Categorized | Featured Stories

    Hedge funds and the global economic meltdown

    I originally published this video on the first anniversary of the destruction of Bear Stearns, though its lessons seem even more timely today, the first anniversary of the destruction of Lehman Brothers.

    And so, as you bump into some of the many discussions currently underway touching upon the cause of Lehman’s demise and the global financial meltdown that followed, kindly refer folks to this video. When the shorts protest that it’s a “conspiracy theory,” you might agree that it is indeed a conspiracy, but a conspiracy fact, not theory.

    When they continue to protest, ask them to get specific.

    And then sit back and enjoy the silence.

    Hedge Funds and the Global Economic Meltdown

    This post was written by:

    - who has written 103 posts on Deep Capture.


    Contact the author

    53 Responses to “Hedge funds and the global economic meltdown”

    1. Tar&FeatherThem says:

      Scary…

      The SEC is run by the crookedest bastards in the world and they were put there by the Bush team. A book is coming that will explain all.

    2. sean says:

      This by far is the best article I have seen about the reversed SEC settlement with Bank of America. It is a MUST READ!!!!

      http://www.nytimes.com/2009/09/15/business/15bank.html?em

    3. Jim Hall says:

      CDS contracts safe and fun for all:

      http://www.bloomberg.com/apps/news?pid=20601087&sid=a6BochzaJd5Y

      Everything back to normal.

      Oversight no longer required.

      Wild west saloon doors swinging off their hinges again!

      YeeHaw!

    4. Tar_&_Feather_Them says:

      It time Mary Schapiro ends her contemplation and retires from the SEC and takes her place alongside the other miscreants on Wall Street.

    5. sean says:

      Tar, Harry Markopolos said that no less than 1/2 the SEC staff should recieve pinkslips!He was right!!! Start with Mary S. and R.Khusami and work down the ranks.

    6. sean says:

      What Does Harry Markopolos’ Example Teach All Researchers About Research Methodology?
      Sep
      15 Written by: bburrell
      9/15/2009 11:07 PM

      What Does Harry Markopolos’ Example Teach All Researchers About Research Methodology?
      From “Front & Center, by Bud Burrell
      Harry Markopolos made his second major appearance before Congress two days ago, this time in front of the Senate Banking Committee along with two SEC lawyers, who clearly were not up to his professional and intellectual standards. Harry talked about his aborted attempts over a ten year period to get the SEC to listen to the fact that it had taken him about five (5) minutes to figure out Bernie Madoff was a stone fraud. He then described his impressions of lack of professional attributes of SEC staffers to recognize fraud at even an elementary level, much less a career examiner’s level.
      He pulled no punches, saying at one point that the SEC “couldn’t find ice cream in a Dairy Queen”, to they “couldn’t find a steak in an Outback (Steakhouse)”. Since his interview will be available electronically soon, there is no need to recite his many statements challenging the conduct and skills of the SEC staff. Suffice it to say that he told the Senate Banking Committee that they should start by firing half the staff, and replace excess lawyers with smart trading and accounting people who should be paid bonuses for finding and busting crooks and frauds.

      For the rest of this article/blog.

      http://www.thesanitycheck.com/Blogs/BudBurrellsBlog/tabid/84/EntryId/794/What-Does-Harry-Markopolos-Example-Teach-All-Researchers-About-Research-Methodology.aspx

    7. sean says:

      Listen to Ron Paul talk about the SEC and the false sense of security that they try to create!!

      http://www.youtube.com/watch?v=Xir5j8SjVlI&feature=related

    8. iStandUp says:

      Digging begins in U.S. probe of financial crisis
      Thu Sep 17, 2009 12:28am EDT

      By Kevin Drawbaugh

      WASHINGTON, Sept 17 (Reuters) – A U.S. financial crisis fact-finding panel will hold its first meeting on Thursday, in what may be the Obama administration’s best hope of reinvigorating a push for tougher financial regulation.

      The 10-member Financial Crisis Inquiry Commission — headed by an ex-California gubernatorial candidate — is charged with getting at the roots of the debacle that late last year brought world banks and capital markets to the brink of collapse.

      Some critics say the causes of the crisis are already understood, ranging from deceptive mortgage lending and reckless debt securitization, to irresponsible banker bonuses and unpoliced over-the-counter derivatives markets.

      Dredging through all that again will only be a waste of time and a distraction from more urgent tasks, critics say.

      But it’s also true that the crisis has not yet been examined from top to bottom in a public forum by a single panel armed with the power to subpoena witnesses and documents.

      Key Senate and House of Representatives committees, often overwhelmed by political point-scoring and rigid ideological rhetoric, have not comprehensively tackled the task, despite the insistence of some lawmakers that it needs to be done.

      The bipartisan commission, say its proponents, at least has the potential to profoundly influence policy. Just look, they say, at the impact in the 1930s of the so-called Pecora Commission, on which today’s panel was loosely modeled.

      After the Wall Street Crash of 1929 that plunged the nation into the Great Depression, the Senate Banking Committee investigated, eventually hiring Ferdinand Pecora, a relentless New York assistant district attorney, to lead the probe,

      The hearings that followed, with Pecora himself sometimes presiding, riveted the public and exposed rampant misconduct among some of the richest and most powerful men in America.

      LEGISLATION FOLLOWED PECORA

      The Pecora Commission was followed by the Glass-Steagall Act of 1933, which separated commercial banking from investment banking, as well as other 1933 and 1934 laws that today form the legal basis of the Securities and Exchange Commission.

      Phil Angelides, former treasurer of California and failed candidate for governor in 2006 of that state, told Reuters last month in an interview that he’s no Ferdinand Pecora.

      But the modern-day commission he chairs will convene at a time when the Obama administration needs a spark to reignite its drive for tighter oversight of banks and capital markets.

      Now bogged down in Congress, financial regulation reform just six months ago appeared ready to sweep all obstacles before it, but its momentum has waned. Stiff resistance from powerful banking lobbyists has been a factor, as has the slow-walking of policy proposals by Republican opponents….

      ( http://www.reuters.com/article/marketsNews/idUSN1616740420090917 )

    9. iStandUp says:

      I thinking further about my thesis that…:

      – REG SHO is a Second Tier Ponzi Scheme.
      – The Original Secret Purpose for setting up REG SHO was to institutionalize and to protect this Wall Street Second Tier Ponzi Scheme for stealing money from Individual Retirement Funds of American Workers.
      – REG SHO allows the SEC to act as defense lawyers for their Wall Street fraternity brothers.
      – REG SHO creates a mere “Facade of Enforcement”, since the SEC openly explains that Naked Counterfeit Shorting is NOT ILLEGAL.

      … I remembered this morning that someone here in DeepCapture.com posted a link to a past congressional hearing on YouTube in which a Senator or Representative related to SEC Commission Cox that BEFORE REG SHO NASDAQ (? ) implemented a rule that if the seller did NOT DELIVER in 3 days the stock shares they sold the sale was declared NULL and VOID.

      Does anyone know what this YouTube link is????

      So it appears that NASDAQ came up with a rule to eliminate Naked Share counterfeiting (long or short), which was quite simple…. If the buyers cash money arrives in three days and the seller does not fulfill their side of the business deal by DELIVERING the shares they sold, then the sale was NULL and VOID… the seller does not gain access to the buyers money and the dealer/brokers do not get to earn interest on the buyers money.

      It appears this rule would prevent Wall Street from operating a Stock Counterfeiting Machine, and prevented Wall Street Criminals from stealing money from American Workers…
      ….. What do you think Dr. Jim DeCosta on this point?

      After it became clear that NASDAQ’s rule would prevent the Wall Street Counterfiet Machine from continuing to operate as usual REG SHO arrives on the scene.

      And What does REG SHO allow Corrupt Wall Streeters to do?

      But of course – REG SHO allows the Wall Street Counterfeit Machine to continue to operate!

      So again it appears to me that…

      The Original Secret Purpose for setting up REG SHO was to institutionalize and to protect this Wall Street Second Tier Ponzi Scheme, the Wall Street Counterfeit Machine.

    10. Jim Hall says:

      SEC may be getting some expertise regarding the dangers of borrowed (or naked) stocks:

      http://online.wsj.com/article/SB125314374937617633.html

    11. Jim Hall says:

      Einhorn trying to destroy Moody’s and McGraw Hill. Could spark a selloff and necessitate new bailouts.

      Now, if the goddamn SEC had put in place an uptick rule…

    12. bbhindyou says:

      I have been trying to come up with another angle.
      We have tried to talk to regulators and we get “naked short selling is not a crime”
      It is pointless to try to talk to the sellers of naked stock. They are cleaning up why would they end it?
      I am in a communications class and have to do a project anyway so…..
      Submited for comment and suggestions please help me with the attempt I am making to come up with new method of communication.
      Clearly we have a failure to communicate here.
      No matter how successful a business is run,good product,good managementand good business plan, naked short selling combined with the captured media slamming at a company [like dendreon]can quickly caues a companys stock to lose value.
      The business’s need to have information to combat this .
      My plan is to try to start a new form of business communication.
      A share owner and issuing companys right to know movement.
      I need to turn in this assignment next week so any suggestions will be appreciated.
      Thank you,bbhindyou

      The purpose of this survey is to determine the level of communication between the sellers of stock ,the investor buying the stock and the companies issuing the stock sold.
      The selling of more shares of a company than were issued by the company affects the share price which can fall at rapid levels harming the company and the investors’ interests
      Unless a stock is held in certificate form, the stock can be “lent” out to short sellers.
      When the stock is “lent out” in share numbers exceeding the share number issued by the company this is called naked short selling.
      The Depository and Trust Corporation [the DTCC] holding your stock and “lending” it [under the name of CEDE] makes money on every share they “lend”.
      This practice has been implicated in the fall of many large financial firms last fall including Lehmans.
      This survey is designed to find out how well the process of stock lending has been communicated to you the stock owner and to determine how well the owners of companies are informed in the trading of more of their stock than the company has issued
      The goal of this survey is to find a way to improve investor and company ability to communicate with the sellers of stock.
      1. Do you own stock or have any money in a retirement or other fund tied to the stock market?
      Yes no

      2. Have you experienced a loss of value in this investment in the last 5 years?
      Yes no

      3. Do you know what it means to hold a stock in certificate form?
      Yes no

      4. Do you feel the DTCC should be responsible for informing the actual share owner when shares the DTCC is holding in trust for them are “lent out”?
      Yes no

      5. Should the DTCC have the right to “lend out” more shares of a company’s stock than were issued by the company?
      Yes no

      6. Do you feel that selling more of a stock than was issued by a company is wrong?
      Yes no
      7. Do you think that when a company is delisted and the shares can no longer be traded that the total number of shares sold should be only what the company issued and that any trades that cannot be covered with real shares should be canceled and the money returned to the investor?
      Yes no

      8. In a case of delisting should the short seller of shares be allowed to not buy in real shares to cover those they borrowed when shorting the stock, never completing the trade, and just be allowed to keep the investors money?
      Yes no

      9. Should a company have the right to know when more shares of their company are trading than were issued by the company?
      Yes no

      10. Would you as a shareholder want to know when more stock than was issued by the company is trading before you buy a stock?
      Yes no

      11. Should all stock trades that do not get “covered” by real shares by the third day after a trade is made be voided and the money returned to the investor?
      [What ordinary trading rules require]
      Yes no

      12. Should hedge fund or stock pool market makers have an exemption from the three day trading rule?
      Yes no

      13. Should the Security and exchange commission enforce existing laws requiring the delivery of real shares by all sellers of stock in the three day settlement period?
      Yes no

    13. iStandUp says:

      What is the new Congressional Commission called?

      I found two different news reports with the following name:

      Financial Crisis Inquiry Commission

      or

      Congress’ Financial Crisis Inquiry Commission

      Where is Congress’ press release containing all the details about this “Financial Crisis Inquiry Commission”?

      I have NOT yet found one yet.

      Where can we find a list of all the 10 members?

      I have NOT yet found one yet.

      There is a partial list revealed on July 15, 2009:

      http://blogs.wsj.com/economics/2009/07/15/democrat-appointments-to-financial-crisis-inquiry-commission/

    14. iStandUp says:

      Panel Probing Financial Crisis Has Wall Street Ties
      JULY 18, 2009

      By JOHN D. MCKINNON

      WASHINGTON — Two appointees to a congressional panel investigating the financial crisis work for law firms that represent either Wall Street or its antagonists, raising concerns about the commission’s impartiality and likely effectiveness.

      Congressional leaders earlier this week announced their choices for the 10-member Financial Crisis Inquiry Commission, a panel that has drawn comparisons to the Pecora Commission that investigated the stock-market crash of 1929. Its mission is to explore the causes of the crisis, as well as the collapse of specific Wall Street firms.

      Some congressional observers are already predicting it could be bogged down by philosophical divides between its pro-consumer and pro-business wings. A nonpartisan watchdog group, the Center for Responsive Politics, released a report Friday saying that some appointees gave substantial amounts in campaign contributions, many of them to Democrats.

      The professional ties of some of its members also could be a complication, legal experts said.

      One Democratic appointee to the commission, lawyer Byron Georgiou of Nevada, works with a securities-litigation law firm, Coughlin Stoia Geller Rudman & Robbins LLP, which has filed suit on behalf of shareholders against subsidiaries of several Wall Street firms, including Bear Stearns, J.P. Morgan Chase & Co. and Morgan Stanley.

      Mr. Georgiou was a pick of Senate Majority Leader Harry Reid of Nevada.

      A Republican appointee to the commission, former U.S. Rep. Bill Thomas of California, who was tapped by GOP congressional leaders, is a government-relations adviser for a law firm, Buchanan Ingersoll & Rooney PC, which represents several banking and financial-services clients.

      Stephen Gillers, an ethics expert at New York University, agreed that “both appointments could present problems.” That could lead the commission to restrict the issues that some members take part in, which could impede the panel’s work, he said.

      Mr. Gillers said a conflict doesn’t mean either member would act improperly, only that an unacceptable risk could exist….

      ……. Continued at link…….

      ( http://online.wsj.com/article/SB124787497559860817.html )

    15. iStandUp says:

      Everyone needs to read this new report…

      So this story makes it clear that we have to battle Congress, their staff, and lobbyist who are EXEMPT from SEC laws!!!

      O yea, it is legal for them to trade on insider information.

      And what happens if they tell some hedge fund buddies what the insider information is?

      ————————-

      Thursday, September 17, 2009

      Listen to the show
      Lawmakers’ inside advantage to trading

      Company executives are forbidden from trading stocks using insider knowledge, but no such law exists to prevent members of Congress from doing so. Steve Henn reports.

      TEXT OF STORY

      Kai Ryssdal: Insider trading is among the biggest of big-time no-no’s. If you know something not everybody else does, you just aren’t allowed to act on it. Corporate executives know there are laws against it. But there’s nothing that says that lawmakers can’t act on inside information they get just by doing their jobs. Marketplace’s Steve Henn reports from Washington.

      STEVE HENN: A year ago this week Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke dashed to Capitol Hill. They hastily met with a small group of congressional leaders to tell them that the country was teetering on the edge of financial catastrophe.

      Paulson and Bernanke asked Congress to spend hundreds of billions to save the banks.

      John Boehner: We clearly have an unprecedented crisis in our financial system.

      GOP House Minority Leader John Boehner…

      Boehner: On behalf of the American people our job is to put our partisan differences aside and to work together to help solve this crisis.

      The next day, according to personal financial disclosures, Boehner cashed out of a fund designed to profit from inflation. Since he sold, it’s lost more than half its value.

      Sen. Dick Durbin, an Illinois Democrat, who was also at that meeting sold more than $40,000 in mutual funds and reinvested it all with Warren Buffett.

      Durbin said like millions of others he was worried about his retirement. Boehner says his stock broker acted alone without even talking to him. Both lawmakers say they didn’t benefit from any special tips.

      But over time members of Congress do much better than the rest of us when playing the stock market.

      ALAN Ziobrowski: Senators make significant abnormal returns, some place around 1 percent above the market, 12 percent a year.

      Alan Ziobrowski is a business professor at Georgia State University. Using hundreds of personal financial disclosures from the 1990s, Ziobrowski analyzed more than 6000 stock transactions by members of Congress going back up to 15 years.

      Ziobrowski: I mean they do better down market, up market. They just outperform the average.

      Most lawmakers are not active traders. But Ziobrowski found that politicians who do play the market fare even better than corporate insiders when it comes to picking stocks.

      Ziobrowski: We have every reason to believe they are trading on information that the rest of us don’t have.

      The value of information that flows from the inner workings of Washington isn’t lost on Wall Street professionals.

      Michael Bagley is a former congressional staffer who now runs the OSINT Group. Bagley sells access and research. His clients are hedge funds, and he makes it his business to mine Congress and the rest of Washington for tips.

      MICHAEL Bagley: The power center of finance has moved from Wall Street to Washington.

      His firm is just one recent entry into Washington’s newest growth industry.

      CRAIG HOLMAN: It’s called political intelligence.

      Craig Holman is at Public Citizen, a consumer watchdog. Holman believes lobbyists shouldn’t be allowed to sell tips to hedge funds and members of Congress shouldn’t trade on non-public information. But right now it’s legal.

      HOLMAN: It’s absolutely incredible, but the Securities and Exchange Act does not apply to members of Congress, congressional staff or even lobbyists.

      That law bans corporate insiders, from executives to their bankers and lawyers, from trading on inside information. But it doesn’t apply to political intelligence. That makes this business lucrative. Bagley says firms can charge hedge funds $25,000 a month just to follow a hot issue.

      BAGLEY: So information is a commodity in Washington.

      Inside information on dozens of issues, from bank capitol requirements to new student loan rules, can move markets. Consumer advocate Craig Holman is backing a bill called the STOCK Act. Introduced in the House, it would force political-intelligence firms to disclose their clients and it would ban lawmakers, staffers, and lobbyists from profiting on non-public knowledge.

      ZIOBROWSKI: What it would do is first of all and most importantly actually make it illegal.

      Professor Alan Ziobrowski says it’s not just the marketplace that suffers.

      ZIOBROWSKI: The real danger here, of course, is that you are going to have in some cases congressman that will literally vote or act against the interests of their constituents in favor of their portfolio. And right now there is virtually nothing that would stop them from doing that.

      The STOCK Act would but none of the lobbyists, hedge fund executives, or congressional staffers I spoke with for this story thought that bill has a prayer of passing.

      In Washington, I’m Steve Henn for Marketplace.
      ( http://marketplace.publicradio.org/display/web/2009/09/17/pm-inside-dope/ )

    16. SeekingFairMarkets says:

      Along these same lines, what about organizations such as Third Way? On their website, it states the following:

      “Third Way is the leading think tank of the moderate wing of the progressive movement. We work with elected officials, candidates, and advocates to develop and advance the next generation of moderate policy ideas. Since our launch in 2005, our policy and communications products as well as our issue trainings have been used extensively in the House and Senate, by governors and by candidates ranging from Barack Obama to those running for Congress.”

      Given that David Heller (Lead Global Equities Trader for Goldman Sachs) & Daniel Loeb both serve on the Board of Trustees, wouldn’t they potentially have information about policy changes before the public? If so, wouldn’t that give them a trading advantage?

    17. sean says:

      You would think that the SEC would have learned by now to use their resources going after potential ponzi schemes, abusive short selling, manipulation of stocks and the capital markets, Michael Milken, Jim Chanos, Steven Cohen, John Paulsen et al but nnnooo, they are after OSTK again. Will they ever learn? I guess not.

      Overstock.com Announces Receipt of Another SEC Subpoena
      Overstock.com Announces Receipt of Another SEC Subpoena

      SALT LAKE CITY, Sept 17, 2009 /PRNewswire-FirstCall via COMTEX/ — Overstock.com,
      Inc. (OSTK) announced today that it has received a notice dated September 15,
      2009 from the Securities and Exchange Commission stating that the Commission is
      conducting an investigation concerning Overstock’s previously-announced
      restatements of its financial statements in 2006 and 2008 and other matters. The
      subpoena accompanying the notice covers documents related to the restatements and
      also to Overstock’s billings to its partners in the fourth quarter of 2008 and
      related collections, and Overstock’s accounting for and implementation of
      software relating to its accounting for customer refunds and credits, including
      offsets to partners, and related matters. Overstock intends to cooperate fully
      with the investigation.

      “All of the matters that are the subject of the subpoena have been thoroughly
      disclosed and we are disappointed, given the extensive public disclosures
      Overstock has previously made, that the SEC, given all of the challenges it
      faces, has apparently chosen to expend time and resources on another
      investigation of Overstock,” said Overstock.com Chairman and CEO Patrick Byrne.
      “Rest assured, I will continue to speak out as I have on the shortcomings of our
      financial regulatory system.”

    18. Jim Hall says:

      Sean, Dr Byrne, we all must be hitting a nerve if the pathetic SEC is after OSTK again while Golden Slacks and Einhorn stride right by them…

    19. Jim Hall says:

      iStandUp, ever know a politician who didn’t emerge much richer after ‘public service’?

    20. Tar_&_Feather_Them says:

      If anyone had any balls Gary Aquirre should run the SEC.

    21. iStandUp says:

      Jim,

      Yea, it seems all politicians become wealthier in office. Now we all know that it is legal for them to trade on insider information.

      Maybe this is one reason rich people seek office – to obtain an exemption from insider trading?

    22. Anonymous says:

      When I was a kid, I rafted down a wilderness river for several weeks with a couple friends. We towed supplies behind in a fishing net and literally went from deserted island to deserted island, camping and living off the pork and beans and beer we towed behind as we read Huckleberry Fin as the sun beat down on us.

      At each island we stared into the milky ways and discussed how we were going to save the world like only university kids too stupid to know better could.

      We believed we could make the world a better place!

      The wilderness experience was great, until we encountered an island full of cows. The farmers had sent the cows onto the island when the water was low, letting them graze on taxpayer land. They were all over us, stomping on our tents and eating our food. We had the sudden juxtoposition of wilderness and the stupidest animals humans have ever bred besides humans.

      I got angry and yelled “boo” and to my amazement, the whole works of them stampeded into the river, risking sudden death. Millions of pounds of beef were scared by me, the human weakling. Maybe 10,000 cows ran from me, risking sudden death because I said boo.

      Since that experience twenty years ago, I’ve tried to understand why power shrinks from authority. Why does the elephant feat the mouse? Why does the lion fear the lion tamer?

      In my mind, we are the power. What if every American went on strike and didn’t buy stock for a month? Why are we begging the corrupt Wallstreet mafia controlled SEC to protect us?

      Why does the world fear 100 rich old farts that control the Bilderbergers?

      We will win against share counterfeiting when the people realize they aren’t children and don’t have to do what the bankster owned media tell them to do.

      http://www.youtube.com/watch?v=jM6US0Qk5_8
      http://www.prisonplanet.com/twenty-minutes-with-the-president.html

      I try not to post off topic, but come on, the issues are all related. The scammers control the media, decide who gets elected, control banking and control our educational system and they are the ones that have brainwashed the population to associate “arrest the banksters” with “tin hat conspiracy theory, go straight to the mental ward”.

    23. iStandUp says:

      Kaufman Statement on Expected Action Today By SEC on Proposal to Ban Flash Orders

      “Flash orders may be a symptom of a much larger problem”

      September 17, 2009

      “I commend the SEC for its proposal to ban flash orders. Let’s not forget, however, that this occurred only after public exposure of the SEC’s previous okay of flash orders. Flash orders may be a symptom of a much larger problem. Now the SEC must examine the rest of the iceberg. I’m pleased that the SEC has begun a comprehensive review of market structure issues, and I look forward to that process.

      “The credibility of the U.S. financial markets is essential. For investors to have confidence, the SEC must ensure that high frequency trading, dark pools, potential conflicts of interest and other market structure issues are not undermining the interests of long-term investors.”

      http://kaufman.senate.gov/press/press_releases/release/?id=08b67813-4870-4a7e-af7c-63f4c050c818

    24. iStandUp says:

      What I want to know SEC is…

      When is the SEC going to propose banning the “Second Tier Ponzi Scheme”, commonly called “Naked Counterfeit Shorting”, you, the SEC, only allow the rich and powerful to partake in?

      And,

      When is the SEC going to propose banning SEC lawyers from acting as defense lawyers for their fraternity brothers?

    25. Anonymous says:

      Patrick needs to squash this lil gw character like a bug.

      Can someone tell me why Gary W hasn’t been arrested yet?

    26. Jim Hall says:

      Anonymous, GW is a perfect foil to PB’s intelligence and integrity.
      We need him.

    27. Jim Hall says:

      Schapiro plays nice-nice with hedgefunds:

      “Securities and Exchange Commission Chairman Mary Schapiro predicted that any new regulation of hedge funds will likely require detailed disclosure to regulators, but not necessarily as much disclosure to the public.

      Also, Ms. Schapiro said in a speech on Friday that she expects the agency to address its “expectations” for the potential adoption of a set of global accounting standards.

    28. sean says:

      Just in case you were wondering if the SEC is in better hands or worst with Queen Mary at the helm check this out!!

      February 05, 2009
      Queen Mary is revolting

      After watching the Cox-era cretins who constitute her senior staff pilloried at yesterday’s House Financial Services Committee Madoff hearing, US Securities and Exchange Commission chairman Mary Schapiro suddenly feigns interest.
      Dear Chairman Kanjorski and Ranking Member Garrett:

      Today’s hearing before your Subcommittee cannot have been satisfactory for you. The Commission’s staff and I understand that you must have adequate information to fulfill your oversight responsibilities. There needs to be a full accounting, both of Mr. Madoff’s activities and why we did not detect the fraud, which we truly regret.

      The Commission’s staff and I believe that it is possible to serve those interests while not impeding the integrity of ongoing civil and criminal investigations. For that reason, I hope that I can set up a prompt meeting with you so that we can determine a course forward that will meet all of our interests.

      We at the SEC are committed to looking at all aspects of our examinations and investigations of Mr. Madoff and his firm and making changes that will enhance our ability to detect similar frauds.

      I am available to meet with you at your earliest convenience.

      And what suddenly got Her Majesty’s attention?

      Probably the statement by would-be whistle blower Harry Markopolos, in response to a question as to why he didn’t take his Madoff allegations to FINRA, or its predecessor, NASD-Regulation (former chief executive officer, Queen Mary):

      I wouldn’t take the case to FINRA.
      FINRA is corrupt.
      The SEC is merely incompetent.

      Or words to similar effect. Betcha that the sudden interest in “a prompt meeting [to] meet all of our interests” has more to do with tossing sand in the eyes of anybody with ideas about belatedly inspecting the barnacles encrusting Queen Mary’s bottom than either providing “adequate information to fulfill your oversight responsibilities” or “a full (fool, surely? — Ed) accounting.”

      Queen Mary didn’t get where she is today by either being an honest steward of investors’ interests, or losing vicious bureau-political dogfights. Keeping attention focused on the SEC will divert The Fooles on The Hill from the vast failings of FINRA which was, for more than 20 years, Madoff’s principal regulator.
      February 05, 2009 in Madoff, Regulators | Permalink | Comments (2) | TrackBack (0)

      http://nakedshorts.typepad.com/nakedshorts/regulators/

    29. Anonymous says:

      The reason this problem is so hard to fix is because the banksters that control the Fed and fractional ownership of money at their banks are the same ones that are trying to legalize fractional ownership (naked shorting) of stock.

      More than one person owns the dollar the Fed issued that the bank has in their vaults and more than one person owns the share issued by the company that the clearing house has in their vaults.

      I’ve taken to writing “Audit the Fed” on all of my money, hoping that some fraction of the people that see my message will do the same on their money until a high percentage of the privately controlled dollars in the nation’s wallets have that message.

      The symbolism of writing on their private money is poetic.

    30. sean says:

      Now, with the resources that the SEC has used to go after Overstock (AGAIN) I wonder what other multi-billion dollar ponzi scheme of financial firms’ crimes they are over-looking? Makes one think huh? Also look at this interview with Patrick on Fox news. In addition to the Reporter seeming totally out of his realm of expertise.. see how quickly he tries to dismiss Patricks claims about the Hedge Fund Hotline to the SEC to initiate another supoena into OSTK. I guess someone is cared because the price of the stock has gone from $12 to $15 in the lat week or so and some covering may have to take place. Is’nt it a great thing this Capitalism?/ Please watch the following “Carefully”

      Sorry they removed the video from Investorsvillage, if anyone can find it please post it here. Thanks in advance. I will continue to look for it.

    31. sean says:

      Yet they (The SEC) still have time to go after Patrick. So much for Change at the SEC huh?

      another year has passed
      Why haven’t any Wall Street tycoons been sent to the slammer?

      Story | A year after financial crisis, the consumer economy is dead
      Story | Worse than subprime? Other mortgages imploding slowly
      WASHINGTON — More than a year into the gravest financial crisis since the Great Depression, millions of Americans have seen their home values and retirement savings plunge and their jobs evaporate.

      What they haven’t seen are any Wall Street tycoons forced to swap their multi-million dollar jobs and custom-made suits for dishwashing and prison stripes.

      There are plenty of civil and class-action lawsuits from aggrieved investors angered by the losses in their mortgage bonds, hedge funds or pensions. Regulators have stepped up their vigilance after the fact. But to date, no captain of finance tied to the crisis has walked the plank.

      There have been some high-profile arrests and federal convictions of financial giants — such as Ponzi scheme king Bernard Madoff and Stanford Financial Group chairman Robert Allen Stanford. They weren’t among the causes of the financial meltdown, however, just poster boys for an era of lax enforcement, weak regulation and devout faith in free markets.

      “A lot of people who are responsible (for the crisis) seem to have gotten awfully rich in the process,” said Barbara Roper, the director of investor protection for the Consumer Federation of America.

      The absence of what many would call justice stands out all the more because past financial crises always had their villains. The depression-era had electricity and railroad magnate Samuel Insull, who partly inspired the movie “Citizen Kane.” The savings and loan crisis of the 1980′s had banker Charles Keating. Energy giant Enron Corp.’s spectacular collapse offered the late CEO Kenneth Lay, a Texas crony of President George W. Bush.

      Yet there’s no such poster child for the Great Recession, as today’s crisis is now called.

      One may yet emerge. The FBI has more than 580 large-scale corporate fraud investigations under way. At least 40 of them are scrutinizing players in sub-prime mortgage lending, which was the first domino to fall and triggered a global financial crisis.

      “The investigations are very complex; it’s not something that’s going to turn overnight,” said Bill Carter, a spokesman at FBI headquarters. “They are labor intensive. They involve a review of records.”

      To date, the closest thing to a prosecution of a major actor in the financial meltdown is a civil fraud case that the Securities and Exchange Commission brought on June 4 against Angelo Mozilo, the perma-tanned CEO of mortgage-lending giant Countrywide.

      The SEC, in documents filed in a federal courtroom in central California, accuses Mozilo of “deliberately misleading investors” by misrepresenting the risk that Countrywide posed. The SEC also accused him of insider trading because he sold large shares of company stock and options ahead of what he allegedly knew was a coming collapse of mortgage lending.

      Unless the Justice Department brings corresponding criminal charges, however, Mozilo could be hit with penalties and a ruined reputation if convicted — but he wouldn’t see the inside of a jail cell.

      Another big trial is imminent, however. On Oct. 13, a Brooklyn jury will begin hearing the federal prosecution of former Bear Stearns investment fund founder Ralph Cioffi and his fund manager Matthew Tannin.

      Two of their hedge funds, offered to mega-wealthy investors and heavily weighted with investments in mortgage bonds backed by sub-prime loans to the weakest borrowers, collapsed in June and August of 2007. Their collapse signaled a gathering storm in mortgage finance that culminated in March 2008 with the government-brokered fire sale of their bank to JP Morgan Chase.

      Both men were charged on June 19, 2008, with defrauding investors, passing off as safe the investment in mortgage bonds even though they described the market for sub-prime mortgages as “toast” in their own e-mails. Cioffi also faces charges of insider trading.

      Lawyers for both men declined comment to McClatchy, but when their clients were arrested they called the pair scapegoats for the broader financial crisis.

      Court documents filed in August show attorneys for the two are trying to suppress evidence that the executives’ special trading notebooks have disappeared. The government suspects that Cioffi and Tannin, or someone helping them, made them disappear to cover their tracks.

      Cioffi’s attorneys also asked in August that the presiding judge quash the use of evidence that points to their clients’ lavish lifestyle, including mansions and Ferraris. The documents accused federal prosecutors of “improper appeal to class prejudice.” Tannin’s attorneys joined the motion on Sept.15.

      Class prejudice against bankers is what many Americans feel, evident in the death threats made against some former or current executives at insurer American International Group and other financial firms earlier this year. Wall Street switchboard operators at some institutions no longer provide addresses to phone callers.

      Americans are angry because the suffering on Main Street is a spillover from the excessive risk taking and lavish compensation of executives who invested on behalf of the ultra-wealthy. Investors seeking outsized “alpha” returns turned to Wall Street, both seeking to make a short-term killing even if doing so eventually brought the near collapse of the financial system.

      President Barack Obama alluded to this on Sept. 14 in a New York speech to commemorate the anniversary of the collapse of investment bank Lehman Brothers, which sent off a global financial panic.

      “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses,” Obama said, promising new rules. “Those on Wall Street cannot resume taking risks without regard for consequences.”

      There are persistent but unconfirmed reports that the FBI and grand juries are looking at the e-mails of executives of failed institutions such as Bear Stearns, which pioneered the process of pooling sub-prime loans for sale to investors, and Lehman Brothers, which was a leader in these toxic products when it collapsed.

      Records from AIG, which the Federal Reserve saved from collapse on Sept. 17, 2008, are also thought to be under review. The FBI reportedly is also looking at rating agencies Fitch, Moody’s and Standard & Poor’s to determine if they knowingly gave pools of sub-prime mortgages AAA investment-grade ratings, the best possible, despite evidence to the contrary.

      Carter, the FBI spokesman, declined comment on ongoing investigations.

      The lack of any prosecution to date doesn’t mean authorities aren’t investigating, added Ian McCaleb, a spokesman for the Department of Justice.

      “There are ongoing cases. But from a prosecution standpoint, it takes a significant amount of time to develop these things. Most financial fraud cases are very complex and it could take a while to unravel the specifics of each case,” he said. “I would characterize financial fraud as one of our top priorities.”

      Another possibility is that a new politically appointed Financial Crisis Inquiry Commission could turn up something that leads to prosecution. The 10-member panel, created by Congress this month, began probing the origins of the crisis, has subpoena power and could compel testimony. This could, however, lead to conflicts with ongoing legal investigations.

      Another reason that there’ve been no arrests of the perpetrators of the financial meltdown is that agencies such as the SEC, which regulates trading in stocks and bonds, and the Commodity Futures Trading Commission, which oversees the trading of contracts for future delivery of energy and farm products, lack powers of criminal prosecution.

      They can bring civil charges that result in fines or pass information to federal prosecutors or the FBI, which under the Bush administration was reorganized to focus less on white-collar crime and more on national security matters and crimes against children.

      Legislation introduced in the House and Senate would make it easier for the CFTC to prosecute, especially allegations of market manipulation. Measures would lower the current high threshold for determining manipulation. In 35 years, the agency has won only a single manipulation case, and it’s under appeal. The bills also would give commodities regulators powers to bring criminal cases.

      “Folks who do the crime shouldn’t just pay a fine, but do the time,” said Bart Chilton, a CFTC commissioner who’s championed the need for prosecutorial powers.

      Because it saves time and money, regulators traditionally have negotiated settlements with bad actors, and fines often amount to a business cost.

      That, too, may be changing, however. The SEC on Sept. 14 was hit with a stinging judicial rebuke for its half-hearted efforts to punish Bank of America for alleged disclosure failures in the government-brokered purchase of investment bank Merrill Lynch.

      U.S. District Judge Jed Rakoff tossed out a $33 million settlement between the SEC and Bank of America, effectively calling it a fig leaf. The agency, he said, looked as if it was enforcing the law while the bank and its CEO, Kenneth Lewis, got away with a slap on the wrist.

      “It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the bank’s alleged misconduct now pay the penalty for that misconduct,” Rakoff wrote in a scathing 12-page opinion that ordered the complaint to proceed to trial.

    32. Jim Hall says:

      Sean, I want Einhorn investigated for Lehman.

    33. sean says:

      Jim, I want Paulsen (J) investigated for Bear Stearns Puts of 1.7 million that yielded 270 million in one week! Where are the results of the investigation that Cox said Congress will be happy with?? WHERE ARE THE RESULTS? Who committed this crime? No, but they are going after Parick Byrne and OSTK that had nothing to do with the financial crisis!!! Justice my bleep!!!

    34. Jim Hall says:

      Sean, yes I remember hearing Cox say those exact words.
      Maybe Mary swept that one aside after her coronation!
      I’d settle for any one of those hedgefund bastards hanging from a hook – for starters….

    35. sean says:

      Jim, you think that the SEC would be busy investigating thie following kinds of activities instead of harrasing Overstock huh?

      Perot Options Trading Rose to 7-Year High Before Bid (Update1)
      Share | Email | Print | A A A

      By David Scheer and Jeff Kearns

      Sept. 21 (Bloomberg) — Trading in bullish Perot Systems Corp. options jumped to a seven-year high Sept. 18 before Dell Inc. said today it will buy the company for $3.9 billion.

      Calls volume climbed to 2,539 contracts, or 242 times the four-week average, according to data compiled by Bloomberg. Only 10 puts traded that day, the data show. The shares, which rose 0.1 percent to $17.91 on Sept. 18, surged 65 percent to $29.62 at 11:03 a.m. New York time today.

      Call options, which convey the right to buy stock at a specified price by a certain date, often return more to investors speculating on takeover targets. Some of the U.S. Securities and Exchange Commission’s biggest insider-trading cases have focused on purchases of options before acquisitions of companies such as Dow Jones & Co. and TXU Corp.

      “The question is whether there was insider trading,” said Tamar Frankel, a professor at Boston University School of Law who has testified to Congress on financial regulation. “It’s enough of a bump to warrant attention, and it’s not costly for regulators to inquire.”

      SEC spokesman John Heine and Dell spokesman David Frink declined to comment. Perot spokesman Marvin Singleton didn’t immediately return a call for comment.

      Most Active

      The last session’s most-active options were October $20 calls, which gained 22 percent to 55 cents Sept. 18 and jumped 1,645 percent to $9.60 today. Those contracts, which expire Oct. 16, are also the most widely owned options, accounting for about half of all 10,353 Perot contracts. Last week’s call volume of 8,279 contracts is almost double that of the preceding three months, according to data compiled by Bloomberg.

      “When there’s a volume spike on a legitimate takeover it smacks of insider trading,” said Steve Sosnick, equity risk manager at Timber Hill LLC, the market-making unit of Greenwich, Connecticut-based Interactive Brokers Group Inc. “What made people wake up Friday and decide to make big bets in upside calls on Perot? That’s the question that has to be asked and the most obvious answer is probably that someone got wind of the transaction.”

      Sosnick’s firm doesn’t make markets in Perot options.

      Other factors may explain the trading, such as investments triggered by changes in the price of Perot’s stock, Frankel said.

      Dell said in a statement today that it agreed to buy Perot, founded by former U.S. presidential candidate H. Ross Perot, undertaking its biggest purchase ever to compete with Armonk, New York-based International Business Machines Corp. and Palo Alto, California-based Hewlett-Packard Co. in computer services.

      Dell, the second-biggest maker of personal computers, offered $30 a share in cash, about 68 percent more than Plano, Texas-based Perot’s closing price Sept. 18. The acquisition probably will boost profit in fiscal 2012, Round Rock, Texas- based Dell said in a statement today.

      To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net. David Scheer in New York at dscheer@bloomberg.net

    36. Jim Hall says:

      Sean, yes that one would actually yield results, I believe.
      Does the SEC want bona fide results from bona fide targets is the question?

    37. sean says:

      The answer is no. Lets see based on what was just reported by CNBC 25% of the congress trades and legally use insider information to do so and sell thise information to Hedge Funds (for beteween 5K and 20 K per month). So what would compell (sp) these guys (Congress) to make the SEC enforce the rules for others when they can make money off the many illegal schemes perpetrated by the smame Hedge Funds that pay them thru lobbysists every month? The game is rigged and every which way we the individual investors and pension plans lose.

    38. Jim Hall says:

      Just gets better and better.

    39. Jim Hall says:

      Let’s all start vetting the hedgefund managers:

      http://www.finalternatives.com/node/9124

      Nice work if you can get it.

    40. iStandUp says:

      Ten Big Companies That Are Veering Toward Bankruptcy

      (http://finance.yahoo.com/tech-ticker/article/336235/Ten-Big-Companies-That-Are-Veering-Toward-Bankruptcy?tickers=AMD,LVS,S,M,GT,MYL,HTZ)

      1. Hertz
      2. Textron
      3. Sprint Nextel
      4. Macy’s
      5. Mylan
      6. Goodyear
      7. CBS
      8. Advanced Micro Devices
      9. Las Vegas Sands
      10. Interpublic Group

      ——————————–

      QUESTION:

      Is the SEC going to allow the rich and powerful through their Hedge Funds destroy these large companies through “Naked Counterfeit Short Selling”?

      Since the SEC has openly stated that

      > “Naked Counterfeit Short Selling” is NOT ILLEGAL in the United States,

      > and we know that their actions have shown us over and over again that SEC lawyers protect their fraternity brothers on Wall Streets to protect their access to multi-million dollar jobs when then leave the SEC,

      it appears that these companies and the all the jobs of American workers created by these companies will be targeted for destruction by the Wall Street Counterfeit Machine.

      If this happens, it will be another sad day in the history of American.

    41. Jaded Worker says:

      So if we know who the most likely perpetrators of these disgusting acts are? Why not end it? If they are willing to destroy millions of lives for personal gain and do not value the people that are harmed, why should we treat them w/dignity? A simple bullet would speak loud and clear to any one of these hedgefund managers.

    42. Jennifer says:

      Former DTCC operations manager Susanne Trimbath is interviewed by Matt Taibbi for his latest article in Rolling Stone. She blows the whistle on the world’s largest central depository by revealing that she warned them 15 years ago of an impending financial crisis.

      Rolling Stone’s own Matt Taibbi interviewed industry expert Susanne Trimbath, Chief Economist at STP Advisory Services, LLC in Omaha, for his latest article in the magazine explaining “how we got into this financial crisis.” Taibbi’s latest piece looks at the history of the Bear Stearns and Lehman Brothers failures. His controversial article earlier this year, “Inside the Great American Bubble” on the undue influence of Goldman Sachs in contributing to and benefitting from the recent economic collapse and the subsequent bailout gained significant attention from media, investors, shareholders and companies.
      In his new article, Trimbath tells Taibbi the story of how, in 1993, she tried to get senior management at the world’s largest central depository (Depository Trust Company) to stop allowing shares of stock in US companies to be multiplied through stock lending and excessive short selling. “You can’t balance the world,” was the response she got from regulators. She contends this is because “Wall Street is self-regulated and they don’t want to write regulations against themselves.” By 2003, the size of the problem had increased ten-fold; by 2008 it contributed to the collapse of major financial institutions and the global financial crisis. Trimbath goes into more detail about this, and the impact of naked short selling and failed trades on shareholders in the recently released Hollywood movie, “Stock Shock: The Short Selling of the American Dream.” (www.stockshockmovie.com)
      Susanne Trimbath holds the Ph.D. degree in economics from New York University. She is an expert on post-trade securities operations and is featured in several films about Wall Street. She frequently acts as an expert witness in securities litigation. Trimbath is a former mid-level operations manager at Depository Trust Company (now a subsidiary of Depository Trust and Clearing Corporation in New York). Matt Taibbi, who is best known for his articles and books on politics, turned to writing and blogging on finance after the 2008 Presidential election. His new expose will be featured in the upcoming issue of Rolling Stone magazine due out in early October.

    43. Amanda says:

      I think this article made some interesting points, I read a textbook directly related to this topic, its called Financing Small Business in America: Debt Capital in a Global Economy by Roger E. Hamlin, Thomas Lyons , I found my used copy for less than the bookstores at http://www.belabooks.com/books/9780275976736.htm

    44. 1. Naked selling on the Hedge Funds Market was the greatest innovative idea of a few Options Trading Personalities back in March, 2008. Encouraged by the lack of regulations from the SEC they brought down very powerful companies like Bear Stearns and Lehman Brothers. Thanks for sharing the informational video on deepcapture weblog.

    45. I just could not leave your website before suggesting that I extremely loved the standard info a person provide to your visitors? Is going to be back regularly to inspect new posts

    46. Madeleine says:

      I am really impressed along with your writing talents and also with the layout for your blog. Is this a paid subject matter or did you customize it your self? Anyway keep up the excellent quality writing, it’s rare to look a nice weblog like this one nowadays..

    Trackbacks/Pingbacks

    1. [...] This post was mentioned on Twitter by DriveTimeHappyHour. DriveTimeHappyHour said: Hedge funds and the global economic meltdown | Deep Capture … http://bit.ly/LAyo6 [...]


    Leave a Reply

    • Popular
    • Latest
    • Comments
    • Tags
    • Subscribe

    Related Sites