SEC Charges Goldman Sachs With Improper Securities Lending Practices

Three cheers for the United States Securities and Exchange Commission.


Washington D.C., Jan. 14, 2016 —The Securities and Exchange Commission today announced that Goldman, Sachs & Co. has agreed to pay $15 million to settle charges that its securities lending practices violated federal regulations.

According to the SEC’s order instituting a settled administrative proceeding, broker-dealers such as Goldman Sachs are regularly asked by customers to locate stock for short selling.  Granting a “locate” represents that a firm has borrowed, arranged to borrow, or reasonably believes it could borrow the security to settle the short sale.  The SEC finds that Goldman Sachs violated Regulation SHO by improperly providing locates to customers where it had not performed an adequate review of the securities to be located.  Such locates were inaccurately recorded in the firm’s locate log that must reflect the basis upon which Goldman Sachs has given out locates.

“The requirement that firms locate securities before effecting short sales is an important safeguard against illegal short selling,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division.  “Goldman Sachs failed to meet its obligations by allowing customers to engage in short selling without determining whether the securities could reasonably be borrowed at settlement.”

The SEC’s order finds that when SEC examiners questioned the firm’s securities lending practices during an examination in 2013, Goldman Sachs provided incomplete and unclear responses that adversely affected and unnecessarily prolonged the examination.

“SEC exams ensure that market participants are following the rules, so there will be consequences, including in the determination of remedies, when a registrant fails to provide complete and clear responses to examination staff,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

According to the SEC’s order, Goldman Sachs employees who were members of the firm’s Securities Lending Demand Team routinely processed customer locate requests by relying on a function of the Goldman Sachs order management system known as “fill from autolocate,” which was accessed via the “F3” key.  This function enabled employees to cause the system to grant locate requests based on the amount of reliable start-of-day inventory reported to Goldman Sachs by large financial institutions, even though its automated system had already deemed this inventory to be depleted based on locate requests processed earlier in the day.

The SEC’s order finds that when Goldman Sachs employees used this function to grant locate requests, they relied on their general belief that the automated model was conservative and the granting of additional locates would not result in failures to deliver when the securities became due for settlement.  In doing so, the Goldman Sachs employees did not check alternative sources of inventory or perform an adequate review of the securities to be located.

The SEC’s order also finds that Goldman Sachs’s documentation of its compliance with Regulation SHO was inaccurate as it failed to sufficiently differentiate between the locates filled by its automated model and those filled by the Demand Team using the “fill from autolocate” function.  In both cases, the locate log simply mentioned the term “autolocate” to refer to the start-of-day inventory utilized by the firm’s automated model as the source of securities underlying the grant of a locate.

The SEC’s order finds that Goldman Sachs violated Rule 203(b)(1) of Regulation SHO and Section 17(a) of the Securities Exchange Act.  Without admitting or denying the findings, Goldman Sachs consented to the order and agreed to pay the $15 million penalty.  The order censures Goldman Sachs and requires the firm to cease and desist from committing or causing any violations and any future violations of Rule 203(b)(1) of Regulation SHO and Section 17(a) of the Exchange Act relating to short sale locate records.

The SEC’s investigation was conducted by John C. Lehmann, Jason W. Sunshine, and Charles D. Riely of the New York Regional Office with substantial assistance provided by John L. Celio, Katy Chiu, Josephine LaFata, and Jennifer A. Grumbrecht of the National Exam Program.  The case has been supervised by Sanjay Wadhwa.

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Obama, Iran, the JPOA, and Federalist Paper #75 (“The Treaty-Making Power of the Executive”)

Obama, Iran, the JPOA, and Federalist Paper #75 (“The Treaty-Making Power of the Executive”)

I am not going to opine on the particulars of the President Obama’s Iran deal (“Joint Plan of Action”), other than to say that many years ago I spent time in Iran, loved the people and  came to think that they are the USA’s natural allies in that part of the world’s (just as in my travels I came to believe that Vietnam is our natural ally in continental Asia), but had a beef with the authoritarianism of most of the mullahs I met (a dissatisfaction that I had opportunity to express to them while there). I am a liberal (not in the modern American misuse of the term, but in the correct, Hayekian/Milton Friedman sense of the term), and to me non-liberals generally seem like sociopaths. So while analysis of the terms of JPOA that I might venture would come from that mixed sense of a belief that American engagement with Persia would be good for the world, while standing up for America’s liberal values (and for those countries that broadly share them, such as Israel) is also good for the world, I will leave that for another place and time. Instead, this comment on the JPOA will be based not on its substance, but on the process which gave birth to it: In my experience, when any one person (including myself) believes that one’s greater wisdom, virtue, or intelligence puts one in a position to bypass institutions which have evolved (such as common law) or which have withstood the test of time (such as the US Constitution), it generally works out badly.

With that in mind, I would would like to excerpt from Federalist Paper #75, “The Treaty-Making power of the Executive” (Alexander Hamilton, emphases added):


“With regard to the intermixture of powers, I shall rely upon the explanations already given in other places, of the true sense of the rule upon which that objection is founded; and shall take it for granted, as an inference from them, that the union of the Executive with the Senate, in the article of treaties, is no infringement of that rule. I venture to add, that the particular nature of the power of making treaties indicates a peculiar propriety in that union. Though several writers on the subject of government place that power in the class of executive authorities, yet this is evidently an arbitrary disposition; for if we attend carefully to its operation, it will be found to partake more of the legislative than of the executive character, though it does not seem strictly to fall within the definition of either of them. The essence of the legislative authority is to enact laws, or, in other words, to prescribe rules for the regulation of the society; while the execution of the laws, and the employment of the common strength, either for this purpose or for the common defense, seem to comprise all the functions of the executive magistrate. The power of making treaties is, plainly, neither the one nor the other. It relates neither to the execution of the subsisting laws, nor to the enaction of new ones; and still less to an exertion of the common strength. Its objects are CONTRACTS with foreign nations, which have the force of law, but derive it from the obligations of good faith. They are not rules prescribed by the sovereign to the subject, but agreements between sovereign and sovereign. The power in question seems therefore to form a distinct department, and to belong, properly, neither to the legislative nor to the executive. The qualities elsewhere detailed as indispensable in the management of foreign negotiations, point out the Executive as the most fit agent in those transactions; while the vast importance of the trust, and the operation of treaties as laws, plead strongly for the participation of the whole or a portion of the legislative body in the office of making them.

“However proper or safe it may be in governments where the executive magistrate is an hereditary monarch, to commit to him the entire power of making treaties, it would be utterly unsafe and improper to intrust that power to an elective magistrate of four years’ duration. It has been remarked, upon another occasion, and the remark is unquestionably just, that an hereditary monarch, though often the oppressor of his people, has personally too much stake in the government to be in any material danger of being corrupted by foreign powers. But a man raised from the station of a private citizen to the rank of chief magistrate, possessed of a moderate or slender fortune, and looking forward to a period not very remote when he may probably be obliged to return to the station from which he was taken, might sometimes be under temptations to sacrifice his duty to his interest, which it would require superlative virtue to withstand. An avaricious man might be tempted to betray the interests of the state to the acquisition of wealth. An ambitious man might make his own aggrandizement, by the aid of a foreign power, the price of his treachery to his constituents. The history of human conduct does not warrant that exalted opinion of human virtue which would make it wise in a nation to commit interests of so delicate and momentous a kind, as those which concern its intercourse with the rest of the world, to the sole disposal of a magistrate created and circumstanced as would be a President of the United States.”

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Anthony Elgindy, R.I.P.

Anthony Elgindy, R.I.P.

Anthony_Elgindy_RIPBy now astute readers of DeepCapture have gathered that over the years I have developed a soft spot in my heart for the assorted brigands, cutpurses, swindlers, and crooks who inhabit these pages. One must keep in mind that they have looted the savings of millions, of course, and some of them are terrorists who wish to harm to our country, but when I was an altar boy I learned that even when rage-stomping bullies and miscreants I would invariably feel a twinge of sympathy. So perhaps it is a legacy of that misspent youth, but when I learned last night that Anthony Elgindy (AKA “Amir Elgindy” AKA “Tony Pacific”) killed himself Thursday, I confess that my chuckle  had a certain sad edge to it. Call me sentimental.

Amir Elgindy was an Egyptian with ties to the Muslim Brotherhood who immigrated to America and, like some others from that neck of the woods, gave himself an Italian name upon arrival. Here he engaged in various forms of stock market mischief. In 2000 he was indicted on nine counts of insurance fraud, and pled guilty to a mail fraud count on which he served four months in federal pen. In 2003 the NASD fined his brokerage, Key West Securities, and expelled Elgindy because he “engaged in a manipulative scheme in 1997 to inflate artificially the share price of Saf T Lok, Inc. through the entering of fraudulent quotations in the Nasdaq system, selling the stock short at the artificially high prices, and then taking active steps to depress the share price of Saf T Lok through the dissemination of negative research comments” (i.e., what is known in the parlance as “a pump-and-dump”).

But Elgindy’s real genius manifested itself in the late 1990’s when he set up a cleverly-designed password protected website on which various criminals (about 60-70 in all), shielded from public scrutiny, coordinated illegal short-and-distort market manipulation schemes. I say, “cleverly designed” because it was rigged as a message board on which one could not scroll backwards. Day and night various criminals would openly discuss which firms to target next, what brokerages were giving loose locates to enable illegal naked short selling, and which toady journalists had been fed stories they had agreed to publish, and when.

Unfortunately for Anthony Elgindy, one of his closest friends was not, in fact, loyal to him. This friend hired assistants to sit at computer screens around the clock, 24/7/365, hitting “Print Screen” every couple of minutes and making physical record of all that was said in this chat room for nearly three years. Many years ago I obtained an attic full of bankers boxers filled with these print outs, which, incidentally, I caused to be scanned and stored with a law firm for posterity. Some future historian working to recreate the evolution of Wall Street criminality in the decade leading up to the Crash of ’08 could find no better place to start than working through these tens of thousands of pages of print-outs, which are available for the asking (come to think of it, maybe it is time I just cause it all to be posted online myself, probably on one of those Dutch servers that is immune from subpoenas and lawsuits). Therefore, unscrambling the various relationships among the miscreants I pursued on Wall Street was far easier than it may have appeared to outsiders. There they were, in black and white:

  • One hedge fund manager rejoices in the compliance of pseudo-journalist Herb Greenberg (of Jim Cramer’s, opining, “maybe when folds we can hire Herb to work exclusively for us” (NB: they did, and that describes Herb’s subsequent career at CNBC and ever after, until he faded into obscurity).
  • Dave Kansas, also of Jim Cramer’s Dave Kansas went on to edit the C Section of the Wall Street Journal, where I first crossed paths with him in 2002 when he degraded a story on Bill Hambrecht’s Dutch Auction IPO as a favor to the Wall Street firms he has spent his career dutifully servicing with all the verve and imagination of a lifer in a Tijuana hump-hump bar.
  • Carol Remond of DowJones.  Later I tangled with Carol Remond on occasion and she became the object of my journalistic attention: see one of my favorite pieces, “Carol Remond Tells a Joke She Doesn’t Get“, in which she engages in debasing apologetics for the failure of David Rocker’s hedge fund, which collapsed in October 2008 through no fault of its own (Carol maintains), but (no kidding, this was her position) simply because in September 2008 rules were adopted preventing Rocker Partners from breaking the law anymore.
  • Bloomberg’s Dave Evans, it is written,”gave us SPBR for free-been very profitable.”
  • Dan Loeb, now a well-known New York hedge fund manager, who got his start on Elgindy’s board using the pseudonym “Mr. Pink”, once wrote of Dave’s willingness to be spoon fed stories to regurgitate on cue in Bloomberg (stories in front of which this syndicate of hooligans could trade). For his services “Dave Evans is a made man,” wrote now-respectable hedge fund manager Dan Loeb.


Elgindy furthered this stock picking “prowess” by bribing two FBI agents to feed him advance knowledge of federal investigations against companies, information in front of which, again, he and his gang of merry miscreants could trade.  He would have gotten away with it forever, I think, but on September 10, 2001, he called his Smith Barney broker and told him to liquidate his (Elgindy’s) stocks, saying that “tomorrow the Dow is going to 3,000” (it was 9,600 at the time). The next day when planes hit buildings the Smith Barney broker called the feds, who rolled up Elgindy and his stock discussion board. At trial the federal prosecutors decided to leave aside mention of their belief that Elgindy had prior knowledge of 9/11 on the grounds that it was too inflammatory: knowing he was losing the trial, however, Elgindy’s lawyer started bringing up such allegations, which opened things up for the feds to discuss them in court. That part of the trial transcript was later sealed by the judge, but in 2007 an enterprising Bloomberg journalist named Gary Matsumoto managed to obtain them from a Brooklyn court storage facility, and it is clear that the feds absolutely believed that Elgindy knew about 9/11 the day before it occurred.

Elgindy was convicted on those charges of bribing FBI agents. Between his conviction and his sentencing he was under house arrest in his home near San Diego. When he showed up to the court for sentencing, he came with only 9 fingers, the other having been lost “in a beach barbecuing accident,” he told the judge. When the prosecutor pointed out that Elgindy had been under house arrest and unable to access a beach, Elgindy changed to another improbable story. A person central to the case later told me that certain elements of Organized Crime had shown up at Elgindy’s house while he was awaiting sentencing, told him that if he talked while he was in prison they would skin Elgindy’s wife alive, took Elgindy to his basement, and at gunpoint forced him to saw his own finger off with a hacksaw, the better to remember the tutorial.

Elgindy was subsequently sentenced to 11 years in federal prison. While in prison he followed my activities closely, even obsessively.  As a result, I made arrangements for an associate of mine to befriend Elgindy (under pretense) through email, and he actually received permission to visit Elgindy in prison in 2006. Three days before my associate’s visit, the Federal Bureau of Prisons revoked my associate’s permission, moved Elgindy to isolation, and refused my colleague further communication with Elgindy. How odd.

Elgindy was released from prison in January, 2014, having served nine years in total. Evidently the strain of it all was too much for the poor fellow, however, and Elgindy killed himself three days ago (Thursday, July 23, 2015). Details of his demise and whether or not it was another “beach barbecuing accident” have not yet been made public.


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Goldman Sachs Internal Memo (Yesterday): “Easy to Borrow List to be Discontinued”

Goldman Sachs Internal Memo (Yesterday): “Easy to Borrow List to be Discontinued”

This post may be a little inside-baseball. I will not explain at length the significance of this (if it does not make sense, you will have to read around in DeepCapture to understand it fully), but the short version is as follows.

My battle with Wall Street started off as a fight regarding slop in the settlement system and how it could be used to rig the stock market (the battle later expanded into other areas, including organized crime, economic warfare, and what I felt was an insufficiently proactive regulatory environment, the latter of which, I am happy to say, is showing signs of real improvement). For a decade I have asserted that one of the sources of that slop has been the system that governs short selling. One of the sources of that slop has concerned how hedge funds locate stock to short sell. And one form of that slop originates in the “Easy to Borrow List” that prime brokerages put out each day.

Every day each prime broker (e.g., Goldman, JP Morgan) looks at the stock it has available to lend to short sellers. Assume that a prime broker has 100,000 shares of Martha Stewart Omnimedia (ticker: MSO) “in the box,” which is to say, “available to lend.” They put that on a list of “Easy to Borrow” stocks that it then faxes in the morning to its hedge fund clients. A hedge fund who wants to short MSO then looks at this morning’s fax, and can short sell sell 100,000 shares of MSO. It can claim it has met its requirements to have a good faith belief that it will be able to locate stock to deliver in three days  based on its having seen this morning’s Easy to Borrow list from its prime broker.

Of course, three high school kids and a pet turtle can figure out the flaw in this system: there is nothing to keep five different hedge funds who all receive the same fax from all short selling that same 100,000 shares MSO, and thus, selling 500,000 shares  into the market place (while only 100,000 are able to be delivered). Yet the authorities have traditionally done nothing to stop this, because the prime broker can say, “We didn’t lie, there were 100,000 MSO in the box this morning when we faxed out that list.” And the five individual hedge funds could not be pursued because each one could say, “I saw it on the Easy to Borrow list this morning, so I had a ‘good faith reason to believe’ I had located shares available to borrow.” Believe it or not, while the nefarious activities described within DeepCapture often use a lot of jargon, and likely seem highly arcane to outsiders, at their heart they are often no more complicated than that. Therein lies the brilliance of these illegal schemes: there is not one pair of dirty hands to cuff, just a bunch of smudgy fingers scattered throughout the system.

Seven weeks ago the SEC (towards which I, having been quite a scold for many years, now feel compelled to give significant credit) tagged Merrill Lynch/Bank of America with an $11 million fine regarding their participation in such loosey-goosey activities over many years. See Merrill Lynch pays $11 mln to settle short sale violations (Reuters, June 1, 2015). In full disclosure, I should mention that Merrill Lynch/Bank of America are on the business end of a lawsuit concerning precisely these activities, a lawsuit which I filed years ago in California, which a few months ago received a green light from the California Supreme Court, which just this week had a judge assigned to try the case (who herself has called a Case Management Conference for August 12), and which, with a little bit of luck, will be being heard later this year or early in 2016 by twelve California citizens good and true.

In a major development, yesterday afternoon Goldman circulated an internal memo announcing that it is discontinuing its long-standing use of Easy to Borrow lists. (To protect my source within Goldman I am sanitizing things by just posting a screen shot of the relevant portion):




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Grateful Dead “Fare Thee Well” Concert Their Greatest Prank Ever: A 60’s Style Acid Test

Grateful Dead “Fare Thee Well” Concert Their Greatest Prank Ever: A 60’s Style Acid Test

dead50America’s Band is making history in their “Fare Thee Well” concert tonight. I’ve been here for three days, and the first two were what we expected (and last night’s July 4 concert was like no other July 4 party I have ever witnessed) but tonight…. I have followed Kesey and the Dead since 1968 (yes, I was 6), attended and/or listened to too many concerts to number, I was prepared for anything, but not tonight. I’ve never seen a musical performance in my life like tonight.  Magnificent unapologetic 60s music, the most hard-core Ken Kesey-style Merry Prankster “happening” that only the Dead could have pulled off. Their “Fare Thee Well” concert is not a message from them to us but a message for us to each other: from its opening chords they staged the whole concert tonight as a massively apocalyptic event, a bunch of crazy 60’s stone cold phreaks gathering at the edge of Armageddon to dance one last time together.

As Deep Capture readers are used to doing, we can now sit back a see how long it takes the world to catch up with what happened tonight.

POSTSCRIPT (7/13/2015):

I have found only one review of the final night of Grateful Dead’s three night “Fare Thee Well” performance that hinted at what happened there. Not a single one of the countless video clips that have been published across the Internet (including some in many major publications) caught the moment. Indeed, I believe many in attendance were baffled until it was almost too late.  I will explain what I saw (in doing so I fear I must over-quote lyrics, which I will replace if the proper video clip emerges).

The sound for the third (Sunday) night was mixed differently than I had ever heard, even at a Dead show, and  in a way that would probably not have been apparent to anyone streaming it at home. In much of the first set, and especially into the climax of the first set, the bass was heavily boosted, and the reverb just…. well… would not fade away (if I may be excused the expression). The result was a stadium vibrating like we were being visited by Armageddon itself. As the sun went down and the first set began to draw to a close, the Dead blasted Soldier Field with a sound that got increasingly cataclysmic,  psychedelic, and weird until (I believe the films will show) even a fair bit of the audience took their seats. In the twilight they transitioned to their climax, distilling 50 years of of music into one howling crescendo, as if to say, “We will not be here to do it for you again, we will condense it into one drop, so please taste this,” and literally shook the stadium with “Throwing Stones/Ashes to Ashes” (see 1987 studio version here) while like a man on fire Bob Weir  defiantly shouted these lyrics:

Picture a bright blue ball just spinning, spinning free
Dizzy with eternity
Paint it with a skin of sky, brush in some clouds and sea
Call it home for you and me
A peaceful place, or so it looks from space
A closer look reveals the human race
Full of hope, full of grace, is the human face
But afraid we may lay our home to waste

There’s a fear down here we can’t forget
Hasn’t got a name just yet
Always awake, always around
Singing ashes, ashes, all fall down
Ashes, ashes, all fall down

Now watch as the ball revolves and the night-time falls
And again the hunt begins and again the blood wind calls
By and by, again, the morning sun will rise
But the darkness never goes from some men’s eyes
(Well I know)
It strolls the sidewalk and it rolls the streets
Staking turf, dividing up meat
Nightmare spook, piece of heat
It’s you and me, you and me

Click flash blade in ghetto night
Rudy’s looking for a fight
Rat cat alley, roll them bones
Need that cash to feed that Jones
And the politicians throwing stones
Singing ashes, ashes, all fall down
Ashes, ashes, all fall down

Commissars and pinstripe bosses roll the dice
Anyway they fall, guess who gets to pay the price?
Money green, or proletarian gray
Selling guns instead of food today
So the kids they dance and shake their bones
And the politicians throwing stones
Singing ashes, ashes, all fall down
Ashes, ashes, all fall down

Heartless powers try to tell us what to think
If the spirit’s sleeping then the flesh is ink
History’s page will be neatly carved in stone
The future’s here, we are it, we are on our own
On our own, on our own, we are on our own

If the game is lost, then we’re all the same
No one left to place or take the blame
We will leave this place an empty stone
Or that shining ball of blue we call our home

So the kids, they dance, they shake their bones
And the politicians throwing stones
Singing ashes, ashes, all fall down
Ashes, ashes, all fall down

Shipping powders back and forth
Singing black goes south and white comes north
And the whole world full of petty wars
Singing I got mine and you got yours
While the current fashions set the pace
Lose your step, fall out of grace
The radical, he rant and rage
Singing someone got to turn the page
And the rich man in his summer home
Singing just leave well enough alone
But his pants are down, his cover’s blown
And the politicians throwing stones
So the kids, they dance, they shake their bones
‘Cause it’s all too clear we’re on our own
Singing ashes, ashes, all fall down
Ashes, ashes, all fall down

Picture a bright blue ball just spinning, spinning free
It’s dizzying, the possibilities

Ashes, ashes, all fall down
Ashes, ashes, all fall down…


There in the gloam of Soldier Field,  those who had been part of The Trip and those who had only heard of it had come together as though on the rim of a volcano on the verge of a final massive eruption. Those who sensed there is no escape chose to face it by gathering one last time on that edge to surrender with love and joy in a frenzy of ecstatic dance to surrender . That moment, that first set’s ending, was truly the final message of the Grateful Dead.

The second set was nurturing, and as if to help us recover from what we had been shown. They told us to keep truckin’, and sang of the passing of their peripatetic friend Neil Cassady (an inspirational figure in Beat literature, such as Dean Moriarty in Jack Keroac’s On the Road, and with Kesey a seminal figure in the Beat-Hippie bridge),  and the spiritual echoes Cassady left in his wake (including the birth of Cassady Law to a crew member of the Grateful Dead):

I have seen where the wolf has slept by the silver stream.

I can tell by the mark he left, you were in his dream.
Ah child of countless trees, ah child of boundless seas.

What you are, and what you’re meant to be
Speaks his name, though you were born to me,
Born to me, Cassidy.

Lost now on the country miles in his Cadillac.
I can tell by the way you smile, he is rolling back.
Come wash the nighttime clean, come grow the scorched ground green.

Blow the horn, and tap the tambourine.
Close the gap of the dark years in between
You and me, Cassidy.

Quick beats in an icy heart, catch colt draws a coffin cart,
There he goes and now here she starts, hear her cry.

Flight of the seabirds
Scattered like lost words,
Wield to the storm and fly.

Fare thee well now, let your life proceed by it’s own design.
Nothing to tell now, let the words be yours, I’m done with mine.
Fare thee well now, let your life proceed by it’s own design.
Nothing to tell now, let the words be yours, I’m done with mine.

See official version from 1980:


They moved on with (among others) an incomparable “Terrapin Station”, ended with “Not Fade Away,” and double-encored with “Touch of Grey” (“I will get by, I will survive”) then, to close, “Attics of My Life”:

In the attics of my life…
When there was no ear to hear, you sang to me….
When there were no strings to play, you played to me….
Where all the pages are my days, and all the lights grow old.
When I had no wings to fly, you flew to me, you flew to me…
In the secret space of dreams, where I dreaming lay amazed.
When the secrets all are told, and the petals all unfold.
When there was no dream of mine, you dreamed of me.


It was a beautiful second set, played with the tenderness of a last parting.  But I had no doubt that what the Grateful Dead came for was to create that singular, unrepeatable moment that occurred when the narrative arc of “America’s Band” celebrated its conclusion in Soldier Field as we all bid each other “Fare Thee Well” in a dusk of fear, darkness, and dizzying possibilities.





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How CNBC (Becky Quick, Jim Cramer, and Joe Kernan) Can Solve Its Collapsing Viewership Problem

How CNBC (Becky Quick, Jim Cramer, and Joe Kernan) Can Solve Its Collapsing Viewership Problem

One of the proudest moments of my life came the day that the CNBC producer called to tell me that the article I had written on Jim Cramer was the single meanest thing she had ever read in her life and that I was banned from CNBC forever.

The article in question, “Jim Cramer Is a Complicated Man,” is largely composed of quotes from Jim’s own writings, with some minimal explication from me. Though Jim’s confessions are tawdry enough to make a pimp squirm, since that piece largely draws upon extensive quotes from Jim’s own writing I do not see how it can be called, “mean”. I do know that various people (e.g., a Georgetown Law School professor friend) who read it have upon completion expressed dumfounded disgust at Cramer.

There is also, of course, the additional issue of the video I caused to be supplied to Comedy Central a year later, a video which Jon Stewart used to publicly humiliate Jim Cramer in a way that in any sane world would have left Jim lucky to be delivering weather forecasts from Butte, Montana.

Thus I was surprised to see on June 5, 2014 Ms. Becky Quick declare on air that she “would love to have Patrick [me] on” CNBC, followed by Joe Kernan’s faux-bewildered account deliberately distorting my early and prescient criticisms of Wall Street. I was not surprised, however, to see Jim Cramer coyly declare that is the one stock in the universe of stocks upon which he will not comment.


I immediately posted a blog accepting Ms. Quick’s invitation (“My Response to Becky Quick’s Proposal: I Do“). Naturally, since the moment that I picked up the gauntlet that the three of them threw down that morning, CNBC has gone dark. No one there, not a journalist, not a producer, not a technician, will reply to my  request that they simply name a time and place for me to appear.

Then recently a post over at Zerohedge (“CNBC Viewership Plunges to 21 Year Low“) brought to light the sad news of the utter collapse of CNBC’s viewership:

CNBC August 2014


CNBC, I’m here to help. Why not make good on your statement that you “would love to have me on” CNBC, and schedule an appearance? Make it live, promote it ahead of time, and we’ll draw some numbers together.


Patrick M. Byrne


PS Live broadcast only, naturally.






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And Now a Message from Our Sponsor….

And Now a Message from Our Sponsor….

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Ex-Mafia Boss Mentions Mafia Activity on Wall Street (CNBC)

Ex-Mafia Boss Mentions Mafia Activity on Wall Street (CNBC)

You can also watch the segment on the CNBC website here


“I did a lot of things at times with people on Wall Street. I don’t trust them. That’s the bottom line. A lot of guys are shady and they did shady things with me so I don’t trust them.”

I like this guy.

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Meanwhile, Euroclear (Europe’s DTCC) Warns That It, Too, Engages in Fractional Reserve Banking Without a Reserve Requirement

Meanwhile, Euroclear (Europe’s DTCC) Warns That It, Too, Engages in Fractional Reserve Banking Without a Reserve Requirement

“The Euroclear operator advises as follows: under Belgian law, investors that are credited with securities on the records of the Euroclear operator have a co-property right in the fungible pool of interests in securities on deposit with the Euroclear operator in an amount equal to the amount of interests in securities credited to their accounts. In the event of the insolvency of the Euroclear operator, Euroclear participants would have a right under Belgian law to the return of the amount and type of interests in securities credited to their accounts with the Euroclear operator. If the Euroclear operator does not have a sufficient amount of interests in securities on deposit of a particular type to cover the claims of all participants credited with such interests in securities on the Euroclear operator’s records, all participants having an amount of interests in securities of such type credited to their accounts with the Euroclear operator will have the right under Belgian law to the return of their pro-rata share of the amount of interests in securities actually on deposit” (emphasis added).

– Warning on securities issued in Europe

Maybe somebody should invent a way to issue a cryptosecurity that trades on a peer-to-peer exchangeless-exchange that generates a public ownership ledger while bypassing all Bezzle-generating centralized institutions.

Just a thought.

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While CNBC Searches for Its Courage, Glenn Beck and Patrick Byrne Discuss Oligarchy on The Blaze

While CNBC Searches for Its Courage, Glenn Beck and Patrick Byrne Discuss Oligarchy on The Blaze

This week I swung through Dallas to be interviewed by Glenn Beck. I was given a tour of TheBlaze, where I found they have assembled some first-rate talent (e.g., President Betsy Morgan, formerly CEO of HuffingtonPost). Their interior design is superb: Beck has taken over a former TV/movie studio and converted it into a really functional, collaborative, attractive tech workspace such as one might expect to see in Silicon Valley or Silicon Alley (do they even still use that term?). The modern-yet-retro that harkens back to the Golden Age of Radio. Simply from an entrepreneur’s point of view I found it all (including their business model) impressive.

The interview went well. I had done one interview with Glenn Beck five years ago, and remember it as being one of the first times that I felt the journalist actually wanted to give me a chance to explain my beliefs without throwing chaff and distortion in my way. So I had positive expectations going in, but still, was again impressed with Glenn’s research, thoughtfulness, and  willingness to engage in an intellectual conversation like an adult.

Incidentally, below please find that first interview I had with Glenn Beck five years ago. My section starts at 7:15, and while short, I note the same virtue as I saw in this week’s interview: Glenn is willing to engage deep issues such as oligarchy, institutional design, and the erosion of our republic in a way that few journalists in the “lunatic mainstream” are willing or able to follow.


Update: After publicly inviting me on air over a month ago (cf. “My Response to Becky Quick’s Proposal: I Do“) CNBC still will not return a phone call or email and will not, in fact, allow me on their show. CNBC vs. Glenn Beck: You make the call.

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