The Jailhouse

[Ignutz]

January 27, 2006 (FinancialWire) New developments in StockGate include a scandal reported in News Corp.’s (NYSE: NWS) New York Post regarding purported naked short sales in Compudyne (NASDAQ: CDCY), by a hedge fund manager associated with Friedman Billings Ramsey (NYSE: FBR), and associated with a partner whose father was called the architect of Bank of America (NYSE: BAC), and who had been recommended by Marvin P. Bush, the brother of President George W. Bush.

Neither Friedman Billings Ramsey nor Bank of America were named by the NASD in any wrongdoings, and apparently were not parties to the alleged illegal stock manipulations.

At the same time, the claim reported here yesterday that a press release issued by the Depository Trust and Clearing Corp. that it was not invited to a North American Securities Administrators Association public forum November 30 was sharply disputed by David Patch, an audience member, and editor of Stockgate Today at http://www.investigatethesec.com

“According to the Press Release, the DTCC contends that they were not invited to speak at the NASAA Public Forum held in November to discuss the issues of Naked Shorting. Ralph Lambiase, Director of Securities for the State of Connecticut and moderator of the forum, specifically identified to the audience attending the forum that the DTCC was invited to attend but had declined the invite. Panelist Dr. Susan Trimbath, former Operations Manager for the DTCC, also confirmed the DTCC invite during the forum discussions,” said Patch.

He also said that the Stuart Z. Goldstein of the DTCC, who was quoted in the press release, did not respond to his request for “clarification.”

The article in the Post, by Roddy Boyd, said that “Investors in Mangan and McColl Partners' flagship hedge fund were never told John Mangan was nailed by the NASD for sleazy trading in a separate business, in a puny Nasdaq stock called Compudyne.

“Mangan, an arbitrage trader managing $1 billion as recently as 2004, and his partner Hugh McColl Jr., son of Bank of America architect Hugh McColl, declined to volunteer the information in the fund's December letter to investors.

“McColl was not involved in any wrongdoing. Mangan was fined $125,000 and barred from NASD member firms for life. He was accused of making naked short sales, in which you sell stocks you don't own and fail to properly borrow the stock before trading.”

The article also said that at the time of the illegal trades, Mangan also was managing hedge funds for Friedman Billings Ramsey Group, a fact disclosed to investors. “Though the illegal trading did not take place in M&M's fund, a former investor in the fund, whose investment was pulled 18 months ago, said their decision to avoid the issue is baffling.”

"You are given a chance to make an argument in front of people and institutions who have given you millions of dollars and are reading about you doing illegal acts," the former investor told the Post. "Their silence spoke volumes."

It went on to note that the fund also has a close relationship with Marvin Bush, the brother of President George W. Bush and a founder of private-equity and fund-of-funds Winston Partners. Bush told The Post he happily served as a reference for Mangan when he was raising capital for the fund.

"John [Mangan] was a neighbor and a friend from Alexandria going back nearly 15 years. We started out playing tennis - he's an incredible player - and the relationship grew," Bush reportedly stated.

"He needed a reference and he was one of the hardest working and smartest guys I knew, so I was happy to tell anyone about that," he added.

The Post said Bush declined to comment on whether he had an investment with Mangan and McColl. An admittedly biased discussion of Bush’s connections and dealings are separately found at http://www.informationclearinghouse.info/article3336.htm

http://www.investrend.com/articles/article.asp?analystId=0&id=22449&topicId=160&level=16...