I doubt that there will be any leadership from the White House, certainly not any in a timely manner. McCain was correct in asking for Cox’s removal, but came off like a quick-shooter.

If that problem is solved in this fashion all we need do is turn our attention to a bigger problem. Phantom shares, the excess number of shares, over and above the stated outstanding and authorized number of shares need be absorbed.

The question is how. Perhaps a topic for a future blog but honestly, without what is nothing less than “repatriation” by the issuer, this task will be almost impossible.

Imagine having 150% of your stated aurhorized shares trading without the underlying company having the benefit of those shares creating the commensurate add on capital as if issued. In other words, if the shorts cover, the money should go to the issuer. The question becomes, at what price this transfer of wealth occurs.

AMG

New Entry Aaron Morgan Group Blog entry wher we tie the pieces of the puzzle together and show why securities have been falling off the Threshold SHO List. It is not due to finding “locates”.

http://aaronmorgangroup.typepad.com/aaron_morgan_group_blog/2008/10/number-of-secur.html

The New Blog: Citizens for Wall Street Reform

http://aaronmorgangroup.typepad.com/citizens_for_wall_street_/reforming_wall_street/

Educating and bringing awareness to the public is one this. Taking action to the next level is another.

No one could ever thank Mark, Patrick, Judd and all others who centralized this cause. It is up to the rest of us to move it forward.

AMG

mateo

The Chinese company, Origin Agritech (”SEED”), has “….has filed a letter of complaint with the U.S. Securities & Exchange Commission regarding the naked short selling of the company’s stock.” (see press release link below)

Maybe pressure from Mainland CHINA will trigger the SEC to require a PRE-BORROW on all short sales?

In my view, the manipulation by the Naked Short Sellers caused the Financial Sector crash – which has spread around the world. Until the financial CRIMINALS are hanging high, this manipulative fraud will continue — and all investors (worldwide and in CHINA) have been — and are still being affected — as panic-selling has now set into the markets.

Senator Orrin Hatch estimates that total Fails-to-Delivers amount to $6 BILLION PER DAY. This makes Enron look like an anthill.

May God Bless Dr. Patrick Byrne and Mr. Mark Mitchell (American Heros) and other courageous, brave people for fighting back against these financial criminal cowards – who can only manipulate easy money, not earn money.

Link to Origin Agritech’s news release:

http://biz.yahoo.com/bw/081006/20081006005989.html?.v=1

On a side note, I hope the State of South Dakota is successful in stopping Fails-to-Delivers in their state. The former Attorney General there has led a charge…and now has a General Ballot Measure for the people to vote on….on November 4th, 2008. Here’s the link to their website:

http://www.voteyes9.com/

With the very strong, powerful, influential Hedge Fund lobby at the Federal level, I recommend that each and every person contact their state legislators (elected officials) to request that legislation be written asap — modeled after the State of South Dakota. It’s the path of least resistance. These financial manipulative criminals can be stopped at the State Level.

If every state gets 19,000 signatures, and General Ballot Measures pass in each state, then the Naked Short Sellers will be prosecutable.

Let’s get some justice back into the markets!

Hang_’em_High

October 22, 2008, 3:15 pm

We See Dead People: $250K Fine for Lehman Short-Sales

Posted by Heidi N. Moore
Sometimes, when Deal Journal closes our eyes, we can picture Lehman Brothers Holdings as it was when it was still alive.

We aren’t the only ones, apparently. The Financial Industry Regulatory Authority, or FINRA, scores our prize for Great Moments in Delayed Reactions for its fine and censure of Lehman. As Bill Singer’s Broke and Broker Blog discovered today, FINRA has censured and levied a $250,000 fine on the defunct firm, which is in ugly process of unwinding what it owes to creditors.

To give FINRA full credit, the Wall Street self-regulatory group was investigating the complaint before Lehman’s bankruptcy filing in mid September. FINRA’s complaint–all too prescient, as it turns out–was that Lehman didn’t provide enough disclosure about its short sales and didn’t do enough to distinguish between the securities firm’s own short-selling orders and those of customers.

FINRA says: “The Firm’s ability to ensure the accuracy of its trade reports as to whether a particular trade was long or short, and whether a particular short sale was prohibited, was impaired and that, in some instances, this impairment resulted in flawed calculations of net positions….The Firm accepted short sales in securities for its proprietary account and customer short sale orders and, for each order, failed to annotate an affirmative determination that the firm would receive delivery of the security or that the firm could borrow the security or otherwise provide for delivery of the securities by settlement date.”

If Lehman couldn’t guarantee that it was allowed to borrow the stock or would in fact receive the borrowed share, that would count as naked short-selling, a practice that isn’t illegal but was roundly criticized in recent months.

Of course, FINRA isn’t the only one to get its licks in long after Lehman’s bankruptcy surprised the markets. Credit raters Moody’s Investors Service and Fitch infamously downgraded Lehman to a junk rating–after the Sept. 15 bankruptcy filing.

Lehman’s bankruptcy proceedings are teeming with angry creditors trying to figure out just how much the firm had in assets, and how much they can expect to get. Considering that those creditors are trying to figure out where over $630 billion in stated assets went, FINRA’s $250,000 claim is hardly the biggest concern.

Permalink | Trackback URL: http://blogs.wsj.com/deals/2008/10/22/we-see-dead-people-250k-regulatory-fine-for-lehman-short-sales/trackback/

Enjoy the read..

Senate Investigators Target SEC Officials

Senate Investigators Target SEC Officials

Inside Knowledge on Bear Stearns Cited

By Amit R. Paley

Washington Post Foreign Service
Wednesday, October 22, 2008; Page D03

Senate investigators are looking into whether senior officials at the Securities and Exchange Commission provided confidential information to former colleagues working on Wall Street.

The inquiry began after the SEC’s Inspector General received an anonymous tip earlier this month. It alleged that Linda Chatman Thomsen, the agency’s director of enforcement, gave information about investigations into Bear Stearns around March to the general counsel of J.P. Morgan Chase, which at the time was considering whether to buy the troubled investment bank. The Oct. 7 complaint claimed that the inside knowledge obtained by the attorney, Stephen M. Cutler, a former head of enforcement at the SEC, allowed J.P. Morgan to low-ball its bid to purchase Bear Stearns.

A copy of the complaint was also provided to Sen. Charles E. Grassley (R-Iowa), the ranking member on the Senate Finance Committee.

In a letter sent last night to the SEC, Grassley asked for information about all SEC investigations into Bear Stearns, as well as communications between SEC officials and J.P. Morgan Chase about those cases.

“Such conduct would reinforce the appearance that Enforcement decisions, and disclosures of information about them, are sometimes based not on the merits,” he wrote in his letter yesterday, “but rather on access to senior officials by influential representatives of power brokers on Wall Street.”

An SEC spokesman declined to comment last night. J.P. Morgan Chase did not respond to a request for comment last night.

The inspector general, H. David Kotz, issued a report last month that criticized what some agency employees called the “common practice” of outside lawyers gaining access to senior SEC officials. He also said the agency should consider disciplining Thomsen for such behavior while she was in charge of an insider-trading case.

Grassley raised concerns last year about improper communications between high-level SEC officials and attorneys at firms under investigation.

Folks if South Dakota can do it why can’t others ? Are all states crooked or owned by Wall Street?

http://www.youtube.com/securitiesreform

Also please look at this other video

http://www.youtube.com/watch?v=-KQwbouyCXo&feature=related

So long, suckers. Millionaire hedge fund boss thanks ‘idiot’ traders and retires at 37

Andrew Clark in New York The Guardian, Saturday October 18 2008 larger | smaller Article history

The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged “idiots” and thanking “stupid” traders for making him rich.

Andrew Lahde’s $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.

Yesterday the 37-year-old told his clients that he had hated the business and had only been in it for the money. And after declaring he would no longer manage money for other people, because he had enough of his own, Lahde said that instead he intended to repair his stress-damaged health; he made it clear he would not miss the financial world.

“The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking,” he wrote. “These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government,” he said.

“All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

Lahde became one of the biggest names in the investment industry when one of his funds produced a return of 866% last year, largely by forecasting the US home loans industry would collapse.

In his farewell letter, which concluded with an appeal for the legalisation of marijuana, Lahde said he was happy with his rewards and did not envy those who had made even more money.

“I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck,” he wrote, citing a life of back-to-back business appointments relieved only by a two-week annual holiday in which financiers are still “glued to their Blackberries”.

Lahde’s retirement came amid an implosion among the hedge fund industry – some 350 of the funds have liquidated this year, according to Hedge Fund Research.

. . . and everyone else . . . thanks.

The response aned feedback has been very positive and sincerely appreciated. We all appreciate everything everyone does . . .

. . . time to make the minority the majority.

AMG

This Dog Will Hunt !!

You’ve got a good nose and are trailing the right scent.

http://www.dailypaul.com/node/69628#comment-732808

You are on point !

http://www.dailypaul.com/node/69201#comment-726977

Let’s see if we can flush ‘em out ( since they flock together) and bag some of these birds of prey and retrieve what they’ve clutched in their talons before they feather their nests more….

A fresh shockwave from the collapse of US investment bank Lehman Brothers could hit home on Tuesday when complex insurance contracts worth hundreds of billions are settled, it was reported.

Around 360 billion US dollars (£208bn) in so-called credit default swap (CDS) contracts are due to be paid off following the company’s failure.

A CDS essentially acts like an insurance policy against defaults on corporate bonds or loans.

It is a form of derivative contract, gaining a “derived” value from the performance of the bond it is based on.

But because Lehman went bust, those selling CDSs to insure against default on its corporate bonds will be forced to stump up the cash to buyers.

Tuesday is the D-Day for the complex web of transactions. A City source told the Sunday Telegraph: “Everyone will be watching the situation and wondering what’s going to happen.”

AIG, the insurance giant which was one of the biggest sellers of CDS products, is thought to have large exposure to Lehman Brothers and was bailed out by the US Government last month.

The Treasury has pumped in more than 120 billion US dollars (£70bn) into the stricken firm so far.

Other insurers of Lehman’s debt are thought to be hedge funds, who created and sold CDSs as a lucrative revenue-raising exercise in better times.

Although CDSs were originally designed as insurance products to allow investors to hedge against the risk of default, traders have also used them as speculative tools.

The SEC knows exactly what went on in the past and what is transpiring currently. If they would simply require a firm “locate” number going forward they would not have to deal with the naked shorting problem going forward but that simple logic seems out of their realm of understanding.

In any case, take a read and keep watching. Working on another article as to how we deal with extinguish phantom shares. That is going to take a little input from our friends at the DTCC but I’m sure they will be happy to cooperate . . . yeah, right.

Enjoy what is left of the weekend.

http://aaronmorgangroup.typepad.com/aaron_morgan_group_blog/

http://www.reuters.com/article/innovationNews/idUSTRE49G5FU20081017

October 10, 2008

Mr. George W. Bush
President of the United States of America
1600 Pennsylvania Avenue
Washington, D.C. 20500

Dear President Bush,
I was pleased to hear you say today that the SEC is taking action to stop manipulative practices in our markets. One such practice that the SEC must stop immediately is the insidious practice of naked short selling. In order for our stock settlement system to work so that trades actually settle, the SEC (or Congress) must take the following steps:

1. Enact a market-wide mandatory pre-borrow requirement for all short sales;
2. Put in place a market-wide hard-delivery requirement on T+3 for allsales;
3. Require that for any failure-to-deliver, broker-dealers must force amandatory buy-in;
4. Track each trade cradle-to-grave, so that prosecutors can go after naked short sellers;
5. Require regular and timely disclosure by naked short sellers of when and how many shares they are failing to deliver; and
6. Enforce these rules, including significant monetary penalties and jail time.

In addition, I believe that Washington must conduct a 9-11 Commission kind of investigation into our nation’s entire clearing and settlement system.

Naked short selling is a significant issue. It has contributed to the recent fall of some of our financial institutions and exacerbated the current market crisis.

A well functioning capital market should settle trades. Only when there are laws in place that ensure settlement of all trades and when those laws are vigorously enforced, will the scourge of manipulative naked short selling stop.

Sincerely,
Patrick M. Byrne, PhD.
Chairman and Chief Executive Officer

cc: Senator Harry Reid, Senate Majority Leader
Senator Christopher J. Dodd, Chairman, Senate Banking, Housing, and
Urban Affairs Committee
Senator Richard Shelby, Ranking Member, Senate Banking, Housing, and
Urban Affairs Committee
Representative Nancy Pelosi, Speaker of the House of Representatives
Representative Barney Frank, Chairman, House Committee on Financial
Services
Representative Spencer Bachus, Ranking Member, House Committee on
Financial Services
Christopher Cox, Chairman, Securities and Exchange Commission
Kathleen L. Casey, Commissioner, Securities and Exchange Commission
Elisse B. Walter, Commissioner, Securities and Exchange Commission
Luis A. Aguilar, Commissioner, Securities and Exchange Commission
Troy A. Paredes, Commissioner, Securities and Exchange Commission
Eric R. Sirri, Director, Division of Trading and Markets, Securities
and Exchange Commission
Henry “Hank” M. Paulson, Jr., Secretary, Department of Treasury

( http://www.marketwatch.com/news/story/ov…{EEA800B4-FAD6-41EC-9453-ADE0D72057E9}&dist=hppr )

This comment is not addressed to the specific post by Mitchell, but I want to reach this audience.

Regarding the link above, Cramer’s schtick has always gotten under my skin, but some of his commentary of late is pegging much of what is happening. He has gone from being a colluder with those abusing their heft to overwhelm and move markets and individual stocks to pointing out the danger they represent when they themselves are overwhelmed. I guess it’s a matter of what goes around comes around, not that that is any comfort to the rest of us.

You remarked that Rule 10b – 21 “ … introduces the concept of aiding and abetting…”

I understand why those who have followed the SEC ‘hands off’ approach to naked short selling under past enforcement policy recognize these new announcements and rules as substantive changes; however, there are reasons ( ex post facto) to take the SEC enhancements at face value in the way they wish to characterize them — mere clarification and renewed emphasis.

http://www.dailypaul.com/node/55223#comment-727086

Under section F to the discussion here is how to SEC chooses to introduce the concept of aiding and abetting:

SECURITIES AND EXCHANGE COMMISSION
17 CFR PART 240
[Release No. 34-58774; File No. S7-08-08]
RIN 3235-AK06
“Naked” Short Selling Antifraud Rule

F. Aiding and Abetting Liability

“In the proposing release, we stated that ‘[a]lthough the proposed rule is primarily aimed at sellers that deceive specified persons about their intention or ability to deliver shares or about their locate source and ownership of shares, as with any rule, broker-dealers could be liable for aiding and abetting a customer’s fraud under the proposed rule.’”

In responding to comments concerning possible adverse impact, at page 33, the discussion of Rule 10b – 21 continued:

“Another commenter stated that, ‘unless Proposed Rule l0b-21 were modified to eliminate aiding and abetting liability and allow reliance upon customer assurances, the price discovery
and liquidity provided through short sales may be constrained.’ Although broker-dealer concerns regarding aiding and abetting liability under Rule 10b-21 may potentially impact liquidity and efficiency in the markets, we believe that such an impact, if any, will be minimal. Rule 10b-21 as adopted does not impose any additional liability or requirements on any person, including broker-dealers, beyond those of any existing Exchange Act rule. Aiding and abetting liability is a question of fact, determined on a case-by-case basis. In addition, as we stated in the Proposing Release, broker-dealer’s would remain subject to liability under Regulation SHO and the general antifraud provisions of the federal securities laws.”

If aiding and abetting fraud has always been illegal, these rules are not new standards, but merely shed light on how past conduct should be scrutinized.

Look out DTCC and Broker-Dealer Participants, HERE WE COME!!

We need to spread this and stop this nonsense.

Just wrote this piece highlighting naked shorting. This goes beyond corporate securities. It is estimated by reliable sources, that approximately 90% of all gold and silver contracts on the commodities exchange (COMEX), has no metal to back it. Didn’t counterfeiting claims on ownership begin in 1913 with the Federal reserve Act??

THE ABUSE OF YOUR FICTITIOUS WEALTH:
http://deliberatecoincidences.blogspot.com/2008/10/abuse-of-your-fictitious-wealth.html

Best regards,
Steve Lemelin
P.S. James Puplava fund manager at FINANCIALSENSE.com, is hot on this topic and has highlighted Attorney John O’Quinn and Wes Christianson’s lawsuits about thuis. WIll this be the next “big tobacco” suits?

“…what a web we weave…”

Lets hope that all nations and all players
clean up this mess.

Thanks and Good Luck.

If the corporation under attack is on the “Threshold list” then you simply either cover by T+12 to avoid the T+13 mandated “buy-in” or illegally “cross” or “park” the delivery failure with a co-conspirator to “refreshen” the delivery failure and illegally postpone the “settlement” of the trade (Rule 15c6-1 makes it illegal) which in turn allows the securities entitlements resulting from the delivery failure to do its damage to the share price via inflating the “supply” of readily sellable “entities” whether they be legitimate shares or mere “securities entitlements”. In a clearance and settlement unconscionably based on “collateralization versus payment” instead of “delivery versus payment” you never, never, never have to cover a naked short position. All you have to do is to “collateralize” it. That’s why this is a game for the rich that have no problem in collateralizing huge debts. Picture a hedge fund with $10 billion that is leveraged at 10-to-1 by its prime broker. They would be insane to ever cover a naked short position in our DTCC-administered clearance and settlement system. All of the world authorities on clearance and settlement systems including the Bank for International Settlements (BIS) and the Committee on Payment and Settlement Systems and the
Technical Committee of the International Organization of Securities Commissions in its “Recommendations for Central Counterparties (November 2004) clearly state that a clearance and settlement system with integrity must be based on “Delivery versus payment” and the seller of securities should NEVER be allowed to gain access to the funds of a purchaser of securities UNTIL he makes good form delivery of that which he sold. Our DTCC disagrees which makes U.S. development stage corporations the prey of choice for abusive naked short sellers worldwide. Interestingly the new 10b-21 that becomes effective tomorrow introduces the concept of “aiding and abetting” fraudulent behavior for the various “facilitators” of these frauds on Wall Street.

http://www.dailypaul.com/node/55223#comment-727086

“While “naked” short selling as part of a manipulative scheme is already illegal under the general antifraud provisions of the federal securities laws, we believe that a rule further evidencing the illegality of these activities will focus the attention of market participants on such activities. Rule 10b-21 will also further evidence that the Commission believes such deceptive activities are detrimental to the markets and will provide a measure of predictability for market participants.”