Regulators Spring Into Action Against Naked Short Sellers. Or not.

    As is explained in numerous pieces in DeepCapture, there are many cracks in the settlement system, one of them being the DTCC’s Continuous Net Settlement system, or CNS. I am highly confident that the federales (at least, the SEC) are not permitted to explore the other cracks, that the failures to deliver that they see within the CNS are thus but a small fraction of all that exist, and that, therefore, trying to gauge the depth of the naked short selling problem from the level of FTD’s in the CNS is like trying to guess the condition of an automobile from the level of water in its radiator.

    But it’s a start. Given that the CNS system is the one place the SEC can look, and might be able to do something about, it is instructive to see how well they are cleaning up unsettled trades there.  Towards that end, DeepCapture has analyzed the data that the SEC released last week. These graphs show their fine progress in that regard.

    fails cns Regulators Spring Into Action Against Naked Short Sellers. Or not.

    fails value Regulators Spring Into Action Against Naked Short Sellers. Or not.
    ============================================================================
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    37 Responses to “Regulators Spring Into Action Against Naked Short Sellers. Or not.”

    1. Fred says:

      What’s wrong with this method, to estimate the failures in a specific issue: any company can get data from the DTCC on the total number of longs in all member brokers accounts and their customers. This number may or may not be net of shorts, but if not you do have short interest data twice a month. Wouldn’t the number of failures simply be the excess of net longs in these accounts over the number of shares registered in street name Cede & Co obtained from the transfer agent?

    2. Deek, the fractional custodian says:

      The problem is the company can’t get accurate information.

      - the only real shareholders are listed on the company shareholder list. Usually, Cede & Co. owns 50-90% of the stock on behalf of people with brokerage accounts.

      - the company can request a breakdown of the beneficial owners of shares registered to Cede & Co., but those beneficial holders are usually clearing houses and foreign depositories.

      - the company can get a list from each foreign depository about which brokerages those shares are being held for

      - the company can request a list of non objecting beneficial shareholders, but if it only includes US investors and if there is hanky panky, they claim that some investors object when they don’t and they don’t include them.

      Specially for smaller OTC companies, it’s common to find situations where you know a single shareholder owns 500,000 shares, but when you pull the NOBO list, you will find one brokerage with 100 clients where the total is less than the 500,000 that one investor holds.

      It becomes pretty obvious that specially for issuers that have a pattern of needing to raise money, that it is likely extremely common that the float of IOU’s exceeds the real float.

      What absolutely sickens me is this scam isn’t limited to equities. They sell you IOU’s for government treasuries, screwing local municipalities and creating a situation where more than one person owns what they believe is AAA debt.

      They sell IOU’s for commodities (screwing miners), foreign currencies, grain (screwing farmers), etc.

      The IOU’s are the reason there is a waiting list to buy gold coins. If prices are set by supply and demand, than there should always be adequate supply at the price – obviously something isn’t working.

      The way to understand it is banksters have got rich taking your government money and giving you receipts (bank notes) in return and only fractionally backing the government money.

      Now they do the same thing with anything that trades. They act as custodian, than only fractionally back what they are holding in trust for you. Their only potential consequence is breach of contract.

      If you want to truly understand how screwed up this is, try to find out who owns Cede & Co. It has existed at least as early as 1971 and is a private partnership. It is not part of the DTC or DTCC (if it was, it would show up in their financials). It is literally the actual owner of most wealth that trades on Wallstreet and no one knows who owns it.

      I’ve tried calling the DTCC and DTC and asking for details on ownership and they get really mad and hang up on you.

    3. Deek, the fractional custodian says:

      Senator Metcalf believed in 1971

      “Cede & Company is the Stock Clearing Corporation, which is a wholly owned subsidiary of the New York Stock Exchange”

      The DTCC didn’t come into existence until 1999 and the NYSE was privately owned, which means your shares are being registered in the name of a private partnership.

      This document is really worth reading – this fight against fails to delivers and phantom ownership dates back to the late 1960′s and early 1970′s.

      http://www.bearfactsspecialistreport.com/Specialist%20System%20Articles/Who%20Owns%20America.doc

    4. Ted says:

      It’s trivially easy for the system to electronically assign shares to real people instead of to Cede & Co. Just assign every investor an anonymous number. Beneficial ownership at the DTC would assign that share to that investor number.

      It would save a fortune as you could get rid of all the foreign depositories, custodians and billions of dollars in brokerage back office expense. Did you know 90% of brokerages outsource that as it is such a headache?

      The reason they don’t do that?

      Cuoio beno?
      Who benefits?

      The system could be trivially fixed in 60 days, but the thieves lining their pockets, the same thieves who determine who gets elected, the same thieves that control all the media outlets don’t want it fixed.

    5. n-tres-ted says:

      Patrick, SIFMA until this year regularly published balance sheets on line for its member firms on a consolidated basis. As of March 31, 2008, consolidated exposure to undelivered shares (both FTRs and FTDs) amounted to $258 billion. That appeared to me to be a marked down measure of total settlement fails in equities, taking into account all of the “cracks,” except maybe whatever they hide off-shore in “unrelated” shells.

    6. Deek, the fractional reserve custodian says:

      Besides this article, which should be a front page Deep Capture story:

      http://www.bearfactsspecialistreport.com/Specialist%20System%20Articles/Who%20Owns%20America.doc

      Patrick should resurrect the writings of Richard Ney.

      He fought the exact same battle in the late 60′s and early 70′s, with Senator Metcalf one of few to listen and finally gave up, giving advice to assume the market is corrupt and bet the same way the specialists do.

      Look for books like:

      Wallstreet Jungle
      Wallstreet Gang
      Making it in the Market

      http://en.wikipedia.org/wiki/Richard_Ney

      My favorite quote was

      “The story is told that after he had been deported to Italy, Lucky Luciano granted an interview in which he described a visit to the floor of the New York Stock Exchange. When the operations of floor specialists had been explained to him, he said, ‘A terrible thing happened. I realized I’d joined the wrong mob’” (1Ney, 8).

      http://w3.tribcsp.com/~fredj/ney.html

    7. pickled_shark says:

      Quick question. What is there to prevent someone from buying up 2 or 3 times the total shares. 300% of the company if you gather all the shares and a bunch of FTD’s/IOU’s. At which point the owner of those shares and IOU’s could then instigate a buyout at any arbitrary price ($10 million, $10 billion whatever) ensuring a profit as the owner is essentially buying the shares from himself at named price and profiting from any shares/FTD’s owned beyond the 100% of the listed share count. I know there are plenty of rules to prevent cornering/ short squeezes, primarily ownership disclosure, but it seems to be outright fair and legal to me if one is genuinely interested in acquiring a company and adheres to fully disclosing ownership and intentions.
      Granted I see the counterparty risk that a market participant that doesn’t deliver on shares more than likely wont deliver cash in lieu of these FTD’s on the tender date, and broker/dealers seem to be having solvency issues of their own these days, any securities law gurus out there?

    8. Deek, the fractional reserve custodian says:

      If you give me your car and ask me to register it for you while you are out of town, I am the “actual” owner and you are the “beneficial” owner.

      If I refuse to give it to you when you get back, you can sue me, but I own it until the judge says otherwise.

      You won’t like the answer.

      You can own 300% of the outstanding shares “beneficially”, but you aren’t allowed to vote.

      Only the “actual owner”, Cede & Co. is allowed to vote. Via contract with you, they may choose to take instructions on how to vote, but if there are a lot of IOU’s out there, they might only assign each one of your virtual votes 1/10th of a real vote.

      Only people that own certificates (electronically or physically) own real shares and have a real right to vote. If you haven’t transferred your shares out of your brokerage account and registered them via the DTC FAST direct ownership to become an “actual owner”, you are part of the problem.

      Much of what is talked about here:

      http://www.bearfactsspecialistreport.com/Specialist%20System%20Articles/Who%20Owns%20America.doc

      is that because Cede & Co. doesn’t have to vote the way they are instructed and has the right to vote if you don’t instruct them, they have voting control of every major corporation in the country, including all media outlets. By controlling media, they know that they don’t have to follow the constitution as applies to property law.

      Cede & Co. is NOT the DTC or the DTCC. It predates it by at least 22 years. It is the privately owned partnership the DTC nominated to own the shares on their behalf.

      Think about it. Trillions of dollars of stock, bonds, commodities and derivatives are owned by a corporation of unknown domicile and unknown ownership that has been accused of being a nominee monopoly owner of US corporations for some super rich group for 40 years.

      What’s really encouraging is we are digging out works by people like Richard Ney that were ignored in 1971 and via the internet, we are mobilizing tremendous change and the banksters are going to lose and people that really produce goods and services for a living are going to have a much higher standard of living.

    9. pickled_shark says:

      okay you missed the mark entirely.
      You are allowed to vote, in fact, 3 times over. Overvoting is a problem, but assume that everyone voting and overvoting votes in favor of the cash tender offer, which of course they would. What am i missing?

    10. Reporter101 says:

      Criminal groups threatening capital markets, RCMP says

      DEAN BEEBY
      The Canadian Press
      December 8, 2008 at 4:31 AM EST
      http://www.theglobeandmail.com/servlet/story/RTGAM.20081208.wcrimemarkets08/BNStory/National/home

      OTTAWA — Organized crime has become a significant threat to Canada’s capital markets, a new report from the RCMP’s fraud squads says.

      Major crime groups are recruiting investment professionals to help them move far beyond traditional activities – smuggling, extortion and counterfeiting – into the rarefied world of high finance and market manipulation, the Mounties say.

      “Using the markets requires a degree of knowledge and expertise,” says the draft report from the RCMP’s Integrated Market Enforcement Teams, or IMETs.

      “Organized crime groups harness this skill set by using professional facilitators in the industry.

      “The facilitators’ subjective knowledge of the true nature of these schemes ranges from willful blindness to direct fraudulent participation.”

      The alarm is being sounded in the first strategic-intelligence report issued by the fraud squads since they were founded in 2003 as Canada’s answer to aggressive U.S. probes into the Enron, Tyco, WorldCom and other Wall Street scandals.

      The Canadian Press obtained a heavily censored version of the 23-page RCMP report under the Access to Information Act.

      The document is intended to alert Canadian law-enforcement agencies and foreign partners to crime trends observed in Canada’s capital markets in 2007-2008.

      Organized crime and “criminalized professionals” – rogue investment specialists – are described as the two main players in financial crimes.

      The Mounties acknowledge that busting criminal organizations that manipulate capital markets is a daunting challenge.

      “The majority of the activity occurs indirectly and is obfuscated under the cloak of apparent legitimate trading between arms-length buyers and sellers,” the document says.

      “Organized crime groups are constantly innovating their money laundering and fraud techniques in the attempt to remain one step ahead of law enforcement.”

      The released sections of the report do not identify which organized crime groups are active in market frauds.

      The IMETs have been criticized over the past five years for the glacial pace of their often-complex probes.

      So far, criminal charges have been laid in just nine cases, four of them relatively minor. Four of the major investigations saw charges filed only this year.

      The teams had initially set themselves a tight deadline of one year from the start of a probe to the laying of charges, but have not lived up to the promise.

      Mountie officials did not respond directly to a question about whether organized crime has been involved in the investigations where charges have been laid. Four of the nine cases involve some form of money laundering, a traditional activity of crime groups.

      “As our charge history has shown, our investigations involve everything related to capital markets fraud, from large companies trading on senior exchanges to small companies on Over-the-counter Bulletin Board (OTCBB) and the Pink Sheets,” Sergeant Dean Buzza, director of the integrated market enforcement branch, said in an e-mail. “Given this broad spectrum, and the sheer magnitude of transactions in the capital markets, it would be expected that traditional organized crime groups would, in one way or another, be connected to the capital markets.”

      OTCBB and Pink Sheets refer to the less-regulated electronic trading in shares of smaller companies that are generally exempt from disclosing full financial information, as regulators require of firms listed on stock markets.

      The RCMP fraud squads have complained they lack power to compel testimony from reluctant witnesses who are protected by a constitutional right against self-incrimination.

      Ottawa has been consulting with the provinces for more than a year on ways to introduce such power, which securities cops in Britain and the United States enjoy, as do Canadian investigators working under the authority of the Income Tax Act and the Competition Act.

      A spokeswoman for Public Safety Minister Peter Van Loan says a proposal is in the works.

      “It is still moving forward,” Stephanie Rea said in an interview. “We’re hoping that we can have something solid soon.”

      There are currently nine IMET teams, three in Toronto and two each in Vancouver, Calgary and Montreal. The teams, funded at $31.3-million annually, employ forensic accountants, market specialists and federal prosecutors to help unravel often-tangled financial crimes.

      Sgt. Buzza said the current meltdown of financial markets underscores the original rationale for the fraud squads, that the loss of public confidence in the system, whether because of crime or financial bungling, not only hurts markets but the economy as well.

      “For quite some time, we have been saying that when the confidence of Canadians, investors and members of the business community in the integrity of the financial system is shaken, it has a detrimental effect on the economy

      http://www.theglobeandmail.com/servlet/story/RTGAM.20081208.wcrimemarkets08/BNStory/National/home

    11. Sean says:

      Recs: 2 Dylan Ratigan Name Bank CEOs Took Too Much Risk, Got Rich and Got Bailed Out

      http://link.brightcove.com/services/link/bcpid1079049304/bctid4123830001

    12. Sean says:

      I can’t stop laughing!They think this move will alleviate their problems with Patrick and OSTK. YThey are trying to run and hid under he guise that the SEC did them in!!LOL!!!!

      Chalk one up for the Good Guys
      DJ IN THE MONEY:Copper River Closes, Returns Funds To Investors

      By Carol S. Remond

      A DOW JONES NEWSWIRES COLUMN

      A violent market downturn and the government’s decision to impose wide-ranging restrictions on short selling in September was just too much for Copper River Management.

      After losing more than half of its value in the last couple of months, the Larkspur, Calif., fund is liquidating and returning funds to its investors.

      The fund had originally been considering its options, including shutting down some offices and continuing on as a smaller entity. But the enormity of its losses might have been too much from which to rebound.

      Fund manager Marc Cohodes declined to comment.

      Copper River, a $1 billion fund that primarily bet on the declining value of stock it deemed overpriced, held large short positions in some illiquid stocks when the Securities and Exchange Commission in mid-September dramatically tightened the rules governing short selling.

      Short sellers typically borrow shares to sell them and profit when the price drops.

      By doing away with an exemption which was the backbone of a trading strategy that allowed funds to short stocks in the options market, the SEC effectively restricted their ability to maintain these positions and provoked a large-scale short squeeze. The SEC later temporarily banned the short selling of financial institutions whose stocks had been severely depressed by the unfolding credit crisis.

      As it became harder to take or maintain short positions, hedge funds were faced with wide ranging ‘buy-ins’ and had to pay large premiums to cover their positions. Copper River lost about 50% of its value in September and was down another 5% in October.

      Fairfax Financial Holdings Ltd. (FFH), a Canadian insurance company that is suing several hedge funds in New Jersey State court, was one of the big beneficiaries of the SEC’s anti-short crackdown, with its price jumping $100 a share to $326 in just a few trading days. Rocker Partners, Copper River’s predecessor fund, was dismissed from the Fairfax suit in late September after successfully arguing that Fairfax hadn’t proven the fund’s alleged participation in a conspiracy to depress its stock.

      The SEC’s anti-short-selling edict was very bad news for most funds, especially those such as Copper River whose main investment strategy was short selling. But Copper River’s plight was made even worse by the bankruptcy filing by Lehman Brothers Holdings Inc. (LEHMQ).

      According to people familiar with the matter, Copper River was unable to cash out derivative contracts, most likely reverse swaps, in which Lehman was the counterparty before the Wall Street company filed for bankruptcy protection. This meant that, when Lehman filed for bankruptcy on September 15, Copper River’s money became tied up in the proceedings.

      As the magnitude of the crisis became more apparent, prime brokers began raising margin requirements, which compounded the impact of the short-selling ban and forced Copper River and other funds already strapped for cash to put up more collateral or liquidate trading positions.

      Copper River made a name for itself as an aggressive short-selling fund that didn’t shy away from controversy. Former manager David Rocker, who retired in 2006, was often very vocal against companies whose stock the fund deemed overvalued. Copper River remains embroiled in a legal battle with online retailer Overstock.com Inc. (OSTK) which alleged in a California state court suit that the fund conspired to denigrate the company. Overstock.com recently settled charges with Copper River’s alleged co-conspirator, research firm Gradient Analytics.

      (Carol S. Remond, a special writer on the In The Money team, is an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with “Exposing Small-Cap fraud,” a series of articles that described how three small companies unscrupulously pumped up their stocks. She can be reached at 303-997-5783 or by e-mail: carol.remond@dowjones.com)

    13. Reporter101 says:

      Regarding your post #11, just how many of these incompetent Boobs do you think have their money sheltered like say at :

      US-Liechtenstein Pact Will Dim Tax Haven’s Allure to Wealthy ….Who will be turned over as scape goats and who will get good ole boy Protection ?
      Show us da MONEY !!!!

    14. Reporter101 says:

      Regarding your post #11, just how many of these incompetent Boobs do you think have their money sheltered like say at :

      US-Liechtenstein Pact Will Dim Tax Haven’s Allure to Wealthy
      http://www.bloomberg.com/apps/news?pid=20601100&sid=aewltPzw8E7Q&refer=germany

      ….Who will be turned over as scape goats and who will get good ole boy Protection ?
      Show us da MONEY !!!!

    15. Ken Lay says:

      Well, Sean and Carol I guess Copper River should have had a more diversified investment strategy but I understand when you have enjoyed all the advantages that short sellers have historically enjoyed it would be easy to slip into a solitary investment strategy. So in the end the markets did what they were supposed to do and eliminated the weak. I guess the short sellers were able to provide their greatest service which is to provide liquidity to the market place.
      I guess federal intervention is always a possibility in any arena and as such should be considered a market force like any other and taken into account.
      However, I see a pattern here that would indicate that Copper River intentionally deystroyed themselves in the “Bunker” rather than be subjected to a trial they would lose due to the OSTK allegations. In other words the investor partners should be suing Rocker & Cahodes personally as they were taken to the cleaners.
      In keeping with this I believe Bear Stearns event and the Lehman Bros. events were handled as they were in order to deystroy evidence of naked shorting and other illegal activities these brokers weere involved in.

      Just a hunch

    16. tommytoyz says:

      To post #6 by pickled_shark:

      You have described the Achilles Heal of selling fake shares to the market. By intelligently exploiting the cracks, change can be demanded and would have to be granted.

      More effective than doing a one time buy out, is to accumulate and concentrate dividend rights in excess of 100% that the company is obligated to pay, with the rest coming from Wall Street, and then run dividends every month.

      It’ll clean their clock with the DTCC along for the ride. Then we can go into a room and from a position of power, demand changes.

      The big trick is to keep it legal, beyond reproach and out of the reach of the SEC and FED, yet keeping a very low profile until the dividends start. This requires a complex and international set up – but it can be done as far as I know.

    17. deek says:

      You DON’T have the right to vote. Only the “actual owner” of the shares, as evidenced on the company shareholder list is allowed to vote. That is Cede & Co.

      You send in a proxy instructed them how you’d like them to vote their omnibus proxy, but they don’t have to vote the way you direct them to. The shares are in their name, not yours.

      In 1971, Senator Metcalf became upset because most people don’t even send in instructions, leaving Cede & Co. to vote as they wish. They control every board of every major company in America, including media outlets.

      It is really worth reading some of the work of Richard Ney.

    18. deek says:

      Tommy is right. If a company pays out dividends, the IOU holders also expect to be paid.

      If there are twice as many IOU’s as real shares, for every dollar the company issues, the people holding the fails have to match it.

      I often thought this would be a way to kill them. Find some company with IOU’s many times the number of shares out. Insiders quietly buy 100% of the shares, then buy a really profitable private business for shares and then take the profits from that business and dividend them every month.

      The shorts have no way to cover (every real share is already owned) and become trapped in a money machine where they have to write a check every month.

    19. Jeremiah 9:24 says:

      Regarding #18 post by Deek commenting on Tommy’s post: I understand that insiders and ‘friendlies’ of OSTK own over 130% of the outstanding common shares of OSTK.

      Considering the way the economy is going and what the Goldman/Citi et al. crowd (they are moonlighting these days at the helm of the Treasury / Fed) have in store for this country, a nationwide discount outlet with no real estate anchor around its neck seems to make sense as a business model that will generate profits thus dividends down the road….

    20. Jeremiah 9:24 says:

      Regarding Sean’s post #12 above, entitled “DJ IN THE MONEY:Copper River Closes, Returns Funds To Investors

      By Carol S. Remond

      A DOW JONES NEWSWIRES COLUMN”

      I note at the end of her misleading and often factually incorrect story it is stated that the lovely Ms. Remond is “an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with “Exposing Small-Cap fraud….”

      Does anyone know whether Gerald Loeb is connected to a certain hedge fund weasel also named Loeb? Maybe it’s just a coincidence. Lots of Loeb’s around I suppose.

    21. deek says:

      Jeremiah, what’s a bit confusing is the difference between the “beneficial owner” (the one who is owed the share) and the “actual owner”, the one who has the right to dividends and voting the share.

      It would be similar to if I gave you money to buy me a house and you registered it in your name. Even though I was the “beneficial” owner, you’d be the “actual” owner and could do whatever you want with it. I might have a trust agreement with you, but if you breached it, it wouldn’t be criminal. It’s only contract / civil law.

      Patrick’s group may be the beneficial owners of 130% of the outstanding stock, but they aren’t the actual owner unless they’ve pulled their certificates or had their shares registered to themselves through dtc.

      Beneficial owners have long chains of trust agreements with their broker who has an agreement with the clearing broker who has an agreement with the prime bank who has an agreement with the DTC who has an agreement with Cede & Co.

      Anyone of those agreements can be broken, with IOU’s bloating to exceed actual shares.

      What drives me nuts is how Cede & Co. could be a private holding company for the privately owned NYSE back in 1971 (Google Senator Metcalf) and now it owns EVERY share and bond in the DTCC system even though it is not part of the DTC or DTCC (it doesn’t appear in their annual reports).

      The implication is that a privately owned partnership company of unknown jurisdiction has been nominated to be the actual owner of every share in the system.

      They claim Cede stands for CEntral DEpository, but it is interesting that if you look up the word in a dictionary, you get:

      “To surrender possession of, especially by treaty. See Synonyms at relinquish.”

      They laugh at you as you give them control over your assets…

    22. Jeremiah 9:24 says:

      Deek,

      One minor clarification on your point, if I breached the hypothetical trust agreement with intent to defraud you or someone else, it would in fact be a criminal act in addition to a civil tort and a violation of the contract.

      If I were using your house or other property (albeit titled to me in trust) to defraud you or other people, e.g., selling it multiple times and/or leasing it multiple times without telling the buyer(s) / lessee(s) then that also would be fraud, even if I had the right as trustee to administer the ‘trust asset’ for you. In fact I have a responsibility under state trust law to not cause or permit ‘waste’ of the trust assets. Actively assisting in the destruction of said assets would of course be a no no.

      If I were loaning out the asset multiple times with reasonable suspicion or worse yet knowledge that the borrowers were committing a criminal act, e.g., stock manipulation, then that would in fact be a crime sometimes known as conspiracy, or a separate crime known as aiding and abetting. If I were making the ‘loans” AND I had in another department evidence –proof, in fact– that the borrowers were manipulating the public market for the asset I loaned them (multiple times), e.g., selling and letting delivery fail for days/weeks/months, then I would in fact be susceptible to civil and criminal charges.

      The DTCC is a criminal enterprise with a legitimate front business; it is the ultimate counterfeiting and money laundering operation. The only problem is that no one will investigate them so they will continue to operate as a criminal enterprise.

      I have typed part of this while on a couple of calls so I hope it makes sense…

    23. deek says:

      Jeremiah, I agree with you completely. I think they are a bunch of counterfeiting thieves.

      But:

      At each step in the daisy chain, they don’t consider you their customer. Cede & Co. only has a contract with the DTC. You aren’t party to the agreement.

      Read the DTC rules. From their point of view, the beneficial owner is the DTC participant (brokerage, clearing house or foreign depository) that their records show the shares belonging to.

      There could be dozens of contracts with various parties in various jurisdictions between you, the beneficial owner and Cede, the actual owner.

      And “criminal” applies to the criminal code in only the one country where the contract exists. There’s no such thing as a global criminal code.

      They’ve used contract law to create a hodge podge of agreements across jurisdictions that not regulator has the authority to peer into as each regulator only regulates one tiny aspect of the system.

      I met a guy who got loans in Canada against a fleet of motorhomes, then went to the US and got another set of loans against the same motorhomes in the US. He was caught using the same security twice, but he wasn’t arrested as in each country, he had abided by the laws of that country.

      The solution is simple. The beneficial owner and the actual owner should be the same entity. With computers, it would be trivial for them to number investors and have the shares belong to an anonymous, unique investor at the end of each trading day.

      Central depositories were invented in the days of mail and paper certificates and are completely irrelevant today, except as far as ripping us all off.

    24. deek says:

      Another point:

      There was a case where it was established that a clearing brokerage is not responsible for knowingly facilitating fraud because from their point of view, their customer is the brokerage.

      Even if they know the brokerage is ripping off the investor, they have no fiduciary responsibility to the investor as their contract is only with the brokerage.

      From their point of view, the brokerage is the beneficial owner of the shares, not you. They aren’t party to your agreement with your brokerage.

      It takes a minute to get your head around it, but they’ve used contract law in a daisy chain across jurisdictions to protect themselves from being accused of fraud.

    25. Hang_'em_High says:

      ATTN: Naked Short Selling Criminals —

      Hedge Fund perpetrators tremble in FEAR of prosecution of a guy named Giovanni Spagnolo. Could the prosecution be happening in the USA? UNFORTUNATELY NOT! It’s happening in Australia. It seems that Australia is trying to clean-out the FINANCIAL-CRIMINAL-SCUM Naked Short Sellers among them. I quote from the article linked below:
      ……………………………………………………….

      “Spagnolo faces five short-selling charges brought by the Australian Securities and Investments Commission. ASIC alleges that Spagnolo sold shares and options he did not own – the definition of naked short-selling – in breach of section 1020B(2) of the Corporations Act.”
      ………………………………………………………

      I wonder — Will the SEC ever prosecute Hedge Funds in the USA that have been FINANCIALLY-RAPING legitimate investors via Naked Short Selling? I have yet to hear of ONE (1) prosecution of “Naked Short Selling”!!! This is irrational — considering that the markets have been pummelled — and the SEC is supposed to be the top policing/regulatory agency of the securities industry in the USA! It doesn’t make much sense to me — especially after viewing the rising FAILS-TO-DELIVERS in the charts posted by Dr. Patrick Byrne on this blog post. You would have to BLIND AS A BAT not to see that the monumental-nuclear-sized problem — is getting even worse!

      But, surprisingly, the SEC even suspended the Uptick Rule on July 6, 2007 — which allows the Bear Raiding Hedge Funds to engineer even faster declines in share prices. Wasn’t that about the time the volatility (wide market swings) began ocurring? (HECK YEAH!!!)

      Maybe USA regulators will wake up one day — and notice that the market is NEAR ZERO — and decide to level the playing field by reinstating the Up-tick Rule and PROSECUTING ALL NAKED SHORT SELLING.

      Here’s a link to the complete article about the Australians trying to clean up the Hedge Fund scum among them:
      http://business.theage.com.au/business/shortselling-case-will-test-the-law-20081107-5k6u.html

      I want justice for LEGITIMATE INVESTORS — and I want to see the financial criminals prosecuted to the fullest extent of the law.

      Hang_’em_High

    26. Reporter101 says:

      Hang_’em_High,
      Ever thought that perhaps maybe, just maybe that the regulators actually are awake and perhaps may have a vested interest in decisions to allow the gang rape of the markets ? That perhaps maybe, just maybe Gary Aguire was getting a little TOO close in his investigations to perhaps insiders as well ? (thus his firing), Maybe, just maybe there is some I know stuff on you, and if you don’t change the rules I might just go public ? Or maybe they have chit on each other ? What a treasonous web that has been weaved !!!

    27. Sean says:

      Reporter 101 I happen to be in total agreement with you latest post!!!

    28. Reporter101 says:

      Maybe this may be one thought !!

      http://www.vnnforum.com/showthread.php?p=846599

    29. aig says:

      Good link, reporter. This guy is an AIG whistleblower.

      http://tinyurl.com/66aqq5

      “In 2000 I worked for a software development entity called SilverStream Software….SilverStream had built internet transactional and trading platforms for Merrill Lynch, Deutsche Bank, Banker’s Trust, Alex Brown, Morgan Stanley; to name a few”

      “Why would anyone in their right mind invest in AIG when AIG played a major role in the collosal thefts from the WTC as the Towers fell? It appears AIG was set up for just that purpose.”

    30. Reporter101 says:

      aig,
      Could this be why we the American people were never told by our government who held the billions of $$$$$ in put options against the airlines prior to 9/11? We never were told who stood to make a profit in the market those attacks ?

    31. Reporter101 says:

      AIG owes $10 billion on trades gone bad: report

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      Wed Dec 10, 7:35 am ET
      AIG owes $10 billion on trades gone bad: report AFP/File – AIG headquarters in Hong Kong. The Wall Street Journal has reported that American International Group …

      WASHINGTON (AFP) – Fallen US insurance giant American International Group owes financial firms some 10 billion dollars on speculative trades that turned sour, the Wall Street Journal reported on Wednesday.

      The trades have not been explicitly revealed before and would not be covered by the US government’s bailout package of more than 150 billion dollars for the troubled company, the Journal reported, citing unnamed sources.

      Details of the trades mark the first indication that AIG may have been gambling with its own capital, the Journal wrote.

      The government intervened to rescue AIG from collapse in September and has since dramatically expanded its rescue funds as the firm suffers from failed bets on complex financial instruments.

      An AIG spokesman told the Journal that the trades were not speculative bets but “credit protection instruments.”

      He said the trades have been fully disclosed already and amount to less than 10 billion dollars of the firm’s 71.6 billion dollars exposure to derivative contracts on debt pools, or collateralized debt obligations, as of September 30.

      AIG was the world’s largest insurer before the global credit crisis brought it down.

      http://news.yahoo.com/s/afp/20081210/ts_alt_afp/financeeconomyinsuranceuscompanyaig_081210123530

    32. Reporter101 says:

      WOW, they are handed Billions of dollars of taxpayers money and do not even have to fully disclose. What is wrong with this picture ?

      AIG May Owe $10 Billion for Sour Trades
      Reuters
      posted: 4 HOURS 53 MINUTES AGO
      comments: 91
      PrintShare
      Text SizeAAA
      NEW YORK (Dec. 10) – American International Group , once the world’s largest insurer, owes around $10 billion to other financial services firms for trades that have gone sour, the Wall Street Journal reported in its online edition on Tuesday.
      The report, citing people familiar with the matter, says the trades have not been explicitly disclosed before, and are not covered by terms of a current $150 billion U.S. government rescue package.
      The government’s rescue package was meant to save AIG from collapse, but the Wall Street Journal report says the newly discovered trades raise further questions about how the insurer will raise money to pay the debts.
      An AIG spokesman could not immediately be reached to comment on the report.
      Reporting by Paul Thomasch; Editing by Gary Hill
      Copyright 2008, Reuters
      2008-12-10 07:10:45

    33. Sean says:

      You guys want to read about the second biggest coverup of the year? Read this!!

      http://investorvillage.com/smbd.asp?mb=3532&mn=28045&pt=msg&mid=6266455

    34. 1776 Again says:

      HYPOTHESIS :

      CEDE & CO/DTC as the market manipulation tool to show trades that are fakes. They can move wholesale numbers of shares back and forth on computer trading programs as many times a day (or night) as necessary to achieve the desired effect. That’s probably because it is only a front for the real owners. THE FED ? MAYBE ALL THE CENTRAL BANKS IN COLLUSION. ??

    35. sammy says:

      pBfGdn vkoo7wvY5Xkfak7bf1Th

    36. higuys, Thanks for sharing. We all are appreciative followers ! ola !

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