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Location: Bob O'Brien's Sanity Check : http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/BlogID/1/Default.aspx
Anyone familiar with my blog is aware that I have been predicting a massive systemic dislocation, or crisis, for years now. The crisis would be caused by the increasingly negative impact of illegal naked short selling and market manipulation, and the stance of our regulators that favors the destruction of companies and investors. It's not like this wasn't foretold in the most exacting manner imaginable. It was. Again and again. You can go back and start reading from my first blogs at this site, or go back and look at the NCANS site in the Internet archives, and see years of now 100% accurate prediction of a major disaster and meltdown of the financial system, caused by NSS.
Patrick is on record for years going on every TV show he could get on, telling it like it is. Warning of the coming calamity. Predicting it in detail. Unconstrained predators, increasingly emboldened by their success with destroying small, and then mid-sized companies, finally turning to the largest and most visible companies to satiate their appetite for destruction. Our regulators, captured and pretending that all was well, precipitating the nightmare. He's on record and has also been 100% accurate in his predictions. You can see a montage of his appearances, for years, here on Youtube :
Muriel Siebert Has a Few Things to Share With Regulators
Aug 14, 2008
URL: http://www.advancedtrading.com/showArticle.jhtml?articleID=210004122
Muriel Siebert needs no introduction. She is a woman who has paved the way for others and has countless "firsts" to her credit: the first woman to own a seat on the New York Stock Exchange; the first woman Superintendent of Banking for New York; the first woman member of the Wings Club, an industry club sponsored by the chairman of several aerospace and airline companies; one of the first members of the Woman's Forum, which is now the International Women's Forum, where she served with the likes of Margaret Thatcher; and the first woman to launch a brokerage firm. She founded discount retail brokerage Muriel Siebert & Co. in 1975.
At 75, Seibert feels somewhat comfortable with women's place on Wall Street, and has now moved on to represent investors' rights. Siebert has testified before Congress on a number of occasions, including after the Enron debacle.
Now she is witnessing what she describes as the worst time in financial services history -- as a result of the culmination of the subprime mess, the housing crisis, market recession and the financial trouble that many financial institutions are facing as a result.
Her passion today is protecting the market from short sellers. Siebert believes there is a lack of market transparency because of the removal of the Uptick Rule, which was lifted in July 2007. [The Uptick Rule said you could not short a stock until there was an uptick in its price, preventing a free-for-all downward spiral of the stock.]
July's emergency order, put in place to protect 19 companies from naked short selling, furthered her passion to protect investors from short selling. She believes this order was unfair as it only protected 19 companies, rather than protecting all companies from naked short selling. [Naked short selling allows investors to short a stock without first borrowing the stock. In other words, it can be done very quickly and in reaction to market rumors. Generally, when you short a stock, the investor borrows the stock and then sells it at a certain price, expecting to buy it back at a lower price. It takes time to borrow the stock, which must be done in advance of shorting the stock.]
But her latest crusade is to reach out to regulators and give them her perspective -- and some suggestions. She has many. No. 1 on her list is to ask that they give thought to having shorts reported daily rather than monthly. As she puts it, "We have the technology to do it, and it would create a transparency that is critically important in this type of market."
I recently sat down with Siebert to discuss short selling, her thoughts on the current state of the market and her views on how Wall Street has changed.
On her suggestions to regulators:
MS: I've made the suggestion that we ought to release the shorts in each stock daily. Look, if you are a long-term holder of a stock, and I see that stock being pummeled, I have a decision to make. Do I want to buy more? Or is there something wrong with the company and I want to get out? The action with the stock would tell me. If I saw 400,000 shares were traded and 300,000 were short, I'd have my answer. We'd have transparency that does not exist right now. What about reporting shorts every day? With computers we can do it.
AT: What is your biggest concern today?
MS: We have individuals who were destroyed in the Internet bubble. Then they said, "We're going to put our money in our homes -- we live there." If they see another hammering of good quality stocks, do they have to own stocks?
I have strangers walking up to me today saying, "Is my money safe? Should I take it out of stocks?" And, God forbid, what if they ever started to cash in their mutual funds?
We ought give them every bit of information in terms of transparency that we can.
AT: Are you surprised by today's market conditions?
MS: Who would have ever thought the major banks could get into this trouble? When I heard 'subprime,' I thought, 'Oh, it's just a little slice.' But these turned out to be greedy little piggies.
This is serious stuff. When the Fed lays on extra liquidity support, you know we need new regulation. When the Glass-Steagall was reformed, and banks took on the roles of brokers and brokers took on the roles of banks, we created something that wasn't so good.
AT: What action do you plan to take?
MS: I'm waiting on the SEC. I've called Chairman Cox, but haven't heard back from him yet. If I don't hear from him, I'll talk to him through the papers [by writing an op ed piece].
AT: What would you discuss with him?
MS: Shorts. The shorts in this market are the most important. Now, the Fed should have made those rules apply to all the companies, and the SEC should address all the companies. All this does is shove the shorts over to other companies, so they're getting the short position that 19 other companies would have gotten.
I'm going to write [Federal Reserve Chairman] Bernanke and [Treasury Secretary] Paulson and ask for an appointment. I'm going to tell them I have a lot of experience and I'd like to share my thoughts.
Another thought I have is that commodities traders, trading on speculation, should put up 50 percent in leverage. This is the same amount that you have to put up in equities. Currently, they only have to put up about 3 percent.
Another suggestion I have is to have the SEC create a Street Committee, made up of all types of roles in the capital markets. This committee should advise or make suggestions to the SEC, being that they have practical knowledge and experience with the markets.
I also think there should be an international standard for rules and regulations, similar to what there is in banking.
CMKM Diamonds, Inc. Appoints New Board of Directors' Members
Last update: 6:48 p.m. EDT Aug. 14, 2008
TYLER, Texas, Aug 14, 2008 (BUSINESS WIRE) -- CMKM Diamonds, Inc. CEO and Chairman of the Board Kevin West announced today that shareholders Stan Polsom, Tom Stephenson, and Roger Summers have been named to the Company's Board of Directors. With the recommendation of the newly formed advisory committee, the Company is now in negotiations with an individual to take over the leadership role as Chief Executive Officer. Kevin West will remain as the Chairman of the Board.
Mr. West stated, "We will continue to forge ahead as we are determined to show our loyal shareholders and the entire business world that this Company will not only survive through the difficult times, but in the end it will flourish." Mr. West continued, "Regardless of what many will say, we still believe after all this time that our shareholders are our biggest strength."
Roger Summers served eleven years as a US Navy Hospital Corpsman stationed with 1st BN Fourth Marines, and at the Naval School of Health Sciences in San Diego as clinical coordinator. He is currently president of OG Advisors LLC., providing subcontracted Corporate Due Diligence, Asset Tracking, and Investigations. Summers is also a clinical instructor in Radiography for a nationally-known medical institute.
Summers said, "Having been a shareholder of CMKM Diamonds since March 2004, I am pleased to step forward and join the fight to reclaim what is ours. This company has faced many obstacles since Mr. West has taken over, yet he and our Corporate Counsel, Bill Frizzell, have met every challenge with courage, dedication and veracity. Together we will work to return legitimacy to this company by building upon the foundation laid by their efforts. I am honored to serve the shareholders of CMKM in building a viable, profitable business."
Tom Stephenson brings a wealth of knowledge and experience with public companies. Tom is a successful private businessman and understands what must be achieved to bring the Company credibility and longevity. His extensive 20-year background in the field of Information Technology will assist the Company in many of the diverse and complex undertakings it is in the process of resolving.
Stephenson stated, "Our role as a team is to effectively represent and promote the interests of all shareholders with a view to adding long term value to the Company's shares. We are all committed and prepared to make any personal sacrifices to ensure that we fulfill that role. We intend to fulfill our goals by any and all means necessary and with honesty and integrity."
http://www.marketwatch.com/News/Story/Story.aspx?guid={6667EFEF-6A37-48B7-B25B-6A3159D08FEA}&siteid=nbkh
" No one ever said naked shorting was a myth. They did say that there was no significant short in CMKX which turned out to be true..."
Could be... or it couldn't be. Let's get the data.
SEC may require short-sale disclosures
The U.S. Securities and Exchange Commission may force investors to disclose bets on falling stocks and may take additional steps to rein...
By David Scheer
Bloomberg News
The U.S. Securities and Exchange Commission may force investors to disclose bets on falling stocks and may take additional steps to rein in rapid-fire short sales, Chairman Christopher Cox said.
The SEC is examining whether to require short sellers to reveal "substantial" stakes, just as investors must disclose significant positions in companies, Cox told reporters Thursday. The agency may also reinstate a version of the so-called uptick rule, which barred short sales of stocks when prices are falling, he said Thursday in testimony to the House Financial Services Committee.
The regulator is trying to strike a balance between installing a "circuit breaker, or something that keeps things from running away," and providing trading liquidity, Cox told the House panel.
The SEC announced temporary rules last week to thwart so-called naked short sales in Fannie Mae, Freddie Mac and 17 brokerages, citing concerns that stock manipulators may fuel false rumors about companies' stability and profit by driving down stocks. The agency is considering permanent measures to prevent abuses throughout financial markets, Cox said.
In traditional short selling, traders borrow shares through a broker and sell them. If the price falls, they profit by buying them back for less money and repaying the loan.
Naked shorting, which can be illegal, occurs when short sellers fail to borrow the stock by the settlement date. Traders can use that method to drive down prices by flooding the market with sell orders. The temporary rule, which took effect July 21, allows most traders to sell short only if they have already arranged to borrow the stock.
"Manipulative naked short-selling is one worry investors shouldn't have," Cox wrote Thursday in The Wall Street Journal. The sales are "far different from ordinary short selling, which is a healthy and necessary part of a free market."
Cox may well face a battle with hedge-fund managers if he tries to institute a disclosure rule.
"Many short-sellers will object to disclosure because there is such a stigma associated with short selling," said Whitney Tilson, founder of New York-based hedge fund T2 Partners, who said his firm is generally open about the stocks it bets against.
Disclosure might have the unintended consequence of causing investors to pile into the same short sales, he said. It also might hurt investors' relationships with company executives, who sometimes refuse to answer questions from money managers they suspect are wagering on a fall in share price.
Copyright © 2008 The Seattle Times Company
OT CRIME OF THE CENTURY-- NSS
Great audio, 7 ways they do it
http://www.netcastdaily.com/broadcast/fsn2008-0621-3b.mp3
FUD 'carpet bombing', pools of operators, morning pop.......
An hour long audio but great stuff!!
You haven't heard of it? - you've gotta be kidding!
Saskatchewan Canada in the vicinity of Hudson's Bay Junction ...
Goldsource GXS and Wescan WGF both listed on the Toronto Venture Exchange.
There'll be many more area plays ... check it out.
Hi Scorpi...
It's The End Of The World As We Know It
Posted by: bobo 11/23/2006 10:40 AM
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Everyone should take out a moment to read the following two spreadsheets from the Securities Industry Association, wherein the NYSE tallies up its liabilities and assets, per that body's requirements.
Spreadsheet one is the latest, for Q2, 2006:
Spreadsheet two are the totals for the last 5 years:
http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/533/Default.aspx
Note that the total FTD's for Q2, 2006 are $27.7 billion, and the FTR's are $35.4 billion. That's a lot more than the $6 billion the SEC and DTCC use as their total to describe the size of the problem, huh? Like ten times as large, JUST ON THE NYSE?
And that is marked to market. The actual cost to buy it in would be more like 10 times that.
So a $60 billion problem - not adjusted for the actual buy-in cost, which could easily be more like $600 billion - not a $6 billion problem.
No wonder the SEC's number one job is to prevent short squeezes. Where would all that money come from to cover what had been STOLEN from the system? It's all gone now - paid out in big bonuses we read all about in the WSJ every year. It isn't in the system anymore. It has been taken, and the asset it was exchanged for never delivered.
What else has the DTCC lied to us about? The SEC?
How about the following: look at the repo agreement column - $1.879 TRILLION.
Reg SHO has a loophole for repo agreements - if you have a repo agreement, which is basically a contract to buy back the shares you sold, you don't have to report the sale as a short sale, as you are still considered long, as is the new buyer, who can then sell them again, execute a repo agreement, and also be long as well.
It's a handy way to use the same million shares over and over and over again to sell into the market, never reporting your sales as short sales, but depressing the price of the targeted stock as a virtually unlimited amount of stock hits the demand.
That would be almost $2 trillion of repo agreements.
So let's all, on this Thanksgiving day, wonder aloud how $63 billion of FTDs and FTRs can possibly be reported as $6 billion of the same animal (unless these are pre-netting amounts, which would make sense - if $6 billion is post netting, and netting equals 96% of all trades, then one would expect the fails to be ten or more times as large, pre-netting - echoing what I've been patiently saying all along about netting and how it conceals the true size of the problem).
And recall that the $63 billion is actually more like multiples of that amount at the original sale price of the stock - the current market value represents the newly depressed price, not the actual sale price. So that is many times larger in actual dollars into the pockets of the scumbags who are taking that money from investors, and taking it out of the system to pay big bonuses and buy Picasso's and whatnot.
And then further think about what that $1.8 trillion of repo agreements means - what percentage of that represents promises to buy back that will never be executed, or better yet, represent a portion of the "ex-clearing" problem?
Most of it? Half?
This is all just for the NYSE. The NASDAQ is likely much larger. And the OTCBB, and the AMEX, and......
I have been mocked as an alarmist by the apologists who claim there is no systemic risk issue, no problem to be really really worried about.
Here we have documented evidence that my most dire predictions have been the tame version.
The system is stealing a percentage of the GDP every year via failing to deliver products. I would guess it runs around $500 billion to $1 trillion every year.
That is a massive theft of the nation's worth by a small segment of the population.
Now, for those who would argue that based upon the trillions traded every year, that hundreds of billions isn't a big deal, let's put that into perspective.
What if hundreds of billions of bank deposits were missing every year? Would you cite the total deposits of the US banking system, and argue that $500 billion to a trillion every year isn't a big deal?
What about if this was the blood supply? If your regulators and government were telling you that supply was safe, and then you found that it was HIV infected to the tune of 10, 20, 30% every year, would that be acceptable?
Folks, this is simple. You have been lied to by an enormously powerful system that requires your complacency and apathy to continue to steal what you worked all your lives to save.
This isn't an issue of being a bad investor, and picking bad investments. This is an issue of hundreds of billions of your dollars being stolen by thieves, just as surely as they would be stolen if they held a gun to your head.
The big lie is that your investment losses are your fault, and sort of deserving of shame and silence. Here is documented evidence that much of it is clearly money stolen by those who sell, and then don't deliver - a massive, coordinated effort involving most of the trusted entities who trade the markets on YOUR behalf.
Do you understand the difference between investing in a house in the wrong neighborhood, and being carjacked & having your wallet taken? Yes? No?
The apologists bang the "it's a bad company" drum to foster this belief in you - that you are a degenerate gambler deserving of what you get. What they won't do is address the very large, very obvious numbers you now have in your possession. Because that shows the amount they are flat out stealing. And they don't want to acknowledge the reality of the numbers.
Please send this column, as well as the links, to Specter for his December 5th hearing, as well as to every journalist you think would be able to read a spreadsheet. This is not a small problem. It is massive, involves the very government you pay to protect you, and is the systematic theft of the nation's savings on an unprecedented scale - and it can only end in a global depression of epic proportions, when the system decides there is nothing left worth stealing.
It's up to you to stop it now. You have the real numbers. Do something.
It will be interesting to see whether any journalists will even get near this now that it is blown wide open. You think Carol Remond, who has written so many "it's a small problem" articles will admit to misrepresenting the whole thing? Think that the Motley Fool will admit that their "ban" on discussing the issue is a blatant censorship attempt to stop anyone from knowing how big this is?
The numbers don't lie. $63 billion on the NYSE alone in Q2, at mark to market valuation, not counting the percentage of the $1.8 trillion of repo agreements that serve to mask another layer of this onion.
Folks? This is not a small problem.
What we have here is a mega, systemic-meltdown-scale problem caused by the brokers treating the markets like their own private piggy bank, from which they can take money and leave IOUs, to be tossed when they've driven the companies to zero. And our regulators, our elected officials, and our media have completely failed us. They have one and all colluded to facilitate the theft of OUR MONEY, and are now scrambling as the size of the theft becomes apparent.
De-materialization is just the final effort to destroy any asset rights you have, so they can conveniently turn the entire market system into a Federal Reserve type of scam, wherein assets don't back the chits you are paying for, but rather the "good name" of the broker does - and his name stinks to high heavens and isn't worth the spit it would take to put him out if he was on fire. Unlike the Fed's guarantee that the currency they distribute is backed by the full credit of the US Government, the guarantee you are getting is that your IOU is backed by the ability of your broker to trick enough new rubes out of their money to make good when you need out of the scam. The guarantee isn't worth squat. It is a sham, and is expressly forbidden by the 1933 and 34 Acts - for very good reason.
Starting to get this now?
Any facile smirking dismissals from the apologists? Any 'lilGW "there is no big problem" paid idiocy to try to feed to the masses? No? Nobody wants to chitty chat about tens or hundreds of billions failed, in black and white, on a spreadsheet prepared by the association that is also lobbying to change nothing about Reg SHO?
I hope everyone completely appreciates how coordinated this all is, how every strata of the entities chartered with ensuring this never happens have instead worked to obfuscate and misstate what has been going on.
Please propagate this blog to every message board and blog you can think of. No smoking gun required anymore - we have the actual data now, and it should scare the hell out of anyone that can read.
It is way worse than anyone ever was willing to admit. And now we can prove it.
They've stolen a lot of our retirements, and concealed the theft by lying and promising that the cash or the stock will be there when we check, or need it.
Guess what? They lied. It isn't.
And now it is absolutely obvious to even the dimmest.
Copyright ©2006 Bob O'Brien
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Comments (19) Add Comment
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Re: It's The End Of The World As We Know It
By Wicked World on 11/23/2006 11:58 AM
What would I do?
I would believe you.
Remember Aguirre! Remember Aguirre!
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Re: It's The End Of The World As We Know It
By bark, hide it and run on 11/23/2006 1:03 PM
Prosecutors in Munich have arrested and questioned six people over alleged attempts to transfer funds from Siemens to external accounts outside Germany. Prosecutors last week made the first arrests and searched Siemens' offices in Munich including that of Klaus Kleinfeld, its chief executive
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=FT&Date=20061123&ID=6222...
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Re: It's The End Of The World As We Know It
By davidn on 11/23/2006 1:05 PM
I believe much of the trading outside the US is completely phantom. They never come to the US to cover, instead handling everything via repos. For stocks that trade a lot of European volume, you rarely see European brokerages or custodians pop up on the security position reports.
We've been tricked into talking about this as shorting, when much of the counterfeit are "phantom longs" via daisy chains of repos, borrowing, etc.
Clearstream is the suspected money laundering custodian that accidently overstated their assets by 1.5 trillion dollars (check Wikipedia).
I think many "naked shorts" are hidden by Clearstream, which owns the German exchanges. They enter into repo agreements with US custodians to mask the phantom nature of the shares.
This is the self regulatory association that manages international repurchase agreements. Rather than borrow shares, you buy them with a promise to sell them at some, possibly undated point in the future. The buyer is long and the seller is long by virtue of having a contract to repurchase.
http://www.icma-group.org/international1.html
The whole repo market is many quadrillion dollars, but the equity piece is almost $6 trillion or 1,000 times the $6 billion the DTC says fails to deliver. $6 trillion against the $31 trillion Cede & Co. owns.
"This market has a significant role in the international securities market as a whole by providing liquidity, marketability and in offering opportunities for the mitigation of credit risk. The most recent ICMA repo survey has set the lower boundary for the size of the market at EUR 5.8 trillion."
"Due to its inherent cross border nature, the international capital market is not subject to the same degree of regulation that governs domestic primary and secondary markets."
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Re: It's The End Of The World As We Know It
By refusing to cooperate, make me on 11/23/2006 1:18 PM
Monster Worldwide Inc., owner of the most-used online job list, fired general counsel Myron Olesnyckyj amid a probe into whether executives manipulated the dates on option grants.
Olesnyckyj, suspended from his job Sept. 16, was dismissed for cause, the New York-based company said today in a statement. Monster cofounder Andrew McKelvey quit the board last month after refusing to cooperate with the company's inquiry.
The executives are among at least 59, including 10 general counsels, who have left their jobs because of options probes. A total of 187 companies have disclosed internal or federal investigations into whether they backdated option grants to when the stock was trading lower, artificially boosting their value. Companies have taken a total of $5.25 billion in charges to account for expenses associated with misdating grants.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIKjaKeipwjE&refer=home
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Re: It's The End Of The World As We Know It
By kevin on 11/23/2006 1:28 PM
The fundamental problem is that they think they are "stock bankers".
They're not. They're "stock brokers".
The difference is that a broker brokers a transaction. A real estate broker matches the person who wants to buy a house to the person who wants to sell a house. The wheat broker matches farmers to grocery stores. A broker is not the owner of the asset and should only receive a small commission to facilitate the trade.
For some reason, these custodians think they are banks and that our shares are some form of fiat currency that they can create out of thin air or that they can treat as their own asset. How many times are your assets pledged as collateral for loans at the various levels all the way up to Cede & Co.?
If you own your cert., they can't do that.
The problem for them is that legally, they aren't banks and they can't treat the asset as theirs. They are supposed to be holding it for you, in segregated form in cash accounts as YOUR asset.
The asset is yours and if they have treated it differently, than they may have committed crimes, including interstate wire fraud. To cover the crime up with fake fail numbers, falsified voting procedures, confirmation slips, etc. is obstruction of justice.
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Re: It's The End Of The World As We Know It
By denied any wrongdoing, where do I pay fine? on 11/23/2006 1:41 PM
Lone Star, the most active private equity fund in Asia's third-largest economy, had been prevented from completing the deal agreed in May as prosecutors looked into allegations that financial data on KEB was understated to help Lone Star buy the bank at a bargain price of $1.2 billion.
http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-11-23T104313Z_01_SEO572...
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Re: It's The End Of The World As We Know It
By How they screw us! on 11/23/2006 1:55 PM
If you want to see first hand how these scumbag naked shorters manipulate a stock watch th trading in Jag Media (JAGHE) tomorrow. Watch the trade cancellations (naked shorters), watch trades at fractions of a cents, crosses ,large drops in prices. You name it and that manipulation is done in JAGHE. However these naked shorters are stuck up the koola and their time has run out!
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Re: It's The End Of The World As We Know It
By bobo on 11/23/2006 2:06 PM
Kevin: You have it absolutely correct. They want to be bankers, rather than brokers. Except that isn't the way the system is supposed to work. Those aren't their assets. They aren't in the stock creation business. The 1933 Act specifically makes illegal stock creation of this type. It is a felony. This isn't supposed to be a market where some faceless scumbag takes your money and exchanges it for an IOU for which they lack the asset. That is fraud. Plain fraud.
And I think we are all beginning to understand just how big and entrenched this all is. It isn't a couple of rogue funds - it is the prime brokerage system, as well as the clearing system, along with some of these rogue funds.
That's basically the whole system.
No wonder they will buy or threaten or destroy anyone or anything that threatens their thievery ring. It is the single biggest theft in history. Makes the S&L thing a sliver by comparison.
And now we know the actual numbers, at least on the NYSE. Question is whether Specter will understand, and bring this up at his hearing.
"Let's turn to the SIA spreadsheet for Q2 on the NYSE's assets and liabilities. Care to explain to me how they are showing $63 billion in FTDs and FTRs while you have been telling us the whole problem is only $6 billion?"
"Uh.....uh....I take the fifth."
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Re: It's The End Of The World As We Know It
By davidn on 11/23/2006 2:24 PM
We also know the international repo market for US equities is $6 trillion as per these guys:
http://www.icma-group.org/international1.html
That's $6 trillion when Cede & Co. only owns $31 trillion altogether.
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Re: It's The End Of The World As We Know It
By bobo on 11/23/2006 2:36 PM
Davidn: That is trillions of dollars taken out of the system we will never see back. It is gone now. The money was stolen, whisked away elsewhere. We are left with essentially worthless IOUs we can hope can be exchanged for real dollars before the meltdown happens and the majority get stuck with a shrug and a lawsuit.
Seeing the confirmation is sort of stunning, really. Money, taken in exchange for assets, wherein the assets aren't there, and the trades have been used to destroy the value of the remaining legitimate assets.
I can't imagine this being any worse at this point.
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Re: It's The End Of The World As We Know It
By davidn on 11/23/2006 2:50 PM
Bob, the Securities Act wouldn't apply to a brokerage in Canada or Europe. My guess is they are taking our asset and selling it via repo to the foreign brokerages.
My first question when trying to figure out who owned Cede & Co. was whether the assets they held in trust were encumbered in any way. They think the assets are theirs and the pledge them as security, sell them or never bother owning them in the first place.
The sad thing is that once you make your money, no one asks where it came from. A crook can hire a lobbyist just as easily as a successful business can.
I can imagine it could possibly be even worse than we've learned so far. It's timely that we can get at least this fail data to Specter. It's hard to argue against facts.
Has anyone in the industry perjured themself to claim this is a $6 billion problem?
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Re: It's The End Of The World As We Know It By grandfather clause2 on 11/23/2006 2:59 PM
Does that mean we cannot force anymore companies into chapter 11 and buy them for pennies and tell the shareholders tough shit, the shares are worthless?
Why you want to mess up our game? It was just getting fun.
Oh well, we took over most of what we wanted and thanks to grandfather clause. You are screwed. Maybe we could just do a grandfather2 and start over. We will do better next time covering our fraud, we got dumb and greedy.
We won't do that again.
Are you going to force us to cover the naked shorts?
No, you are a poor dumb american that is to dumb to understand how
the system works. It is not my fault that you are to poor to bribe someone, to get your needs met. That is your problem. I can afford to buy the media, judge, lawyer, accountant and the lobbyist and the politician. So go back to your cardboard box and hold out your tin can. Stop blaming us for all of your troubles crybabies.
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Re: It's The End Of The World As We Know It
By kevin on 11/23/2006 4:20 PM
The crooks plan to crash the system, 1929 style so they can cover at pennies on the dollar. They gained control of much of the wealth of the country the last time they orchestrated a great depression.
Let's stop them before they can orchestrate a crash. Let's make them cover at today's prices so we can make money for a change as the money transfers from their pocket into ours.
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Re: It's The End Of The World As We Know It
By Jeremiah 9:24 on 11/23/2006 4:21 PM
Gives one an idea of why the crime masters (1) want to take all these exchanges public and (2) want to acquire/merge as many as possible as soon as possible. Just like what happened with Refco, if they can get these houses of prostitution public, then a good portion of the financial loss is shifted to the investing public (plus the money masters can naked short them into the ground as they collapse, "laughing all the way" -- to borrow a holiday theme). And of course, if you control all the major exchanges, then there is no other playground for those who would love to exit Wall Street's cesspool.
It's tough to admit but the scam is too big to be allowed to collapse--or even be exposed; and as BobO noted, any crusaders will get bought or crushed before the gates can be crashed. Then again, all scams eventually collapse; the Federal Reserve is probably the longest lasting one so far, but how much longer can a fiat currency issued by a private banking cartel and backed by a bankrupt former democratic republic (now a de facto oligarchy) last? Maybe the banks are off limits, sort of a professional courtesy thing among thieves. So perhaps one might invest in them.
--------------------------------------------------------------------------------
Re: It's The End Of The World As We Know It
By feelin' fine on 11/23/2006 4:22 PM
That's great, it starts with an earthquake, birds and snakes, an aeroplane -
Lenny Bruce is not afraid. Eye of a hurricane, listen to yourself churn - world serves its own needs, regardless of your own needs. Feed it up a knock, speed, grunt no, strength no. Ladder structure clatter with fear of height, down height. Wire in a fire, represent the seven games in a government for hire and a combat site. Left her, wasn't coming in a hurry with the furies breathing down your neck. Team by team reporters baffled, trump, tethered crop. Look at that low plane! Fine then. Uh oh, overflow, population, common group, but it'll do. Save yourself, serve yourself. World serves its own needs, listen to your heart bleed. Tell me with the rapture and the reverent in the right - right. You vitriolic, patriotic, slam, fight, bright light, feeling pretty psyched.
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.
--------------------------------------------------------------------------------
Re: It's The End Of The World As We Know It
By feelin' fine on 11/23/2006 4:27 PM
My favorite line is "offer me solutions, offer me alternatives and I decline"...it implies that no matter what, we won't back down from anything--even "the end of the world as we know it."
--------------------------------------------------------------------------------
Re: It's The End Of The World As We Know It
By don't F___ with this crybaby on 11/23/2006 4:54 PM
kevin
You are right. That was/is the shorts plan. Scare the hell out of everyone.
The more violence the better. It keeps the focus on the scare tactic. The thugs are mad, very mad. Even trying to scare and threaten or kill some of the people that are hunting them down. They want the parties to fight against each other and create as much chaos as they can muster up.
Panic is their goal. We will not. We will kick their ASS. watch.
We just need to get rid of the SCUM in leadership positions.
The American public does not know who
the F___! to trust.
SICKENING.
If our elected officials do not get their shit together and clean up this mess.
It is going to get nasty. Very NASTY.
Enough people now understand what the hell is going on
and how the game works. We might see some hedge funds blow up.
The shorts plan to destroy is not going to work.
--------------------------------------------------------------------------------
Re: It's The End Of The World As We Know It
By Depression II TV on 11/23/2006 5:16 PM
http://www.depression2.tv/
--------------------------------------------------------------------------------
Re: It's The End Of The World As We Know It
By will we get them? on 11/23/2006 5:44 PM
'The bastards got me'
THE poisoned Russian spy breathed defiance at the Kremlin as the effects of a mystery cocktail pushed him towards death.
"I want to survive, just to show them," Alexander Litvinenko said in an exclusive interview just hours before he slipped into unconsciousness, and later died.
http://www.theaustralian.news.com.au/story/0,20867,20813647-2703,00.html
Senator Grassley Lays Down The Law
Bob O'Brien's Sanity Check Blog
Posted by: bobo 10/29/2006 12:10 PM
Usually I disseminate 2000 words in my column like so much aspirin on New Year's day.
Today, fortunately, I don't need to. In two remarkable letters, Senator Grassley shows that not everyone is marching in lockstep to Wall Street's melody. Even though at times it seems that the bad guys own the system and can do whatever they want, every now and then we get a ray of hope, and an indication that there are a few honest men left.
The press has a wonderful way of softening and filtering topics that their masters wish to see massaged, so it's best that one go straight to the source documents if one wishes to know the truth. With that in mind, here are the two letters, absent any editorial.
http://www.senate.gov/~finance/press/Gpress/2005/prg091906a.pdf
http://www.senate.gov/~finance/press/Gpress/2005/prg091906b.pdf
Read them, and you get a sense that Grassley is on to the obfuscation campaign from our regulators, and isn't having any of it.
Now, if we can just get Congress to understand that taking investors' money and not delivering what they paid for is fraud, we could really move the ball down the field.
Baby steps. But this isn't a bad start.
Ben Stein is a very smart man. His latest very smart column for the NY Times is also a must read - it approaches the rampant ransacking of American investors from a different angle, although one that is parallel to the overall take on things advanced by this site.
A good read… http://tinyurl.com/ymrxge Check it out.
Copyright ©2006 Bob O'Brien
SEC facing congressional probe
Financial Times
By Jeremy Grant in Washington
The Securities and Exchange Commission, the US financial markets watchdog, was on Thursday facing a congressional probe into its policing practices after a top senator expressed dissatisfaction over its handling of a hedge fund probe involving Morgan Stanley CEO John Mack.
The move thrusts the SEC into the political spotlight at a time when it is already handling a series of high-profile investigations into a widening stock-options backdating scandal.
It is also the biggest test of the political skills of chairman Christopher Cox since the former Republican congressman took the job over a year ago.
The Government Accountability Office, the investigative arm of congress, said it had agreed to a request by Chuck Grassley, chairman of the senate's committee on finance, to review the operations of the SEC's enforcement division.
Mr Grassley has pressed for more details surrounding an SEC probe into the circumstances around alleged insider trading at Pequot Capital, a hedge fund.
"Based on allegations I have received over the past few months, I have become increasingly concerned regarding the operations of the SEC, and whether the SEC is faithfully adhering to its mission," he wrote in a letter to David Walker, the GAO's comptroller general.
John Heine, an SEC spokesman, said: "We welcome the review and look forward to any recommendations that might follow."
Mr Grassley and other politicians are concerned that the SEC may have shielded Mr Mack from scrutiny as part of the Pequot probe.
In June, Gary Aguirre, an SEC enforcement official fired by the SEC earlier this year, told a senate judiciary committee hearing that he was refused a request to interview Mr Mack as part of his investigations into Pequot.
Mr Mack, who has denied any wrongdoing, was subsequently interviewed by the SEC. The SEC recently dropped its investigation.
The GAO has been asked by Mr Grassley to evaluate whether the SEC is "effectively managing the substantial increase in funds allocated to the enforcement and CIE [office of compliance inspection and examination] subsequent to the passage of the Sarbanes-Oxley Act in 2002".
GAO investigations into the SEC's enforcement operations are not unusual. The mid-1990s saw a significant probe into SEC enforcement programmes on mergers and acquisitions. John Carney, a former SEC enforcement staffer and partner a law firm Baker Hostetler in New York, said: "The SEC has always been a fine institution and if the GAO review will confirm this – so much the better."
Mr Grassley also requested that the GAO investigate whether any conflicts of interest had arisen at stock exchanges as they carried out their twin roles as exchange operators and self-regulatory organisations. The issue highlights questions that periodically arise over the possibility that exchanges are using their self-regulatory powers to pass rules that give them a competitive advantage over rivals.
ends
Copyright The Financial Times Ltd. All rights reserved.
http://msnbc.msn.com/id/15431005/
The story brokers don't want you to read...
this came to me by way of email.
Arne Alsin: The story brokers don't want you to read
By Arne Alsin
Published: October 20 2006
This is a column that the brokerage industry does not want you to read. That is because it will embarrass them. Brokers don't want you to know that they reap big profits by withholding important information from investors. Brokers don't want you to know that they are the reason why shareholder voting has become a farce. And they don't want you to know that they regularly and systematically discriminate between classes of investors.
The reasons for broker misbehaviour should come as no surprise. They misbehave because: (1) it is profitable; and (2) they can get away with it.
Brokers, as fiduciary agents, are supposed to act in the "best interests" of investors. But many brokers act in their own interests when they have an opportunity to generate more profits. Before I get to the cold, hard facts regarding the self-serving conduct of brokers, I will identify the root cause of the problem. That is, brokers wield too much power and influence.
There is no other asset class where brokers have such enormous power. A real estate broker or an auto broker, for example, is not able to lend your house or your car to someone else without your knowledge.
In the stock market, it happens every day. Brokers lend investor property to short sellers, often at annual yields in excess of 10 per cent, without notice to investors. After lending investor property, brokers have the gall to keep 100 per cent of the proceeds.
Broker lending of investor property generates $10bn a year for the brokerage industry. Because brokers are reluctant to share this booty, they willfully and systematically discriminate between investors. They discriminate between those investors who have information and those who don't have information.
Investors who know when their shares are lent (in other words, institutional investors) demand a piece of the action. And they should. Those investors deserve to be compensated when their property is lent to someone else.
Investors who do not know when their shares are lent (retail investors) are treated differently. Brokers regularly loan out the property of uninformed retail investors and keep all the proceeds. Those property owners cannot demand a piece of the action if they do not know about it in the first place.
In the brokerage industry, which I believe is collusive and anti-competitive, all retail investors must sign a "hypothecation" agreement when they open a margin account. This gives the broker the right to lend investor property without prior knowledge and without compensation to the investor.
The hypothecation agreement is an indefensible anachronism. The reward captured by brokers under the umbrella of the hypothecation agreement is outrageous, and it is not subject to normal open-market supply and demand forces.
Per the industry-standard hypothecation agreement, brokers are able to lend out investor property and secure high returns while putting none of their own capital at risk. So, all of the capital is put up by the retail investor; all of the reward goes to the broker.
The key to the ruse is this: keep the retail investor uninformed. Broker behaviour borders on the absurd in this regard. When a broker lends the shares of a retail investor to a short seller, who then sells the shares to someone else, the right to vote goes with the shares. To keep the loan a secret from the owners, brokers mail proxy voting materials to investors even when the broker knows that the shares have been lent to someone else.
The deceit is carried a step further. Even though the shares have been lent and the retail investor is not legally entitled to vote, brokers allow the investor to vote anyway. As a result, shareholder voting has become a farce. That is evident, in part, by rampant over-voting.
The common broker complaint - that it is too difficult to track shares for voting purposes - is a canard. That is because brokers already track shares pursuant to Internal Revenue Service rules.
Brokers track shares for tax purposes because they have to. They permit systematic violation of the "one share, one vote" rule because they can get away with it.
Arne Alsin is a portfolio manager for Alsin Capital and for the Turnaround fund.
<mailto:arne@alsincapital.com> arne@alsincapital.com
<http://www.ft.com/servicestools/help/copyright> Copyright The Financial Times Limited 2006
Bob O'Brien on Carol Remond
http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/33/Default.aspx#
Snoop5, if you wish to learn more, here's Edward Jay Epstein's 22 chapter book The Diamond Invention ... how they're advertised and marketed.
http://edwardjayepstein.com/diamond/prologue.htm
I wouldn't call it a spelling error fung...
If you pay attention you'll find the majority of US Americans say it that way as well as spell it that way.
Are you one of them?
You know the difference between:
"I would rather squash a bug than eat it".
and...
"I would rather squash a bug then eat it".
So why don't you see the difference between:
"He slipped up and said something than tried his best"
and...
"He slipped up and said something then tried his best"
Again... as I said before, what does "...something than tried..." actually mean?
What does this mean?
"...something than tried..."
His DD was second to none.
What you mean to say fung is 'He knew about Roger coming before most were aware the news of it hit the streets..."
It's a pity zeninvestor32 no longer visits iHub on the "One Step Ahead" board; he had good insight into this CMKX saga, and yes he did have something to say re Crystalix. Snoop5, if you have the time you might search for it among the posts contained in his profile:
http://www.investorshub.com/boards/profile.asp?User=40944
States Weigh In On Naked Shorts
Liz Moyer, 10.16.06, 6:00 AM ET
By This Author
Liz Moyer
Let the mudslinging begin!
State securities regulators have asked their federal counterparts to force the disclosure of more data on securities transactions, and to tell the clearing firm that collects this data to stop hiding behind privacy and other claims as its excuse for not doing so.
This is all part of the debate on whether aggressive short-sellers are gaming market rules on stock borrowing and trade settlement to drive down the shares of targeted stocks (the "short and distort" trick), reaping big profits in the process.
The U.S. Securities and Exchange Commission is considering ways to close loopholes in the regulations governing short-sales, especially so-called naked shorting. But some say the amendments don't go far enough, and the rhetoric is heating up.
In an Oct. 4 comment letter, the North American Securities Administrators Association takes direct aim at the Depository Trust & Clearing Corp. (DTCC), a brokerage-owned private company that handles the bulk of the clearing and settlement of U.S. securities.
NASAA, an organization representing all the state securities regulators and others, describes the DTCC as being "obstructionist" in the movement to make more data available on trade settlement--and, more precisely, on trade settlement failures.
Stock trades are supposed to settle in three days, with the shares being transferred from seller to buyer. Trades "fail to deliver" when that settlement deadline is breached. There are various reasons why that can happen, but high incidences of trade settlement failures in a stock can indicate manipulation.
That explains why regulators and a growing list of publicly traded companies are demanding more and earlier disclosure of trade settlement failure data, some even asking for the disclosure of the brokerages through which many of the fails are occurring. Their view is that more disclosure would ferret out the manipulators.
"The paucity of information available to investors and issuers in the short-selling market is surprising, and contrary to the SEC traditionally disclosure-oriented public policies," complains Barry McCarthy, chief financial officer of Netflix (nasdaq: NFLX - news - people ), in a Sept. 19 letter to the SEC.
Netflix has been on the threshold list of stocks with high and persistent trade settlement failures for over a year. Several other stocks have been on that list for much longer than the SEC ever intended, such as Overstock.com (nasdaq: OSTK - news - people ), Fairfax Financial Holdings (nyse: FFH - news - people ), Novastar Financial (nyse: NFI - news - people ), Krispy Kreme (nyse: KKD - news - people ) and Martha Stewart Living Omnimedia (nyse: MSO - news - people ).
But the DTCC, which collects all of this data and gives it to the SEC and the stock exchanges, guards it from public consumption and has thrown up confidentiality and federal pre-emption claims against releasing it, even to state regulators.
The DTCC "cannot be allowed to hide behind jurisdictional claims or assert that privacy concerns preclude it from sharing information about broker-dealer transactions with state regulators," says the NASAA's letter, which is signed by Joseph Borg, director of the Alabama Securities Commission.
Of course, the DTCC doesn't quite see it that way. In its own comment letter submitted last month, it said it favors the release of more data but adds that the decision of what, when and how much of the data should be made available must be left up to the SEC and the brokerages to sort out.
"A fundamental issue of concern within the industry has been that disclosing current fails data on a stock would reveal position information and could be used to manipulate the market," said Larry Thompson, DTCC's general counsel, in a Sept. 27 letter.
It's an attitude that irks state regulators. In the last year, Connecticut and Utah have attempted to get trade failure data out of the DTCC, with mixed results. Connecticut subpoenaed the DTCC for data on the stocks of four Connecticut companies, while Utah's request was far broader, involving trade failures by brokerages licensed to do business in the state. (DTCC would describe Utah's request as "numbing.")
In each instance, the DTCC told the states that the data was confidential and, in any event, that it didn't have to respond to the state requests because it was not regulated by them but by the SEC. If the states wanted the data, they would have to go through the SEC to get it.
Connecticut, working with the DTCC through the SEC, did just that and obtained its data. The state is investigating the trading activity of the four companies to see if manipulative short-selling is involved, says Division of Securities Director Ralph Lambiase, a former president of the securities administrators group.
But Utah is still working on it, as it notes in its own comment letter, the substance of which was repeated in the NASAA's letter this month.
Wayne Klein, director of Utah's Division of Securities, wrote in a letter to the SEC, "The division does not know whether the obstreperous attitude of DTCC is because DTCC has shortcomings that it fears releasing or whether DTCC's lack of cooperation is at the behest of its participant firms."
In a letter fired off by the DTCC's outside counsel, Proskauer Rose, to Klein a few days after that comment letter appeared, the DTCC said the accusations that it hampered his investigation were "false" and demanded that Utah "correct the record" with the SEC on its dealings with the DTCC. Klein said by telephone Thursday that he had not responded to that letter.
http://www.forbes.com/business/2006/10/13/state-regulators-naked-shorts-biz-cx_lm_1016shorts.html
Yes, CMKX was the symbol for
CMKM Diamonds Inc.
Snoop5, the Bud Burrell post originated here:
http://www.thesanitycheck.com/
Bud is one of about a dozen knowledgeable individuals that are at the forefront exposing this criminal activity.
Others are...
Bob O'Brien (The Easter Bunny)
Mark Faulk
Dave Patch
Dr. Patrick Byrne
Dr. Susanne Trimbath
Gary Aguirre
Dr. Robert Shapiro
etc
Outcry grows over naked short sales
STARTUPS' POTENTIAL STIFLED, CRITICS SAY
By Will Shanley
Denver Post Staff Writer
Article Last Updated:10/14/2006 02:52:59 PM MDT
http://www.denverpost.com/business/ci_4494028
Traders work on the floor of the New York Stock Exchange on May 17, 2006 in New York City. (Getty / Spencer Platt)Acting on a stock tip three years ago, Carol Pederson made what turned out to be one of the costliest investments of her life.
It began as Pederson watched words appear on her computer screen at her Arvada home office. Investors, writing via an Internet chat room, were touting a mining company called CMKM Diamonds Inc.
The Las Vegas-based company, the investors claimed, owned mineral rights to more than a million acres of diamond-rich land in Saskatchewan, Canada. Intrigued, Pederson bought shares worth $15,000.
The decision began Pederson's involvement in a saga that includes lawsuits, huge financial losses and allegations of fraud on Wall Street and inaction by federal regulators.
CMKM, Pederson said, became the target of naked short sellers, who bet that a company's stock price will fall. The traders pledge to borrow shares, then sell them and later buy them back at a lower price, pocketing the difference.
Unlike traditional short sellers, such "naked" traders don't actually borrow the shares or deliver them to buyers, and the unfulfilled orders can hang over a company for months, dragging down the stock price.
Naked short selling, say a growing number of companies nationwide, including some in Colorado, is a scourge that snuffs out startup companies before they can fulfill their promise.
Securities and Exchange Commission Chairman Christopher Cox, during a July speech, called naked short selling a "serious problem" that can "drive down a company's stock price to the detriment of all of its investors."
Added Pederson of her soured investment in CMKM: "We believe it is the biggest naked short sell in history. There were so many bashers, the company never had a chance," Pederson said.
But others question whether some companies, including CMKM, use naked short selling as an excuse for mismanagement or even fraud.
Targeted firms lose value
Two Denver-based companies, Vyta Corp. and Metretek Technologies, have complained about naked short selling. Vyta, in particular, says its stock price declined after it was targeted by such traders.
Meanwhile, dozens of public companies, investors and financial experts are pushing the SEC to tighten loopholes that they say allow hedge funds and stock brokers to profit from naked short selling at the expense of American companies and investors.
The practice is not illegal as long as it is not part of a concerted effort to manipulate share prices. It is regulated by the SEC, which is considering enacting additional regulations, such as requiring shorter settlement deadlines on these kinds of transactions and mandating greater transparency for hedge funds.
Some Wall Street investment banks, which are lobbying against the proposed changes, say additional regulations would disrupt the market and make short sells more difficult to execute. They also argue that naked short selling affects only a small swath of companies.
Critics of the tactic, however, contend the problem is widespread and threatens the integrity of the U.S. financial markets.
"The system is rigged," said Patrick Byrne, chairman and chief executive of Over stock.com, the Salt Lake City-based online retailer. "I've gone from golden boy to public enemy No. 1 for trying to expose this."
Far-reaching effects
Byrne's company, with $827 million in annual revenue, has since January 2005 been on a stock exchange-generated list that identifies companies possibly targeted by naked short sellers. Since then, the company's share price has dropped from above $55 to about $18.
Byrne, 43, one of the most high-profile critics of naked short selling, said brokerage firms sometimes short-sell more shares than have even been issued. He said if the SEC changed its policy and required investors to suddenly cover their short positions - meaning investors had to purchase the shares to replace the ones that they had shorted - it could possibly cause "hedge funds to blow up and banks to blow up."
While Byrne acknowledges that is the worst possible outcome, other financial experts are concerned.
Naked short selling affects "significant numbers of stocks and, in many cases, harm(s) their markets," wrote Robert Shapiro, an economist and former economic adviser to Bill Clinton, in a Sept. 14 letter to the SEC.
Shapiro added that the current setup "provides a means for stock manipulation and other criminal activities."
Yet some companies claiming to be hurt by naked short sellers have other problems and are perhaps using short sellers as an excuse to cloak their own mismanagement or fraud, experts say. Some company executives even naked short-sell shares of their own firms as new investors buy in, a twist on the classic pump-and-dump scheme, they say.
"You have two separate types of companies" that talk about naked short selling, said Mark Faulk, an Oklahoma City-based author preparing to release a book later this year about CMKM. "This company, by my estimation, is not a good poster child for the problems associated with naked short selling."
CMKM Diamonds, which legally issued 700 billion shares when it held its initial public offering in 2003, had its shares revoked in 2005 after it failed to file financial reports with the SEC.
The company, Faulk said, used unusual promotional tactics to create an "obsessed" legion of investors. The company plastered its stock ticker on billboards and on the side of a race car and even handed out free shares.
Faulk estimates that investors lost $250 million or more and that at least three government agencies are investigating it. He said it's unclear whether CMKM knowingly defrauded investors; the company owned mineral rights to some land in Canada that initial tests showed could contain diamonds, he said. Attempts to contact CMKM officials were unsuccessful.
Pederson, the Arvada investor, said she has become spooked by the effect naked short selling can have on publicly traded companies.
"I wouldn't put my money in Wall Street until there are changes," said Pederson, a small-business owner who provides cost estimates for floor coverings at commercial buildings. "This is bigger than anyone realizes."
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com
Janice, you're a part of this whole NSS circus.
What's the attraction?
Stay tuned...
"So far, there aren't any..."
Simple...
Because this is where many of the NSS apologists hangout.
Naked Shorting and Fails Around the World, US Embarrassed Again
Location: Blogs Bud Burrell - Front and Center
Posted by: bburrell 10/13/2006 1:46 PM
Japan has announced it is going to Straight Through Processing, and India is doing the same, moving to T+0 shortly. Now it is reported by reliable sources that markets in Europe are shutting down all new naked shorting, and related fails, and forcing gradual liquidation of existing fails.
A company I work with is filing an application for listing on the Offex in London. That Company has been informed that the Offex (similar to our Pink Sheets here) will not permit naked shorting, nor allow fails to deliver.
The AIM market in London is adopting the same rules according to this source, linked to a study began in 2001 by the FSA. The UK has adopted these rules across the board.
Germany has moved to stop all new naked shorting on its exchanges, and is forcing a gradual workout of existing fails.
Switzerland has enforced three day settlement for years without wavering. They don't look very stupid right now.
India's SEBI rejected the DTCC model for its custody system, and permits neither naked shorting nor fails.
Japan's JASDEC has announced it is moving to straight through processing.
So the US and its markets' and regulators' positions on these matters are being roundly rejected globally.
I said some months ago the issue is no longer in doubt. Either the US fixes this horse manure here, or they will not be able to trade in other global environments.
The line forms at the left for the rotten vegetables to be thrown at our pigs. We can always hope they will try to seek retribution against those opposing them. I would personally welcome such an event as a "Retirement Moment", one I can live on and enjoy till I die.
http://www.thesanitycheck.com/Blogs/BudBurrellsBlog/tabid/84/EntryID/482/Default.aspx
Naked Shorting and Fails Around the World, US Embarrassed Again
Location: Blogs Bud Burrell - Front and Center
Posted by: bburrell 10/13/2006 1:46 PM
Japan has announced it is going to Straight Through Processing, and India is doing the same, moving to T+0 shortly. Now it is reported by reliable sources that markets in Europe are shutting down all new naked shorting, and related fails, and forcing gradual liquidation of existing fails.
A company I work with is filing an application for listing on the Offex in London. That Company has been informed that the Offex (similar to our Pink Sheets here) will not permit naked shorting, nor allow fails to deliver.
The AIM market in London is adopting the same rules according to this source, linked to a study began in 2001 by the FSA. The UK has adopted these rules across the board.
Germany has moved to stop all new naked shorting on its exchanges, and is forcing a gradual workout of existing fails.
Switzerland has enforced three day settlement for years without wavering. They don't look very stupid right now.
India's SEBI rejected the DTCC model for its custody system, and permits neither naked shorting nor fails.
Japan's JASDEC has announced it is moving to straight through processing.
So the US and its markets' and regulators' positions on these matters are being roundly rejected globally.
I said some months ago the issue is no longer in doubt. Either the US fixes this horse manure here, or they will not be able to trade in other global environments.
The line forms at the left for the rotten vegetables to be thrown at our pigs. We can always hope they will try to seek retribution against those opposing them. I would personally welcome such an event as a "Retirement Moment", one I can live on and enjoy till I die.
http://www.thesanitycheck.com/Blogs/BudBurrellsBlog/tabid/84/EntryID/482/Default.aspx
STOCKGATE TODAY-SEC's Secret Conflicts of Interest
An online newspaper reporting the issues of Securities Fraud
SEC's Secret Conflicts of Interest - October 11, 2006
David Patch
Today, you can't pick up a newspaper or magazine without finding some topic of discussion on the conflicts of interest between our members of Congress and the US business community. From who it is that contributes to their campaigns to what programs are proposed through the back door lobbying of some special interest groups, Congressman are clearly scrutinized over their business and financial associations.
While the power of Congress is such that the media must carefully scrutinize these potential conflicts of interest, so lies the expectation for scrutiny of other federal employees including those who regulate our securities markets. As Wall Street goes so goes our economy and thus, potential conflicts of interest can have an overall damaging affect on our nation if not properly controlled.
Last week the NY Times published an op-ed piece drafted by a lawyer named Richard Sauer (October 6; Bring on the Bears). Sauer’s resume includes such distinguishing roles as former SEC Division of Enforcement attorney and administrator. Sauer' s op-ed piece, leveraged off his prior employment, was woefully biased to the short selling side of the market as the writer admitted to initiating investigations into public companies based on the recommendations of short-interest investors. To Sauer, the short sellers act as nearly the non-deputized sheriff’s in the act of market regulation and should be heralded for their public service.
Certainly, coming from a former SEC attorney, this should carry some measurable weight to the credible role short sellers play in our capital markets.
At the conclusion to this op-ed article the NY Times disclosure states that Sauer is now employed by a “short-biased hedge fund.” The op-ed article, while frequently disclosing Sauer’s former position at the SEC, never identifies the name of the short-biased fund Sauer is now employed for.
While the NY Times failed to make such proper disclosure, others within the media thought it garnered enough interest to investigate and, as truth would have it, Richard Sauer is in fact employed by Copper River (formerly Rocker Partners). Copper River is the same hedge fund under SEC investigation for illegal tactics used in their short selling practices including the possibility of paying off analysts to write “hatchet jobs” on companies they short to distort the public’s perception of those public business operations.
Why is all this critical information?
In the NY Times publication Sauer admits that he “received from short sellers early warnings on certain companies that led to the capture and return to investors of hundreds of millions of dollars taken by stock frauds. Such information came from no other source"
According to an April 2006 Hedge Fund Intelligence article published by Michelle Celarier “Rocker Partners exposed frauds at such companies as AremisSoft, ACLN and Lernout & Hauspie Speech Products, all of which were later prosecuted by the U.S. Securities and Exchange Commission.”
And who was the SEC attorney involved in each of these cases?
According to public records for each case identified, Richard Sauer was one of the attorneys in each of these investigations. Public record does not identify the lead attorney. Leading from Sauer's own commentary, and with the SEC cases publicized, Richard Sauer appeared to be David Rocker’s personal SEC cop and now Sauer works for the Fund Rocker co-Managed until just recently.
The problem?
Since nobody can be 100% accurate, even those smart Hedge Fund managers the financial press makes them out to be, this thus begs the question regarding how many cases Rocker directed Sauer or other SEC agents way that yielded no enforcement actions? This is important because of the impact such an investigation has on a company who, when the SEC comes calling, is presumed guilty first by Wall Street and the Investing public standards. >
When the SEC comes calling there must be something there.
If the SEC created an open door policy with David Rocker, as the SEC did with Anthony Elgindy, Rocker could then use the SEC to manipulate the markets in companies he took a short interest in yielding profitability despite a lack of successful SEC enforcement action. Once Rocker has received the confidence of the SEC trust he then could control the situation and Rocker clearly had the SEC's confidence.
Records indicate that Sauer worked for the agency as late as 2003 before heading to the law firm that represented Rocker; Vinson & Elkins. But Rockers fortunes of having his short interests investigated have not changed since Mr. Sauer’s departure with SEC investigations made public regarding Allied Capital (NYSE: ALD), Taser Corporation (NASDAQ: TASR), Novastar Financial (NYSE: NFI) and several others known short by David Rocker. Ironically, these SEC investigations have not yielded the same “capture and return of millions of dollars” in stock fraud but each saw a share value impact off the news of such investigations..
Sauer was so impressed by the selective results provided by Rocker that his op-ed piece even suggested that “Congress should provide the S.E.C. with discretion to pay bounties, similar to those available in insider trading cases, for tips resulting in successful financial fraud cases. This would give some degree of recognition to those contrarian’s who help keep the market honest by flagging problems concealed by companies - and missed by institutional analysts. "
As if the profits obtained by short sellers through the collapse of the security itself was not enough.
The flaw in Mr. Sauer’s recommendation, it will draw every short seller out of the woodwork to knock on an SEC door looking for an investigation into some company “they perceive” of wrong doing. At times when assessments are accurate, justice will be served and the short interests will be profitable. For those times they erred, they too can become profitable as the SEC would have tarnished the markets perception of the company for no other reason than a short seller “thought” deceit was in the works.
It is a win-win situation for the hedge funds and one destined for lobbying about Washington for weeks and months to come.
In the regulatory environment, the SEC has a “neither confirm nor deny” policy on investigations. While holding to this policy, the SEC also has laws that require public companies to disclose material events to their shareholders for which most consider an SEC investigation a material event. Such disclosure, made by the company but forced upon by the SEC, will have a negative impact on the market in that security.
On the flip side, the markets will never hear of a decision where the SEC elects not to investigate a company recommended by a short seller.
There is no public disclosure required of a material event that never transpired because, in many cases, the company is unaware of the preliminary analysis in the first place. The times a short seller proposed wrongdoing but the SEC attorney never pursued it because they were wrong is not data the public has access to. The public will only see the success and failure stories of SEC investigations initiated and that data alone highlights the level of mistakes short sellers have made.
Being exonerated from claims of fraud is a secret but being suspected of wrong doing, whether accurate or misplaced, quickly becomes public knowledge and possibly a distortion of the truth, manufactured for personal profit.
For Richard Sauer and his short-biased hedge fund, this is an acceptable risk they believe is necessary. After all, it can only turn into hefty profits if even 25% of the referrals get investigated and 5% yield an enforcement action.
The Commission would not respond to inquiries about a potential conflict of interest between Sauer the SEC attorney and his new employer Copper River with whom he admits to running investigations for. The Commission would only confirm that Sauer worked for the agency between March 1990 and June 2003.
One can only wonder, based on other comments stated in the op-ed piece, how many times complaints came across attorney Sauer's desk regarding Rocker and how many were dismissed based on this relationship.
Yet another conflict for another day.
For more on this issue please visit the Host site at www.investigatethesec.com
Copyright 2006
GREAT WEST DIAMONDS - Brent Jellico CEO
Go to http://www.gwdc.ca/ there is an interview with GWDC. Look on the home page on the right hand side of the page.
Selling Shares by the Billions to Racing Fans
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By FLOYD NORRIS
Published: September 29, 2006
Was this stock being traded by crooks? Should the brokers have noticed? How about the regulators, who now charge that the brokers missed “red flags” but may have missed a few themselves.
The story of a tiny Nevada company that claimed to be in the diamond mining business but spent the little money it had on sponsoring a race car, sheds light on the market for small stocks that can fly below the radar for years.
It is a story that involves a former F.B.I. agent and associate of Howard Hughes, who was promised a lot of money for doing very little but says he did not get the cash, and an auditing firm that was fired 11 days after it was hired. There is a claim that the Patriot Act — the law passed after Sept. 11, 2001, as a way to fight terrorism — was violated.
The company, CMKM Diamonds, never traded for as much as 2 cents a share, and most of the trades were for about a fifth of a penny. But that did not stop one trader from taking in an impressive $53 million. He sold more than 259 billion shares from 2003 to 2005, a vast majority of them before the company had bothered to let investors know so many shares existed.
All that from stock in a company that, when it last filed a balance sheet with the Securities and Exchange Commission, in 2002, reported total assets of $344.
After that, the company went into the diamond business, or at least said it did, acquiring some mineral claims in Canada. Some of those claims were later given away because the company could not come up with the money needed to work on them, but it did spend $4 million to promote itself at “funny car” races by sponsoring the CMKXtreme car, which had a drawing of a diamond and a miner on its side.
The S.E.C. later concluded the company had lied when it claimed it did not have to file reports with the S.E.C., and revoked its registration. The company said that it made an honest mistake when it filed a form claiming the exemption, and that the S.E.C. should have noticed that the form was obviously in error.
While it was not filing financial statements, it was seeking publicity, both through the race car and through press releases.
One of them reported the hiring of Robert Maheu, a former F.B.I. agent who it said had “served as an adviser to many great men and companies throughout the history of America.” It listed some of those he had been associated with, including Howard Hughes and the C.I.A., adding, “To list all of Maheu’s accomplishments would turn this brief announcement into a novel.”
Mr. Maheu became co-chairman of the board and chairman of the audit committee, at a salary of $40,000 a month, but his testimony before the S.E.C. convinced an administrative law judge that he was not very well informed. He did not know how many employees the company had, or what they did. He was not familiar with the company’s assets or liabilities.
Nor had he ever visited the company’s offices. But that is no surprise. One address it gave to the S.E.C. was actually the home of a hot-rod shop.
When I reached Mr. Maheu this week, he said his lawyer had told him not to comment, but he did say the company had not paid him what he was owed.
Perhaps the highlight of this story was the audit firm that left quickly, after warning the company’s board of possible criminal activities. The company’s lawyer protested that the auditor could not know any such thing, given that so many of the company’s records could not be found.
This week, NASD, the regulatory agency for the over-the-counter and Nasdaq markets, filed a disciplinary complaint against NevWest Securities, the small brokerage firm that handled the trades for the man who sold more than 30 percent of the shares in the company, giving the firm an address that was a postal box. As it happened, the company used the same address.
The NASD claimed NevWest, which is based in Las Vegas, should have filed reports of “suspicious activity” with the Treasury Department, as required by the Patriot Act. That section is supposed to deal with money laundering, but it requires brokers to report evidence of violation of any federal law.
Sergey Rumyantsev, NevWest’s president, told me his firm did nothing wrong. Anyway, he said, NASD examiners did not complain when they learned of some of the trades in 2004.
What does all this prove? It may indicate that the Patriot Act gives regulators an unexpected tool to force brokers to tell the government when they see funny business. It may also reflect the fact that regulators do not even look at many filings.
And it shows that this can go on and on. CMKM has reached a deal to sell what assets it has to Entourage Mining, a penny stock company based in Vancouver, British Columbia, which will pay with shares that will be distributed to CMKM holders.
Looks like a hot stock to me.
This is huge.... his credibility is on the line...
He's the one writing the book and supposedly has the inside scoop with sources
Short selling long on trouble
By FLOYD NORRIS
Columnist
http://www.kansascity.com/mld/kansascity/business/15615955.htm?source=rss&channel=kansascity_bus...
He who sells what isn’t his’n must buy it back or go to pris’n.
— Attributed to Daniel Drew, 1797-1879
The annals of short selling have no better exemplar than Daniel Drew, whose career demonstrated both the risks and rewards of pursuing such an unpopular strategy. He made, and lost, several fortunes, along the way founding a Methodist seminary that bears his name.
He died broke.
In an era when insider selling was not illegal — and in fact was deemed a sacred right of insiders — it was Drew who persuaded members of the New York City Council to first sell short shares of a railroad company controlled by Cornelius Vanderbilt and then to revoke the company’s license to operate a street railway in Manhattan. The idea was that the councilmen, and Drew, would profit when the share price plunged.
The scheme backfired when Vanderbilt bought shares, keeping the price from falling. Eventually he owned more shares than existed, leaving those who were short at his mercy. They needed to buy shares to cover their short positions, and he was the only possible seller. The city councilmen were allowed to exit with small losses, in return for reinstating the license. It cost Drew much more to get out.
The market was much wilder in those days, but fights over short selling are still lively. The Securities and Exchange Commission finds itself caught between economists, who tend to think that markets are more efficient if everyone can bet on whether a price is too high or too low, and politicians and corporate executives who argue that markets are being manipulated by traders who sell shares without either owning them or borrowing them.
That is called naked shorting, and it is the major cause of failures to deliver shares for heavily shorted stocks. It makes sense: Those who borrow shares must sometimes pay hefty fees if a lot of others want to borrow the same stock. Why pay if you can get the same benefits by shorting without borrowing?
The SEC has a rule aimed at reducing such shorting, but the practice has risen, and a proposed tightening of the rule may not have much effect.
But economists testifying before the SEC recently produced an interesting idea: Make those who do not borrow pay the same, or more, than they would have had to pay if they did borrow. In other words, use the market to police the market.
That would require shining light on the market for borrowing shares.
If the lending price for any given stock was available, it would make it clear just how overvalued the shorts thought a stock was. Those who failed to deliver shares could be subject to fines based on the price for borrowing.
Some economists warn that restrictions on shorting can lead to overvalued shares, damaging the economy by leading to inefficient allocation of capital and depressed future returns for those who buy at the higher prices.
But the companies whose shares are subject to heavy naked shorting say it must be stopped, and they fume at the SEC’s argument that stocks can be manipulated by those trying to force prices up through short squeezes, as well as by those who dump large volumes of stock in an effort to overwhelm the market.
In the long run, prices will adapt to reality. If stocks are unreasonably cheap, someone may bid for the entire company, creating a big problem for the shorts. If shares are far too expensive, prices will eventually plunge no matter how eager a company’s fans.
If the SEC wants to continue requiring that shares be borrowed before they can be shorted, then an effort to make the stock loan market more transparent — and force every short to pay the price — makes sense.
Too much to paste...hit the link.
http://www.buyins.net/articles/gamesshortsellersplay.pdf
Liz Moyer from Forbes and now Bob Drummond from Bloomberg. The mainstream folk are finally starting to pick up. Never thought we'd see the day.
This is one tenacious guy who knows how to fight.
Patrick Byrne's Heavy-Hitter Banquet Speech
Good evening, Heavy Hitters of the Pan-Massachusetts Challenge. I am deeply honored to speak to you this evening.
There is a Zen saying that happiness is planting a tree knowing that you will not be there to enjoy its shade. Tonight, I am thinking about the meaning of that saying in the context of cancer and cancer research that is supported by men and women such as yourselves.
Mr. Starr has asked me to speak to you about my own experience, my own struggle with cancer, a struggle which occupied the three years of my life immediately after college, as well as the three transcontinental bicycle rides which helped me to recover physically and mentally from my cancer ordeal. I do have a doctorate in philosophy from Stanford, which he mentioned, and he asked me to share with you all the philosophical and inspirational lessons I learned from these ordeals. I told him if I share all of the lessons, this is going to be a very short speech.
I should tell you that I've never spoken publicly about cancer, and only rarely privately, to a handful of friends. And to borrow a line from Oscar Wilde, I warn you that you would have to have a heart of stone to listen to the story of my struggle with cancer without laughing. I'll be laughing and you're welcome to join in at any occasion. Also, I should tell you that I've always declined requests to speak about cancer because I feel as though I’m boasting, “Hey look at me, I cheated death.” And in general that’s just a bad idea, because I think in the end, he will take the last round.
So with such caveats in place, per Billy's request, I will tell you my story of cancer, pausing to note such meager philosophical and inspirational lessons as I may.
Shortly after I graduated from college in 1985 I woke from what was supposed to be exploratory surgery on my kidneys to learn that cancer had metastasized basically everywhere through my body and that my right testicle had been cut off. (I'll pause here for guys in the audience to squirm.) The next several days of testing brought repeated and increasing bad news about the thoroughness of metastasis. My vena cava – the vena cava is the main blood supply from the lower half of the body – was apparently occluded by a tumor pressing on it, so the doctors rushed me to emergency open-chest surgery in the hope of cutting it away. Instead, they found that my vena cava and the center of my lungs were completely tumorized, as one doctor put it. He said, candidly, “There's nothing we can cut: it's all tumor.”
Within nine days, I had three open-chest surgeries. All three were on an emergency basis, and before all three my family and I were told it was unlikely I would survive and that no alternative existed. Now here's the punch line…that's when things started to get really bad.
I will spare you further gory details, mentioning only those that remain relevant. I had over 20 pulmonary embolisms, each of which feels something like getting this microphone stand through the side of your chest. My blood thickened and eventually the blood supply on my right leg congealed; it was blocked from the hip down until my foot and leg turned black. The next day, I was told that, if I lived, I would probably never walk, or if I did, it would be with the aid of crutches and braces, so severe was the muscle and nerve damage in my leg.
In these first ten months, I had 10 surgeries and lost 60 pounds. On many occasions my family and I were told I would not survive this or that crisis or procedure, that there was no option. We would hear this in subsequent months and years so often that I began to wonder if it were not the medical profession's equivalent of when you pick your date up to take her to dinner and you tell her she has a nice dress on, something you learn to say automatically, whether or not you're really sure you know it.
This went on deep into the fall that year. Unless you think I practice simple Irish blarney, I will relate one last story from that period. I was at Memorial Sloan-Kettering Cancer Center in New York, attended by Dr. George Bosl, a wonderful doctor with a superbly candid approach to patient relations. He is now the head of medicine at Sloan- Kettering, and I understand from people I met today at Dana-Farber Cancer Institute that he has become quite well known in his field.
I started getting visits from packs of doctors, four or five together, to interview me. I was an old hand at this point and knew enough to recognize these were not the standard entrance exams, nor standard interns. They were senior doctors. I saw a new group every other day for a couple of weeks. Finally I asked Dr. Bosl what it was all about. He said, “Well, Pat, I presented your case in a medical conference. There were 70 doctors there and we decided that with 2,000 years of combined medical experience among us, we'd never heard of anyone have so much go wrong with them and not die. You see, you think you're getting better, but you're still well below the point people usually just die,” he said cheerfully. “These doctors want to know what's going on in your head.”
So here's my first inspirational lesson, such as it is. I remember telling the doctors over and over what was going on in my head. It was Coach Joe. Coach Joe was one of my earliest wrestling coaches, a huge Greek, built like a fire hydrant but with thicker shoulders. He was the toughest, meanest, baddest man any of us kids had ever seen. If he had a last name, none of us had the courage to ask him. Coach Joe used to have us end practice with endless push-ups and sit-ups and pull-outs and sit-ins and sit-in-turnouts and so on and so forth, until somebody fainted. Literally, that was his way of keeping track of when it was time to end practice.
And one night he did this and this lad Steven something-or-other, whose last name I don't recall, fainted from heat exhaustion in our sauna-like wrestling room and was taken away in an ambulance. The next evening as we walked into practice, Steve's mother was in there yelling at Coach Joe, threatening him with lawsuits and loss of a coaching job, and all kinds of repercussions. We could see that Joe was barely holding his temper. Finally she said something like, “We're going to send you to jail.” And Joe snapped back, “Hey lady, why don't you send me some place I ain't been before, like Hawaii?”
Now, I'm guessing that that seems crude, crass and vulgar, but when you're 14, you think that is by God the coolest thing you're ever going to hear anybody say in your entire life. I waited years for a chance to deliver that line. And it never came. Until one morning, at 4:00 a.m., two interns come to my bed with tears in their eyes, a man and a woman whom I had gotten close to in the preceding few weeks. They were not much older than I, and they knew I understood the implication of what they were telling me. They said, “We're sorry, Patrick, you're bleeding in your pericardial sac, tamponod something-something. We have to do another open-chest surgery. We've called your parents to come in. We don’t expect you to survive but we have no choice. We're taking you to the operating theater now.” And I finally got to croak out, as nonchalantly as I could, “Hey, why don't you take me someplace I ain't been before, like Hawaii?”
Now, if you say things like that, people look at you a little strangely, but it works. So the lesson is, I promise you, I am the least tough person in this room. I hate pain, especially now, and I'm a true wimp. But if you ever go through something like this, what you do, if you don't feel tough enough, is you think of the toughest, baddest, meanest cat you know, and you just pretend you're him. It works, it just does – pretend like that guy, act however you think he or she would act and say, and you'll get through it. At least, it gives you something to do.
I'll skip ahead a few months. Cancer had gone into remission. Dr. Bosl released me from the hospital. Something made me ask him, “If cancer comes back, what are my chances?” He said, “If it returns you have a 20 percent chance of beating it.” Some weird instinct made me ask again, “What if it comes back and I beat it, but it comes back again?” “At that point, Patrick, you'll go into something called salvage therapy, where we try to make you comfortable and salvage as many weeks and months of your life as we can.” My parents wheeled me from the hospital, and we climbed into a taxi. The cabby turned around and said, “Have you heard? It's on the radio, the space shuttle just blew up.” So that's where I was when the Challenger blew up.
That was sometime in January or February, and I had been in the hospital more or less straight since the previous end of July. Staring up at the ceiling, throwing up 30 or 40 times a day, pretending to be a wrestling coach I hadn't seen in ten years, those had not been my immediate post-college plans.
I'm the youngest of three sons, a classic Irish-Catholic family, and my family had been wracked by the strain of my illness. My oldest brother John quit his job to spend some time with me. I saw a physical therapist a number of times and did exercises for my leg, which was stiff and swollen and numb on the side. When I tilted my head forward, I would experience a strong shock sensation in my hands and feet, and I lost my balance a lot.
John and I went on a golfing vacation in the south. Well, John went on a golfing vacation in the south and he brought me along, and I would hobble a few hundred yards here and there or else ride in the cart. A friend of mine, a philosophy professor named David Luban, mentioned to me that bicycle riding might be good for me as there was no impact and it worked the heart and lungs. Two days later, John and I flew to San Diego and bought bicycles. We joked that we were going to ride across the country. Actually we figured we would have a few nice days, bicycling slowly across the desert.
The first day we went three miles. I would ride a few hundred yards and lie down in the grass in the shade of some strip mall while John waited. The next day, not much farther, nor the next. So that by the end of three days, we had reached Julian, California. I checked recently on a map and Julian is about 30 miles inland from San Diego. Not a blistering three-day pace.
Then, a funny thing happened. We became increasingly inspired by that most beautiful aspect of the relationship that exists between brothers, unmatched in any other human bond: sibling rivalry. Neither of us was going to be the guy to say, “Let's quit.” So he would wait for me miles ahead under a bridge as I rode weaving along some state highway in the desert, when I reached him he'd say, “Had enough?” I would say, “What, are you kidding me?” Later, pushing our bikes up Texas Canyon, east of Tucson, in the noon heat – this is, you know, June in Arizona – I'd look at him and he'd be hunched over the front of his bike, and I'd say, “Gee, John, you look pretty done in. You want to call this a ball game?” John would say, “Not me. Just enjoying the view. That is, unless you want to quit.” And so on and so forth for 2000 miles. Until one day, we're eating a sandwich in Mississippi, (my brother Mark got out of a job and joined us in Texas). On that day in Mississippi we start to realize we're actually going to bicycle across country. And that's what we did. We did centuries the rest of the way in to the waves in Jacksonville, Florida.
I was well and fit, but still fairly shell-shocked. I went off to Stanford to pursue a master's in mathematical logic and walked the sunny hills of what was then, in 1986, the quaint California Silicon Valley. But in my heart, I knew something was wrong. And in December, I woke with a gurgling in my chest. X-rays revealed a silver-dollar-sized spot in my lungs. So – round two.
People in my corner were worried. They knew the 20% odds. I do not mean to sound cocky or as though I take any of this for granted, but I will tell you the truth. Deep down, I was not worried. Remember your high school English course, and the concept of dramatic irony, where the reader knows more about what's going on than the characters in the novel or the play? I was experiencing dramatic irony. It was as though I had flipped to the end of the book, I had read the last page, I knew the guy lived. I’m not sure how, but I knew it, and I tried to act appropriately worried, but it didn’t come easy. I felt tremendously sorry for those people around me who were worried about me, and of course there was no way to explain to them that I had read the ending already and knew the hero came out okay. More than anything, I was curious, because it sure did look like our hero was in a bit of a fix, and I wanted to hang around to see how he got out of it.
I don't mean to say, of course, that it was pleasant. As in round one, the kind of chemotherapy I had was intense enough that I had to be knocked out every day with Thorazine. When I woke up, I would throw up dozens of time throughout the afternoon and evenings. My white cells sailed way over the horizon and it was generally impossible for me to leave the hospital, even between chemotherapy cycles.
I also had my first face-to-face encounter with medical research, properly performed. Dr. Bosl was running a study comparing the effectiveness of inpatient and outpatient chemotherapy. He was letting some patients get Thorazine in a special outpatient clinic, get their chemotherapy, and then go home for the evening. I expect this is now probably fairly standard, but then it was a clinical trial. I desperately wanted to get into that study. I had spent so many nights staring at the hospital ceiling. I begged him to let me in, told him I was going crazy month after a month in the hospital. Every time I seemed close, some little scratch would turn into an infection or some other problem would arise and I would be on my back for 14 days of antibiotics and get off it just in time to start another five-day chemotherapy cycle.
Finally they told me that for the last cycle, as everything seemed right, Bosl was going to let me participate in the outpatient study. I was so grateful. He asked me if I was sure I wanted this. With tears of joy and thankfulness in my eyes, I said, “Absolutely.” Bosl pulled out a coin and flipped it, saying, “Call it. Heads/tails, nope you lose, you're in the control group, back in bed.”
At least I did know what was going to happen on the last page. I met a fellow patient named Andy Yu, whom I am proud to call a friend. Andy often stopped in to see me. A few years older than I, Andy had been working at an insurance agency in Long Island when he was diagnosed with leukemia. Sometimes I would walk a lap around the halls and stop to chat with Andy, and sometimes Andy would stop in to see me in the mornings. I don't remember seeing Andy having many visitors, so he was always eager for the company, eager to stretch it into a long conversation when all I had in mind was a few words.
I wanted neither to commiserate nor swap experiences. I wanted to be quiet. He was always too ####### chipper for me. Everything was always great with Andy. “No problem” was his answer to everything. The chemo nurse would call him, “I gotta run, Pat. Chemo waiting.” “No problem,” he'd say, “We're gonna get on top of this stuff, Pat. No problem.”
I am ashamed to say that there were times I was barely polite, I'm sure. I did not acknowledge that there was something to get on top of. Hell, I'd read the end of my book. Maybe I was just too exhausted. More often than not, I let my mother take over, if she were there, or barely spoke if Andy and I were alone. Once my mother berated me, telling me I could make an effort to be friendlier when Andy came, instead of just lying listlessly in bed and barely answering him. I remember Andy backing out of my room a couple of mornings, with a sad look saying, “Well, I can see you're busy, I'll come back tomorrow.”
I finally did get out of the hospital for awhile, just as Andy was coming in for his bone marrow transplant. Oddly, he was looking forward it, like a kid waiting for a present. I was peppy as well, because I was packing and knew that unless I ran a fever, I would have a good two weeks out of the hospital before another chemotherapy cycle began. For once, we were both up and cheerful. We chatted about our plans for when we got out of the hospital for good.
Two weeks later, I checked back in. Phyllis, my favorite nurse, was helping me unpack my bag into the night stand. “How's Andy doing?” I asked. She flinched, then quietly said, “Andy didn't make it.”
I think about Andy sometimes. I wonder who else out there still thinks about him. My mother and I mention him every couple of years to each other.
Here’s another of Coach Joe's pearls of wisdom. In one of our rare moments alone, I remember him telling me about winning the East Coast heavyweight college wrestling championship. I was already familiar with the tendency of older guys to exaggerate their bronze medals into gold. I said, “Coach, are you saying you were the champion, or one of the champions?” Joe stood up, and sort of slapped his hands. He said, “Byrne, there's only one champion. Everyone else is last.”
I don't know about that anymore. I think there may be many champions. But I know this: Andy was a champion. And he was my friend.
Just one last inspirational story – I did beat the 20 percent odds, made the cut. My cancer went into remission, and one month later, I was celebrating with my family. I pulled a muscle in my side, but o be on the safe side I went to the hospital for a work-up. Lying there in the hospital room that night, I heard my family coming down the hall, Bosl intercepting them, then long conversations in hushed tones.
My father came and sat next to me and started talking about bridge, which he had taught me in my early teens. We chatted about what a stimulating game it was for the memory, for the analytic muscles of the brain. And he steered the conversation around to the structure of a hand, how you study your cards, bid your hand, and then the first few plays really determine the outcome. The rest is just the playing out of the hand. Life was like that, he pointed out to me. By the time you're in your 20s, you've figured out who you are, you've bid your hand, played your first few cards, and the rest is just routine, playing out of the hand.
I didn't really like the direction the conversation was taking, so I said, “What's your point here, Pops. Are we throwing in the jock strap or something?” He said simply, “Cancer's back. Dr. Bosl says you're not going to make it. He's starting you on salvage therapy.”
(Incidentally, those of you in the medical profession ought to consider hiring a marketing consultant to help you here, because that term is just never going to sell the product.)
You can imagine how confused I was about this. I knew that it all turned out all right by the last page. I could not for the life of me figure out how we went from here – it looked like we were pretty close to the last page and how could it still turn out OK?
So here’s the third and last pearl of wisdom from Coach Joe. One night he had me doing push-ups in return for some imagined slight. He had me doing sets in front of the team until I literally could not lift my face from the mat. And he stood over me screaming, “What are you doing, Byrne?” And I replied, quite carefully, “I believe I'm considering quitting, Coach. I believe that's what I'm doing.” Joe thought for a bit, and I remember this long silence in the wrestling room while he searched for something pithy to say, and then he finally said the kind of thing that only someone like Coach Joe could get away with saying. He said, “Byrne, don’t you never quit at nothin'.”
So I did not quit at nothin', but I sure started to think about it a lot, especially when we learned the cancer had spread at last into my bones, where given the limited blood supply, chemotherapy is largely ineffective, or was. I confess that I began to wonder if perhaps I had read the wrong ending because we seemed to be getting pretty close to that last page and I couldn't quite see any angle that worked out, and quitting sure looked a lot easier. As corny as it sounds, I look back, and I know what tipped the scales: my mother.
To really appreciate this you'd have to meet her, but when I run into people I knew from high school, 20 years ago, invariably the first thing they say to me is, “How is your mother? I met her that one time and I thought of her so many times ever since.” She is the classic Irish mother, sweet and caring, and hard as rock. Even my dad and the doctors, Dr. Bosl, were afraid of her. And as best as I can see it now, she just never believed the doctors and she never gave me permission to quit. I sure felt like quitting, but my mom had spent the better part of two and a half years literally sleeping in a chair by my hospital bed, upright. She had straightened out every nurse who had not brought my painkiller on time. And she just wasn't going to give me permission to quit. If you knew Dorothy Byrne, you'd know how much weight that carries.
Dr. Bosl presented me with an opportunity to participate in an early stage experiment. There were six lads in the same situation around the country. All of us had failed twice, we were all going into salvage therapy. Bosl wanted to hit us with large doses of iphosphamide, a drug then being used in Germany for breast cancer. I was warned that the side effects themselves could be lethal and would certainly be as unpleasant as any of the chemo we had tried to that point. They said they would dose us to the point of kidney failure, so I started drinking water like a madman as they started therapy. Within two months, four of the six of us died. News of this came to me though the nurse grapevine. The fifth, a nice fellow from Lebanon, two months ahead of me in the treatment, went briefly into remission, then the cancer returned and he went home to die. And then there was me.
After the last round of Iphosphamide, they cut two ribs out of my side and the woman who did it said that the bone had nearly petrified from the cancer in it and that two interns had to use some kind of bolt cutters together to snap the ribs. To everybody's surprise, all the cancer, even in the bones, was dead.
In China, when you open a new hall or a new store, typically you have a Buddhist monk come and bless it with a scroll that he's drawn. There's a Chinese story about a man opening a new shop and a Chinese monk comes to the opening party to present the scroll. A whole crowd is there. They unroll the blessing – and this may sound a little morbid at first, but bear with me – they unroll the blessing, and the blessing is: “The grandfather dies, the father dies, the son dies.” Everybody is horrified: what kind of awful blessing is that? Until finally a wise man in the audience explains it, that it is a blessing. The grandfather dies, the father dies, and the son dies; not the grandson and the father and then the grandfather.
Part of embracing life, as terrible and morbid as it may sound, is embracing this aspect of it, that it is the natural order of things. And as awful as it seems to lose somebody, an ancestor or a father or grandfather, there's no such thing as embracing life without embracing that side of it, and at least having tolerance for that side of it.
But the flip side of that is just the one memory I've never been able to get over. It’s the memory of the day I pressed the wrong elevator button and ended up exiting on the children's cancer ward. And I just think there must be no worse place that that, and I would rather go through what I went through a hundred times than to see my own child go through that.
So, moving on…Samuel Johnson said that if you tell a man he is to be hung in a fortnight it tends to focus his mind tremendously. I didn't know, of course, that cancer was gone. I got out as soon as I could, I biked across country again. That, oddly enough, was for a girl who lived in D.C. who told me that she didn't quite see me as dependable and stable. So I biked to see her, I biked from L.A. to D.C. to prove my stability. Oddly, this tactic didn't work. When I finished, I said “Never again.” Never again will I do this. Never again will I bike across country.
The next year I rode across country again, and this time I came very close to leaving the bicycle in the waves. I almost gave it away to some kids there. I just never wanted to look at a bicycle again. I've made a few small trips in the nine years since then, but nothing major. That was the end of my cancer and the end of my biking career.
…Until six weeks ago. I got a phone call from Mr. Billy Starr asking if I would speak here. I can't tell you how many requests I've turned down to speak, and it's quite selfish I'm sure. Requests from doctors and so on. I just never have done a single one of them, never accepted a single invitation. But within about three or four minutes I found myself agreeing to come here and speak to you. Odd how that happens, Billy. And then even more oddly, I began to suspect I was on the phone with a Jedi Knight. On his end he was saying, “Why don't you come speak?” And then he said, “Would you consider riding to the Pan-Mass Challenge from Salt Lake?” And I found my mouth saying, “Yes. In fact, why don't I just do it from San Francisco?” So I am leaving next Friday from San Francisco and I will meet you on August 5th in Sturbridge.
Billy persuaded me to do that but there is something else that I decided to do myself. Billy sent me videotapes about you and about the history of the Pan-Mass Challenge. Given that he had set a fairly rigorous challenge for me, I decided to return the challenge to Billy. I know that you raised $8.7 million last year, and I've made a challenge pledge of a million dollars contingent upon you folks raising $11 million this year.
I flew in last night and I met Billy this morning for the first time. We went to Dana-Farber and I was, as he says, “love-bombed.” I'd like to comment philosophically for a moment on this concept. A friend of mine recently – actually, the same fellow, Dave Luban, whom I mentioned, who suggested bicycling in the first place, which I have to thank him for – he invited me to his daughter's Bat Mitzvah. He is a philosopher and he explained to me that – in Hebrew, in the Judaic tradition – “mitzvah” is both the word for commandment, as in the ten big ones, and the word for a good deed. I'm very interested still in philosophy and philology and how concepts get buried in language. The concept of an obligatory good deed is such an appealing concept. In English we don't have that concept exactly. In English the nature of a good deed is something that is supererogatory, it's not something that you have to do. But in this case, I feel having been exposed to the Pan-Mass Challenge and Dana-Farber, I can't imagine not doing any of these things, not doing this ride or not making this challenge grant.
In closing, we all rest in the shade of trees we didn't plant. Andy did. I know I live everyday in the shade of a tree I did not plant. They were planted by you and people like you. On behalf of all of us who rest in such shade, thank you very much.
Hi. I wanted to share this interview with Dr Bryne of ovestock.com, this was recorded last Sunday in Phoenix.
I was stunned at what he said I was shocked the implications he talked about, the most amazing interview on NSS I have ever heard up to now. You have copy the order # to enter so it will play on VMS. Enjoy...
(The Terry Gilberg Show, KFYI, Pheonix, Arizona 1:11:26, 9/17/2006 5:00:00 PM)
Starts with PATRICK BYRNE 5:50 min:sec into the broadcast
Here is the recording. Go to http://www.vmsdigital.com
Then enter this order number
98804A53-200D-4669-B83B-89ED5D089168
Judge Warns Wall Street Cheats
By LARRY NEUMEISTER Associated Press Writer
© 2006 The Associated Press
NEW YORK — A judge said Wednesday he wants Wall Street to learn that cheating the public because everybody else is doing it or because there's lax enforcement of financial crimes is no defense for white collar crime.
Judge Sidney H. Stein repeatedly stated the message before he announced plans to send a high powered specialist who supervised traders on the floor of the New York Stock Exchange to prison for two years and three months for cheating the public on thousands of trades.
"People rely on the U.S. securities markets as being fair and clean and he undercut that," Stein said.
The judge said he plans to impose the prison sentence and a $250,000 fine on Joseph Bongiorno, 52, in October after lawyers in the case submit additional arguments on a point of law.
"I'm truly sorry for my actions," Bongiorno told the judge. "I wish I didn't do what I did."
Bongiorno and Patrick McGagh Jr., 40, pleaded guilty in May, admitting they put their companies' orders ahead of orders from the public. A sentencing hearing was also held for McGagh on Wednesday, but Stein didn't indicate what sentence he was considering for him.
The proposed sentence for Bongiorno was shorter than prosecutors were seeking. The judge said he recognized the circumstances on Wall Street had changed significantly since the crimes occurred between 1999 and mid-2003.
Stein bristled at repeated efforts by Bongiorno's defense lawyer, Barry Berke, to argue that Bongiorno worked in an environment in which enforcement of NYSE trading rules was so lax that Bongiorno's behavior was not out of the ordinary.
At one point, Berke said even former NYSE chief Richard A. Grasso had compared the type of crimes Bongiorno committed to jaywalking.
"Your client compromised the integrity of the securities markets," the judge said. "`Clerks made me do it. Mr. Grasso made me do it.' I don't accept any of that."
Stein added: "It was money that should have gone to public customers. Do you know where it went? It went into his pockets."
Stein said Bongiorno occupied a coveted spot on the floor of the exchange as a floor governor with supervisory powers over less senior floor traders.
The defendants were among 15 people charged after a probe of specialists working on the floor of the stock exchange revealed they had allegedly used their inside positions to earn an estimated $20 million in illicit gains for themselves and their firms.
Federal authorities said the specialists at five firms put their companies' orders ahead of customers' orders, causing those customers to get inferior prices.
Assistant U.S. Attorney Lauren Goldberg said it was not fair for defendants to argue that the environment on the NYSE floor permitted the crimes. She said in 4,000 instances in which illegal trades were pointed out by regulators, specialists insisted it was an error and never tried to defend the practice as acceptable.
Specialists operate "open-outcry" auctions _ a method of commodities trading involving often loud verbal bids and offers _ on the floor of the NYSE. They match buy and sell orders for customers of the stocks they oversee. They also use their firms' money to buy shares when nobody else wants to buy and to sell shares from their own inventory when nobody else wants to sell.
Since the criminal investigation and civil charges brought against individuals and firms by the Securities and Exchange Commission, the exchange has said it has made changes in its surveillance and enforcement plans on its floor.
NYSE specialist firms have paid a total of $247 million to settle SEC charges.
The NYSE has said specialist firms gained $155 million in illegal profits over five years, a time when the exchange handled $50 trillion in trades.
http://www.chron.com/disp/story.mpl/ap/fn/4202021.html
To borrow a phrase from Former FBI Agent Robert Maheu, "Tough assignments are not solved by wishful thinking, but rather by tough action"....
September 18, 2006
The Honorable Christopher Cox, Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549-2001
Re: File No. S7-12-06
Proposed Amendments to Regulation SHO
Dear Chairman Cox,
Thank you for providing this opportunity to comment on proposed amendments to Regulation SHO under the Securities Exchange Act of 1934. I understand the proposed amendments are intended to further reduce the number of persistent fails to deliver in certain equity securities, by eliminating the grandfather provision and narrowing the options market maker exception.
Before I expound on this proposed rule and related matters, I want to state my position that the grandfather provision should be eliminated from Regulation SHO. The options market maker exception, and any other exceptions, should be eliminated wherever necessary for the protection of individual investors. We should not be creating artificial liquidity in any security, by creating an artificial supply of shares that place downward pressure on the bona fide security value.
Chairman Cox, in the opinion of thousands of individual investors, you inherited an organization that is captured by the very same Wall Street institutions the SEC is charged with regulating. You inherited an executive staff that frames opponents of so-called naked short selling, the counterfeiting of commercial securities, as just mad because they want their stock prices to go up. To borrow a phrase from Former FBI Agent Robert Maheu, "Tough assignments are not solved by wishful thinking, but rather by tough action". Chairman Cox, you have a tough assignment on your shoulders, and it is going to require tough action on your part to solve it. In my opinion, with respect to persistent, strategic and abusive naked short selling, you are looking at a multibillion dollar organized crime operation that is going to take all the resolve you can muster to eliminate it. Fortunately, you are not alone.
I am an individual investor living in the United States of America.
While I am not representing any group of investors, my thoughts and comments on this matter are representative of thousands of other individual investors across America and Canada. I know this because I have communicated with many of them on a daily basis, over a period of several years. This opportunity to comment is one of the few public opportunities that individual investors have to communicate our expectations to the Securities and Exchange Commission. Our elected officials have repeatedly demonstrated that they are captured by lobbyists, and cater exclusively to special interest groups. They have clearly forgotten what this county was founded upon, or perhaps they have not forgotten and have chosen instead to sell their souls at the expense of their constituents. The caliber of comments to the Commission on this proposed rule is outstanding. I am proud to submit my comments on this matter, on the same page of so many honorable and respectable names that I recognize.
Individual investors have met with, and wrote thousands of letters to, the US Senate Banking committee. After no action on the matter of naked short selling, and upon concluding that an inherent conflict of interest is present within the Banking Committee, we have recently focused our efforts toward communication with the US Senate Finance Committee and the Committee on the Judiciary. I expect the campaign contributions from the broker dealer and the hedge fund communities, toward those committee members, will increase exponentially over the next several years. We appear to be gaining some traction on this issue of so-called naked short selling though. Naked short selling is simply the counterfeiting of commercial securities, at the expense of many, for the enrichment of a few.
What we expect from the Securities and Exchange Commission is also simple. We expect to be treated with honesty and integrity, and we expect our securities regulators will perform in the utmost ethical manner. When we work everyday in an ethical and law-abiding manner, to support our families, we expect our elected and appointed officials to be working diligently in the same manner at their respective positions. Any one of us could game the system, and commit fraud to increase our income, but we do not. Only the criminals in our society do that. We expect honesty and integrity from all those we elect to office, and those appointed by them. When we look at state and federal taxation on our pay stubs, we expect our contribution is providing important services to our citizens, one of which is the protection of our retirement and discretionary investment capital from fraudulent manipulation of any kind. Theft of investment capital from any citizen is simply wrong, and theft of investment and retirement capital from the elderly of this great nation is particularly egregious. Yet it continues. Chairman Cox, you have the exclusive authority to stop it, today.
We know existing and future securities laws are irrelevant where there is little or no enforcement. We expect securities laws to be enforced, and criminals to be prosecuted. We know it is easy for criminals to "game the system" and steal our investment capital. It does not take a genius to figure out how to steal money, from any system. When they do, it should always be met with swift enforcement. It should never be met with a comparatively small fine versus the amount stolen. It should never be met with a deal to avoid criminal prosecution by increasing the monetary penalty. This is the present state of enforcement against securities fraudsters. They pay fines with our stolen capital, and then effectively write it down as a business expense. Chairman Cox, you now have the opportunity to correct this vicious cycle that has literally spun out of control. This vicious cycle presents systemic risk to our national market system, by any reasonable measure.
SEC Regulation 17A(a)(1)(A) states, The prompt and accurate clearance and settlement of securities transactions, including the transfer of record ownership and the safeguarding of securities and funds related thereto, are necessary for the protection of investors and persons facilitating transactions by and acting on behalf of investors.
Individual investors are becoming fully aware of the persistent fraud that plagues our securities markets, particularly with respect to naked short selling.
We are aware of the multitude of securities lending lawsuits against the major prime brokers,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115853340....
(If the link is broken, please copy and paste into your browser)
We see many of these same prime brokers receiving fines for acts that we perceive to be criminal, repeatedly. These are simply business expenses for those perpetual violators of our trust,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115853462....
We are aware of the problems with shareholder proxy over-voting related to issuance of electronic counterfeit securities, markers in our brokerage accounts for shares we paid for that simply do not exist anywhere in physical form.
Chairman Cox, we see members of your enforcement staff testing your resolve to stand behind them when they subpoena conflicted journalists.
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115853614....
Showing his disrespect toward your most courageous, ethical and honorable staff members, we watched Jim Cramer write BULL on his SEC subpoena, on a conflicted but well known cable television program, providing us with visual evidence of what we already knew someone needs to bring honor and respect back to the SEC,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115853919....
My fellow investors stood behind your courageous staffs decision to subpoena suspect journalists, journalists that many suspect of colluding with short sellers to drive down stock prices. Jim Cramers network polled us with a question, Did the SEC overstep its authority by subpoenaing business journalists? The network had no idea that we have clearly had enough media manipulation of this stock market. In just 24 hours, 2348 citizens voted, and 89% of us backed your staffs decision to issue those subpoenas,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115853706....
We watched in utter disappointment when you halted the efforts of your staffs honorable intentions, then wrote a policy that embarrassed that same staff and their commendable subpoena actions,
http://www.sec.gov/rules/policy/2006/34-53638.pdf
We watched as former SEC attorney Gary Aguirre leveled charges against the SEC, charges that individual investors have been claiming for years. This time, we had a champion on our side,
http://www.thesanitycheck.com/Portals/0/Let.pdf
http://www.faulkingtruth.com/Files/aguirre_congress0623.pdf
http://judiciary.senate.gov/testimony.cfm?id=1972wit_id=5485
http://www.senate.gov/finance/press/Gpress/2005/prg082306.pdf
http://www.whistleblower.org/doc/Aguirre FOIA.pdf
Every few months, we get a lesson from DTCC First Deputy General Counsel Larry Thompson. My fellow investors are not accepting the word of this organization that is supposed to clear our trades in their stock borrow program, but refuses to offer any transparency whatsoever. Furthermore, we are not impressed that the DTCC Board of Directors is populated with executives from the same market participants that we scrutinize for naked short selling. It seems the proverbial fox is guarding the hen-house here,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115854435....
We watched our champion, Dr. Patrick Byrne of Overstock.com, give us a first hand account of so-called naked short selling, the counterfeiting of commercial securities. A CEO purchases two million dollars of stock in his own company, and he cannot take delivery of this stock in certificate form. Thank you for the lesson Dr. Byrne. We can never repay you for all you have done to champion the exposure of this egregious crime. We are standing behind you, and we will always be there for you when you need us,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115854524....
We followed the campaign to eliminate stock certificates from our securities markets, when curiously they are the only form of stock ownership that we can trust in this market of counterfeit securities. We do not like the idea of removing stock certificates from the equation. Forgive us if we are not trusting at this stage of our journey,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115854602....
We took another lesson from Dr. Byrne, as he spent countless hours preparing a presentation that describes failures to deliver in the securities market. We wanted to know why we need someone like Dr. Byrne to stand up for us, on his own time, when our tax dollars are paying for thousands of lawyers and criminal prosecutors to do the same, on our dime,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115854562....
We heard Senator Hatch is fearful for Dr. Byrne's life, and that he would move the earth to get whoever did it, should Dr. Byrne meet with an untimely end - hit by a car, plane goes down, chokes on a chicken bone, takes two slugs to the back of the head in a "suicide."
That is pretty serious stuff. When the Ranking Republican on the Select Committee on Intelligence is telling Patrick that he is worried about him remaining alive, and wants to let the bad guys know that they will have Hatch to contend with if they decide to off him,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115863123....
We watched as Dr. Byrnes Overstock.com, Biovail, and Fairfax Financial Holdings sued their respective defendants alleging an entirely separate, but likely related, form of stock manipulation via tainted research reports. We did some research and found similar concerns in 1991, and we wondered why our representatives would not cleanse this market of such perpetual corruption,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115854761....
We looked at another threshold security, Taser. The maker of one the most life saving tools that law enforcement has ever had at their disposal. Although it spends hundreds of days sitting on the NASDAQ threshold security list, since the commencement of Regulation SHO in January 2005, we didnt hear a word from Tasers CEO. We found there is only one large-cap CEO willing to stand up against the criminals that raid our portfolios every day, Patrick Byrne. Dr. Byrne knows the consequences of his efforts to cleanse this market of perpetual corruption, but he continues this battle with the determination and skill of a well-trained army. We watched as Taser was placed under investigation by the SEC on a TIP. We watched as the investigation closed a year later, with no charges. We looked at Tasers decimated stock price and how the entire process looked all too familiar. We were curious why the SEC would receive a TIP on Taser, and the stock would fall off the charts, beginning on day-one of the newly implemented Regulation SHO,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115854807....
We witnessed the State of Utah take a leadership role when they passed Senate Bill 3004, imposing penalties on and exposing naked short sellers. We sent messages to every Utah Senator, and the Governor, telling them how proud we were of them for listening to us and for standing up for what is right and just. We saw the Utah law challenged, and its implementation delayed by the same industry lobby groups that we believe have captured the SEC and our elected officials,
http://www.le.state.ut.us/2006S3/bills/sbillenr/sb3004.pdf
Out of a collection of what we believe to be several hundred criminal stock manipulators, we saw the SEC act on a handful,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115854903....
We saw countries around the world becoming aware of the manipulative short selling practices in the United States markets. Once the crown jewel of the financial markets, we continue to see deteriorating interest in our markets by public companies. In a sense, one could theorize, the word is out on the street about the corruption infested US market system,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115854918....
Mr. Chairman, we know your job is difficult. We recently heard from former Chairman Arthur Levitt about the incredible pressures of your position. In an interview, he is quoted And when all else failed, lobbyists would cash in their chips with members of House and Senate committees to threaten the SEC - an independent regulatory agency - with budget cuts to get what they wanted. Regrettably, I occasionally found myself succumbing to this immense pressure in order to save the commission.
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115854952....
We learned three out of four U.S. investors (76%) say someone who naked shorts a stock should face civil (8%) or criminal penalties (9%) or both (59%). By the same margin (76%), investors believe such penalties should be about as (65%) or more (11%) severe than those for fraud and counterfeiting, according to a recent survey commissioned by Working Americans for an Open Economy, conducted online by Harris Interactive® among 1,243 investors nationwide,
http://marketreform.proboards46.com/index.cgi?action=displayboard=referencematerialsthread=115854986....
We saw Refco implode, perhaps the best show since the LTCM collapse, but the broadcast media was curiously silent on the issue. We appreciated the Time Magazine story on Refco and naked short selling, but there was not a regulator, a law enforcement officer, or politician in the land that would lift the lid on the full scope of this crime, still.
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115855050....
We waited patiently as Dateline NBC released their report on naked short selling, after eighteen months of research. We were disappointed when they finally aired it, eight minutes in its final form. The network must have been proud. Edited down, diluted, it was nearly useless, except for the honorable CEO of a small company we met. We found another champion of honesty and integrity. Rodney Young, CEO of Eagletech, a small business decimated by criminal naked short sellers. We think Mr. Young is a true American hero, and we followed him to Washington DC on February 13 of this year. We listened as he testified in front of your Commissioners on the revocation of his companys securities. We knew he was challenging the constitutionality of the Regulation SHO grandfather provision and we were behind him 100%. We looked at your empty chair throughout the proceeding Chairman Cox. I wish you could have been there to listen to this honorable man in person,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115855140....
Still, we wondered what happened to Datelines eighteen months of interviews and preparation for the show that was to expose naked short selling to all Americans. We looked to the board of directors at NBC parent General Electric because we wondered who would accept such a lousy return on their eighteen-month investment. We found Chase Manhattan, J.P. Morgan Co, Citicorp, Morgan Guaranty Trust, State Street Bank and Trust, Banco Nacional de Mexico, and The New York Stock Exchange. These are all smart people. We figured NBC must be a strategic loss leader for the parent company. In our opinion, Dateline was another strategic failure to deliver.
We read Dr. Leslie Bonnies study on Strategic Delivery Failures in U.S. Equity Markets, the Wharton-UNC study titled Failure is an option, the Finnerty Study on short selling, and the Advanced Small Business Alliance position paper on naked short selling.
http://www.businessjive.com/nss/bonistudy.pdf
http://www.businessjive.com/nss/failureoption.pdf
http://www.businessjive.com/nss/jdfinnerty050505.pdf
http://www.advancedsmallbusiness.org/positionpaper.htm
We watched a former DTCC board member submit to a public grilling on naked short selling during a NJ State hearing for his treasurer post,
http://marketreform.proboards46.com/index.cgi?board=referencematerialsaction=displaythread=115855282....
When asked if he ever participated in naked short selling at one of his former employers, there was a four-second pause before the reply came.
Chairman Cox, individual investors have sought relief from the manipulative practices of illegal naked short selling predating the 1999 SEC Concept Release No. 34-42037 File No. S7-24-99 on Short Sales. Our research indicates the resultant Regulation SHO to be an utter failure with respect to investor protections and categorically fails to curtail manipulative naked short selling practices throughout the industry. We find it appalling to find dozens of securities listed on the Regulation SHO Threshold lists, some for more than a year, with no relief from regulatory agencies sworn to protect investors against such manipulation.
I respectfully request that you commence enforcement action on criminal naked short sellers under the following existing laws and regulations, to name a few:
RICO Act under 18 U.S.C. 1961(1)
Securities Act of 1934 Section 20 -- Liabilities of Controlling
Securities Act of 1933 Section 17 -- Fraudulent Interstate Transactions
Securities Act of 1934 Section 17A - National System for Clearance
Securities Exchange Act of 1934 Section 8 -- Restrictions on Borrowing
Securities Exchange Act of 1934 Rule 15c3-3 -- Customer Protection
Securities Exchange Act of 1934 Rule 15c6-1 -- Settlement Cycle
Title 18—Crimes and Criminal Procedure
Sherman Antitrust Act
U.S.A. PATRIOT Act
The Martin Act
When I began writing this letter, I considered a line-by-line response to all of the Commissions requests for comments. I read the entire proposal, including this statement, To allow market participants sufficient time to comply with the new close-out requirements, the proposals include a 35 settlement day phase-in period following the effective date of the amendment.
With all due respect Mr. Chairman, market participants are not the entity we are concerned with here. Market participants are handling our assets. We are the owners of the capital, and we are the owners of the securities. We are concerned with the shareholders of public companies like Overtock.com that have been watching their investment appear on the NASDAQ threshold security list for eighteen months. We are concerned about retirement fund participants and mutual fund holders of manipulated securities like Overstock.com, and Taser. The SEC is far too concerned with pleasing self regulatory organizations that are no more capable of regulating themselves than a kid in a candy store. Trades should settle at T+3, not T+300, period. The multitude of questions the Commission seeks comments on are simply not germane to the issue at hand. The problem and the solution have been identified. Stop the counterfeiting of commercial securities, protect investors, and settle the trades.
Chairman Cox, I recognize your task to rid our markets of manipulative naked short selling is no simple matter. I, along with thousands of other individual investors have listened to you since your appointment to the Commission. We are encouraged by your apparent receptiveness to cleaning up our corrupt markets. Although the political pressure must be incredible, and the influence from the financial institutions you govern must seem insurmountable, we are counting on you to be the first SEC Chairman in decades to do something we can be proud of.
In closing, I would like to revisit that statement by Former FBI Agent Robert Maheu, "Tough assignments are not solved by wishful thinking, but rather by tough action".
Be a Chairman for the people, for the millions of American citizens that want to trust our capital markets with our retirement and discretionary investment capital. While the challenge is great, you must realize that you are the only one that has the authority to correct this systemic risk that naked short selling represents in our markets. We are counting on you to do the right thing and we are more than ready and willing to stand behind you. Just say the word and we will be there. We only ask that you lead the way, with an unwavering commitment to prosecute criminals, and bring integrity back to our securities markets.
Sincerely,
Anonymous American Investor
Main Street
Any town, USA
Isn't it COX now?
" William H. Donaldson, Chairman of the Securities and Exchange Commission "
SEC Chairman Cox confirms Naked Short Selling is a Serious Problem
Dave Patch
This past Wednesday the Securities and Exchange Commission approved the first step in the proposal to amend 18-month old Regulation SHO and finally address the issues of naked short selling abuses. The Commission approved the Division of Market Regulation proposal for public comment.
In the opening remarks to this segment of the public hearing Chairman Cox set the tone very early on where he stood on this issue and never wavered throughout the remainder of his remarks.
In his opening remarks on the Regulation SHO amendments the Chairman started by informing the Commission Staff, attorneys, and listening public that “the next item on our agenda is the serious problem of abusive naked short sales.”
We went from naked shorting being a figment of investor imaginations prior to 2004, to a small problem in 2004, and finally a “serious problem” in 2006. How life transforms itself.
Cox did not stop in just calling this a serious problem however; he spoke about how and why it was a serious problem.
“We are particularly concerned about the potential negative effect that substantial and persistent fails to deliver may be having on the market in some securities. Specifically, these fails to deliver can deprive shareholders of the benefits of ownership - voting, lending, and dividends from issuers. Moreover, they can be indicative of abusive naked short selling, which could be used as a tool to drive down a company's stock price. They may also undermine the confidence of investors who may believe that the fails to deliver are evidence of manipulative naked short selling in the stock. In turn, issuers may be harmed, as investors may be reluctant to commit capital to a stock that they believe is subject to abusive naked short selling.”
Finally we have a Chairman in place that is willing to speak the truth in public. Something Cox’s’ most recent predecessors did not have the courage to do. Former Chairman William Donaldson smugly smirked when confronted by Senator Bennett in the 2005 Senate Hearings on Capital Markets when naked shorting and SHO was brought to the table and former Chairman Harvey Pitt, who now speaks against this practice, never broached the subject matter while in position to correct it.
Now with a legacy of the Commission to downplay any type of egregious market abuses, for the Chairman to publicly cite a “serious problem” exists here must mean it is really a serious problem.
What made this an even greater monumental moment was how the members of the Division of Market Regulation and the remaining Commissioners presented this amendment. They did so as if new revelations had been made.
Under a forum of accolades and back slapping the Commissioners applauded the efforts of the Division of Market Regulations in honoring their commitment to monitor the 18-month old regulation and make necessary changes as was promised back in June of 2004. This 18-month review and reversal of the grandfather clause was in fact a delay tactic by the Commission to aid the most blatant violators to clean up their act free of charge. That free pass is now coming to an end.
A little history here folks…
In October 2003 the SEC submitted Regulation SHO for public comment and by June 2004 the Commission staff approved the rule. The staff allotted a six-month window for the industry to come in full compliance bringing us to January 2005 before industry compliance began.
In the period between October 2003 and June 2004 the public was afforded the opportunity to write comment letters to the SEC while the SEC was meeting privately with the congressional oversight committees and members of Wall Street to openly discuss option. What resulted from these private meeting would blow away the hopes of the investing public.
Despite the concerns raised by aides for the House Financial Services Committee, and despite a proposal submitted by the NASD in March 2004, the SEC Division of Market Regulation created an alteration to the proposal submitted for public comment. The alteration was a “grandfather clause” that was inserted into the rule making which allowed all prior settlement failures to be immune from the new closeout provision of SHO. The alterations came at the benefit of, and most likely the bequest of, Wall Street.
The final draft served notice to the investing public that their rights would take a back seat to the rights of broker-dealers and certain clients.
Fast-forward to today and the same Division of Market Regulations, with much of the same individuals involved; have identified this grandfather clause as a loophole that now needs to be closed. Repeal of the grandfather clause part of the modifications presented to the Commission staff.
In the 18-months that this provision existed however the members of Wall Street were able to slowly and methodically work through a large portion of the pre-existing fails as the SEC claims that the fails have been reduced some 50% on daily average from when SHO was first enacted in January 2005. Members of the staff of market regulation claiming SHO to be a success as few market disruptions associated with volatile short squeezes occurred while the fails were being eliminated.
In July 2005 and again Wednesday the SEC making serious claims that the grandfather clause had one sole purpose – insure short squeezes due to trade settlements did not occur.
Ironically, a glance at how these fails were removed from the market highlights an opposite impact to a short squeeze. While short squeezes were not prevalent, Bear Raids were. Data provided by the SEC under the Freedom of Information Act indicate that companies with excessive fails in the trading were methodically being driven down by Wall Street to cover these fails at lower prices and higher profits. Only when the fails were eradicated could these stocks begin to see positive price responses.
Was that just coincidence? Hardly.
While the SEC takes a myopic view of SHO success looking only at the reduction in the number of fails to deliver registered for any given security, success is really to be measured by how these fails were eliminated from the system and how many enforcement cases came against those the Commission admits entered into abusive trading practices.
I believe no enforcement cases have been brought to term as of yet.
Wednesday was the start of the new administration at the SEC. Chairman Cox has already exposed himself for gaffes made (Derailing Journalist Subpoenas) but Wednesday he began the process of making amends by addressing what no other has been willing to tackle. Time will tell how the remainder of the Commission staff responds.
As for the financial press and allegations of bias, consider this. The Chairman of the SEC states publicly that a “serious problem” exists in the markets and in the same sentence uses the word “abusive” and barely a word is mentioned the next day.
This is the same financial press that berates the SEC on a regular basis for failing to take action until the State regulators beat them to the punch. Now, on a subject matter the financial media claims does not exist, the SEC claims it is serious problem based on their thorough analysis and the financial press refuses to cover it. Go figure.
Senate Judiciary Hearings, State changes to laws, State task forces, SEC admissions of abuse and the financial press has suddenly swallowed their keyboards. What better reason to re-issue those subpoenas and find out where their alliances are.
There will be more to come on this issue and an opportunity for yet another round of public comment.
For now, lets just give our special thanks to Senator Hatch, Senator Bennett, Senator Specter, and Connecticut Director of Securities Ralph Lambiase for following through on their promise to put the interests of the people first.
http://tinyurl.com/mw65o
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