This is Part 3 of an ongoing series.
A few years ago, a clique of influential journalists went to extraordinary lengths to cover up the problem of illegal short selling. In the face of indisputable data and evidence, the journalists insisted, over and over, that “naked” short selling (hedge funds manipulating stock prices by flooding the market with phantom stock) rarely occurred. And they said short sellers (who profit from falling stock prices) don’t set out to destroy public companies.
Moreover, if a person were to criticize illegal short selling, the reporters would smear that person’s reputation with a savagery that was almost without parallel in contemporary journalism.
At the time, these journalists were working at major news organizations like The Wall Street Journal, The New York Times, and CNBC, but most shared a common history: they had been founding editors or top employees of TheStreet.com, a financial news website. The few who had not worked for TheStreet.com were close colleagues of TheStreet.com’s owner, Jim Cramer, who is best known as the eccentric host of CNBC’s “Mad Money” program.
Having studied more than 1,000 stories by these journalists, I can assure the reader that nearly every one of them was sourced from a tight network of hedge fund managers, and that a great many of the stories were false or misleading. Moreover, most of the people in this network (including Jim Cramer himself) are tied in important ways to two famous criminals from the 1980s – Ivan Boesky and “junk bond king” Michael Milken.
And though I realize that is hard for some people to absorb this, I will continue to provide evidence that a surprising number of the “prominent investors” in this network have had dealings with associates of organized crime – the Mafia.
* * * * * * * *
Last spring, we published “The Story of Deep Capture,” which sought to explain the origins of the Deep Capture website (mission: “to bypass the ‘captured’ institutions mediating our nation’s discourse”) by way of exposing the machinations of the Cramer clique of journalists and their short selling sources.
One day after we published our story, Cramer had some kind of awakening. Whereas he had previously sought to whitewash short seller crimes, he now suddenly repeated our assertion that illegal short selling was a big problem – the same problem that precipitated the great stock market crash of 1929.
A few months later, abusive short selling was implicated by U.S. Senators, CEOs of major banks, the U.S. Chamber of Commerce, respected academics, prominent law firms, current and past chairmen of the Securities and Exchange Commission, and then-Treasury Secretary Hank Paulson in the near total collapse of our financial system.
Nowadays, Cramer is even more adamant. He says he knows a lot of short sellers. He says that short sellers are destroying public companies. He says they crushed the markets and they’re going to crush America too.
These short sellers, Cramer hollers, are downright “diabolical.”
* * * * * * * *
If you have not done so, please read Deep Capture reporter Patrick Byrne’s primer on naked short selling. Please read “The Story of Deep Capture.”
Think about what Cramer has said.
And then have a look at the following email.
= = = = =Begin Message= = = = =
Message # : 727
Message Sent: 02/22/2006 08:57:48
From: AHELLER3@bloomberg.net|ANDY HELLER|EXIS CAPITAL MANAGEM
To: JONKALIKOW@bloomberg.net|JONATHAN KALIKOW|STANFIELD CAPITAL
Subject: CNBC – FAIRFAX
Reply:
He did this one time before, and the stock went down 3 on the open, then closed up 1. the way to get this thing down is to get them where they eat, like the credit analysts and holders. we’re taking this baby down for the count. ads and I are going to toronto in 2 weeks for a group lunch. J
= = = = =End Message= = = = =
* * * * * * * *
That email was authored by a top employee of Exis Capital, which is an offshoot of SAC Capital — said by some to be the most powerful hedge fund on Wall Street. We can’t be certain who, aside from the email’s author and “ads” (Adam D. Sender, head of Exis), attended that “group lunch.” But from other emails we know that a particular “group” of hedge fund managers did, indeed, intend to take “this baby down for the count.”
The “baby” was Fairfax Financial, a major, publicly listed insurance and financial firm.
The above email (acquired through discovery in Fairfax’s lawsuit against some members of the “group”) makes reference in the first line to journalist Herb Greenberg, who bashed Fairfax on CNBC, apparently causing the stock to go “down 3 on the open.” Other emails in our collection (we’ll publish a couple more of them) suggest that Herb’s reporting involved nothing more than contacting the “group” to find out what he was supposed to say.
* * * * * * * *
Herb took Fairfax “down 3 at the open” in February 2006, right at the time that Herb, a founding editor of TheStreet.com, received a subpoena from the Securities and Exchange Commission. TheStreet.com also got a subpoena. So did Jim Cramer, the owner of TheStreet.com. Short seller David Rocker, a member of the “group” and then the largest outside shareholder of TheStreet.com, got a subpoena too.
At the time, the commission had opened a formal investigation into Gradient Analytics, a financial research firm that stood accused by multiple former employees of manufacturing false “independent” research reports in cahoots with short sellers (namely, the “group”) and letting the short sellers trade ahead of the reports’ publication.
The “group” – which also included “prominent investor” Jim Chanos of Kynikos Associates – had a similar scam going with “independent research” firm Morgan Keegan. Deep Capture reporter Judd Bagley broke that story more than a month ago. Bloomberg News, which seems to be the only major media outfit willing to write critically about these “prominent investors,” picked the story up last week.
The Wall Street Journal published a major, front-page article that exposed the dubious tactics that Jim Chanos and affiliated short sellers used to demolish public companies.
But that article was published more than twenty years ago — in 1985.
Since then, the Journal has not published a single negative story about Chanos and his friends. It has not published a single investigative story about abusive short selling.
When David Kansas, a founding editor of TheStreet.com, was running The Wall Street Journal “Money & Investing” section, that part of the paper served as little more than a mouthpiece for Rocker, Cohen, Chanos and affiliated “prominent investors.”
But last week, even The Wall Street Journal had to acknowledge that Chanos is now the target of an SEC investigation.
* * * * * * * *
When the SEC issued subpoenas in the Gradient investigation, one former Gradient employee provided a sworn affidavit stating that Herb Greenberg held his negative stories so that David Rocker could establish short positions that would make money when Herb’s stories caused stocks to do such things as go “down 3 at the open.”
At the time, Jon Markman, a founding editor of TheStreet.com and later managing editor of MSN Money was running a hedge fund out of Gradient’s back office. Former Gradient employees said that Markman was also trading ahead of Herb’s negative stories and Gradient’s false negative information. If true, this would likely be illegal.
But SEC officials say that the investigation in February 2006 was aimed at bigger prey than just Gradient and a few journalists. The commission was aware that some “prominent investors” were, in the words of our email author, taking companies “down for the count.” Good people at the SEC (the rank and file) hoped to put a stop to this.
But when the subpoenas were issued, Herb, Cramer and others in their media clique went berserk. They said journalists don’t have special relationships with short sellers. They said short sellers don’t destroy companies. Cramer famously vandalized his government subpoena – live on CNBC.
Under this “media” pressure, the SEC chairman announced that it would not enforce the subpoenas. Later, the SEC dropped its investigation altogether.
In an interview with Bloomberg News about the decision not to enforce the subpoenas, SEC attorney Kathleen Bisaccia said this: “To have the chairman publicly slap us in the face for doing our jobs – that really crushed the spirit of a lot of people for a long time.”
Indeed, former SEC officials say that this was a pivotal moment in SEC history. With morale sapped, the commission all but ceased to function.
Certainly, it did not stop the short sellers who would soon begin efforts to take some of Wall Street’s biggest financial institutions “down for the count.”
* * * * * * * *
Herb Greenberg, the journalist who took Fairfax “down 3 at the open,” and who was alleged to have allowed at least one short seller in the “group” to trade ahead of his stories, now runs an “independent” financial research firm that advertises itself as “bridging financial journalism and forensic analysis.”
We believe that Herb receives the bulk of his income from the above-mentioned “group” and affiliated “prominent investors.”
* * * * * * * *
From the above email it is evident that in addition to working with corrupt journalists, the “group” sought to destroy Fairfax Financial by getting “them where they eat.” That is, the hedge funds sought to “take this baby down for the count” by cutting off the company’s access to capital.
Sometimes “prominent investors” will merely dish dirt to a company’s lenders. Other times, the schemes are more complicated, with investors in their network actually financing the company. This gives them access to inside information and (in the case of convertible debentures) to stock that can be lent to affiliated short sellers.
In other cases, “prominent investors” will buy the company’s debt, package it into “collateralized debt obligations” (financial weapons of mass destruction that were pioneered by Michael Milken’s team at Drexel Burnham Lambert), and then trade it in such a way as to make it seem as if the company is in trouble.
When the time is right, the “prominent investors” fob off the debt to some witless or compliant pension fund. Then they tell people that they’re no longer financing the company – the company’s been “cut off.”
Meanwhile, the company will be subjected to unbridled “naked” short selling – hedge funds illegally selling stock that they do not actually possess (phantom stock) to manipulate down the share price. (By way of example: when the above email was written, SEC data showed that millions of phantom Fairfax shares had been “failing to deliver” on a daily basis.
What usually happens is that legitimate lenders see the plummeting stock price. They see a supposed “financial partner” yanking credit. They see the negative media. They see the debt trading at disturbing prices. They have short sellers feeding them horrible news about the company.
The legitimate lenders know the news is false. They know the company is credit worthy. But the negativity itself becomes a liability. The falling stock price is a liability. The legitimate lenders get worried. They raise their cost of capital, or cut if off altogether.
And so the “baby” goes “down for the count.”
* * * * * * * *
Fairfax survived this onslaught. Other companies were not so lucky.
Last year, Bear Stearns, Lehman Brothers, and dozens of other companies all went bust in a similar pattern — waves of naked short selling slightly preceding false stories planted in the media and then, suddenly, a financial “partner” cutting off a source of capital.
That is, short sellers got these companies “where they eat.”
Did the short sellers “cause” these companies to collapse? If a sniper shoots at a man who is swimming in a dangerous ocean current, and the man drowns, we cannot say for sure that the sniper “caused” the man’s death. But we can say that shooting at struggling swimmers is a crime.
Which short sellers committed the crimes? Only the SEC and the FBI can tell us for sure.
But we know which “group” attacked Fairfax Financial. We know that this same “group” and affiliated “prominent investors” attacked the big financial companies that collapsed last year. And we know that the people in this “group” are not passive investors.
Rather, when they attack a “baby,” they seek to take it “down for the count.”
Given that the collapse of the financial companies caused an economic catastrophe that will wipe out the jobs and savings accounts of millions of Americans, it seems that the “group” and affiliated “prominent investors” warrant further attention.
* * * * * * * *
One “prominent investor” is Adam Sender, proprietor of Exis Capital, the hedge fund that employs the author of the above email. As you will recall, Exis is an offshoot of SAC Capital, which is managed by Steve Cohen – described by BusinessWeek magazine as “the most powerful trader on the Street.”
As I noted in my previous piece, a former Mafia soldier turned private investigator offered to have one of Sender’s business partners buried in the Nevada desert. Sender claims to have declined this offer, but an FBI recording (hear it again here) suggests that Sender paid more than $200,000 to that former Mafia soldier and that Sender intended to “fix” his business partner and somehow bring about a “doomsday.”
Sender also hired a thug named Spyro Contogouris to harass and threaten executives of Fairfax Financial – part of the “group” effort to take that “baby down for the count.” In upcoming stories, I will publish some of Spyro’s shocking emails. In one, he told an FBI agent that somebody was threatening his life. He claimed that it was lawyers working for Fairfax Financial.
But that claim seems somewhat absurd. Fairfax Financial is a Canadian insurance company run by a mild-mannered immigrant from India named Prem Watsa, who is known as “the Warren Buffett of Canada.”
Given that Spyro wrote his email shortly before he was arrested by the FBI agent, and given that this FBI agent was investigating the “group,” it is possible that Spyro either made up the story to solicit sympathy, or the “group” was threatening Spyro’s life to prevent him from testifying.
Either way, it says something about the state of the American media that this intrigue, involving a major financial firm and some of the nation’s most “prominent investors,” is not front page news.
* * * * * * * *
The recipient of the email promising to take Fairfax “down for the count” was Jonathan Kalikow of Stanfield Capital, a hedge fund specialized in the trading of collateralized debt obligations.
Jonathan is a member of the mighty Kalikow family. The patriarch of this family is “prominent investor” Peter Kalikow, who was one of the largest financial backers of the stock manipulation firm run by Ivan Boesky, the famous criminal from the 1980s.
But Peter Kalikow is perhaps best known as the former owner of The New York Post.
When Kalikow owned the Post, the newspaper’s fleet of delivery trucks was handed over to members of New York’s five organized crime families. With Bonanno Mafia soldier Richard “Shellack-head” Cantarella presiding over the delivery bay, guns and drugs were loaded into the Post’s newspaper trucks and transported throughout the city.
Indeed, the New York Post became one of La Cosa Nostra’s principal smuggling operations.
* * * * * * * *
The other members of the “group” — David Rocker, Steve Cohen of SAC Capital, Jim Chanos of Kynikos Associates, and Dan Loeb of Third Point – have been discussed at length on this website. In upcoming installments, I will tell you more about them and others in their network.
They are all “prominent investors.”
To be continued…
* * * * * * * *
Mark Mitchell is a reporter for DeepCapture.com. He previously worked as an editorial page writer for The Wall Street Journal in Europe, a business correspondent for Time magazine in Asia, and as an assistant managing editor responsible for the Columbia Journalism Review’s online critique of business journalism. He holds an MBA from the Kellogg Graduate School of Management at Northwestern University. Email: mitch0033@gmail.com
If this article concerns you, and you wish to help, then:
1) email it to a dozen friends;
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Bottom line…Not only did the SEC look the other way, so did Congress……BOTH SIDES…
http://www.investigatethesec.com/drupal-5.5/?q=StockgateToday
Fire Chairman Cox, What about Firing an Enabling
Congress? January 6, 2009
David Patch
The NY Post headlines today read ‘CONGRESS PROBES HOW SEC BLEW IT’. This in response to a voluntary House Financial Services Committee hearing held yesterday to interview witnesses regarding the Bernie Madoff Ponzi scheme. It is the $50 Billion Madoff Ponzi scheme that has been the most recent nail in the coffin for our nations top securities regulator as the SEC missed detection of the scheme for better than a decade despite red flags and outside complaints and allegations that such a scheme was taking place.
But while this hearing had its high points it was more a disappointment to those smart enough to understand what the capital market regulatory structure consists of.
Called in to testify with regards to the SEC’s shortcomings with regards to Bernie Madoff was not SEC Chairman Chris Cox or any of the four appointed Commissioners. Called in to testify was not Linda Thomsen, Director of the Division of Enforcement or any of his top staff members. Called in to testify was not Lori Richards, Director of the SEC’s Office of Compliance Inspections and examinations or any of her staff. Nope, who the House Financial Services Committee on Capital Markets called in to testify was David Kotz Inspector General for the Securities and Exchange Commission.
Now well not everybody from the investing public should understand the role an Inspector General plays in our federal government you would expect that the House Financial Services Committee with responsibility for oversight of the US capital markets and the Securities and Exchange Commission would understand what role this office plays. In fact, just in case the Committee members were unclear, OIG Kotz opened up his presentation identifying to the members and the public exactly who he is and what role he plays at the SEC.
Kotz plays the role equivalent to internal affairs at a police department. He responds to and investigates claims of wrong doing by employees of the Commission and their contractors and provides reports and recommendations based on those findings. Repeatedly Kotz reminded the members that his office only responds to complaints filed against the SEC and is not part of the SEC organizational structure that goes out to member firms and investment advisors and audits these business operations. He inspects and audits only those who inspect and audit but Congress was not listening.
Unfortunately it took nearly 3 hours of the 3.5 hour session for the members to grasp this concept as one by one the members sat up in their seats when called upon and postured for their constituents by belaboring over why David Kotz and his office did not respond to the red flags presented to the Commission. How could David Kotz and his predecessor miss such warnings and allow so many victims to lose their life savings?
It was embarrassing to witness the uninformed members of the House Financial Services committee speak. Clearly few knew even the remotest thing about what they spoke and were speaking from the note cards provided them by equally misinformed staffers. The members sounded sincere in their concern for the victims; at least sincere enough to get a few more contributions from constituents, but what they said was child speak, valueless grandstanding at a time when leadership was required.
For 3.5 hours the members voiced little substance and exposed what little they really knew about our capital markets and how it is regulated.
By the third hour the members finally realized that they were addressing the wrong person but by then it was too late. All credibility was lost long before Pennsylvania Representative Paul Kanjorski, Committee Chair closed the session for this witness panel.
A campaign point each member fit into their rhetoric was that of how and why could an agency like the SEC miss what was happening. How did this all happen despite the red flags and despite the written and detailed complaints filed by third parties who investigated the matters? After repeated questioning as to whether there were people complicit within the SEC or whether a quid pro quo was pulled on behalf Madoff one Representative Brad Sherman finally asked whether OIG Kotz whether he thought the entire SEC staff should all tender their resignations. Out of political correctness the question was just as quickly rescinded.
For me I would follow up that question and ask, why haven’t the American people started asking the same about our distinguished members of Congress?
Congress has oversight over the SEC as well as the capital markets and what has been abundantly clear since the days of Eliot Spitzer; the SEC has been asleep at the switch when it comes to detecting and brining enforcement to major players in white collar fraud. Where were the House Financial Services Committee members and the Senate Banking Committee members who were expected to oversee and make the necessary adjustments after the SEC was first exposed as being captured?
In 2003 a petition went up, http://www.investigatethesec.com, that accused the SEC of regulator bias and mismanagement pertaining to Wall Street fraud. More than ten thousand investors signed the petition and those names were presented to Congress. Records show that members of Congress monitored the site making it impossible to deny they were aware of public sentiments regarding the SEC’s performance.
Did Congress act on the concerns presented or did they act as they accused the SEC of acting; irresponsibly?
Like the SEC’s failure to act on Madoff evidence, the members of Congress failed to take the issues seriously and limited their efforts to mere window dressing. The members solicited aides to write letters to the SEC on behalf of their constituents and asked for explanations into certain dealings caring not what the response would be. When responses were returned from the SEC the members simply wrote them off as acceptable despite glaring evidence that the response was pure fiction. A response comprised of fiction should be a red flag but Congress ignored them.
By 2005 more sites dedicated to the SEC failures developed. One site in particular focused on presenting the arguments that the SEC was a captured regulator of Wall Street and sought out to prove just that. The site, http://www.deepcapture.com was likewise well read by Congress and provided documented evidence of fraud that was being purposely overlooked by the SEC.
Even still, Congress allowed the SEC to do what they do. Annual Congressional oversight hearings on the state of the US Capital markets, on hedge funds, and on investor protection were met with little fan fare and little focus on what was being missed or how the public perceived the performance of the SEC. Change was not forthcoming because congress played down the need for change.
Today everybody wants to blame the subprime fiasco, the banking blowups, the federal bailout, everything wrong with the US economy and our capital markets on greed. They would be right in their assertions but not all inclusive in directing responsibility.
Yes the banks, yes Madoff, yes the hedge funds, all failed us due to the need for self-enrichment by greedy CEO’s and investment managers. But Congress likewise is to blame for putting the interests of this nation at risk for the almighty dollar. The dollar that comes to them as a campaign contribution and the dollar that comes as a perk from a friendly lobbyist.
The Congressional oversight committees failed to reel in a sinking federal agency because it was not in their self-interests to take charge. Too much personal money would be lost in necessary change.
While the present SEC Commissioners are relatively new to their respective posts that cannot be said about the present members of Congress. These members in capital market oversight should not be asking whether it would be prudent for each of the SEC staff to tender their resignations. Instead, these members should be considering
tendering theirs.
Then again,
Monday was voting day on Capital Hill as Congressional raises were up for the taking. In a year where our nation’s economy suffered so dearly, and a year where Congress put every employee at risk of losing their job, these members voted on whether to take a cost of living pay raise at taxpayer expense.
In the wake of Congressmen labeling CEO’s across this country as greedy and irresponsible this Congress simply took more money.
Fire em.
Fire em all!
I wonder how the committee will handle the Stanford fiasco ? More it is the SEC’s fault only? It is FINRA’s fault? How about the fact Congress got a 10,000 signature petition against NAKED SHORT SELLING and did NOTHING? It would be nice to see someone fess up and say, as congress, WE SCREWED UP….unlikely though. Easier to point the finger down the chain. THEY ALL SCREWED THIS UP. THEY ALL ARE TO BLAME. THEY ALL ARE CAPTURED. period. Blinded by self interest and greed. “The Love of Money.”
Ever wonder how the failing banks that become seized by the government can be monitored but the bailout money used to prop up the banks with JUICE can’t? 6 banks in the last 6 weeks have been seized and taken over. (Ang, 1 bank per week).
http://bailoutsleuth.com/
dear gawd,
in these prison walls as i sleep tank you fer perteting me from the evil patric burn and his sheep. tank you fer reforming fellow criminals lle webb, sam antar and berry mincow. tanks for teeming them with gary (weazel) weiss and tracey (ferret) cohen. what wismon you show in putting together this mighty crime fighting teem. i’m sure meny hours were spent exposing this possible 2 million doller mistake. pleeze don’t let dem get sidetracked going after small time scmucks like madoff and stanford. and most of all gawd let dem contiue to cloud the issue of neked shorts. at least long enouf fer me to be parolled and get my piece of the neked short pie. as you know i promised bubba a new life. as soon as i meet my goals i to wil join the fight to expose dese do gooders fer what they are;do gooders.
UNTIL CONGRESSIONAL OVERSIGHT COMMITTEES BECOME AN INTRICATE PART OF OUR PUBLIC EQUITY REGULATORY SYSTEM THAT TRANSCENDS “POLITICS” AS A PRIORITY IN THE PURSUIT OF DEMOCRATIC CAPITALISM, DEMOCRATIC CAPITALISM IS JUST BLATANT TERMINOLOGY USED TO PROMOTE SPECIAL INTERESTS AND THEIR “AMERICAN DREAM” AS ASSOCIATED WITH “JOE SIX PACK” THE AVERAGE AMERICAN VOTER AND INVESTOR WHO HAS NO POLITICAL CONNECTIONS! IT WOULD APPEAR TO ME THAT “DEEP CAPTURE” FAVORS AND IS SUPPORTIVE OF A 180 DEGREE CHANGE IN THE WAY THE EXISTING REGULATORY SYSTEM FOR PUBLICLY TRADED EQUITIES INITIATES AND INVESTIGATES PUBLIC CORPORATION FRAUD!
SCREW POLITICS AS ASSOCIATED WITH THE AVERAGE “JOE SIX PACK” PUBLIC INVESTOR!!!!
Marv Eatinger
Anonymous Says:
February 21st, 2009 at 5:21 pm
Bottom line…Not only did the SEC look the other way, so did Congress……BOTH SIDES…
http://www.investigatethesec.com/drupal-5.5/?q=StockgateToday
Fire Chairman Cox, What about Firing an Enabling
Congress? January 6, 2009
David Patch
The NY Post headlines today read ‘CONGRESS PROBES HOW SEC BLEW IT’. This in response to a voluntary House Financial Services Committee hearing held yesterday to interview witnesses regarding the Bernie Madoff Ponzi scheme. It is the $50 Billion Madoff Ponzi scheme that has been the most recent nail in the coffin for our nations top securities regulator as the SEC missed detection of the scheme for better than a decade despite red flags and outside complaints and allegations that such a scheme was taking place.
But while this hearing had its high points it was more a disappointment to those smart enough to understand what the capital market regulatory structure consists of.
Called in to testify with regards to the SEC’s shortcomings with regards to Bernie Madoff was not SEC Chairman Chris Cox or any of the four appointed Commissioners. Called in to testify was not Linda Thomsen, Director of the Division of Enforcement or any of his top staff members. Called in to testify was not Lori Richards, Director of the SEC’s Office of Compliance Inspections and examinations or any of her staff. Nope, who the House Financial Services Committee on Capital Markets called in to testify was David Kotz Inspector General for the Securities and Exchange Commission.
Now well not everybody from the investing public should understand the role an Inspector General plays in our federal government you would expect that the House Financial Services Committee with responsibility for oversight of the US capital markets and the Securities and Exchange Commission would understand what role this office plays. In fact, just in case the Committee members were unclear, OIG Kotz opened up his presentation identifying to the members and the public exactly who he is and what role he plays at the SEC.
Kotz plays the role equivalent to internal affairs at a police department. He responds to and investigates claims of wrong doing by employees of the Commission and their contractors and provides reports and recommendations based on those findings. Repeatedly Kotz reminded the members that his office only responds to complaints filed against the SEC and is not part of the SEC organizational structure that goes out to member firms and investment advisors and audits these business operations. He inspects and audits only those who inspect and audit but Congress was not listening.
Unfortunately it took nearly 3 hours of the 3.5 hour session for the members to grasp this concept as one by one the members sat up in their seats when called upon and postured for their constituents by belaboring over why David Kotz and his office did not respond to the red flags presented to the Commission. How could David Kotz and his predecessor miss such warnings and allow so many victims to lose their life savings?
It was embarrassing to witness the uninformed members of the House Financial Services committee speak. Clearly few knew even the remotest thing about what they spoke and were speaking from the note cards provided them by equally misinformed staffers. The members sounded sincere in their concern for the victims; at least sincere enough to get a few more contributions from constituents, but what they said was child speak, valueless grandstanding at a time when leadership was required.
For 3.5 hours the members voiced little substance and exposed what little they really knew about our capital markets and how it is regulated.
By the third hour the members finally realized that they were addressing the wrong person but by then it was too late. All credibility was lost long before Pennsylvania Representative Paul Kanjorski, Committee Chair closed the session for this witness panel.
A campaign point each member fit into their rhetoric was that of how and why could an agency like the SEC miss what was happening. How did this all happen despite the red flags and despite the written and detailed complaints filed by third parties who investigated the matters? After repeated questioning as to whether there were people complicit within the SEC or whether a quid pro quo was pulled on behalf Madoff one Representative Brad Sherman finally asked whether OIG Kotz whether he thought the entire SEC staff should all tender their resignations. Out of political correctness the question was just as quickly rescinded.
For me I would follow up that question and ask, why haven’t the American people started asking the same about our distinguished members of Congress?
Congress has oversight over the SEC as well as the capital markets and what has been abundantly clear since the days of Eliot Spitzer; the SEC has been asleep at the switch when it comes to detecting and brining enforcement to major players in white collar fraud. Where were the House Financial Services Committee members and the Senate Banking Committee members who were expected to oversee and make the necessary adjustments after the SEC was first exposed as being captured?
In 2003 a petition went up, http://www.investigatethesec.com, that accused the SEC of regulator bias and mismanagement pertaining to Wall Street fraud. More than ten thousand investors signed the petition and those names were presented to Congress. Records show that members of Congress monitored the site making it impossible to deny they were aware of public sentiments regarding the SEC’s performance.
Did Congress act on the concerns presented or did they act as they accused the SEC of acting; irresponsibly?
Like the SEC’s failure to act on Madoff evidence, the members of Congress failed to take the issues seriously and limited their efforts to mere window dressing. The members solicited aides to write letters to the SEC on behalf of their constituents and asked for explanations into certain dealings caring not what the response would be. When responses were returned from the SEC the members simply wrote them off as acceptable despite glaring evidence that the response was pure fiction. A response comprised of fiction should be a red flag but Congress ignored them.
By 2005 more sites dedicated to the SEC failures developed. One site in particular focused on presenting the arguments that the SEC was a captured regulator of Wall Street and sought out to prove just that. The site, http://www.deepcapture.com was likewise well read by Congress and provided documented evidence of fraud that was being purposely overlooked by the SEC.
Even still, Congress allowed the SEC to do what they do. Annual Congressional oversight hearings on the state of the US Capital markets, on hedge funds, and on investor protection were met with little fan fare and little focus on what was being missed or how the public perceived the performance of the SEC. Change was not forthcoming because congress played down the need for change.
Today everybody wants to blame the subprime fiasco, the banking blowups, the federal bailout, everything wrong with the US economy and our capital markets on greed. They would be right in their assertions but not all inclusive in directing responsibility.
Yes the banks, yes Madoff, yes the hedge funds, all failed us due to the need for self-enrichment by greedy CEO’s and investment managers. But Congress likewise is to blame for putting the interests of this nation at risk for the almighty dollar. The dollar that comes to them as a campaign contribution and the dollar that comes as a perk from a friendly lobbyist.
The Congressional oversight committees failed to reel in a sinking federal agency because it was not in their self-interests to take charge. Too much personal money would be lost in necessary change.
While the present SEC Commissioners are relatively new to their respective posts that cannot be said about the present members of Congress. These members in capital market oversight should not be asking whether it would be prudent for each of the SEC staff to tender their resignations. Instead, these members should be considering
tendering theirs.
Then again,
Monday was voting day on Capital Hill as Congressional raises were up for the taking. In a year where our nation’s economy suffered so dearly, and a year where Congress put every employee at risk of losing their job, these members voted on whether to take a cost of living pay raise at taxpayer expense.
In the wake of Congressmen labeling CEO’s across this country as greedy and irresponsible this Congress simply took more money.
Fire em.
Fire em all!
—– Original Message —–
From: marv eatinger
To: oig@sec.gov ; hawked@sec.gov ; chairmanoffice@sec.gov ; fraud@gao.gov ; casework@grassley.senate.gov ; lee@leeterry.com
Sent: Sunday, January 25, 2009 1:22 PM
Subject: SEC REGULATORY CONTROL CONCERNING UNITED STATES EQUITY MARKETS?
Dear SEC OFFICE OF INSPECTOR GENERAL:
I have never received a reply to your email dated january 12, 2009 10:24 AM.
Marv Eatinger
========================================================================================================
—– Original Message —–
From: OIG
To: marv eatinger
Sent: Monday, January 12, 2009 10:24 AM
Subject: RE: WHAT EVER HAPPENED TO DEMOCRATIC CAPITALISM AND REGULATORY CONTROL IN ORDER TO INSURE CREDIBILITY IN UNITED STATES PUBLIC EQUITY MARKETS??????????
Dear Mr. Eatinger,
Thank you for your recent emails to the Office of Inspector General. We appreciate your bringing the information contained in your email to our attention. We will review the information you have provided and will reply back to you.
Sincerely,
Natasha Dandridge
Legal Assistant
On behalf of the Office of Inspector General
of the U.S. Securities and Exchange Commission
——————————————————————————–
From: marv eatinger [mailto:maeating@aol.com]
Sent: Tuesday, January 06, 2009 11:49 AM
To: OIG; Hawke, Daniel; CHAIRMANOFFICE; fraud@gao.gov; casework@grassley.senate.gov; Casey, Kathleen; aguilarl@sec.gov; Paredes, Troy A.; Walter, Elisse; CFLETTERS; “brandon barford”
Cc: Kara.scannell@wsj.com
Subject: Fw: WHAT EVER HAPPENED TO DEMOCRATIC CAPITALISM AND REGULATORY CONTROL IN ORDER TO INSURE CREDIBILITY IN UNITED STATES PUBLIC EQUITY MARKETS??????????
JOANNE: UNDERSTAND THAT THE INFORMATION THAT I SENT TO JENSVOLD IN THE SEPTEMBER 19, 1998 FED EX PACKAGE, INCLUDED COPIES OF THE “NON-PUBLIC” COMPUTER PRINT OUT SENT TO ME BY MISTAKE BY THE SEC. THESE COPIES SHOWED HOW MARIO V. MIRABELLI MANIPULATED DALECO’S PUBLIC FILINGS FOR 1983, 1984, 1985, 1986, 1987 & 1988 INTO DIFFERENT BRANCHES OF THE SEC DIVISION OF CORPORATION FINANCE IN ORDER TO CIRCUMVENT SEC SCRUTINY!
THE FOLLOWING CERTIFIED LETTERS TO THE WALL STREET JOURNAL (ALLANNA SULLIVAN) ALSO DISAPPEARED WITHOUT A TRACE, TRACERS WERE SENT AND CAME BACK “NO RECORD”:
AUG. 1, 1998 – Z576952930, OCT. 6, 1998 – Z185651154, FEB. 19, 1999 – Z576951152 & MARCH 17, 1999 – PRIORITY MAIL #0304 79900002 7769 4274. REGISTERED LETTER #R829468548 TO WALL STREET JOURNAL (ALLANNA SULLIVAN) RECEIPT CAME BACK WITH “NO” RECEIVED DATE.
FEDERAL EXPRESS PACKAGE TO ROBERT SKIRNICK DATED JAN. 11, 1999 TRACKING NO. 809575017901 TO MEREDITH COHEN GREENFOGEL & SKIRNICK NEW YORK – PROOF OF DELIVERY CAME BACK SHOWING THAT “M FUKIN” AT 63 WALL STREET ON JAN. 12, 1999 at 10:24 AM RECEIVED AND SIGNED FOR THIS PACKAGE. “M FUKIN” NEVER WORKED FOR MEREDITH COHEN GREENFOGEL & SKIRNICK AND ROBERT SKIRNICK NEVER RECEIVED MY FEDERAL EXPRESS PACKAGE AND FEDERAL EXPRESS WOULD NEVER VIA THEIR COMPLAINT PROCESS EXPLAIN WHAT HAPPENED TO THIS PACKAGE RECEIVED BY “M FUKIN”!
ALL OF THE ABOVE COMMUNICATIONS HAD A COPY OF THE “NON-PUBLIC” COMPUTER PRINT OUT SENT TO MARV EATINGER BY THE SEC MISTAKE IN 1991.
==============================================================================
—– Original Message —–
From: marv eatinger
To: fraudnet@gao.gov
Sent: Monday, October 23, 2000 8:35 AM
Subject: Fw: DALECO RESOURCES CORPORATION (otc-dlov)
—– Original Message —–
From: marv eatinger
To: oig@sec.gov
Sent: Tuesday, October 17, 2000 9:34 PM
Subject: DALECO RESOURCES CORPORATION (otc-dlov)
I received a letter dated October 5, 1998, from Jon D. Jensvold in answer to my letter dated September 11, 1998. He stated that based upon his review of my letter dated September 11, 1998, (received on September 21, 1998) that he could discern no indication of misconduct on the part of any employees of the Securities and Exchange Commission while employed at the Commission. This was all in regards to a public company named Daleco Resources Corporation which was listed on the NASDAQ stock exchange. He further stated that the documents indicate, however, that a former Commission employee, Mario V. Mirabelli, who left the Commission in 1973, may have engaged in misconduct while employed in the private sector from the mid-1980’s to 1991.
I have had a conversation with a former branch manager in the Division of Corporate Finance. The consensus of opinion seems to be that inside (SEC employee) help was necessary in order to guarantee that Daleco Resources Corporation filing sequence with the SEC would not be derailed.
I am pursuing this possibility. If I come up with concrete proof of SEC employee participation in this fraud I will relay this information the SEC.
Sincerely,
Marv Eatinger
I don’t get all the anger directed at Madoff?
Help me out here. These people want him dead because they lost money. What’s up with that? How is that any different than the millions that lost life savings in BSC, what about LEH, FNM, FRE, AIG, etc, etc, etc. Oh they’ll say Madoff stole it. Well they handed over the funds willingly. Where is the theft in that? They’ll say cause he lied about the financial operations. How is that any different than AIG, LEH, BSC, FNM, FRE???
Again, this is just silly. Ok so then they’ll point to the illegality of the ponzi scheme. Wait a minute, how can a ponzi scheme be illegal if our own government is running the biggest one ever constructed? And unlike Madoffs ponzi, social security isn’t voluntary. So if you believe Madoff is a thief, what is our government? TEN TIMES WORSE. You want to stone Madoff, what should we be doing with our government?
I was holder in HQNT, few years ago, which is now named SNDH.PK, which was probably also target of that group. Now trading in fracton of its price before.
Lamar Smith Signature residential and commercial projects can be seen in Marsh Harbour, Mainstreet, Richmond Place & Parkside
Your blog is amazing, i first landed to another post but then get interested and thought, i will just look a little more arround to see what else i can find out about such stuff
ont is agreat story on naked shorting in order to steal the company..This is a story worth telling
As Stated above you said this in the story: “When Kalikow owned the Post, the newspaper’s fleet of delivery trucks was handed over to members of New York’s five organized crime families. With Bonanno Mafia soldier Richard “Shellack-head” Cantarella presiding over the delivery bay, guns and drugs were loaded into the Post’s newspaper trucks and transported throughout the city.
Indeed, the New York Post became one of La Cosa Nostra’s principal smuggling operations.
* * * * * * * *
The other members of the “group” — David Rocker, Steve Cohen of SAC Capital, Jim Chanos of Kynikos Associates, and Dan Loeb of Third Point – have been discussed at length on this website. In upcoming installments, I will tell you more about them and others in their network.
They are all “prominent investors.”
To be continued
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I’m wondering if this story has anything to do with it:
Newspapers Raided: Police Raid New York Newspaper Offices For Union Corruption Probe
http://www.huffingtonpost.com/2009/11/17/newspaper-mail-deliverers_n_361139.html
It’ seems to be all mafia related.