to the Mob. Among Gary’s favorite sources were John Fiero (fined $1 million in Hanover Sterling scandal), Anthony Elgindy (currently serving an 11 year prison sentence for short selling crimes and alleged to have had his finger sawed off by Russian mafiosi who were concerned that he would become a government informer), and Manuel Asensio (who once worked for a Mafia-controlled brokerage called First Hanover).
Weiss has reported extensively on the Mafia’s infiltration of Wall Street, but he has, for years, insisted that only conspiracy theorists believe naked short selling is problem. He wrote a great deal about Hanover Sterling, but not once did he mention that naked short selling was central to that case. In his book, “The Mob on Wall Street,” Weiss told the story of a Genovese Mafia broker, and mentioned that this Mafia broker claimed to clear his trades through none other than…Penson Financial.
But, of course, Gary insisted that the Mafia broker must have been lying, because Penson is a “legitimate firm.”
Meanwhile, a blog called ClusterStock has also suggested that Taibbi’s video is a “hoax.” Taibbi has written a fine rebuttal to that claim (which you can read here), so I have nothing to add, except that ClusterStock was founded by Henry Blodget, who was famously charged with securities fraud in 2002, and by the former co-owners of DoubleClick, a company that was once defrauded by the Colombo Mafia family. DoubleClick was never charged with any crimes, as it was, alas, the victim. Such is the sad fate of many firms that have business dealings with the Mafia (of course, this fate may be avoided by adhering to a simple dictum: “Avoid having dealings with the Mafia”).
I tell you this not because I think there is some kind of conspiracy, but merely because I am fascinated by the always colorful biographies of people who attack those who seek to expose the crime of naked short selling. Blodget is, by all accounts, a reformed criminal, and I’m sure the other people at ClusterStock are law-abiding people. Gary Weiss would be perfectly innocent, too — except that he’s an out-and-out fraud.
Recently, Deep Capture reporter Judd Bagley revealed that Weiss was the anonymous author of a blog on the popular website Daily Kos. This blog, of course, denied that naked short selling is a crime, while smearing those who said otherwise. To support its smears, the blog, written by the anonymous Gary Weiss, referred readers to another blog, written by none other than Gary Weiss. Indeed, Gary Weiss has had a great many phony on-line aliases, and all of these Gary Weiss aliases proclaim that Gary Weiss is right and great.
In a variation of this on-line chicanery, ClusterStock’s writers littered the comments section of Taibbi’s blog with allegations that his video was a “hoax.” To support these allegations, the ClusterStock writers provided links to another blog…ClusterStock. Presumably, Gary Weiss will also provide links to ClusterStock. Oh wait, he already did that.
Meanwhile, Penson Financial, has written a letter to the SEC, suggesting that Taibbi’s video was (what else?)…”a hoax.” In the letter, Penson Financial, which was fined in 2006 for naked short selling, promises that it does not engage in naked short selling.
The SEC no doubt believes this.
http://www.deepcapture.com/on-rolling-stone-penson-financial-the-mafia-and-naked-short-selling/
op: Some cases are easier to prove than others. This one is a slam dunk imho with all the facts and players trapped and locked in. I don't think the shorts are any happier than the longs and it shows. Justice will prevail, just a matter of time. Go BCIT!!!
BofA Nears Huge Settlement
$8.5 Billion Payment to Investors in Mortgage Securities Would Be Biggest Yet
JUNE 29, 2011
By DAN FITZPATRICK
http://online.wsj.com/article/SB10001424052702304447804576414222265248768.html?mod=WSJ_business_LeadStoryCollection
Bank of America Corp. on Wednesday announced an agreement to pay $8.5 billion to settle claims by a group of high-profile investors who lost money on mortgage-backed securities purchased before the U.S. housing collapse.
The payment would be the largest such settlement by a financial-services firm to date, exceeding the total profits of the Charlotte, N.C., bank since the onset of the financial crisis in 2008. Bank of America's board approved the settlement during a meeting Tuesday to discuss the matter, one of these people said.
The bank also plans to release preliminary 2nd-quarter earnings on Wednesday, people familiar with the matter said.
A settlement would end a nine-month fight with a group of 22 investors who hold mortgage-backed securities originally valued at $105 billion, including the giant money manager BlackRock Inc., the insurer MetLife Inc. and the Federal Reserve Bank of New York.
A deal could embolden mutual-fund managers, insurance companies and investment partnerships to seek similar settlements with other major U.S. banks by arguing that billions of dollars in loans they bought before the housing collapse didn't meet sellers' promises or were improperly managed. Bank of America, Wells Fargo & Co and J.P. Morgan Chase & Co. collect loan payments on about half of all outstanding U.S. mortgages.
The dispute between Bank of America and the mortgage investors began last fall when they alleged in a letter to the bank that securities they scooped up before the financial crisis from Countrywide Financial Corp. were full of loans that didn't meet sellers' promises about the quality of the borrowers or the collateral. The investors also alleged Countrywide failed to maintain accurate files while managing the loans. Bank of America purchased Countrywide in 2008 for $4 billion.
If Bank of America goes ahead with the plan—first reported Tuesday afternoon by The Wall Street Journal online—it would hand $8.5 billion in cash to Bank of New York Mellon Corp., which acted as the trustee for the bondholders and would distribute the funds to the investors.
Bank of America would take a corresponding pre-tax charge against earnings for the second quarter, these people said. The after-tax cost to the bank would be roughly $5 billion, they said. The charge would increase the chances that Bank of America will report a loss in the second quarter.
On Wednesday, the bank is expected to announce it is taking a separate provision of billions of dollars during the quarter to cover future repurchase claims and other mortgage-related issues, these people said. The trustee expects to submit a filing soon asking a New York state court to approve the transaction.
The mortgage-related woes highlight the challenges faced by large banks as they struggle to put the financial crisis behind them and soothe investor concerns about their future profitability.
An $8.5 billion settlement has the potential to put Chief Executive Officer Brian Moynihan on the hot seat. The bank hopes that a deal will convince shareholders that many of the problems inherited from Countrywide are behind it a year and a half into Mr. Moynihan's tenure as chief, according to people familiar with the situation.
But some investors may be upset about such a large payment in the wake of Mr. Moynihan's pledge last year to engage in "day-to-day, hand-to-hand combat" against investors demanding that the bank repurchase bad loans—called "put-back" demands—and "not just do a settlement to move the matter behind us." In a conference call with investors in October, he said the bank would push back against investors whose attitude was: "I bought a Chevy Vega but I want it to be a Mercedes."
On June 1, he hinted at a new approach. "There's a point where fighting doesn't have any value," he said during an appearance in New York.
Earlier this year, the bank said its maximum possible loss from private mortgage put-back demands was $7 billion to $10 billion—above and beyond the $6.2 billion already reserved for probable mortgage-repurchase losses.
A multibillion-dollar charge would "wipe out most earnings in the first half of the year," said banking analyst Mike Mayo earlier this month, before news of the potential settlement. Bank of America earned $2 billion in the first quarter. Mr. Mayo had lowered his 2011 earnings-per-share estimate to 50 cents, from $1, based on an expectation that a settlement could amount to $7 billion.
Despite any hit to earnings, "the need to settle is compelling for momentum, morale and management focus," Mr. Mayo said. It would "help to eliminate a cloud of uncertainty over Bank of America."
Over the past year, the bank's shares have dropped 28% amid investor doubts about its ability to get its arms around an array of woes linked to the 2008 purchase of troubled mortgage lender Countrywide. The acquisition ballooned the size of Bank of America's mortgage portfolio to 14 million loans, from four million, just as the housing market was set to collapse. It saddled the bank with hundreds of thousands of delinquent borrowers and thrust it into the middle of the foreclosure-paperwork crisis last fall.
It also exposed the bank to numerous requests from angry investors demanding that the bank buy back poorly performing mortgages, which had been packaged together and sold to them as securities.
The mortgage woes are one reason the nation's largest bank by assets is lagging behind U.S. rivals J.P. Morgan Chase and Citigroup, the latter of which received more U.S. aid during the financial crisis. Shareholders are also worried about the impact of U.S. regulatory reform, lackluster revenues, higher capital requirements from regulators and weak loan demand.
Bank of America's request to raise its dividend in the second half of the year was rejected recently by the Federal Reserve—another embarrassment for the 51-year-old Mr. Moynihan.
The New York Fed, which got mortgage securities in the process of bailing out ailing firms, BlackRock and a collection of other well-known names on Wall Street picked the fight with Bank of America in a letter last October from Houston law firm Gibbs & Bruns LLP. Other investors that the letter claimed had been harmed were government-owned mortgage company Freddie Mac, MetLife and Allianz SE's Pacific Investment management Co., or Pimco. Some invested on behalf of clients.
The letter objected to the handling of 115 bond deals issued by affiliates of Countrywide. The failure to properly handle the loans "has materially affected the rights" of the bondholders, the letter said.
The group has since expanded to 530 bond deals originally valued at $424 billion, said people familiar with the situation. The settlement would cover not just the 22 investors represented by Gibbs & Bruns but all other bondholders in the 530 deals.
The day the letter was disclosed, the bank's stock tumbled 4.4%. The demand caught the bank by surprise and threatened to affect the relationship between BlackRock and Bank of America, which at the time owned a stake in the New York money manager. Mr. Moynihan and BlackRock Chief Executive Officer Larry Fink talked by phone to defuse any tension, said people familiar with the situation.
Mr. Moynihan told analysts in October that he wasn't interested in a large lump-sum payment to make the mortgage-repurchase issue go away. But in December, Mr. Moynihan reversed course and decided to begin settlement talks.
Several events persuaded the bank that a settlement would be wiser than a fight, according a person involved in the discussions. There was an unfavorable ruling in a mortgage-related lawsuit against the bank, which made it easier for a bond insurer to pursue claims against the bank.
Earlier this year, the bank reached similar settlements for smaller amounts with government-owned mortgage buyers Fannie Mae and Freddie Mac and bond insurer Assured Guaranty Ltd. Fannie Mae and Freddie Mac agreed to a $3 billion settlement in January, and investors continued to pepper the bank with questions about its future exposure to repurchase liabilities.
"It's been more of an evolution than a revolution," this person said.
—Susan Pulliam and Francesco Guerrera contributed to this article.
Write to Dan Fitzpatrick at dan.fitzpatrick@wsj.com
http://online.wsj.com/article/SB10001424052702304447804576414222265248768.html?mod=WSJ_business_LeadStoryCollection
original post by scion
That 5 trillion authorized "mistake" was the chum which was swallowed hook line and sinker. Going to be very expensive for shorty to cover here, hope he has the dough! Go FFGO!!!
It is not easy beating shorty at his own game but even he must admire how masterfully this was done. 3400%+ is an awesome ROI!
Chas56789: Would not surprise me a bit and certainly would explain the actions of the DTCC at the time. I can't help but wonder if the deepcaptrue expose is finally causing some to open their eyes. We can only hope that those working diligently behind the scenes are powerful enough to force the cleanup or our markets. Sadly some BCIT shareholders are not looking at the big picture and fail to understand how prevelant and far reaching the corruption in our system was. Seems like we are finally moving forward at a rapid pace. All records both of the longs and the shorts are indelible here and we are all locked in. Go BCIT!!!
I am all for that, especially if the legit companies who have been shorted get those non existant shares that have been sold bought back. Lock up the crooks and throw away the keys!
I agree. Nice to see the activity. This is a long term hold for me and I hope they are able to grow the company and increase shareholder value. Go UNQT!!!
Anyone know how the BCIT present FTD trades are now accounted for?
Are those records maintained by the DTCC? I wonder if BCIT will be impacted by OW in any way? Anyone know who/how the BCIT fails are being managed now?
DTCC Set To Launch Service To Automate Matching Of Broker-To-Broker Ex-Clearing Trades
-- Service Will Also Offer Real-Time Access to Track, Manage and Resolve Fails
New York, February 16, 2011- The Depository Trust & Clearing Corporation (DTCC) announced today plans to launch Obligation Warehouse (OW) to automate the matching and confirmation of broker-to-broker trades that are currently confirmed and settled directly between the trading parties rather than through DTCC (known as ex-clearing), and to give Member firms real-time access to track, manage and resolve their failed obligations.
The service, an offering of DTCC’s clearing agency subsidiary, National Securities Clearing Corporation (NSCC), is expected to be fully functional by June 2011, with implementation beginning in March 2011 following the Securities and Exchange Commission’s (SEC) recent approval of NSCC’s related rule filing.
“The OW represents a giant leap forward in helping financial firms better manage and address the operational risks and costs associated with processing broker-to-broker ex-clearing trades, as well as failed obligations,” said Susan Cosgrove, DTCC managing director, Clearance and Settlement/Equities. “It will create a more efficient and cost-effective system that will transform the processing of these transactions, while also delivering real-time capabilities to view virtually all failed trading activity in the U.S. marketplace for equities, corporates, municipals and unit investment trust securities.”
While most equity, bond and UIT trades are fed directly to NSCC for clearing from the various U.S. marketplaces and trading platforms, currently amounting to an average of more than 80 million daily transactions, there are an unknown number of trades that brokerage firms confirm and settle directly with their counterparties. Fails in those trades have never been tracked in a central location prior to the development of OW.
A Real-Time Automated Service
OW leverages NSCC’s existing systems and enhances its current fail clearance system, known as the Reconfirmation and Pricing Service (RECAPS), to automate the matching and confirmation of broker-to-broker ex-clearing trades, replacing the highly manual and error-prone processes, including phone calls and faxes, currently used by financial firms to manage these transactions.
In addition, OW will track, store and maintain certain unsettled obligations in a central location, and make these obligations available for RECAPS processing until they are settled, cancelled or otherwise closed in the system. Transactions eligible to be tracked, stored and maintained in OW include failed or unsettled broker-to-broker obligations that are compared through OW and obligations forwarded to OW from other NSCC services, including securities exited from NSCC’s Continuous Net Settlement (CNS), Non-CNS Automated Customer Account Transfer Service (ACATS) items and NSCC Balance Order transactions.
RECAPS processing of these transactions, which includes re-pricing, re-netting and allotting, will take place initially on a monthly basis instead of the current quarterly schedule. A new daily maintenance function will check the obligations stored in OW for CNS eligibility and will make adjustments for certain corporate actions. In addition, Member firms will no longer have to resubmit certain open obligations to RECAPS because OW will process RECAPS on all matched fails in OW aged greater than two days.
As part of the service, firms will also receive real-time updates, as well as an end-of-day report, that reflect their positions in OW.
A Collaborative Approach
NSCC worked closely with Member firms, service bureaus as well as the Securities Industry and Financial Markets Association’s (SIFMA) Securities Operations and Data Management Sections to help formulate the business requirements and development of OW.
“This collaborative approach allowed us to drill down to learn the unique needs of the industry and develop an enhanced service that closes the chapter on the manual processing of broker-to-broker trades and the management of open obligations,” Cosgrove said. “We added new functionality and features to further mitigate risk from the system, enhance transparency for financial firms and provide a comprehensive view to better understand these obligations in their totality.”
About DTCC
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas. For more information, please visit www.dtcc.com.
Who to Call
Customer Service
1.888.382.2721
Customer Service (Int'l)
1.212.855.8099
Press Contacts
1.212.855.5471
Read More
DTCC Releases New ISO Messages to Help Automate Corporate Actions Processing
Release of draft messages is a key element in plan to automate and streamline corporate actions processing.
Ten million traded so far today. My bet is that at the end of the day those shares were sold 100% short like virtually all others that have sold since that cold winter day in February. Go FFGO!!!
OldBen: I suspect most FFGO longs have been reading about the clearing issues Penson is having trading in penny stocks. Do you think what is really causing that is this OW change and what will happen with FFGO as a result in your opinion? Go FFGO!!!
DTCC Set To Launch Service To Automate Matching Of Broker-To-Broker Ex-Clearing Trades
-- Service Will Also Offer Real-Time Access to Track, Manage and Resolve Fails
New York, February 16, 2011- The Depository Trust & Clearing Corporation (DTCC) announced today plans to launch Obligation Warehouse (OW) to automate the matching and confirmation of broker-to-broker trades that are currently confirmed and settled directly between the trading parties rather than through DTCC (known as ex-clearing), and to give Member firms real-time access to track, manage and resolve their failed obligations.
The service, an offering of DTCC’s clearing agency subsidiary, National Securities Clearing Corporation (NSCC), is expected to be fully functional by June 2011, with implementation beginning in March 2011 following the Securities and Exchange Commission’s (SEC) recent approval of NSCC’s related rule filing.
“The OW represents a giant leap forward in helping financial firms better manage and address the operational risks and costs associated with processing broker-to-broker ex-clearing trades, as well as failed obligations,” said Susan Cosgrove, DTCC managing director, Clearance and Settlement/Equities. “It will create a more efficient and cost-effective system that will transform the processing of these transactions, while also delivering real-time capabilities to view virtually all failed trading activity in the U.S. marketplace for equities, corporates, municipals and unit investment trust securities.”
While most equity, bond and UIT trades are fed directly to NSCC for clearing from the various U.S. marketplaces and trading platforms, currently amounting to an average of more than 80 million daily transactions, there are an unknown number of trades that brokerage firms confirm and settle directly with their counterparties. Fails in those trades have never been tracked in a central location prior to the development of OW.
A Real-Time Automated Service
OW leverages NSCC’s existing systems and enhances its current fail clearance system, known as the Reconfirmation and Pricing Service (RECAPS), to automate the matching and confirmation of broker-to-broker ex-clearing trades, replacing the highly manual and error-prone processes, including phone calls and faxes, currently used by financial firms to manage these transactions.
In addition, OW will track, store and maintain certain unsettled obligations in a central location, and make these obligations available for RECAPS processing until they are settled, cancelled or otherwise closed in the system. Transactions eligible to be tracked, stored and maintained in OW include failed or unsettled broker-to-broker obligations that are compared through OW and obligations forwarded to OW from other NSCC services, including securities exited from NSCC’s Continuous Net Settlement (CNS), Non-CNS Automated Customer Account Transfer Service (ACATS) items and NSCC Balance Order transactions.
RECAPS processing of these transactions, which includes re-pricing, re-netting and allotting, will take place initially on a monthly basis instead of the current quarterly schedule. A new daily maintenance function will check the obligations stored in OW for CNS eligibility and will make adjustments for certain corporate actions. In addition, Member firms will no longer have to resubmit certain open obligations to RECAPS because OW will process RECAPS on all matched fails in OW aged greater than two days.
As part of the service, firms will also receive real-time updates, as well as an end-of-day report, that reflect their positions in OW.
A Collaborative Approach
NSCC worked closely with Member firms, service bureaus as well as the Securities Industry and Financial Markets Association’s (SIFMA) Securities Operations and Data Management Sections to help formulate the business requirements and development of OW.
“This collaborative approach allowed us to drill down to learn the unique needs of the industry and develop an enhanced service that closes the chapter on the manual processing of broker-to-broker trades and the management of open obligations,” Cosgrove said. “We added new functionality and features to further mitigate risk from the system, enhance transparency for financial firms and provide a comprehensive view to better understand these obligations in their totality.”
About DTCC
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas. For more information, please visit www.dtcc.com.
Who to Call
Customer Service
1.888.382.2721
Customer Service (Int'l)
1.212.855.8099
Press Contacts
1.212.855.5471
Read More
DTCC Releases New ISO Messages to Help Automate Corporate Actions Processing
Release of draft messages is a key element in plan to automate and streamline corporate actions processing.
Read More
Is what we are seeing with Penson their reaction to the institution of OW by the DTCC?
DTCC Set To Launch Service To Automate Matching Of Broker-To-Broker Ex-Clearing Trades
-- Service Will Also Offer Real-Time Access to Track, Manage and Resolve Fails
New York, February 16, 2011- The Depository Trust & Clearing Corporation (DTCC) announced today plans to launch Obligation Warehouse (OW) to automate the matching and confirmation of broker-to-broker trades that are currently confirmed and settled directly between the trading parties rather than through DTCC (known as ex-clearing), and to give Member firms real-time access to track, manage and resolve their failed obligations.
The service, an offering of DTCC’s clearing agency subsidiary, National Securities Clearing Corporation (NSCC), is expected to be fully functional by June 2011, with implementation beginning in March 2011 following the Securities and Exchange Commission’s (SEC) recent approval of NSCC’s related rule filing.
“The OW represents a giant leap forward in helping financial firms better manage and address the operational risks and costs associated with processing broker-to-broker ex-clearing trades, as well as failed obligations,” said Susan Cosgrove, DTCC managing director, Clearance and Settlement/Equities. “It will create a more efficient and cost-effective system that will transform the processing of these transactions, while also delivering real-time capabilities to view virtually all failed trading activity in the U.S. marketplace for equities, corporates, municipals and unit investment trust securities.”
While most equity, bond and UIT trades are fed directly to NSCC for clearing from the various U.S. marketplaces and trading platforms, currently amounting to an average of more than 80 million daily transactions, there are an unknown number of trades that brokerage firms confirm and settle directly with their counterparties. Fails in those trades have never been tracked in a central location prior to the development of OW.
A Real-Time Automated Service
OW leverages NSCC’s existing systems and enhances its current fail clearance system, known as the Reconfirmation and Pricing Service (RECAPS), to automate the matching and confirmation of broker-to-broker ex-clearing trades, replacing the highly manual and error-prone processes, including phone calls and faxes, currently used by financial firms to manage these transactions.
In addition, OW will track, store and maintain certain unsettled obligations in a central location, and make these obligations available for RECAPS processing until they are settled, cancelled or otherwise closed in the system. Transactions eligible to be tracked, stored and maintained in OW include failed or unsettled broker-to-broker obligations that are compared through OW and obligations forwarded to OW from other NSCC services, including securities exited from NSCC’s Continuous Net Settlement (CNS), Non-CNS Automated Customer Account Transfer Service (ACATS) items and NSCC Balance Order transactions.
RECAPS processing of these transactions, which includes re-pricing, re-netting and allotting, will take place initially on a monthly basis instead of the current quarterly schedule. A new daily maintenance function will check the obligations stored in OW for CNS eligibility and will make adjustments for certain corporate actions. In addition, Member firms will no longer have to resubmit certain open obligations to RECAPS because OW will process RECAPS on all matched fails in OW aged greater than two days.
As part of the service, firms will also receive real-time updates, as well as an end-of-day report, that reflect their positions in OW.
A Collaborative Approach
NSCC worked closely with Member firms, service bureaus as well as the Securities Industry and Financial Markets Association’s (SIFMA) Securities Operations and Data Management Sections to help formulate the business requirements and development of OW.
“This collaborative approach allowed us to drill down to learn the unique needs of the industry and develop an enhanced service that closes the chapter on the manual processing of broker-to-broker trades and the management of open obligations,” Cosgrove said. “We added new functionality and features to further mitigate risk from the system, enhance transparency for financial firms and provide a comprehensive view to better understand these obligations in their totality.”
About DTCC
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas. For more information, please visit www.dtcc.com.
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DTCC Releases New ISO Messages to Help Automate Corporate Actions Processing
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RocketMan: I agree. Nothing else makes sense. 3400%+ is an awesome return! Go FFGO!!!
Important Notice to All Correspondents – New Low Priced Securities Deposit Policy
In recent months, the depositories (DTCC/NSCC) have exponentially increased the requirements associated with the trading of illiquid securities. Their rationale is based, in part, in the inherent volatility in the price of these securities in addition to the fact they are often very low in price. They are also concerned when a trade in an illiquid security is relatively large when compared to the security’s historical trading volume.
To date, Penson Financial Services, Inc. (PFSI) has allowed trading in illiquid and very low priced securities within certain prescribed guidelines in an effort to accommodate our correspondents. We have also, to a large degree, absorbed the substantial additional requirements associated with these trades, which have not been fully passed through to the correspondent.
Also, the regulatory community has recently become more focused on the deposits of physical certificates, particularly those that trade on the Pink Sheets or OTC Bulletin Board. The securities industry has experienced a significant spike in fraudulent transactions related to reduced valuations or non-existent or fraudulent transfer agent services for sub-penny securities. In addition, the potential for the use of these types of securities for money laundering or investor fraud are also of serious concern. As a result, the regulators have increased their scrutiny of transactions in these types of securities.
The combination of the deposit of a physical certificate and a subsequent trade in that security, which the depository has deemed to be illiquid, can result in exceptionally large requirements from the depository.
The risk deposit formula is based in part on liquidity and concentration and is also reflective of current regulatory and depository risk perspective of trading in low priced securities. In some cases, the deposit requirements exceed the value of the underlying trade by more than 100 times. For example, the depository requirement for one unsettled trade in an illiquid security done recently was $1.2 million, while the value of the underlying trade was less than $10,000.
After careful analysis and strong guidance from our regulators, and in response to the exorbitant additional requirements imposed by the depositories, we are modifying our policies to reflect a dramatically changed industry landscape.
Accordingly, effective immediately, PFSI has instituted the following changes to its securities processing policies.
PFSI will no longer accept deposits of equity securities traded on the Pink Sheet or OTC Bulletin Board markets priced below $0.10, to include but not limited to, utilizing the following methods of deposit:
1. Any form of Physical Certificate Deposit
a. Through the Penson SPS application (Securities Processing System)
b. Through the Transit System (TNST)
c. Via Mail
2. DWAC (Deposit/Withdrawal at Custodian)
3. DRS (Direct Registration Service)
4. ACAT Transfer of Restricted Stock -although, we will continue to accept deposits of certain low priced securities without any restrictive legend via ACAT, we reserve the right to reject any account that has a concentration of low priced securities (Penny Stocks).
To the extent that PFSI has received qualifying certificates that have not been processed, we will return those certificates to you immediately.
We are also reviewing ongoing trading activity in accounts with large, low priced securities positions, especially positions established by the deposit of certificates in some way. On a case-by-case basis, we may be restricting sale activity in such accounts, or even closing accounts when necessary.
PFSI recognizes that these new requirements pose certain challenges, however this decision is not negotiable. Our policy to cease processing deposits for these securities is an effort to reduce the exposure to both PFSI as well as its Introducing Broker-Dealers correspondents related to these securities.
To the extent you have questions, please contact your Relationship Manager for assistance.
Thank you,
Penson Financial Services, Inc.
original post by Billy Jack
We need more facts on what is behind the Penson situation. If it is in fact an action ordered by regulators to have them and their clients buy in the shares they are short the playing field should change rather dramatically. Is the deepcapture expose making folks finally realize what is going on? We should have better insight into what is really happening in the not too distant future imho. Is this the beginning of the end of naked shorting? Stay tuned, interesting days ahead!
fourkids: Thanks for sharing. Will we be watching naked short positions being closed out by Penson clients soon? Is Penson following orders of a higher authority? Will Merrill Lynch follow suit? Interesting days ahead to be sure. Make all those shorts cover and bring back the funds presently hidden offshore without taxes being paid and lets see that wealth transfered back to those it was stolen from. That kind of justice would be awesome!
fourkids: Perhaps it is a "short" story! lol
puppy: Did you ever think that if in fact they filed timely they might have no choice but to expose how screwed the shorts are?
Tom: Common sense tells me that men with these qualifications, educations and reputations would not tarnish their good names by doing some of the things some posters would like us to believe. My confidence increases with each passing day. The shorts are going down, just a matter of time!
SevenTenEleven: Could what is going on be responsible for the price increase from .95 to the present $4.50? This is interesting:
This is from Zecco's website:
Penson Discontinues Execution for Certain Non-DTCC Eligible Securities
Effective May 2, 2011, Penson Financial Services, Inc. ("Penson") (the clearing agent for Trading Direct) will discontinue execution through the managed (mngd) route for certain Non-DTCC eligible securities due to increasing pass-through costs. (The effected stocks are primarily all pink sheet stocks).
For various reasons, certain securities cannot be made DTCC-eligible or have had their eligibility revoked, usually due to operating or financial issues with the underlying company. As a result, the clearing of these physical positions can carry significant pass-through charges to settle the trade. Trades routinely carry with them the following pass-through charges: Execution Fee-$7.50, DTC Fee-$80.00, Deposit Fee-$75.00, and a New York Window Fee of $34.00. Additional pass-through fees from Transfer Agents ranging from $25.00 to $500.00 can also be associated with these securities that would increase the cost Penson passes through for clearing and execution. Please note that trades executed outside of Penson's MNGD'd route will also be subject to these fees for the clearance of these trades.
We intend to discontinue execution for the securities on the attached list (on a best-efforts basis). As Penson identifies additional securities that are Non-DTCC-eligible, they will bed added to the list and they will not be able to be traded through the MNGD route.
As more detailed information is made available from Penson regarding fee information for the effected securities, this memo and subsuquent stock list will be updated accordingly.
View the Non-DTCC eligible stock list. {pdf,154kb}
original post by retireat40
RocketMan: Sure sounds like fraud to me!
RocketMan: Could that have been because they did not have the shares they needed and they needed folks to sell but did not want them to sell until the price was much much lower because it was expensive for them? lol
1LVELV: Thanks, and then there were three! Go SRSR!!!
Fry shorty fry!
This is from Zecco's website:
Penson Discontinues Execution for Certain Non-DTCC Eligible Securities
Effective May 2, 2011, Penson Financial Services, Inc. ("Penson") (the clearing agent for Trading Direct) will discontinue execution through the managed (mngd) route for certain Non-DTCC eligible securities due to increasing pass-through costs. (The effected stocks are primarily all pink sheet stocks).
For various reasons, certain securities cannot be made DTCC-eligible or have had their eligibility revoked, usually due to operating or financial issues with the underlying company. As a result, the clearing of these physical positions can carry significant pass-through charges to settle the trade. Trades routinely carry with them the following pass-through charges: Execution Fee-$7.50, DTC Fee-$80.00, Deposit Fee-$75.00, and a New York Window Fee of $34.00. Additional pass-through fees from Transfer Agents ranging from $25.00 to $500.00 can also be associated with these securities that would increase the cost Penson passes through for clearing and execution. Please note that trades executed outside of Penson's MNGD'd route will also be subject to these fees for the clearance of these trades.
We intend to discontinue execution for the securities on the attached list (on a best-efforts basis). As Penson identifies additional securities that are Non-DTCC-eligible, they will bed added to the list and they will not be able to be traded through the MNGD route.
As more detailed information is made available from Penson regarding fee information for the effected securities, this memo and subsuquent stock list will be updated accordingly.
View the Non-DTCC eligible stock list. {pdf,154kb}
original post by retireat40
You never know what is going to happen here. Lots of rumors going around about Penson being in trouble and ordering short positions of their clients to be closed. If this proves to be true things may get very interesting. Go CDIV!!!
Penson Financial, the Mafia, and Naked Short Selling
http://www.marketrap.com/article/view_article/91158/penson-worldwide-inc-pnsn-rolling-stone-the-mafia-and-naked-short-selling
Tags: Adler Coleman, Hanover Sterling, Mafia, Matt Taibbi, naked short selling, organized crime, Penson Financial, Rolling Stone, SEC
As should be clear from the contents of Deep Capture, the world of illegal naked short selling is a weird one, populated by sociopathic billionaires, slick lobbyists, famous felons, bent regulators, crooked law firms, corporate spies, message board maniacs, sinister banks, shifty private investigators, mendacious professors, professional dissemblers, propagandists, grifters, thugs, liars, and the Mafia.
Things become all the more weird when you consider that regulators and law enforcement do almost nothing to stop naked short selling, even though a growing number of prominent people – everyone from U.S. Senators to George Soros – insist that criminal naked short sellers helped take down Bear Stearns, Lehman Brothers, and the American financial system. Then there’s the weird fact that anybody who tries to shed light on this weird state of affairs is quickly subjected to smear campaigns that are…weird.
Anyway, message to Matt Taibbi: Welcome to our world.
Taibbi, as many people know, is the star reporter who published a major expose about naked short selling in the most recent issue of Rolling Stone magazine. In addition, he has published a few blogs providing more evidence to support his claim that illegal naked short selling is a big deal and it’s pretty “hilarious,” as he puts it, that the government hasn’t prosecuted the people who might have helped crash the financial system.
In one of his blogs (which you can read here), Taibbi posts a video that seems to show a day trader conducting a short sale of stock in an unnamed big bank through a brokerage called Penson Financial. The SEC says that short sellers have to have “reasonable grounds” that they can locate actual stock to deliver to their buyers. As Taibbi rightly points out, this is a “very funny piece of regulatory policy – asking greedy ass financial companies to determine what to them is a ‘reasonable’ effort to follow the rules. “
At any rate, if you believe what you see in Taibbi’s video, Penson Financial gave that day trader a phony “locate” on quite a few of the unnamed big bank’s shares. In fact, the video seems to show Penson Financial confirming that it had “located” many billions of the unnamed big bank’s shares – altogether, five times as many shares as were then in circulation. In other words, it seems that if this trader had had the inclination and the funds, Penson would have accepted a massive naked short sale, helping the trader flood the market with billions upon billions of shares that simply did not exist.
This is rather important, because Deep Capture has reviewed evidence showing that little Penson Financial and one other relatively unknown firm were by far the biggest traders in financial stocks in the first nine months of last year, handling more than 80 percent of volume. To repeat, Penson Financial, a little firm in Dallas, Texas, and one other relatively small firm handled by far the biggest volume of trading in the stock of all those big banks that collapsed last year, leading to the worst financial crisis since the Great Depression. When it came to clearing trades in financial stocks, Penson was bigger than Goldman, bigger than Merrill, bigger than every major brokerage on Wall Street.
We do not know for certain that the trading through Penson was naked short selling. We know only that naked short selling accounted for much of the overall trading last fall in companies like Lehman Brothers. And we know that a preponderance of the overall trading went through Penson. Perhaps Penson carefully weeded out the naked short sellers, in which case it handled almost all of the trading in financial stocks except for naked short selling. But if Taibbi’s video is any indication, Penson was certainly willing to locate stock that did not exist.
If I have anything to add to Taibbi’s terrific reporting, it is this: Penson Financial’s vice president in charge of stock clearing (that is, the head of the division that appears to have located stock that did not exist) is a man named Christopher Sandel. From 1985 to 1995, Sandel was a top executive at Adler Coleman, best known for being the clearing firm to the Genovese Mafia family.
Adler Coleman famously went bust when its top customer, the Genovese-controlled brokerage Hanover Sterling, self-imploded in one of the greatest naked short selling scandals of all time. Several traders tied to the Gambino crime family were charged with naked short selling companies that were underwritten by Hanover. That the Genovese Mafia brokers at Hanover were not charged in this case seems odd, because the most likely scenario is that the Genovese underwrote hapless companies, pumped their stock prices, and then called in the Gambinos to vaporize the companies, with everybody profiting on the way down.
Anyway, when some of America’s biggest financial companies collapsed under a barrage of short selling last fall, an enormous chunk of that trading was being cleared by a fellow who used to work for a company that seemed to specialize in clearing trades for the Mafia. Should this concern us? Might the Mafia have played some role in the collapse of the financial system? If I were more heavily armed, I would venture an opinion.
Now, of course, there is a concerted effort to portray Taibbi as a sucker, and his video as a fake. One blogger who has suggested as much is Gary Weiss, a former BusinessWeek reporter. As we have documented elsewhere on Deep Capture, Gary Weiss is a corrupt pseudo-journalist whose sources have included naked short sellers with ties to the Mob. Among Gary’s favorite sources were John Fiero (fined $1 million in Hanover Sterling scandal), Anthony Elgindy (currently serving an 11 year prison sentence for short selling crimes and alleged to have had his finger sawed off by Russian mafiosi who were concerned that he would become a government informer), and Manuel Asensio (who once worked for a Mafia-controlled brokerage called First Hanover).
Weiss has reported extensively on the Mafia’s infiltration of Wall Street, but he has, for years, insisted that only conspiracy theorists believe naked short selling is problem. He wrote a great deal about Hanover Sterling, but not once did he mention that naked short selling was central to that case. In his book, “The Mob on Wall Street,” Weiss told the story of a Genovese Mafia broker, and mentioned that this Mafia broker claimed to clear his trades through none other than…Penson Financial.
But, of course, Gary insisted that the Mafia broker must have been lying, because Penson is a “legitimate firm.”
Meanwhile, a blog called ClusterStock has also suggested that Taibbi’s video is a “hoax.” Taibbi has written a fine rebuttal to that claim (which you can read here), so I have nothing to add, except that ClusterStock was founded by Henry Blodget, who was famously charged with securities fraud in 2002, and by the former co-owners of DoubleClick, a company that was once defrauded by the Colombo Mafia family. DoubleClick was never charged with any crimes, as it was, alas, the victim. Such is the sad fate of many firms that have business dealings with the Mafia (of course, this fate may be avoided by adhering to a simple dictum: “Avoid having dealings with the Mafia”).
I tell you this not because I think there is some kind of conspiracy, but merely because I am fascinated by the always colorful biographies of people who attack those who seek to expose the crime of naked short selling. Blodget is, by all accounts, a reformed criminal, and I’m sure the other people at ClusterStock are law-abiding people. Gary Weiss would be perfectly innocent, too — except that he’s an out-and-out fraud.
Recently, Deep Capture reporter Judd Bagley revealed that Weiss was the anonymous author of a blog on the popular website Daily Kos. This blog, of course, denied that naked short selling is a crime, while smearing those who said otherwise. To support its smears, the blog, written by the anonymous Gary Weiss, referred readers to another blog, written by none other than Gary Weiss. Indeed, Gary Weiss has had a great many phony on-line aliases, and all of these Gary Weiss aliases proclaim that Gary Weiss is right and great.
In a variation of this on-line chicanery, ClusterStock’s writers littered the comments section of Taibbi’s blog with allegations that his video was a “hoax.” To support these allegations, the ClusterStock writers provided links to another blog…ClusterStock. Presumably, Gary Weiss will also provide links to ClusterStock. Oh wait, he already did that.
Meanwhile, Penson Financial, has written a letter to the SEC, suggesting that Taibbi’s video was (what else?)…”a hoax.” In the letter, Penson Financial, which was fined in 2006 for naked short selling, promises that it does not engage in naked short selling.
The SEC no doubt believes this.
http://www.deepcapture.com/on-rolling-stone-penson-financial-the-mafia-and-naked-short-selling/
Penson Financial, the Mafia, and Naked Short Selling
http://www.marketrap.com/article/view_article/91158/penson-worldwide-inc-pnsn-rolling-stone-the-mafia-and-naked-short-selling
Tags: Adler Coleman, Hanover Sterling, Mafia, Matt Taibbi, naked short selling, organized crime, Penson Financial, Rolling Stone, SEC
As should be clear from the contents of Deep Capture, the world of illegal naked short selling is a weird one, populated by sociopathic billionaires, slick lobbyists, famous felons, bent regulators, crooked law firms, corporate spies, message board maniacs, sinister banks, shifty private investigators, mendacious professors, professional dissemblers, propagandists, grifters, thugs, liars, and the Mafia.
Things become all the more weird when you consider that regulators and law enforcement do almost nothing to stop naked short selling, even though a growing number of prominent people – everyone from U.S. Senators to George Soros – insist that criminal naked short sellers helped take down Bear Stearns, Lehman Brothers, and the American financial system. Then there’s the weird fact that anybody who tries to shed light on this weird state of affairs is quickly subjected to smear campaigns that are…weird.
Anyway, message to Matt Taibbi: Welcome to our world.
Taibbi, as many people know, is the star reporter who published a major expose about naked short selling in the most recent issue of Rolling Stone magazine. In addition, he has published a few blogs providing more evidence to support his claim that illegal naked short selling is a big deal and it’s pretty “hilarious,” as he puts it, that the government hasn’t prosecuted the people who might have helped crash the financial system.
In one of his blogs (which you can read here), Taibbi posts a video that seems to show a day trader conducting a short sale of stock in an unnamed big bank through a brokerage called Penson Financial. The SEC says that short sellers have to have “reasonable grounds” that they can locate actual stock to deliver to their buyers. As Taibbi rightly points out, this is a “very funny piece of regulatory policy – asking greedy ass financial companies to determine what to them is a ‘reasonable’ effort to follow the rules. “
At any rate, if you believe what you see in Taibbi’s video, Penson Financial gave that day trader a phony “locate” on quite a few of the unnamed big bank’s shares. In fact, the video seems to show Penson Financial confirming that it had “located” many billions of the unnamed big bank’s shares – altogether, five times as many shares as were then in circulation. In other words, it seems that if this trader had had the inclination and the funds, Penson would have accepted a massive naked short sale, helping the trader flood the market with billions upon billions of shares that simply did not exist.
This is rather important, because Deep Capture has reviewed evidence showing that little Penson Financial and one other relatively unknown firm were by far the biggest traders in financial stocks in the first nine months of last year, handling more than 80 percent of volume. To repeat, Penson Financial, a little firm in Dallas, Texas, and one other relatively small firm handled by far the biggest volume of trading in the stock of all those big banks that collapsed last year, leading to the worst financial crisis since the Great Depression. When it came to clearing trades in financial stocks, Penson was bigger than Goldman, bigger than Merrill, bigger than every major brokerage on Wall Street.
We do not know for certain that the trading through Penson was naked short selling. We know only that naked short selling accounted for much of the overall trading last fall in companies like Lehman Brothers. And we know that a preponderance of the overall trading went through Penson. Perhaps Penson carefully weeded out the naked short sellers, in which case it handled almost all of the trading in financial stocks except for naked short selling. But if Taibbi’s video is any indication, Penson was certainly willing to locate stock that did not exist.
If I have anything to add to Taibbi’s terrific reporting, it is this: Penson Financial’s vice president in charge of stock clearing (that is, the head of the division that appears to have located stock that did not exist) is a man named Christopher Sandel. From 1985 to 1995, Sandel was a top executive at Adler Coleman, best known for being the clearing firm to the Genovese Mafia family.
Adler Coleman famously went bust when its top customer, the Genovese-controlled brokerage Hanover Sterling, self-imploded in one of the greatest naked short selling scandals of all time. Several traders tied to the Gambino crime family were charged with naked short selling companies that were underwritten by Hanover. That the Genovese Mafia brokers at Hanover were not charged in this case seems odd, because the most likely scenario is that the Genovese underwrote hapless companies, pumped their stock prices, and then called in the Gambinos to vaporize the companies, with everybody profiting on the way down.
Anyway, when some of America’s biggest financial companies collapsed under a barrage of short selling last fall, an enormous chunk of that trading was being cleared by a fellow who used to work for a company that seemed to specialize in clearing trades for the Mafia. Should this concern us? Might the Mafia have played some role in the collapse of the financial system? If I were more heavily armed, I would venture an opinion.
Now, of course, there is a concerted effort to portray Taibbi as a sucker, and his video as a fake. One blogger who has suggested as much is Gary Weiss, a former BusinessWeek reporter. As we have documented elsewhere on Deep Capture, Gary Weiss is a corrupt pseudo-journalist whose sources have included naked short sellers with ties to the Mob. Among Gary’s favorite sources were John Fiero (fined $1 million in Hanover Sterling scandal), Anthony Elgindy (currently serving an 11 year prison sentence for short selling crimes and alleged to have had his finger sawed off by Russian mafiosi who were concerned that he would become a government informer), and Manuel Asensio (who once worked for a Mafia-controlled brokerage called First Hanover).
Weiss has reported extensively on the Mafia’s infiltration of Wall Street, but he has, for years, insisted that only conspiracy theorists believe naked short selling is problem. He wrote a great deal about Hanover Sterling, but not once did he mention that naked short selling was central to that case. In his book, “The Mob on Wall Street,” Weiss told the story of a Genovese Mafia broker, and mentioned that this Mafia broker claimed to clear his trades through none other than…Penson Financial.
But, of course, Gary insisted that the Mafia broker must have been lying, because Penson is a “legitimate firm.”
Meanwhile, a blog called ClusterStock has also suggested that Taibbi’s video is a “hoax.” Taibbi has written a fine rebuttal to that claim (which you can read here), so I have nothing to add, except that ClusterStock was founded by Henry Blodget, who was famously charged with securities fraud in 2002, and by the former co-owners of DoubleClick, a company that was once defrauded by the Colombo Mafia family. DoubleClick was never charged with any crimes, as it was, alas, the victim. Such is the sad fate of many firms that have business dealings with the Mafia (of course, this fate may be avoided by adhering to a simple dictum: “Avoid having dealings with the Mafia”).
I tell you this not because I think there is some kind of conspiracy, but merely because I am fascinated by the always colorful biographies of people who attack those who seek to expose the crime of naked short selling. Blodget is, by all accounts, a reformed criminal, and I’m sure the other people at ClusterStock are law-abiding people. Gary Weiss would be perfectly innocent, too — except that he’s an out-and-out fraud.
Recently, Deep Capture reporter Judd Bagley revealed that Weiss was the anonymous author of a blog on the popular website Daily Kos. This blog, of course, denied that naked short selling is a crime, while smearing those who said otherwise. To support its smears, the blog, written by the anonymous Gary Weiss, referred readers to another blog, written by none other than Gary Weiss. Indeed, Gary Weiss has had a great many phony on-line aliases, and all of these Gary Weiss aliases proclaim that Gary Weiss is right and great.
In a variation of this on-line chicanery, ClusterStock’s writers littered the comments section of Taibbi’s blog with allegations that his video was a “hoax.” To support these allegations, the ClusterStock writers provided links to another blog…ClusterStock. Presumably, Gary Weiss will also provide links to ClusterStock. Oh wait, he already did that.
Meanwhile, Penson Financial, has written a letter to the SEC, suggesting that Taibbi’s video was (what else?)…”a hoax.” In the letter, Penson Financial, which was fined in 2006 for naked short selling, promises that it does not engage in naked short selling.
The SEC no doubt believes this.
http://www.deepcapture.com/on-rolling-stone-penson-financial-the-mafia-and-naked-short-selling/
This post seems to cover the whole enchilada as far as Penson is concerned: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64619230
3400%+ is an awesome return! Go FFGO!!!
TomSawyer: As long as Penson is making their clients cover their short positions I don't care if it is the King of Siam! Just mandate that they cover and I am very happy and you should be too.
Go FFGO!!!
SevenTenEleven: Perhaps Penson sees the billions of shares for sale at Varmit's buck a share hence their limit! lol Go FFGO!!!
Simple solution to all clearing problems. If the trade does not clear within 3 days the trade is cancelled and all funds including commission is refunded to the party not at fault. That party in addition will receive compensation from that at fault brokerage firm a payment equal to 10% of the total value of the trade excluding commission. I would bet the FTD's would be cleaned up very quickly were this initiated.
Stock BasherWhat Does Stock Basher Mean?
An individual, either acting alone or on behalf of someone else, who attempts to devalue a stock by spreading false or exaggerated claims against a public company. After the stock's price has dropped, the basher, or the basher's employer, will then purchase the stock at a lower price than what he or she believes it is intrinsically worth. Investopedia explains Stock Basher
This is an illegal activity that can carry significant legal repercussions. The basher is generally paid on the basis of how many lies and negative rumors are spread, which can dramatically affect a stock's value. If an investor believes some of the lies, he or she may sell off the stock at the higher price before it falls. The basher will then purchase the stock and ride out the gains.
Read more: http://www.investopedia.com/terms/s/stockbasher.asp#ixzz1QICiBB3M
original post by sizzle
giabull: I am hoping it is in fact and read a post by Janice Shell who said she thought it was true in spite of the misspelling. Supposedly it was an email and as Janice pointed out all the terminology used was in fact correct. Additionaly I have read that USAA has just sent out a letter about upcoming changes that will prevent trading in certain issues. I can't imagine Penson doing this voluntarily but also know their stock price has taken a huge hit in the past year and there have been lots of rumors about them fwiw. Time will tell but it would be great if true imho.
Goldman Sachs Unit Misstates $242 Billion of Pension Derivatives
June 24 (Bloomberg) -- Goldman Sachs Group Inc.’s pensions buyout unit, Rothesay Life, mistakenly told U.K. regulators it had entered into derivatives contracts valued at 151 billion pounds ($241 billion).
The bank overstated the position by a factor of a thousand in its annual return to the Financial Services Authority, signed by the unit’s chief executive, Addy Loudiadis, and audited by PricewaterhouseCoopers LLP. The unit has 151 million pounds of inflation and interest-rate swaps outstanding, spokeswoman Fiona Laffan said by e-mail today. The firm told the FSA about the typographical error after filing in March and wasn’t required to resubmit it, Laffan said. PwC declined to comment.
Goldman, which set up Rothesay in 2007, manages about 4.3 billion pounds of pensions liabilities for companies including British Airways and RSA Insurance Group Plc. Firms such as Rothesay promise to pay pensions if retirees live beyond a certain age. They typically receive a portion of the pension plan’s assets in return and try to hedge the risk they take on with derivatives.
Rothesay has total capital of 161 million pounds, 350 percent more than the regulatory minimum required by the FSA, according to the filing, and more than competitors including Pension Insurance Corp., Prudential Plc, and Legal & General Group Plc, according to Goldman Sachs.
Goldman Sachs also disclosed in the filing it assumes pensioners will live longer than their employers assume. London- based RSA said in 2009 it expected 65-year-old men to live a further 22.5 years on average, while Rothesay, which reinsured the fund the same year, says that these men will live for 25 more years. Rothesay expects a woman aged 45 today to pass their 95th birthday, five years more than RSA’s assumptions.
“The more conservative these assumptions are, the better capitalised and solvent the insurance company is,” Goldman Sachs said by e-mail.
--Editors: Edward Evans, Francis Harris.
http://www.businessweek.com/news/2011-06-24/goldman-sachs-unit-misstates-242-billion-of-pension-derivatives.html
If the information contained in this link is real and not a hoax then things are going to get really interesting here soon. Go CDIV!!! http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64596203
Nice first post here! Margin calls can be troubling. What are your thoughts on the rumor that Penson is demanding all of their clients with short positions cover them? Do you think this is a hoax? Having fought for the elimination of naked shorting for the past 11 years I have my fingers crossed but will have to see it to believe it. What a transfer of wealth that would cause and think of all the funds presently untaxed and hidden offshore that would come home and into the hands of small investors. That would be a beautiful thing. Go NMGL!!!
Madoff Trustee Seeking Billions More From JPMorgan
June 24, 2011
By BLOOMBERG NEWS
http://www.nytimes.com/2011/06/25/business/25madoff.html
Irving H. Picard, the trustee liquidating Bernard L. Madoff’s firm, said on Friday that he had filed a revised lawsuit against JPMorgan Chase & Company, demanding a minimum of $19 billion in damages.
Mr. Picard had sought $5.4 billion in damages previously in addition to $1 billion in transfers and claims.
JPMorgan “was an active enabler of the Madoff Ponzi scheme,” David Sheehan, Mr. Picard’s lawyer, said in a statement. JPMorgan officials “not only should have known that a fraud was being perpetrated, they did know,” he said.
Mr. Picard, who has filed 1,000 lawsuits, claiming $90 billion for Madoff investors, first sued JPMorgan in bankruptcy court in December, contending it ignored signs of fraud as billions of dollars flowed from Mr. Madoff’s account at the bank to investors. JPMorgan was Mr. Madoff’s primary banker.
The lawsuit sought $1 billion in fees and transfers, and $5.4 billion in damages, contending that JPMorgan defrauded federal regulators and violated banking law.
The amended complaint makes additional allegations, including that two former employees of an unidentified financial institution observed “nearly daily circular transactions” between an account that Mr. Madoff controlled at their employer and his account at JPMorgan.
After raising questions about the transactions, the financial institution closed the account because it saw no legitimate business purpose for the transactions, according to the complaint.
The amended complaint also includes a request for a jury trial.
A JPMorgan spokesman, Joseph Evangelisti, has said the bank complied fully with all laws and regulations.
JPMorgan has sought dismissal of the case, arguing that Mr. Picard was hired to liquidate the Madoff firm and has no legal right to mount a class action and claim damages for the Ponzi scheme’s investors.
http://www.nytimes.com/2011/06/25/business/25madoff.html
original post by scion
TomSawyer: Who cares who the clients of Penson are? If Penson is ordering that all penny stock short positions be eliminated no doubt they are being ordered to have their clients do this by a higher authority. Being one of the larger clearing firms they no doubt have some clients that are short and will be forced to cover. This is a good thing for individual investors of all stocks and something many of us have been hoping to see happen for years. I am just hoping this is the real deal and not a hoax.
Time will tell all but this would be awesome news accross the board for all small companies. Go FFGO!!!
3400%+ is an awesome return!