The Jailhouse

[GO FOR IT]

bigmellons, thats from: Patrick Byrne
Founder and President of Overstock.com

A simple and animated look at the problem of “Failures to Deliver” in the marketplace.
Part 1
Part 2
Part 3
Part 4

http://www.cmkmtaskforce.com/

the bashers song, no “Failures to Deliver”
I love how there no “Failures to Deliver” in the marketplace.
The DTCC wants to eliminate paper certificates - they're so messy, and icky, and stuff
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 3/23/2006
I was just sent this little slice of heaven http://www.dtcc.com/nomorepaper/index.html in my email inbox. It is filled with smiling, fleshy faces promising a world of eternal happiness, and sunny days, and perfect health...if only we eliminate paper certificates.

Because the DTCC, which is owned by the exchanges and the brokers (and the exchanges really are the brokers - they are owned by the brokers as well), is getting ready to help us - some more.

Now, I admittedly am suspicious whenever Wall Street wants to "help" investors. Usually that is akin to the IRS helping one with taxes - the person being helped is usually far worse for it.

I'm particularly suspicious when the help being offered is to eliminate the single mechanism investors have to verify that their brokers aren't lying to them about the investors' ownership of stock. That kind of makes me nervous. Very nervous.

You think that might be because the DTCC lies?

We caught them lying when they claimed they had never been invited to the NASAA conference. We caught them lying when they invented statements and inserted them into Cam Funkhouser's mouth.

Dr. Byrne, CEO of OSTK, contends that they are lying through their teeth. Said so publicly, just recently.

No suit over that, BTW. Byrne went on Rob TV and called the DTCC an organization run by criminals, that was lying through its teeth, and invited them to sue him - and nothing. Not a peep.

Odd. Why wouldn't the DTCC sue Byrne, unless it wanted to avoid discovery, and exposure of its crookery? Maybe they want to avoid having to take the fifth, like Grasso recently had to, when questioned about the larcenous dealings of the specialists?

But anyhow, here they are with a warm offer of help.

Think of how helpful the Stock Borrow Program has been - consider the enormous assistance that not having to deliver shares has been for sellers intent upon driving the price of a stock through the floor. Very helpful, that DTCC. Very, very helpful.

And now, these beaming Stepford faces assure us that our world will be so much better without paper certificates - or as I like to call them, "proof of genuine shares."

We are invited to consider all the money companies will save by eliminating them. Actually, that doesn't help me much. We are also told that we won't be subjected to the annoyances of having to hassle with lost certificates. Actually, that doesn't help me much, either - I've never in my life sold stock and then failed to deliver it.

Upon consideration, the only people actually helped are the DTCC and their broker/owners. They can process more trades, faster, and there is no mechanism to replace the paper certificate as the ultimate proof that you own what you paid for.

If one was cynical, one could speculate that this would be the ultimate way to cure the fail to deliver problem - simply eliminate the only mechanism most have to prove ownership - and then we are all reliant upon the DTCC, and their broker/owners, to be honest.

You know, the brokers who are being fined constantly for crookery, and the DTCC, which has been caught in two lies by the Bunny, just recently.

Why do I feel like I have to check my wallet when I read stuff like this?

In fairness, the DRS promises to be a decent substitute - direct registration with the issuer. But here's my problem: The same liars and cheats that compose much of Wall Street will be in charge of that system, and at the end of the day, I don't have any proof like a paper certificate. None. Just someone's electronic word - from the pathological liars on Wall Street.

That's a problem. A big problem. That the DTCC has been able to ramrod this past all the states is frightening at a profound level.

When the DTCC wants to help you, my hunch is that it wants to help itself to your money.

Call it a gut feel.



Copyright ©2006 Bob O'Brien

http://thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/170/Default.aspx

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