CMKM Diamonds Inc (fka CMKX)

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Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 5/26/2006 5:49 AM

UPDATE: I just received an email that the Governor has signed the bill - apparently he just released a statement. So all of Wall Street's underhanded pressure techniques were for naught.

http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/303/Default.aspx

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The bill in Utah has caused a firestorm in that state, and on Wall Street.

The Governor has faced enormous pressure from the brokers, who are unwilling to have their party spoiled by being forced to report those violating federal securities laws relating to prompt delivery of shares.

This is probably because a large portion of the violation comes from Wall Street’s trading desks.

The brokers have crafted windfall profits in a time of flat markets by creating a booming stock loan business, and by trading their house accounts alongside the hedge funds who are moving, and in some cases manipulating, the markets.

So they don’t want to let anyone see how big and how terrible this crisis is – they require secrecy for their scam to continue.

And the Utah Governor has faced the full weight and wrath of Wall Street, who is lobbying against this bill as though it was the end of the world, versus a simple “sunshine” bill aimed and leveling the playing field and identifying the violators.

Morgan Stanley has threatened to pull their Discover Card call center, with 4700 or so employees.

The Securities Industry Association demanded an amendment to the bill (to stall implementation to October 1) in order to support it, and then when it was passed with the amendment, they pulled their support. They basically lied, IMO – that’s the old fashioned word for it.

Brokers in Utah are getting outraged phone calls from their NY offices demanding that they march on the Governor’s mansion, and call, email and write protesting and threatening.

I have it on good authority that they are amused by all the hubbub, as most haven’t shorted a stock in years. Thus, they fail to understand what all the ruckus is about.

They don’t realize that their NY headquarters has been printing money by creating IOUs, and failing to deliver stock for weeks or months or years. Nobody shared that with them, so they, as most honest folk, are looking at this bill going, “Hey, what’s the big deal? All it says is that they have to report anyone failing to deliver for longer than a reasonable period – what’s wrong with that?”

The level of hysteria and objection this has caused should wake everyone up as to the magnitude of the larceny and fraud being perpetrated by Wall Street. They are fighting as though their very lives depended on it, and all the bill does is add a caveat to the existing framework of regulation, requiring the reporters to report violations.

You would think it was the end of the world for them. Which in a sense, it is, as their illegal shenanigans will now carry a huge financial penalty…it won’t be long before smart attorneys sue the violators, which will create a large price tag for being a bad guy, and should act as a disincentive to further larceny.

Interestingly, the SEC and Wall Street can’t argue federal preemption here, as the bill is entirely consistent, and in no way conflicts with, federal securities law. It is sort of like California’s emission standard for cars – more stringent than the federal, but also entirely inclusive of and consistent with the federal standard. So the preemption argument falls flat here.

That Wall Street has been trying to blackmail the Governor of Utah – that is what they call it when you threaten dire consequences if you take an action (or rather extortion, I suppose, would be another good way of describing it) – is despicable. His sworn duty is to protect his citizens, both corporate and private. Wall Street is trying to extort him into selling his constituents, those he has sworn to protect, down the river. These NY parasites are so arrogant, and have been allowed to rip off the heartland of America for so long, that they have forgotten that they don’t own the whole country.

The Governor of Utah is about to send a strong signal.

Hopefully this will embolden other Governors and legislatures to mirror the Utah bill, and protect their citizens from the predations of Wall Street. There’s no reason not to, except that it will cut into Wall Street’s ability to prey on the locals.

I spoke with Patrick this morning at length, and his feeling was that if Wall Street felt that this had pissed in their Wheaties, they could look forward to another big shoe dropping sooner rather than later. 10 days or so was mentioned. Two weeks was discussed.

As can be seen from this bill, his sense of the magnitude of the changes coming at Wall Street is not given to inflation.

I really can’t wait to see what happens next. For the first time since 1934 Wall Street is getting a flavor for the rest of the country’s outrage over their larceny.

The Governor of Utah is the real thing. He deserves the strongest possible accolades, as does the Utah legislature.

I am quite sure every variety of legal BS will be conjured up as soon as Wall Street can mount a challenge – again, they CAN’T afford for their misconduct to become part of the record. The lengths they will go to in order to prevent that should be an eye opener for everyone.

I am not the least bit surprised.