Interesting...Hmmm has USXP been damaged by COUNTERFEITING ?
Thought this article was worth posting......
Please circulate it widely among your senators and congressmen, and
anybody else who might need to get educated on this...
Over Eighty (80) Years of COUNTERFEITING, COUNTERFEITING,
COUNTERFEITING, Ad Infinitum, Ad Nausea
_________________________________________________________
Senator Bennett used the word EIGHT (8) times in the broadcast
meeting of the Senate Banking Committee with Paulson, Bernanke, and
Cox. He directed most of his comments directly to Honorable Chairman
Cox, who reacted with about 40 tells indicating he was being less
than completely honest at best, constantly touching his lips, eyes,
ears, and mouth. In my basic training in interrogation, such actions
were a major RED FLAG. Maybe a little recitation of the case history
of Counterfeiting would be helpful here. There is nothing here not
contained in my previous writings, but a linear recitation could be
of value to others with a single focus.
_________________________________________________________
The modern history of counterfeiting of commercial securities began
over 80 years ago. It started with the wholesale traditional
counterfeiting of stock certificates to support the short selling
activities of more than 500 pools comprised of the assets of the
wealthiest individuals in this country at the time, over a 3 year
period leading to the October, 1929 Raid-related Crash.
The refinement of the earliest photo lithography made it possible to
produce reasonably high quality counterfeit stock certificates
duplicating the real ones. These certificates could then be loaned to
short sellers to create a required "borrow" to secure the margined
short, especially useful when stocks were tightly held. The manual
back offices of the brokerage firms never knew the difference, and
they never saw what hit their companies until it was too late.
These unregistered counterfeit securities sold above were never
registered by the true underlying company. They were never entered
into the stock record book of the corporation, nor were any proceeds
ever given to the underlying Company, nor were they ever accounted
for in any audit process or financial reports of the Company. The
frauds/criminals here knew they would force de-registration or
bankruptcy of the targets, and subsequent loss of the books and
records of the companies they broke. There was no Federal Record
Keeping requirement back then.
In most cases, if not all, the people doing the counterfeiting were
directly linked to the very same Pools (we call their modern analog
Hedge Funds) referred to above, most of whom coordinated their
efforts to act in concert at the direction of what might today be
called in Chinese organized crime a "Snakehead". The largest short
of the Crash was to become the first head of the SEC, Joe Kennedy
Sr. He would accumulate a personal cash net worth of over $500
Million in 1933.
This counterfeiting practice was so widespread; it was one of the
earliest to acquire a name for its practitioners, PAPER HANGERS.
The counterfeit securities also were named: They were
called "WATERED STOCK."
President Roosevelt chose Joe Sr. as the head of the SEC, only to
face a firestorm of criticism. This was a tough period for FDR, as it
was well known and believed that Kennedy and his key associates
(Bernard Baruch was rumored to be the other key) had actually
manipulated the 1929 Crash and subsequent bank failure in 1933 to
their own profit.
FDR responded to the criticisms of his selection of Joe Sr. with the
statement "I needed one of their own kind, who understood their
criminal methods, to have any hope of controlling them." Controlling
them was a pipe dream. They ran the same identical scam again in
1937, another Raid, with similar results.
Joe Sr. created an SEC that was little more than an enforcement and
extortion racket he used to protect his friends, to attack his
enemies and economic targets, and to further fill his pockets. The
legendary investment banker and trader Charlie Allen would later say
that Joe Sr. started the SEC to make sure no one else could ever have
real money again.
Basic organizational theory dictates that the original culture of an
institution can never be completely stamped out, and it further
predicts that that culture will always re-surface, even if it is
decades later. Remember this.
Laws were created to control the sale of unregistered securities, to
prohibit the counterfeiting of commercial securities, and to
federally criminalize as conspiracy any act done in concert to
manipulate financial assets of the United States. I refer you all to
Sections 5 and 6 of the Securities Act of 1933, to USC Title 18,
Sections 513 and 514, and finally, to CJS Sections 22, 22A and 46,
the latter being the supporting law behind the Sherman Anti-Trust
Act, the Holding Company Act, the Investment Company Act of 1940, and
more recently, the RICO statutes.
Sections 5 and 6 made such causes the basis for civil and limited
criminal complaints for enforcement penalties, while Title 18 was
used to attack the counterfeiting of commercial securities by making
it a Class B Federal Felony, and finally, the CJS sections caused
such conspiracy conduct between two or more parties to be judged as
Insurrection and Sedition, a form of Treason.
During the 16 years I was on the street, I never worked in a firm
that would begin to allow any form of unregistered security to be
sold. Only two firms allowed the creation of synthetic securities
from registered securities assemblages, specifically for Down and
Outs, a form of synthetic put made up of a short of the stock, and
the short of the call, a variant of the old Reverse Conversion
arbitrage from options.
One firm would do it for client hedge funds, while the other firm
told its clients it didn't do them, so their clients would not
compete with their house trading accounts' activities in this space.
In 1979, I was offered job working on this very account at the second
firm, an A list bulge bracket underwriter. I passed.
There were many professional short sellers throughout my time on the
street, who tried to manipulate their target companies just as
today. They operated at first without many of the tools and
opportunities created by the ERISA Act of 1974, and the letter ruling
of 1993 which dropped the word "Borrow" from the short seller's
lexicon, and substituted word "Locate". This same letter ruling
created exemptions from even this rule for three kinds of traders:
Market Makers, Arbitrageurs, and Hedged Accounts (read funds).
During the Oil and Gas boom of the late 1970's and 1980's, one short
seller in Texas in particular cut such a swath through the Oil Patch
it was rumored someone finally put a high caliber bullet through the
window of his Rolls Royce. This same dirt sandwich would call up a
friend of mine who was a NASD Senior Supervisor and scream at him,
saying "You got to stop this insider buying!!!" This bozo was
INSANE, a stone sociopath. This is but one small example of the
mentality of this type.
As the market makers realized what they had been given, they levied
an economic assault matching the coordinated attacks the equal of any
in the history of modern warfare. They determined how to drag the
clearing business in by giving them a piece of the action on their
shorting, and invented numerous ways to use offshore brokers and
jurisdictions to leverage their power.
This was done so dramatically, that for a 7 to10year period, it would
be said that 80% of NASD member firm profits came from shorting,
particularly the development stage small public companies of the OTC
Bulletin Board, nearly annihilated in six years. By the end of that
period, they were attacking any company with an alpha, or "excess
return". This included stocks on the NASDAQ NMS, the AMEX (leading to
its ultimate acquisition), and even the NYSE. Acting on concert in
large syndicates (remember the word "Conspiracy" above?!), NO company
could stand up to them in any attempt to maintain orderly markets.
In 2002, one of the largest of these syndicates' (650 members
including many large hedge funds) operator, one Amir "Anthony"
Elgindy, was arrested in connection with investigation into his
activities surrounding terrorism, subornation of FBI agents, and
money laundering issues. He was later convicted of securities fraud
and more, and was sentenced to 11 Years in Federal Prison, from where
he continues to run his web site.
It is believed his syndicate killed well over 2000 target companies.
His conduct was the direct link of shorting as a tactical approach to
the strategic objective of money laundering for organized crime and
other nasty global entities.
Experts at first talked much about naked short selling, not focusing
on its real character, which was from the imputed contra account
effect. Every time a share was naked shorted, a counterfeit long was
created never registered by, known to, or accounted for by the
underlying company. This should start to sound familiar. Some
interesting twists in FASB also entered into their tactical
equation.
If the short sellers could bankrupt a target company, they could
avoid a revenue recognition event under GAAP. No revenue recognition
event, no taxable event. Ergo, they pursued their targets
with "unbridled aggression", always hoping for either an involuntary
deregistration of the Company, or its actual bankruptcy.
In another twist of the SEC rules, if a company did either, the
shorts never had to cover, not ever. Again, they had laundered money
without tax consequence. I have explained this to every one I have
worked with and talked to, and universally, it leaves them stunned.
The SEC came under so much pressure to clean up this disgrace, that
finally, they issued a piece of window dressing rule making called
Regulation SHO. After doing it, they realized the market could not
clean up its past without wiping the operators out, so they initiated
a "Grandfathering" proviso, saying that shorts existing prior to SHO
would be exempted from immediate settlement, the latter which was
highly cushioned.
Then came another wave of indignation from investors, and the SEC
had to switch its position from there being no such thing, to it not
having any effect on markets, to now, that it is really negative for
the market, and adversely affects capital formation. They have said
so many things about so many positions, that they have now said
everything and taken every position so well that they can refer back
to being right, and having acted prudently, no matter what happens.
In the late 1990's and early 2000's, market makers at broker-dealers
had a 10 day fail rule, which mandated a charge to their net capital
for any fail over 10 days. They would roll their positions within
the system by kiting trades known by several names, including whip
calls, and rolls. Reg SHO changed that effectively to 13 days. Re-
enter rolls/whip calls, but now, not put through the clearing system,
but rather done directly broker to broker in what is called Ex-
Clearing.
Shorts and their related counterfeit longs would sit in Ex-clearing,
invisible and unreported anywhere. Taking things a step further, the
short players would take to intentionally miss-marking tickets to
reflect short sales as actually "Long Sales" when they weren't, and
no one was the wiser. Well, not exactly no one.
Everyone needs to realize that calling naked shorting anything other
than counterfeiting, albeit by virtual electronic journal entries
rather than a printing process, is simply WRONG. It is the intent of
the perpetrators to delude the longs into thinking that they have
bought real shares from a real seller, when in fact, the longs only
know this when they themselves are dirty, such as when a manipulator
wants the counterfeit proxies attached to the counterfeit longs to
manipulate actions at a target company.
One well known company would call for a Proxy vote at their annual
board meeting. They had a legally outstanding number of shares
according to their stock record book of 60 Million shares. How many
proxies showed up? 80 MILLION. I am shocked, SHOCKED, that such a
thing could happen in America. Counterfeit proxies are the most
serious corporate governance issue coming out of this scandal, a
concern to every major corporate counsel in this country and overseas.
This is the longest piece I have ever posted. It re-covers many
points in my previous writings. The SEC recently declared that the
naked shorting selling of securities was NOT the sale of an
unregistered security, in a completely illogical and self serving
regulatory statement designed to feed key vested interests with their
hands in the guts of the SEC.
Illegal naked short selling is MOST CERTAINLY not only the sale of an
unregistered security; it is by intent and practical impact the
COUNTERFEITING OF COMMERCIAL SECURITIES BY SYNDICATES. What the SEC
says as a bureaucracy is meaningless to true honesty. It is very
interesting that in making this declaration, the SEC specifically did
NOT exempt such players from insider trading rules, particularly
where they had previous knowledge of a pending PIPE deal.
After a scathing set of Euromoney articles in April and June, 2005,
the UK and EU went to a mandatory three (3) day settlement on all
their exchanges, effectively stopping their shorting scandals
mirroring those here. They gave no grace period. It was hard, but
their markets are now much cleaner than here. It is no accident that
London has now trumped New York as the leading IPO environment.
I could hang unending detail on this scurrilous story, but this is
enough for now. This needed to be said in one piece in one place,
and here is an attempt at it
