NO QUARTER FOR CORRUPTION (Focussing on The Fed./FRBS)

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http://www.faulkingtruth.com/Articles/Investing101/1058.html


The CMKX Story: When Too Much Isn’t Enough
by Mark Faulk
June 1, 2005


“..every stockholder is entitled to have a certificate, signed by officers or agents designated by the corporation for the purpose, certifying the number of shares owned by him in the corporation.”






On October 28, 2005, CMKM Diamonds, Inc. (best known by its trading symbol CMKX) was delisted by the SEC for non reporting violations, halting trading of the stock in a company that had issued an incredible 703 billion shares of “real” stock, sold to over 50,000 shareholders. Shortly afterwards, the company appointed a three person task force, consisting of Attorney Bill Frizzell, Attorney Don Stoecklein, and Howard Hughes’ former right-hand man Bob Maheu, to “identify bonafide shareholders” of the company’s stock, a process that after seven months, and three deadline extensions, still has not been completed, as brokers have used excuse after excuse to delay delivery of shareholders’ stock certificates.


Yesterday, Bill Frizzell sent a complaint letter to the NASD, along with copies to the SEC, Nevada state securities regulators, and several key members of Congress, claiming that there is “indisputable evidence of large numbers of failed deliveries in this stock,” and that brokers are trying to undermine shareholders rights by denying them their rights to ownership, stating that:


Nevada law NRS 78.235 mandates that each shareholder has the right to request and receive certificates of ownership from the company for their stock. Specifically, the statute states “..every stockholder is entitled to have a certificate, signed by officers or agents designated by the corporation for the purpose, certifying the number of shares owned by him in the corporation.”


In his complaint letter to the NASD, Frizzell lists a few of the reasons that brokers have given their clients for failing to deliver the stock certificates to their rightful owners. It is a list worthy of David Letterman’s Top Ten:


The most alarming problems are represented by those shareholders who have been requesting certs from their brokers since the company’s first announcement of a distribution seven months ago. Here is a sampling of excuses being given to shareholders as reasons for their inability to obtain a cert:


1. “We had your cert, but it is now lost. It will take us another 6 to 8 weeks to obtain another one.”


2. “This stock purchase was a book entry only and no certificate is available.”


3. “Your stock was classified as a worthless security and is no longer in your account.”


4. “Our clearing firm has not been able to deliver these certificates due to a backlog of requests at the transfer agency.”


5. “I have been instructed we are no longer pulling certs for CMKM and there is nothing I can do. You need to contact the company.”


6. “CMKM Diamonds has a “K” code next to it, indicating that it is being held in safekeeping for the client. The clearing agent has made the decision not to issue certs but rather fax a copy of the certs it holds to the transfer agent.”


7. “Attached herewith is evidence of ownership of shares held electronically by XYZ clearing for ABC broker. ABC to confirm receipt of this proof of shares of CMKM and related companies are held with XYZ.”


8. “In light of the lack of cooperation (by the transfer agent), your May 15th, 2006 deadline must be bogus and must be extended, and Entourage shares could of course still be sent to ABC for the benefit of XYZ.”


9. “MNO said they had discussed with the Task Force the acceptability of the affidavit as proof of ownership in lieu of the certificate, and that it would be accepted.” No such conversation ever occurred with the Task Force members.


10. “We ordered your certificate, and it has been lost. You must now fill out a loss certificate.” The transfer agent confirms that no certificate was ever issued.


Each quoted statement above is taken verbatim from a shareholder’s letter or from a broker’s written response to a shareholder’s request for a cert. I could continue with pages and pages of documented incidences of these broker responses to the requests of the shareholders if such is necessary to establish the need for a full investigation.


Read the rest of this story at:
http://www.faulkingtruth.com/Articles/Investing101/1058.html


This article is also posted on Mark Faulk's blog, along with an excellent comment section, at:
http://www.thesanitycheck.com/Blogs/MarkFaulksBlog/tabid/86/EntryID/312/Default.asp