Wall Street caught printing Counterfeit Shares.
February 1, 2005
David Patch
That’s right folks! Wall Street has once again been defrauding the investing public and this time they were caught printing counterfeit shares. Almost as bad, those chummy boys and girls in our Washington DC Regulatory Office apparently could care less about it. Fraud pays their salaries and it pays for new office space that may or may not provide a window seat to the Capital Building. More directly, we pay these fees, as we are the ones financing their schemes through our losses.
In June 2004 when the SEC released their short selling reform package, Regulation SHO they did so requiring all market centers to publish daily the list of securities that had abusive levels of settlement failures. They dubbed this list the “threshold list”. The lists are now public disclosure effective January 7, 2005
While the first official published lists did not come out until January 7 the lists were available if you knew who to call or where to look. The NYSE started their publication on December 3, 2004 and the NASD had their publication, dubbed Rule 11830 stocks, published for several months going back into October. Both lists are strikingly similar to the present published “threshold lists” even though we are several months later. There has been little by way of urgency or regulatory enforcement to clean up the fails and remove the abused from the list.
So how is this counterfeiting you say?
When Wall Street executes a sell order from a house account or for a preferred Hedge Fund for example, whereby there are no shares available in these accounts or available to borrow, they are selling counterfeit shares. The regulators may disagree with the terminology but when you sell something you do not own and receive cash for it by replacing the “real” with a “fake” that to most logical people is counterfeiting. Wall Street has been putting electronic “fake shares” into our accounts for decades telling us each time in our account statements that they are real. Wall Street makes these claims even though a “real share” in the electronic vault at the Depository Trust does not support the shares seen in our account. The publication of the threshold list validates that fact. The fails represented by the list are shares that are showing up in investor accounts.
And how and why is it happening?
Wall Street makes its money from trade volumes and commissions. Fed Chairman Alan Greenspan addresses the need for market liquidity, liquidity created by Hedge Funds and their wealthy clients. Chairman Donaldson asks “how much fraud are you willing to accept for liquidity” as he questions the integrity of the unregulated Hedge Fund Industry? In the end, regulators accept enough fraudulent liquidity to get several hundred companies listed today with hundreds more suspiciously missing from the published lists. It happens because the trades identified on these lists funnel money into the wealthy that in turn funnel money right down Pennsylvania Ave and Independence Ave. in Washington DC.
Consider this. While present market conditions do not constitute a Bull market, we are far from a Bear market. Investments are coming back into the markets creating more buyers than sellers. Under these market conditions Wall Street has several hundred companies identified on the various threshold lists with settlement abuses represented by uncontrolled sellers. How? Many of these companies have been on the list for months as Wall Street has, and continues to, allow the sellers of counterfeit shares ample opportunity to cover at a profit. Why? This list, only now being published, is a snap shot of what is transpiring under a market of cautious buyers. Lists the regulators have watched grow over the past decade at the detriment to investors and business growth. What then do you think was transpiring when the market when Bearish and massive selling was taking place?
If the SEC were forced to re-create a “Threshold List” dating back to the late 90’s would the list be several hundred or would the list be far greater with tech stocks dominating the list? One can only speculate on an answer but the list certainly shows a pattern of Wall Street abusing troubled companies and troubled industries.
On the list today is the Airline Sector including Delta Airlines, United Airlines, US Air, and Midway Airlines. Is it coincidence that all these companies are tremendously oversold when the sector is financially straining? Wouldn’t we all like to go out and sell shares of these firms as they publish possibilities of bankruptcy? Unfortunately the law requires that we be able to locate and deliver a share and not sell at will taking advantage of a situation in a “Bear Raid”. These companies listed have had Wall Street rape them while they were down and out. Wall Street continues to steal their business and our investments as they sell to any preferred customer who wants to join in the “Raid”. Laws say we cannot all be sellers just because we want to be. Wall Street obviously violates those laws.
Also on the list is Martha Stewart Living. Let’s go beat up on Martha Stewarts Company and Shareholders because she got into personal legal trouble. How are the two related to company earnings, it doesn’t matter? Put Martha in jail, create a selling frenzy of illegal counterfeit shares, and drive investors out making a nice profit in the process. If the profits are not good enough, wait out the remaining investors as Wall Street ignores their obligations for settlement. The SEC is allowing the seller to cover the fails at their pace and at their manipulated price. The economics of supply and demand do not play a role in the SEC’s mentality.
Finally you have the new tech phenoms like Google. Google is on the list as investors are willing to pay ungodly prices for that stock. Short sellers know it can’t last forever so they have already started selling short shares they cannot deliver. Maybe you have one of those shares that you paid $200/share for as you tied up your capital. Wall Street credited you with a $200.00 share but the seller doesn’t have any. He/She doesn’t plan on getting one until it is at least down to $150.00/share so hang on for the wild ride Wall Street will put you through to draw you out at a loss. Wall Street has no intention of going after the failed trade, the SEC isn’t going to force delivery, we need liquidity at any cost. What we really need is counterfeiting in our markets to make our preferred customers happy. Your $200 share will be a tax write off to you in some distant future. The game is rigged that way. The very fact that we have a published threshold list tells you that.
There has to be winners and losers and without the wealthy stealing from the poor where would our nation be?
Wall Street has been forced to go public with their counterfeiting scheme but it was so neatly wrapped we almost missed the devil inside the dress. The same devil that keeps re-surfacing - Wall Street greed. The significance of the threshold list is simple. Wall Street now admits that they have been selling shares illegally and by the duration of time we see companies listed they have NO INTENTION of doing anything about it. It is about the Money.
Wall Street has been caught printing counterfeit shares and the SEC is in on the game. This is my opinion anyway and I challenge any member of the SEC with integrity to refute the facts presented. By the very existence of a “threshold list” that will be hard to do. There should be no need for a list as it is securities law (Section 17A of the Securities Act of 1934) that requires trades to settle in a timely manner. The SEC needs to explain to us all how the natural balance of supply and demand is taking place protecting our investment in any one of these threshold companies when counterfeit shares have overrun the supply side of the equation. How can we be protected when abused fails have lasted for upwards of 4 months or longer?
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