From Bloomberg:

“Airport Runway

On Sept. 17, two days after Lehman Brothers filed for Chapter 11 bankruptcy, the number of failed trades climbed to 49.7 million, 23 percent of overall volume in the stock.

The next day, the SEC announced its ban on shorting financial companies in 2008. The number of protected stocks ultimately grew to about 1,000. On Sept. 19, the commission announced “a sweeping expansion” of its investigation into possible market manipulation.

The ban, which lasted through Oct. 17, didn’t eliminate shorting, according to data from the SEC, the NYSE Arca exchange and Bloomberg. Throughout the period, short sales averaged 24.7 percent of the overall trading in Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. on NYSE Arca. In 2008, short sales averaged 37.5 percent of the overall trading on the exchange in the three companies.

To date, the commission hasn’t announced any findings of its investigation.

Pollack, the former SEC regulator, wonders why.

“This isn’t a trail of breadcrumbs; this audit trail is lit up like an airport runway,” he said. “You can see it a mile off. Subpoena e-mails. Find out who spread false rumors and also shorted the stock and you’ve got your manipulators.”

http://www.bloomberg.com/apps/news?pid=20601109&sid=aB1jlqmFOTCA

udge Rejects BofA-SEC Pact, Sets Trial Date

SEPTEMBER 14, 2009, 12:53 P.M. ET
By JESS BRAVIN
http://online.wsj.com/article/SB125294493976909051.html

Federal District Judge Jed S. Rakoff rejected a proposed $33 million settlement of allegations by the Securities and Exchange Commission that Bank of America Corp. “materially lied” in shareholder communications about bonuses to employees of Merrill Lynch & Co.

Instead, Judge Rakoff set a Feb. 1 trial date on the allegations in his New York courtroom.

Judge’s Order: BofA-SEC Pact
http://online.wsj.com/public/resources/documents/bofaorder914.pdf

The SEC and Bank of America had sought the judge’s approval of a consent decree to resolve charges that the bank concealed an agreement to pay up to $5.8 billion in bonuses to Merrill executives.

In an order issued Monday, Judge Rakoff acknowledged the public interest in settling disputes rather than having them go to trial. Nonetheless, he wrote, “even upon applying the most deferential standard of review,” he was “forced to conclude that the proposed consent judgment is neither fair, nor reasonable, nor adequate” to protect the public interest.

In effect, Judge Rakoff found, the settlement would force the victims of the alleged misstatements–Bank of America shareholders–to pay an additional $33 million.

“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,” the judge wrote.

The judge has noted that SEC policy directs that culpable executives be punished for misleading shareholders, something the commission had not sought in this case.

Write to Jess Bravin at jess.bravin@wsj.com

http://online.wsj.com/article/SB125294493976909051.html

I like the “phrase of the day” award you gave to Judge Rakoff in the B of A case.

The “Facade of Enforcement” is, in my opinion, exactly what the SEC has become. And I think this describes what “REG SHO” was and is today.

We sent in irrefutable posts proving that Ru4real and Jag-this were one and the same basher and they were never taken down for a multi-alias violation. But any poster appearing as a long will be gone almost instantly unless posting over the weekend when RB staff is not present.

The RB JAGH board is captured lock, stock and barrel. Prove it to yourself by going on the board and create a new profile and post as a long and you will be taken down shortly.

What a crock that board is.

“The parties’ submissions, when carefully read, leave the distinct impression that the proposed consent judgment was a contrivance designed to provide the SEC with the façade of enforcement and the management of the bank with a quick resolution of an embarrassing inquiry,” Rakoff wrote.

I think our “phrase of the day” award has to go to Judge Rakoff in the B of A case. He labeled the SEC’s role in accepting the B of A settlement as the SEC providing the “facade of enforcement”. The role of a truly “captured” regulator is to provide the “facade of enforcement” so that misguided investors under the illusion that the SEC and the SROs are providing effective “investor protection” will gladly place their bets on the table. What you need is the presence of a police-like entity that refuses to act in a policeman-like role.

Thank you again for your “hard hitting” letter to the SEC.

It is now obvious to me that the SEC has no intention of ever eliminating “Naked Counterfeit Short Selling,” because this would prevent Wall Streeters from running their extremely profitable Second Tier Ponzi Scheme. So we are left with seeing continual announcements from the SEC about how they are proposing another change in REG SHO.

In fact, I suspect the Original Secret Purpose for setting up REG SHO was to institutionalize and to protect this Wall Street Second Tier Ponzi Scheme.

In thinking about this, I recently make the connection to the fact that most American Workers today have a 401K Retirement Plan instead of a Pension Plan. Instead of professional Wall Streeters overseeing a pension plan, now each individual American worker is a single small fish in the sea with no one looking out for their welfare on Wall Street.

REG SHO, this Wall Street Second Tier Ponzi Scheme, allows corrupt Wall Streeters to steal money from any small fish American Worker’s retirement fund with ease and with protection from the SEC as defense lawyers for their Wall Street fraternity brothers.

Keep up the good fight Doctor!

http://www.reuters.com/news/video?videoId=111472&videoChannel=3