Ignoring that fact has no particular usefulness except to replace those managers with persons more competent.

That Congress itself may be implicated from such failure due to its close association with commerce is obviously one of the first rocks to look under for the culprits. Why should anyone be reelected to ignore the obvious since most are incumbents who’ve been there right along?

Identifying incompetence is as important as identifying the best and brightest of any leadership cadre, and in order to exercise the right of citizenship and pursue social justice. CEO’s who benefited from the financial crisis should go, just as those in Congress who allowed it to happen on their watch under their administrative obligations to the nation. It isn’t rocket science; but ignorning the impact of mismanagement surely makes imbeciles of the public returning them to office, or tolerating the mismanagement they deliver.

Replied to my post above about the foreign broker loophole. Reply says that it’s the foreign depository, not the foreign broker who has the account with DTC/DTCC.

I don’t see what difference that makes. Whatever entity has an account with DTC/DTCC, if that entity does a sell of 1000 shares and then does not deliver in say T+3, then that entity gets bought in for 1000 shares on T+4 and gets charged for the buyin. Anonymous said something about buying ion the entire depository, but that makes no sense. Just buyin the amount of failures.

We need to keep up this dialog until it becomes clear.

… Fred

That’s a scary mindset but it is the mindset of the naked short selling community. How would you like to be trying to feed your family as an employee of a corporation that he and his colleagues targeted for destruction? Do you think people with this mindset bother performing “locates” as per Reg SHO before making short sales? Look at the charts on deepcapture.com illustrating share prices versus failures to deliver. I think it’s pretty easy to recognize the cause and effect. That interview should scare the absolute you know what out of you when recognizing that Wall Street is inundated with that mindset!

Due to the phraseology used in UCC 8-501 you are left with only two options. You can either ban failures to deliver entirely except for bona fide MMs OR you need somebody to buy-in delivery failures the second it becomes obvious that the seller of shares had no intent whatsoever to deliver that which he sold perhaps on T+6 or so.

In regards to the execution of “buy-ins” when the NSCC management with the congressional mandate “to act in the public interest, provide investor protection and “promptly settle” all securities transactions as well as 15 of the 16 sources of empowerment to execute buy-ins pretends to be “powerless” to do so then FTDs need to be banned entirely except for truly bona fide market making.

“Buy-ins” are the ONLY solutions available when the seller of securities refuses to deliver that which he sold. The fear of a buy-in is the only source of truly meaningful deterrence to these crime waves. The NSCC management is refusing to provide the only cure as well as the only source of deterrence to these thefts.

The ability to merely refuse to deliver that which you sell and thereby establish a naked short position as well as cause the “issuance” of readily sellable “shares” albeit they TECHNICALLY have no “legal owner” nor are they TECHNICALLY “outstanding” which depress the share price which gives value to your naked short position is too tempting for most crooks to not take advantage of.

Can you appreciate why the NSCC management has to attempt to “intentionally deceive” investors as shown in post # 72. Remember these are the same guys that have cornered a monopoly on the sources of empowerment to execute buy-ins and then intentionally refuse to deploy it in order to look after the financial interests of their corrupt NSCC participating “bosses” that are the financial beneficiaries of these thefts. If NSCC management has the ONLY cure available when their bosses refuse to deliver that which they sell and has the ONLY source of deterrence available to dissuade these thefts and refuses to provide it then of course their corrupt “bankster” bosses are going to set up shop in this “regulatory vacuum” they have graciously provided.

Take another look at that “Sears Holding” chart. This occurred AFTER Reg SHO went into effect. Does it look like having “reasonable grounds” to believe that a “locate” would result in delivery by T+3 is working out well?

go to the 9 minute mark

Bring a vomit bag

All you have to do is to concentrate on UCC Article-8-501. It FORCES securities intermediaries (NSCC participants) on Wall Street to treat the holders of “securities entitlements” as being able “to exercise all of the rights and property interest to the shares they have an entitlement to”. Those are the exact same rights that “legal owners” of shares have.

This phraseology converts mere “securities entitlements” which were designed to be “accounting measures”/IOUs denoting a failed delivery obligation into this weird species of “share” that TECHNICALLY has no “legal owner” and that is not TECHNICALLY “outstanding”. But from a damage point of view they are very much “outstanding”.

They’re invisible and that’s what the crooks that sell securities to U.S. citizens and refuse to deliver that which they sell need! What I just described in the 3 lines above is that for all intents and purposes THE IOU ITSELF JUST MAGICALLY BECAME THE “SHARE” THAT IS THE SUBJECT OF THE IOU. Who cares if it TECHNICALLY has a legal owner or not? That’s why “entitlements” are so tricky and so subject to abuse.

Thus if you can create a “securities entitlement” then you can create an incredibly damaging “share” of a slightly different species that packs all of the dilutional damage that a real “share” does. What’s the easiest way to create a “securities entitlement”? You refuse to deliver the securities that you sell. What happens when a crook refuses to deliver that which it sold? He established a naked short position. What else happens when you refuse to deliver that which you sold? You cause the “issuance” of readily sellable “securities entitlements” which automatically drive the share price down which gives your naked short position value. You get two for the price of one; you place a negative bet against a corporation and the mere method of how you placed your bet (by refusing to deliver that which you promised to deliver) has increased the prognosis for the success of your bet! Now how clever is this fraud?

Now the task becomes to find an UNCONFLICTED member of an SRO, or of the SEC or of one of the congressional oversight committees willing to do the right thing to once and for all end these thefts of the investment funds of U.S citizens.

May 11, 2008

Elaine Meinel Supkis

http://elainemeinelsupkis.typepad.com/money_matters/2008/05/elaine-meinel-5.html

This has to do with the phraseology used in UCC Article-8-501 in regards to what are referred to as “securities entitlements”. Raising the “legal ownership” issue presents an intentional misrepresentation to investors that our markets in some corporations targeted for destruction are not “rigged” to go anywhere but downwards.

@dtcc: “One of the allegations made in some of the lawsuits is that the Stock Borrow program counterfeits shares, creating many more shares than actually exist. True?”

Thompson:” Absolutely false. Under the Stock Borrow program, NSCC only borrows shares from a lending member if the member actually has the shares on deposit in its account at the DTC and voluntarily offers them to NSCC. If the member doesn’t have the shares, it can’t lend them.

Once a loan is made, the lent shares are deducted from the lender’s DTC account and credited to the DTC account of the member to whom the shares are delivered. Only one NSCC member can have the shares credited to its DTC account at any one time.
The assertion that the same shares are lent over and over again with each new recipient acquiring ownership of the same shares is either an intentional misrepresentation of the SEC-approved system, or a profoundly ignorant characterization of this component of the process of clearing and settling transactions”.

This statement is TECHNICALLY 100% accurate but also 100% misrepresentative. NSCC participants do indeed “donate” the shares of their clients into the SBP’s lending pool of securities for use in “curing” delivery failures. Before being lent the donors of shares do indeed need to have them in their NSCC “participants share account” from which they are indeed debited. Then they are indeed “credited to the DTC account of the member to whom the shares are delivered”.

“Legal ownership” is then transferred to the buying party whose purchase order resulted originally in a failure to deliver. This occurs via the transmission of an electronic book entry. It is also 100% accurate that “only one NSCC member can have the shares credited to its DTC account at any one time”.

Now comes that little tiny multi-trillion dollar “material” fact that was omitted. The party receiving the borrowed shares as the new “legal owner” then has all of the right in the world to re-donate them right back into that very same SBP lending pool as if they never left in the first place. Perhaps it’s easier to picture all of the shares held in the lending pool as being white marbles of various sizes. It is critical to realize that they all look alike because they are all kept in an “anonymously pooled” format. “Anonymous pooling” forms the foundation for many, many types of fraud.

Let’s artificially dye red the parcel of shares chosen by the NSCC to cure any particular delivery failure. The “red” parcel of shares that were borrowed are then credited to the “shares account” of the party receiving the borrowed shares i.e. the purchasing party. It as the new “legal owner” of that particular parcel of shares can then re-donate that “red” parcel of shares right back into the lending pool from whence it just came out of.

There they sit waiting to “cure” yet another delivery failure. Soon that same “red” parcel of shares might be “co-beneficially owned” by a dozen different U.S. investors. Soon a dozen different DTCC participating brokerage firms will be earning interest from the loaning of the SAME parcel of shares. That’s why the DTCC and its participants are in no hurry to disrupt this current ultra-corrupt status quo. THE “LEGAL OWNERSHIP” OF THAT RED PARCEL OF SHARES GOES ONLY TO THE LAST PARTY RECEIVING DELIVERY OF IT.

The other 11 purchasers of this very same parcel become “co-beneficial owners” and they don’t “legally own” anything at all. The 11 clients of these brokerage firms that purchased that same “red” parcel of shares are TECHNICALLY “securities entitlement” holders. That’s why that statement is 100% accurate but 100% misrepresentative.

At the end of the day the LAST party of the 12 different brokerage firms receiving the “red” parcel of shares becomes the sole “legal owner”. Who cares who the “legal owner” is when UCC Article-8-501 mandates that any “securities entitlement” holder must be given the ability “to exercise all of the rights and property interest attached to that security”.

The argument proffered is a “red herring” trying to hide the fact that the markets in certain U.S. corporations targeted for destruction are “rigged” to go nowhere but downwards.

What the General Counsel forgot to mention is that the NSCC management mandates that all shares held in the lending pools at the SBP are held in an “anonymously pooled” format. The red dye basically reversed the “anonymous pooling” to allow a more transparent view of what is really occurring.

These frauds are somewhere in between a Ponzi scheme and a “shell game”. The pea under one of the shells is the “legal ownership” title to any parcel of shares. The DTCC management tells the unknowing investors to concentrate on the “legal ownership” pea while it is cranking out an infinite amount of “securities entitlements” behind the curtain.

What U.S. investors need to realize is that the “securities entitlements” that are generated by each and every failure to deliver on Wall Street and each and every “borrow” from the NSCC’s SBP’s “lending pool” of securities are for all intents and purposes “shares” due to the phraseology used in UCC-8-501. They are admittedly a rather odd species of “shares” being that they TECHNICALLY have no “legal owner” and they are TECHNICALLY not “outstanding”. That’s why it is so disingenuous for the leaders of an SRO (self-regulatory organization) to say “concentrate on the “legal ownership” pea”.

Since this rather odd species of “shares” being “issued” are readily sellable they have all of the dilutional damage that a legitimate “share” does.
Do not be misled by those arguing the “ownership” issues or how the number of shares “outstanding” does not go up and therefore abusive naked short selling is not harmful. Every single shareholder of the company cited above is damaged by the share price depressant effect of those 11 extra parcels of shares that are above and beyond the number of shares TECHNICALLY “outstanding”.

Let’s look at that statement again: “The assertion that the same shares are lent over and over again with each new recipient acquiring ownership of the same shares is either an intentional misrepresentation……”.

The same shares are indeed lent over and over again contrary to the above statement but he is correct in stating that each new recipient does not acquire “ownership” because only the last party receiving the borrowed shares does.

Now as far as the issue of making “intentional misrepresentations” I’ll let you be the judge as to who is making “intentional misrepresentations”. As far as why the need to make “intentional misrepresentations” to the investing public that’s where the focus should be.

Let’s address the issue raised by the interviewer in the text of the question regarding the “counterfeiting of shares”. Does the SBP Technically “counterfeit shares”? Again it’s misrepresentation through semantics. Technically what is getting “counterfeited” are “securities entitlements” and not “shares” issued by a corporation but since UCC-8-501 mandates that the holder of “securities entitlements” be allowed “to exercise all of the rights and property interest in that security” there are indeed “shares” being counterfeited but they’re that odd species of readily sellable “shares” that TECHNICALLY don’t have a “legal owner” and TECHNICALLY aren’t “outstanding” like it makes a difference to the U.S. investors whose retirement funds are flowing into the wallets of those refusing to deliver that which they sell!

http://video.google.com/videoplay?docid=-8295984779951129935

I highly recommend this article about AIG and other articles located here. They are posted in reverse chronological order.. so start at the bottom.
http://www.ritholtz.com/blog/2009/04/aig-before-cds-there-was-reinsurance-part-2/

AND WRITE ABOUT NAKED SHORTING!

http://finance.yahoo.com/banking-budgeting/article/106872/Short-Sellers-Squeezed-All-Around;_ylt=AmtDErDgjrFmND_QXfYK3si7YWsA?sec=topStories&pos=9&asset=TBD&ccode=TBD

The trades go both directions, with US brokerages failing to deliver to the foreign depository, so the fails can kind of cancel and net to zero even though real investors in both countries have fake stock.

Even though many of the fails come from Canada, Canada has a good system to limit shorting on their own exchanges. You have to put up double the collateral, with a minimum in most cases.

So, for example, if you short a stock trading at a penny, they require you to put up minimum collateral of $.25 per share. If you short one trading at $1, you have to put up the dollar from the trade, plus another dollar of your own.

Compare this 200% rule to our 102% collateral rule.

Also, it is quite common to be bought in on Canadian traded stocks and the members have an incentive to rip you off if the volume is low. They put out a note to their members and they bid on who gets to sell you the stock and you often get filled way above current prices, reflecting the stock is hard to borrow.

The problem is that Canadian regulators only regulate their brokerages for stocks that trade on Canadian exchanges. There’s a loophole when they trade US stocks.

I have several questions. Who would do the buy-in? It seems that would be the DTC itself, because the DTC is the guarantor to the buyer for the shares purchases. Is that correct? And the member firm whose customer did not deliver is on the hook for the money, so the member firm would pass the debit to its account holder. This incentivizes the broker to demand shares of its short sellers to reduce its own exposure.

Now if the DTC does the buy-in, where does the foreign broker loophole come from? I don’t see it. The DTC would do the buy-in (under proposed rules). The foreign broker is subject to US rules the same as everyone else when trading on a US market. No one needs jurisdiction in a foreign country. Trading on US markets is subject to US rules, plain and simple. What am I missing from the commenters here that say we need separate rules?

Also how can we allow these ultra short ETF’s to even exist as they allow traders to get around regulation T which is supposed to provide a limit to how much Margin a broker can provide a customer.

Also can the SEC not see that on some occasions more than 50% of all the selling in financials can be traced to the SKF ultra short ETF? If that isn’t circumstantial evidence for Market Manipulation, then what will it take?

This Country is surely rotting from the head down.

God help us!

http://news.yahoo.com/s/nm/20090407/bs_nm/us_sec_shortselling

I guess the Senators will have to push it through legislation.

______________________________________

SEC signals no need to rush restrictions on ’short sellers’

http://latimesblogs.latimes.com/money_co/2009/04/the-securities-and-exchange-commission-wont-rush-possible-new-rules-to-rein-in-short-sellers-chairman-mary-schapiro.html

SEC signals no need to rush restrictions on ’short sellers’

11:39 AM, April 6, 2009

The Securities and Exchange Commission won’t hurry possible new rules to rein in “short sellers,” Chairwoman Mary Schapiro said today.

The SEC on Wednesday will consider restrictions on short sellers, bearish traders who borrow stock and sell it, betting the price will drop. The shorts have been blamed for deepening the bear market and, in particular, for fueling the drastic declines in many financial stocks over the last year.

At a minimum, many critics of short sellers want the so-called uptick rule restored. That rule, which the SEC revoked in 2007 after it had been on the books since 1938, required a short seller to wait for an uptick in a stock’s price before shorting it. The idea was to eliminate the potential for a cascade of short sales that could send a stock into a death spiral.

Schapiro, speaking to reporters after giving a speech in Washington, said the commission would reconsider the uptick rule, and also would look at a “circuit breaker” proposal from major stock exchanges to limit short selling in a stock after the price has fallen by a specific percentage.

There had been speculation that the SEC might act quickly on new short-selling restrictions. But Schapiro indicated she wasn’t in any rush,

and wanted to get feedback from investors.

From Bloomberg News:

The SEC will likely take public comment on its various proposals for 45 days before commissioners decide whether to hold a second public meeting to make any rules binding, Schapiro said. The agency also plans to hold a roundtable on short-selling so investors, experts and market participants can discuss the proposals, she said.

In September, the SEC temporarily banned short-selling of all financial stocks. The prohibition was approved behind closed-doors as an “emergency order” under then-SEC Chairman Christopher Cox. Schapiro said she would be hesitant to re-impose a ban on short-selling.

“I’m pretty uncomfortable, and I think the commission is as well, with doing emergency orders unless absolutely essential,” she said.

– Tom Petruno

Dear Commissioners and Staff of the SEC,

I believe that if the regulators, SROs, exchanges and congressional oversight committees could get their arms around one seminal concept regarding abusive naked short selling crimes then legislation, regulation and enforcement in this arena could be much more effective.

This concept has to do with the “issuance” of shares on Wall Street. You are aware of the standard mode for issuing shares which is done by a corporation’s board of directors through a “director’s resolution”. These shares then become “issued and outstanding” for all of the world to see. They have a designated “legal owner” at all times and they have been “registered” by the SEC.

The type of “issuance” that your prior legislative and enforcement efforts indicate that you have forgotten about or never entirely appreciated is the “issuance” of a special species of shares that occurs every time a failure to deliver occurs or every time a failed delivery is cured by the NSCC’s “Automated Stock Borrow Program”. This special species of shares TECHNICALLY has no “legal owner” and they are TECHNICALLY not “outstanding”. They are essentially “issued” by those that fail to deliver the securities that they sold which is a rather troublesome concept as I’m sure you’ll agree.

This special species of shares has to do with the phraseology used in UCC Article 8-501. Since the nominee of the DTC “Cede and Co.” serves as the surrogate “legal owner” of all shares held in “street name” 8-501 was drafted to “remind” the DTC that they were only acting in that “legal owner” capacity for reasons associated with streamlining our clearance and settlement process.

Since “Cede and Co.” is TECHNICALLY the “legal owner” of these shares the purchaser of shares that have yet to be delivered to its purchaser is relegated to be acting as a “securities entitlement” holder. As such UCC 8-501 mandates that the holder of the “securities entitlement” (the purchaser of the undelivered shares) be allowed “to exercise all of the rights and property interest that comprise that security”.

The net effect of this phraseology meant to be a subtle reminder to the DTC not to try to leverage its role of being deemed the surrogate “legal owner” is that a failure to deliver essentially results in the “issuance” of this rather odd “share” that TECHNICALLY has no “legal owner” nor is it TECHNICALLY “outstanding”. The problem is that this “share” is readily sellable just as if it was a legitimate share “issued” by a company’s board of directors and is therefore incredibly damaging from a dilution point of view because it contributes to the “supply” of that which is readily sellable whether it be legitimate shares or these special shares. These special shares add arithmetically to the number of legitimate shares that are already “issued and outstanding”. As such their presence predictably MANIPULATES share prices downwards.

The concept of those intentionally refusing to deliver that which they sold resulting in the “issuance” of incredibly damaging “shares without a legal owner” is rather troubling in that the invitation presents itself for securities fraudsters to establish massive naked short positions by simply refusing to deliver that which they sold while SIMULTANEOUSLY manipulating the share price downward which in turn creates value for the naked short position that was ILLEGALLY established if the failure to deliver was intentional. I think you can appreciate the “two for the price of one” aspect to this form of theft. This obvious invitation for abuse is what makes ANY failure to deliver worthy of inspection.

I can appreciate the fact that the concept of securities fraudsters being able to in essence cause the “issuance” of incredibly damaging “shares” is rather foreign at first but since the fact of whether or not that which is “issued” TECHNICALLY has a “legal owner” or not or is TECHNICALLY “outstanding” or not is immaterial from the point of view of the investor whose investment funds are being rerouted into the wallets of those accessing this “loophole” via intentionally refusing to deliver that which they sold.

The very concept of “CROOKS ISSUING SHARES” that create value for the naked short positions they have ILLEGALLY established via refusing to deliver that which they sold is rather frightening but it is exactly what is going on in this arena. What kind of a “rigged” casino would allow the mere methodology of placing a negative bet to alter the outcome of the bet? The “price discovery” mechanism does indeed need to tally all votes cast whether they be negative votes cast from short sales or positive votes cast from the purchase of shares but with the ability to literally “stuff the ballot box” with an infinite amount of these special shares then the “price discovery” process cannot work efficiently and is subject to intentional MANIPULATION.

With that being the reality you can imagine how a clearance and settlement system with integrity would aggressively treat ANY failure to deliver as an emergent measure needing to be “bought-in” promptly.

The fact that these special shares being issued are kept invisible to a corporation’s management team and prospective investors is also very troubling. The ’33 Securities Act (“The Disclosure Act”) clearly mandates that all information of a “material” nature regarding a prospective investment be made available to the investing public. The lack of these special shares being “outstanding” and therefore rendering them invisible to the public prohibits their disclosure to the investing public and encourages their issuance by securities fraudsters needing to operate in the darkness.

“Securities entitlements” are tricky. They were designed to serve as “accounting measures” to denote the DELAY of an imminent delivery. The DTCC’s default assumption is that all failures to deliver are associated with a “legitimate” delivery delay wherein it was presumed that the delivery of the missing shares was just around the corner. This allows the “issuance” of these special shares but when the delivery failure was intentional then all of a sudden it’s too late to in effect “cancel” the special shares that were mistakenly “issued” because the only way that can be done is to “buy-in” the failed delivery obligation.

Although the NSCC management has the congressional mandate “to act in the public interest, provide investor protection and to “promptly settle” all securities transactions as well as 15 of the 16 sources of empowerment to execute “buy-ins” they still have the audacity to plead to be “powerless” to execute buy-ins despite the fact that they are the ONLY cure available when an abusive NSCC participant absolutely refuses to deliver that which it sold and that the fear of a buy-in represents the only source of meaningful deterrence to these crimes. They are also the only means to “cancel” the special shares that were mistakenly “issued” when the default assumption as to the legitimacy of the delivery delay was incorrect.

How can one explain this mysterious behavior of this SRO known as the NSCC which is supposed to be acting as “the first line of defense against market abuses” like naked short selling? It might have something to do with the NSCC management doing exactly what their bosses the abusive NSCC participants/co-owners want them to do since they are the ones refusing to deliver that which they sell. It is usually a good idea for employees to look after the financial interests of their bosses should they want to remain employed.

If you at the SEC could only get your arms around the concept involving the “issuance” of these special shares then the emergent nature of ANY failure to deliver will jump out at you because of the ability of securities fraudsters to intentionally “stuff the ballot box” with negative votes during the voting procedure associated with the “price discovery” process. The ability to establish massive naked short positions by merely refusing to deliver that which you sell while SIMULTANEOUSLY forcing the share price down represents the ability to easily create a “positive feedback loop” resulting in the investment funds of U.S. citizens being rerouted into the wallets of those abusive NSCC participants that merely refuse to deliver that which they sell. What could be easier?

The insanity of removing the protective benefits of the “uptick rule” in the midst of this ability to create “positive feedback loops” is beyond description. The ability to qualify for having made a “locate” by merely having “reasonable grounds” to believe that your “locate” would result in delivery by T+3 is equally unconscionable. That policy has only made the “bogus locate” a form of currency amongst securities fraudsters. I’ll give you a “bogus locate” for shares of company “A” if you provide me one for company “B”. An appreciation for the “issuance” of these special shares and the accessibility of these “positive feedback loops” would have forewarned you that many parts of REG SHO were essentially dead on arrival.
Sincerely,
Dr. Jim DeCosta

http://seekingalpha.com/article/129706-did-the-ecb-save-comex-from-gold-default-part-2

A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.

“We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,” it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

In effect, the G20 leaders have activated the IMF’s power to create money and begin global “quantitative easing”. In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body.

http://www.nytimes.com/2009/04/06/business/06short.html?_r=1&ref=global-home

Sad for him!