stockrocker...if you are around you might like this one...havent really absorbed all myself but will ASAP...BTW hang in there!!
How's this for starters?
May 24, 2005
Leslie Hakala
Counsel for the Division of Enforcement
Securities and Exchange Commission
5670 Wilshire Boulevard, Suite 1100
Los Angeles, CA 90036
Dear Ms Hakala:
Please forgive the presumption of an unsolicited letter but I feel constrained to communicate with you.
I am touched by your personal story and congratulate you for perseverance and success in the face of adversity. To the point, I address this open letter to you both as an admirer and as a concerned investor in several companies I believe to be illegally shorted, one of which is currently on your agenda (CMKX). It is my hope that you will personally resonate to what truth may be in this letter and that moreover you will forward this to all SEC attorneys for their independent perusal.
Most likely you are now painfully aware of the SEC’s internal conflict(s) re the emerging “Stockgate” revelations that center on electronic counterfeiting of market securities. In your place, I would probably feel somewhat set up and a little used. It seems SEC staff attorneys are instructed to enforce only selective securities regulations while well-connected superiors contravene regulations of more universal import.
You (and most SEC staff attorneys) are no doubt aware Regulation SHO grandfathers all past failures to deliver, effectively legitimizing years of counterfeiting without so much as a token fine or slap on the wrist of any entity responsible. Take your pick of entities in the “short” chain…the DTC, Cede and Co., the NSCC, certain Market Makers, various off-shore and domestic Hedge Funds, certain Broker/Dealers, certain Institutional Banks…not one was taken to task. Equally ludicrous, SHO ostensibly corrects a problem the SEC’s top brass repeatedly denies exists. This is not rocket science…even a cursory review reveals this “regulation” gave the counterfeiters a get out of jail free card despite inordinate “profits” gleaned from selling naïve investors phony shares created to dilute the value of hundreds (maybe thousands) of targeted companies. The end game is to dilute the targeted company out of business so the failure to cover becomes moot; moreover the money made (translate stolen) from the sale of the counterfeit shares is likely never reported or taxed. With boatloads of easy money in the mix none of the participants are anxious to make good on their failures to deliver, after all, if the SEC’s top cop doesn’t care, why should they?
Most SEC staff attorneys are aware (or should be) that “top cop” regulatory officer Annette Nazareth has long been the chief apologist for what we now understand to be blatant counterfeiting. Under her “watch”, the illegal activity multiplied exponentially and now appears systemic. Nazareth (and now Donaldson) would have us believe there is no illegal naked shorting whatsoever, but if there is perhaps just a little bit of naked shorting (wink, wink), it is somehow necessary for the “good” of the market.
George Orwell would love all this. We also hear the SEC "conventional wisdom" that all pink sheets are pump and dump scams in the first place and probably 96% deserve to be put out of business. If the 4% that do not “deserve to be put out of business” get whacked (or put of business) in the process, that’s perfectly OK…kind of like friendly fire or collateral damage and never mind the dollar loss to the naïve small investor. In reality, the percentage of “honest” pinks is of course considerably higher than the 4% admitted by Nazareth with damage to small investors increased proportionally. Inexplicably, Nazareth is now recommended for a big-time promotion instead of being sent to jail, the precise location many victimized investors devoutly wish to see her “settle”, so to speak. Fortunately for Nazareth, she has friends in high places. Being married to the Vice-Chairman of the Federal Reserve would seem to have advantages despite (or maybe because of) the Fed’s own apparent complicity in this sordid affair of the naked shorts. I would imagine Annette and Roger have lots to talk about. The Federal Reserve is guilty by association with the Depository Trust Company, the Federal Reserve’s cash-guzzling stepchild. It is common knowledge the DTC arrogantly scoffs at even the pretence of transparency by cavalierly refusing to disclose short positions and transaction records germane to the convoluted Stock Borrow Program. The whole issue of naked shorts will remain cloudy until the DTC is forced to open its books.
Most SEC staff attorneys will soon be aware (as are you, Ms. Hakala, through CMKX), of the growing number of outraged American investors now convinced they have been robbed by a rigged system beholden to big (and crooked) players cavalierly fashioning their own “rules”. Any rationalization whatsoever for continually allowing the sale of something one does not own (and continually fails to acquire) seems suspect at best, conspiratorial at worst. There seems to be growing evidence of large scale, on-going failures to deliver not only in CMKX but also in scores of other securities. I personally exchanged several emails with one broker, Wells Fargo Securities, wherein WF named E-trade as their broker/dealer and moreover identified them as being short 5 million shares of GLKC with no specific time constraints within which to cover, thus the certificate I requested was (and still is) simply unavailable. I was surprised at Wells Fargo’s ultimate candor and, if you have an interest, I would be delighted to send you a record of the entire (and rather preposterous) exchange. In an attempt to gather first hand evidence of naked shorting I had purchased a few shares of GLKC shortly after Senator Bennett identified the company as a poster child for naked shorts during a recent Senate Banking Committee hearing. I trust you are aware of the Committee hearing to which I refer; Senator Bennett attempted (unsuccessfully) to get some straight answers from Chairman Donaldson regarding the subject phenomenon of naked shorting. Donaldson’s responses were, to be charitable, obtuse, and he was instructed by Bennett to report back to the committee with some answers they could understand. Might you know if a date has been set?
Most SEC staff attorneys I’m sure believe (at least in principle) the small investor deserves a level playing field but will, for a variety of personal reasons, continue to ignore or rationalize the “short” issue. I pray however (and I’m not a praying man) that one or two SEC staffers has the courage and conviction to transcend their comfort zone, come clean and blow the whistle. It would be a real service to working America.
Ms. Hakala, you would be the ideal whistleblower in that your center of gravity is unquestioned. You are an extremely bright light, so bright in fact that now, with new information, you must suspect your employers’ malfeasance in this whole sorry phenomenon. There seems to be growing evidence of a trail of major mischief snaking in and out the SEC’s back door. I would imagine your interactions with Bill Frizzell have been instructive and that you have become at least “suspicious” of collusion in your own workplace, have you not?
As a major player in this drama it is likely you will (like it or not) go down in history one way or another as the story of CMKX (together with the Stockgate scandal) plays out. While CMKX may have some dirty or unreported linen, in my view the counterfeiting activity associated with Stockgate is a trillion times more egregious (literally and figuratively) and undermines our entire economy. There is considerable dark speculation as to where some illegal and unregulated hedge fund profits eventually land; anti-American interests are at the top of many lists.
Leslie (if I may presume to call you Leslie), while I don’t suppose I expect you to actually blow the whistle on SEC complicity (or will actually forward this to fellow SEC staffers), I would love to be pleasantly surprised. An epiphany with attendant will to action sometimes springs from strange sources when least expected.
As an aside, one thing for sure…this is Great Theater for us all and I bet you never dreamed you would encounter the legendary Robert “Iron Bob” Maheu. I think you would agree Mr. Maheu is a separate reality all by himself and that just possibly he is on to something of major import; hence his association with Urban Casavant and CMKX.
In any event, thank you very much for reading this and allowing a small investor like me to express his views. Needless to say I am anxiously awaiting the next chapter in the continuing saga of “The SEC Meets CMKX.”
Regards and good health,
XXXXXX
XXXXXX
XXXXXX
Ccs: The Honorable Brenda P. Murray, Bill Frizzle, Don Stocklein
