Contributor Candidate or PAC Amount Date FEC Filing
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L. MADOFF INVEST.-SEC./CHAI
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE (D) $25,000
primary 09/12/08
Madoff, Bernard L. Mr.
New York, NY 10021
Bernard L. Madoff Investment Securi
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION POLITICAL ACTION COMMITTEE $5,000
primary 08/20/08
MADOFF, BERNARD
NEW YORK, NY 10022
SELF EMPLOYED/INVESTOR MERKLEY, JEFFREY ALAN (D)
Senate – OR
JEFF MERKLEY FOR OREGON $2,300
primary 04/24/08
Madoff, Bernard L.
New York, NY 10021 SAUL, ANDREW MARSHALL (R)
House (NY 19)
SAUL FOR CONGRESS INC $-2,300
primary 12/05/07
Madoff, Bernard L
New York, NY 10021
Bernard Madoff Investment/Chairman LAUTENBERG, FRANK R (D)
Senate – NJ
LAUTENBERG NJ VICTORY COMMITTEE $5,000
primary 07/20/07
Madoff, Bernard L
New York, NY 10021
Bernard Madoff Investment/Chairman LAUTENBERG, FRANK R (D)
Senate – NJ
LAUTENBERG NJ VICTORY COMMITTEE $2,300
primary 07/20/07
Madoff, Bernard L
New York, NY 10021
Bernard Madoff Investment/Chairman LAUTENBERG, FRANK R (D)
Senate – NJ
LAUTENBERG NJ VICTORY COMMITTEE $300
primary 07/20/07
Madoff, Bernard L.
New York, NY 10021
Bernard L. Madoff Investment/Chairm SAUL, ANDREW MARSHALL (R)
House (NY 19)
SAUL FOR CONGRESS INC $2,300
primary 07/10/07
Madoff, Bernard L Mr.
New York, NY 10021
Bernard L. Madoff Investment Securi
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION POLITICAL ACTION COMMITTEE $5,000
primary 05/24/07
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L. MADOFF INVEST.-SEC./CHAI
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE (D) $25,000
primary 05/04/07
Madoff, Bernard L Mr.
New York, NY 10021
Bernard L. Madoff Investment Securi
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FUND A $5,000
primary 10/17/06
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L. MADOFF INVEST. SEC./CHAI
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE (D) $25,000
primary 09/30/06
Madoff, Bernard L Mr.
New York, NY 10021
Bernard L. Madoff Investment Securi
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FUND A $5,000
primary 09/22/05
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF INVEST SEC
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE (D) $25,000
primary 05/09/05
Madoff, Bernard
New York, NY 10021
Madoff Investments/Chairman MATHESON, JAMES (D)
House (UT 02)
MATHESON FOR CONGRESS $250
general 10/18/04
Madoff, Bernard
New York, NY 10021
Self-employed/Banker HOOLEY, DARLENE (D)
House (OR 05)
HOOLEY FOR CONGRESS $250
general 10/15/04
Madoff, Bernard L
New York, NY 10021 FROST, MARTIN (D)
House (TX 32)
MARTIN FROST CAMPAIGN COMMITTEE $250
general 10/15/04
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF INVESTMENTS SCHUMER, CHARLES E (D)
Senate – NY
FRIENDS OF SCHUMER $1,000
general 08/18/04
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF INVESTMENTS SCHUMER, CHARLES E (D)
Senate – NY
FRIENDS OF SCHUMER $1,000
primary 08/18/04
Madoff, Bernard L Mr.
New York, NY 10021
Madoff (Bernard L.) Investment Secu
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FUND A $5,000
primary 07/08/04
Madoff, Bernard L
New York, NY 10021
Madoff Investments/Chairman MARKEY, EDWARD J MR. (D)
House (MA 07)
MARKEY COMMITTEE, THE $2,000
primary 06/17/04
Madoff, Bernard L
New York, NY 10021
Madoff Investments/Chairman MARKEY, EDWARD J MR. (D)
House (MA 07)
MARKEY COMMITTEE, THE $2,000
general 06/17/04
MADOFF, BERNARD
NEW YORK, NY 10021
BERNARD MADOFF INVESTMENTS LAUTENBERG, FRANK R (D)
Senate – NJ
LAUTENBERG FOR SENATE $1,000 02/18/04
Madoff, Bernard L
New York, NY 10021
Bernard L Madoff/Chairman GEPHARDT, RICHARD A (D)
President
GEPHARDT FOR PRESIDENT INC. $2,000
primary 09/23/03
MADOFF, BERNARD
NEW YORK, NY 10021
BERNARD MADOFF INVESTMENTS WYDEN, RONALD LEE (D)
Senate – OR
WYDEN FOR SENATE $2,000
primary 03/25/03
MADOFF, BERNARD
NEW YORK, NY 10021
BERNARD MADOFF INVESTMENTS WYDEN, RONALD LEE (D)
Senate – OR
WYDEN FOR SENATE $2,000
general 03/25/03
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF INVESTMENTS SCHUMER, CHARLES E (D)
Senate – NY
FRIENDS OF SCHUMER $1,000
general 04/08/02
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF INVESTMENTS SCHUMER, CHARLES E (D)
Senate – NY
FRIENDS OF SCHUMER $1,000
primary 04/08/02
Madoff, Bernard L.
New York, NY 10022
Bernard L. Madoff P.C./Chairman RANGEL, CHARLES B (D)
House (NY 15)
RANGEL FOR CONGRESS $1,000
primary 08/30/01
MADOFF, BERNARD
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT SECURIT
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FUND A $2,000
primary 11/03/00
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD MADOFF INVESTMENT SEC FOSSELLA, VITO (R)
House (NY 13)
COMMITTEE TO RE-ELECT VITO FOSSELLA $1,000
primary 04/20/00
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD MADOFF INC OBEY, DAVID R (D)
House (WI 07)
A LOT OF PEOPLE FOR DAVE OBEY $1,000
primary 03/10/00
MADOFF, BERNARD
NEW YORK, NY 10022
CHAIRMAN CLINTON, HILLARY RODHAM (D)
Senate – NY
HILLARY RODHAM CLINTON FOR US SENATE COMMITTEE INC $1,000
primary 01/13/00
MADOFF, BERNARD
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT SECURIT
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FUND A $2,000
primary 12/20/99
MADOFF, BERNARD
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT SECURIT
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FUND A $2,000
primary 12/20/99
MADOFF, BERNARD
NEW YORK, NY 10021
MADOFF SECURITIES CORZINE, JON S (D)
Senate – NJ
CORZINE 2000 INC $1,000
primary 08/24/99
Madoff, Bernard Mr.
New York, NY 10021
Bernard Madoff Investment Securitie BRADLEY, BILL (D)
President
BILL BRADLEY FOR PRESIDENT INC $1,000
primary 04/26/99
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF INVESTMENT SECURIT SCHUMER, CHARLES E (D)
Senate – NY
VICTORY IN NEW YORK $1,000
primary 10/30/98
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L MADOFF PC RANGEL, CHARLES B (D)
House (NY 15)
RANGEL FOR CONGRESS $1,000
general 10/23/98
MADOFF, BERNARD L
NEW YORK, NY 10021
SELF-EMPLOYED D’AMATO, ALFONSE M (R)
Senate – NY
FRIENDS OF SENATOR D’AMATO (1998 COMMITTEE) $1,000
general 09/21/98
MADOFF, BERNARD
NEW YORK, NY 10022 CROWLEY, JOSEPH (D)
House (NY 07)
CROWLEY FOR CONGRESS $-500
primary 08/26/98
MADOFF, BERNARD
NEW YORK, NY 10022
BOND BROKER CROWLEY, JOSEPH (D)
House (NY 07)
CROWLEY FOR CONGRESS $500
primary 08/04/98
MADOFF, BERNARD
NEW YORK, NY 10021 SCHUMER, CHARLES E (D)
Senate – NY
SCHUMER ’98 $-300
primary 06/29/98
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT SECURIT SCHUMER, CHARLES E (D)
Senate – NY
SCHUMER ’98 $1,000
primary 05/22/98
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT SECURIT SCHUMER, CHARLES E (D)
Senate – NY
SCHUMER ’98 $1,000
general 05/22/98
MADOFF, BERNARD L
NEW YORK, NY 10021
MADOFF INVESTMENTS MARKEY, EDWARD J MR. (D)
House (MA 07)
MARKEY COMMITTEE, THE $1,000
primary 05/15/98
MADOFF, BERNARD L
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT TAUZIN, WILBERT J II (R)
House (LA 03)
BILLY TAUZIN CONGRESSIONAL COMMITTEE THE $1,000
primary 05/05/98
MADOFF, BERNARD
NEW YORK, NY 10022
BERNARD L MADOFF INVESTMENT SECURIT SCHUMER, CHARLES E (D)
Senate – NY
SCHUMER ’98 $300
primary 03/31/98
MADOFF, BERNARD L
NEW YORK, NY 10021
BERNARD L MADOFF CO FRISA, DANIEL (R)
House (NY 04)
DAN FRISA FOR CONGRESS $1,000
general 09/17/96
MADOFF, BERNARD L
NEW YORK, NY 10021
MADOFF SECURITIES MARKEY, EDWARD J MR. (D)
House (MA 07)
MARKEY COMMITTEE, THE $1,000
primary 08/04/96

Every counterfeiter of U.S. $100 bills can claim that they are increasing the liquidity of U.S. currency – there is more money to spend!

So the counterfeiting hedge funds and their supporting cast claim they are increasing the liquidity of the U.S. Stock Market – there are more shares to sell.

But in both cases, the reason both counterfeit is to increase the liquidity of THEIR bank accounts.

So the counterfeiting hedge funds play the corrupt system knowing that when they want to short any company, the corrupt system will “magically” produce any amount of counterfeit shares they want or need. And the corrupt system will claim it has no control over delivery of real shares.

maybe this “cascade of corruption” analogy will help clarify that concept you asked about.

THE SELF-PROPAGATING “CASCADE OF CORRUPTION” ACCESSIBLE IN A CLEARANCE AND SETTLEMENT SYSTEM FOUNDED UPON “COLLATERALIZATION VERSUS PAYMENT” (CVP)

When a party sells shares they can either deliver them or fail to deliver them. If delivery “in good form” is made then the trade legally “settles”. This is referred to as “delivery versus payment” or “DVP”.

In a clearance and settlement system illegally utilizing a foundation based upon mere “collateralization versus payment” or “CVP” the FTD resulting from a failed delivery obligation can become the top pool of a “cascade of corruption”.

Flowing down from this FTD pool will be the readily sellable “securities entitlements” that all FTDs procreate. Since “securities entitlements” are readily sellable then from their accumulation in the share structure of a corporation will flow lower share prices by definition. Flowing down from lower share prices pool will be a bifurcation of the flow. To one side will be the flow of the investor’s money to the party refusing delivery. This flow goes into a pool with a pump in it that allows the parties refusing to deliver that which they sold to take these ill-gotten profits and pump them back up to the top where they can make yet more short sales leading to yet more FTD to occupy the top “FTD pool” of the cascade to augment the overall flow. The greater the flow generated results in the greater the profits at the bifurcation the next time around.

To the other side of the bifurcation will flow the “extra” shares needing to be issued by a yet to be positive cash flow corporation forced to sell more “shares” to fund its fixed monthly burn rate than it otherwise would have had to in the absence of the prior share price manipulation downwards. These flow into a pool without a pump. From this pool overflow yet lower share prices associated with this “extra” dilution. This time, however, the dilution is cause by “extra” legitimate “shares” instead of mere “securities entitlements” resulting from FTDs.

These lower share prices results in yet another bifurcation involving the flow of ill-gotten profits associated with decreased collateralization requirements (associated with mere CVP) into another pool with a pump in it that leads back to the pool of FTDs at the top of the cascade. Once again the other side of the bifurcation leads to yet lower share prices which leads to yet another bifurcation.

As you can see this cascade is self-propagating and continues until the corporation under attack is dead from the dilutional effects of both the “extra” real shares and the readily sellable “securities entitlements”. The ability to use the money “stolen” from investors to establish and collateralize yet more FTDs represents a form of “self-generated” leverage leading to augmented flow rates.

Small investors do not have the resources to pay the price of admission into the area on Wall Street featuring this self-leveraging “cascade of corruption”. The price of admission includes massive amounts of “order flow” to the DTCC “participants” that built and service the “cascade”. But once invited all one must do is simply refuse to deliver that which you sell and place your FTDs into the top “FTD pool” and you can take advantage of all of this free flowing of investor money.

As one can see every time the share price drops there is a bifurcation in the water flow which creates a pay day to those that refuse to deliver that which they sell. Those invited to this cascade can take these profits at each bifurcation or simply let the profits roll and allow them to be pumped back to the top which augments the flow of the cascade.

Participants often invite co-conspirators to take part in the festivities which serves to augment the flow rate for all concerned.

In a clearance and settlement system based on CVP invited guests need only collateralize the monetary value of the failed delivery obligation in a daily marked to market manner and as the share price drops so too do the collateralization requirements.

In a clearance and settlement system based upon “delivery versus payment” or “DVP” there is no special area with “cascades of corruption” as FTDs are either not allowed or quickly bought-in shortly after their creation.

What are the structural components of this “cascade”? First of all you need a clearance and settlement system based on CVP? This may take a while to construct because you need to get a lot of corrupt practices incorporated into the rules and regulation of your particular “registered clearing agency”. You need to sneak through any new corrupt rules at a time when the SEC is napping or in a manner wherein you baffle them with complexity that they don’t understand. Once these corrupt rules are in place you have it made in the shade because the SEC is not allowed to add to or delete from the rules and regulations of any “registered clearing agency”/”sacred cow”. Why? I have no idea because the 7 “Securities Acts” expressly forbid any “registered clearing agency” from having any rules that are not in alignment with the tenets of these 7 Acts.

What other components can serve to fortify these “cascades”? Self-replenishing “stock borrow programs” are very helpful as are policies allowing the brokerage firms not getting delivery of that which their clients sold to sit around and wait for the “eventual” delivery of the missing shares. The “anonymous pooling” of shares is helpful as is having the “registered clearing agency” involved acting as the legal “custodian” of shares, the “qualified control location” of choice, the “legal/nominal/record” owner of all shares, the “central counter party” to all trades that is mysteriously subject to bouts of “powerlessness” when the financial interests of the owners of the “RCA” are jeopardized, etc.

Is this “cascade of corruption” available only to powerful Wall Street players? Oh no. It is available to any financial terrorist that wants to take down any U.S. corporation that it looks upon as a threat or impediment to its own ideologies.

How does one combat these “cascades of corruption”? You reconvert your clearance and settlement system back to DVP as mandated by Section 17 A of the ’34 Exchange Act that mandates the “prompt settlement” of all securities transactions.

When the NSCC has the audacity to plead to be “powerless” to buy-in delivery failures despite 15 separate reasons why they have all of the power in the world to do so then FTDs need to be forbidden. If the seller of securities hints that delivery of that which he is selling is just a day or two behind schedule then let’s just wait that day or two before those securities arrive and are in place for being delivered by T+3. If the seller was lying then you just prevented a fraud and provided “investor protection and market integrity” which is the congressional mandate of the SEC.

What do we do when those that are accustomed to accessing this “cascade of corruption” cry out that we won’t be able to inject all of this wonderful liquidity that we are used to injecting? You tell them that U.S. citizens are tired of having their investments drown in all of this theoretically beneficial “liquidity” they provide.

The books at the NSCC look semi-clean to a corporation that orders an SPL list but those don’t address SBP abuses and the shares that purchasong b/ds are patiently “waiting for”.

The books at the clearing firm NSCC participants use anonymous pooling and look confusing because of the existence of gazillions of different “introducing” or “correspondent” b/ds. These books reflect ex-clearing abuses as “undelivered securities” although they should be listed as “contingent liabilities”. Ex-clearing involves 2 co-conspiring clearing firms saying to each other you don’t have to deliver the $1 billion worth of shares of corporations “A”, “B” and “C” if you don’t force me to deliver the $1 billion worth of shares of corporations “X”, “Y” and “Z”. This way the PPS of all 6 corporations can expect top crash from all of these FTDs that procreate “securities entitlements”. Notice the similarity between the NSCC saying that you have the option to patiently wait for the “eventual” delivery of your client’s shares and what occurs in “ex-clearing” where there is an implicit guarantee not to buy-in (wink, wink) on the table. The abusive DTCC participants will argue that at least there is still a FTD that is generated and “eventually” must be taken care of but what happened to T+3 as the previously contracted for delivery date? By the time “eventual” comes around those incredibly damaging “securities entitlements” may have killed the company. The average lifespan of the “securities entitlement” is the killer because the authors of UCC Article unfortunately made them readily sellable because they presumed that they would never get over 3 or 4 days in age because the NSCC had the congressional mandate to “promptly settle” all transactions.

When you add these “ex-clearing” FTDs to the ones generated and covered up by the SBP plus the ones associated with buying b/ds being bribed to patiently wait for their securities to deliver plus those sitting at trading desks associated with “desking” you wonder how any corporation can survive.

Throughout the history of the DTCC, the DTC, the NSCC and their predecessors “BASIC”, etc. we see a nonstop quest for “enhanced efficiencies”. The problem is that each one of these theoretical “enhanced efficiencies” results in the DTCC participants that refuse to ACT IN GOOD FAITH gaining “enhanced leverage” over the U.S. investors that they act as an SRO (Self-Regulatory Organization) for and for whom they act as a “gatekeeper” to our markets. You cannot enter our markets without going through one of these DTCC participating “gatekeepers” similar to how in the old days you couldn’t enter into a college fraternity system without going through a little “hazing”.

For instance, at the DTCC and at all “registered clearing agencies” (RCAs) the shares of investors are held in an “anonymously pooled” format. This greatly reduces the amount of paperwork needed when shares change hands. The same is true when you have a centralized “legal/nominal/record” owner of all shares held in “street name” as the DTCC’s nominee “CEDE and Co.” does. The problem in the case of both “anonymous pooling” and a centralized “legal owner” is that investors cannot trace the particular parcel of shares that they purchased. They first of all cannot tell if what they paid for ever even got delivered on or near T+3 as promised. Nor can they tell if they have been illegally loaned out to short sellers without their permission. The shares they purchased become part of an enormous amorphous blob of shares held as electronic book entries at the DTCC and nobody would ever notice if one tiny “lobule” of that blob was missing. These two policies are “efficient” but begging to be abused.

This is acceptable in a clearance and settlement system with a rigorous set of policies that would diagnose and treat any counterfeiting improprieties that might represent untoward side effects of these “enhanced efficiencies” but the DTCC does not have any of these instead they have other “efficiency enhancers” that obfuscate the existence of blatant acts of counterfeiting. Take their self-replenishing lending pool sponsored by their “Automated Stock Borrow Program” or “SBP”. When a failure to deliver (FTD) occurs at the NSCC Addendum “C” to the rules and regulations of the NSCC allows NSCC management to dip their hand into that “lending pool” and take out an unidentifiable (due to “anonymous pooling”) parcel of shares and send those shares via an electronic book entry transmission to the “participants shares account” of the buying firm that didn’t get delivery of the shares purchased.

Upon receipt of that unidentifiable and untraceable parcel of shares this purchasing broker is then allowed to unconscionably place that very same “parcel” of shares right back into that very same lending pool as if it never left in the first place. There it sits ready to “cure” yet another FTD. As mentioned before soon there may be a dozen different U.S. investors that “co-beneficially own” that one parcel of shares. The problem is that 11 of those 12 transactions resulted in the genesis of incredibly damaging “securities entitlements” that the DTCC treats as being readily sellable and which the unknowing investors see referenced on their monthly brokerage statement as “securities held long”. The share price of the corporation, by definition, has to go down as the “supply” of readily sellable legitimate shares plus the “supply” of readily sellable but mere “securities entitlements” interacts to the “demand” variable to determine a price well below the price would have been without all of those extra readily sellable “securities entitlements”.

This predictable drop in price represents a financial windfall to those that have established massive naked short positions by simply refusing to deliver that which they sell because in a clearance and settlement system illegally converted to a foundation based on mere “collateralization versus payment” all a DTCC “participant” is asked to do is to collateralize the monetary value of his failed delivery obligation which results in the unknowing investor’s funds flowing to the sellers of nonexistent shares that absolutely refuse to deliver that which they sell. Why would they when they don’t have to? Yet the DTCC has the audacity to say that their SBP is an “efficiency enhancing” measure that serves to “increase the likelihood that the purchaser of shares will receive that which he purchased on “settlement date”. Wait a minute. Of those 12 purchasers of the same parcel of shares only one of them got delivery of legitimate “shares” of a corporation and the other 11 got a readily sellable IOU that in and of itself decreased the prognosis for the investment made. Again we see the theme of “enhanced efficiencies” procreating “enhanced leverage”. The problem is that fraud is not an efficient way of doing business except from the purview of the fraudster.

If all of these theoretical “enhanced efficiencies” (and there are dozens) were revenue neutral then that is one thing but when every single one of them serves to reroute the investment proceeds of unknowing investors to those that designed the “enhanced efficiencies” then we’ve got some issues that arise.

Having the DTC act as the “legal custodian” of all shares held in “street name” seems like an “efficiency enhancing” policy at first glance but what kind of a “legal custodian” would administer a self-replenishing SBP serving to blatantly counterfeit that being held in its “legal custody”?

Having the NSCC act as a “qualified control location” also seems at first glance to be an “efficiency enhancing” procedure but what kind of “qualified control location” mandated to take possession of all fully paid for shares on behalf of the “participants” that use it to attain compliance with Rule 15c3-3 would have a policy in effect that allows their “participants” that buy shares for their clients to sit around and wait for delivery while earning interest off of its own client’s funds without being forced to buy-in the delivery obligation when it becomes obvious that the seller of the securities had no intention whatsoever to deliver that which it sold. Again, why would ANY seller with access to all of these corrupt and self-serving policies deliver that which it sells when it can still gain access to the unknowing investor’s funds without delivering anything at all?

What we’re left with is an “us verses them” scenario wherein the average U.S. citizen, perhaps a “baby boomer” that has labored his entire life is merely trying to invest wisely in order to retire at a certain age is pitted against DTCC participants with a far superior knowledge of, access to and visibility of the clearance and settlement system that is grossly “rigged” in favor of the financial interests of those able to establish massive naked short positions by merely refusing to deliver that which they sell.

What does it take to participate in these frauds? You need to have enough critical mass to provide “juice” to the DTCC participating market intermediaries like market makers, clearing firms and prime brokers. What does this “juice” consist of? It consists of being able to provide massive levels of “order flow” to these market intermediaries which will indirectly provide them with cash flow as opposed to bribes which directly provide cash flow. Although not all hedge funds are corrupt an unregulated hedge fund fits the bill quite well.

People have a tough time envisioning how all of these corrupt policies came into being when these markets are supposedly so “highly regulated”. The NSCC acts in the capacity of a “registered clearing agency” that is in turn regulated by the SEC. In the ‘34 Exchange Act there is a curious stipulation that the SEC cannot add to or abrogate (delete from) the rules and regulations of a “Registered Clearance Agency”. In fact in the “Comment period” associated with Reg SHO the DTCC made a comment that basically said to the SEC (paraphrased) as you know well you can’t amend our rulebook but in the spirit of cooperation we at the DTCC will do our best to follow the tenets of Reg SHO. Wow, what a slap in the face!

The end game for abusive DTCC participants appears to have been to get as many self-serving corrupt policies incorporated into their book of rules and regulations while the SEC is dozing and then they can turn Wall Street into their own little fiefdom. The SEC did have a shot at shooting down corrupt DTCC policies but they indeed dozed off from time to time. Historically the bad guys have had a superior knowledge of the intricacies of Wall Street over the SEC. The SEC was constantly using Bernie Madoff as a reference source. To this day the SEC allows the trading of derivative securities like CDOs and CDSs that they don’t understand fully and they have no clue as to the associated systemic risks involved.

The moral of the story is that all of these theoretical “enhanced efficiencies” have associated fiduciary duties of care and responsibilities attached. This gives rise to the need for the parties enacting these theoretical “enhanced efficiencies” (the NSCC management) to ACT IN GOOD FAITH while doing so. Being that those around the DTCC do indeed have a superior working knowledge of the intricacies of our clearance and settlement system they, as a “securities cop” known as an SRO, would be theoretically entrusted to also ACT IN GOOD FAITH with this superior “inside view” that they are entrusted with. The problem arises when some of these “market intermediaries” with this superior working knowledge find themselves amongst trillions of dollars belonging to relatively unsophisticated U.S. citizens aren’t quite up to this presumption to ACT IN GOOD FAITH. Other “market intermediaries” are overwhelmed by the amount of money they can “earn” by prostituting their access to abusive NSCC policies to unregulated hedge funds seeking access to this rather curious and untouchable “rulebook”.

Dr. DeCosta,

From your example above where you address “TWO SETS OF BOOKS?”, it does appear that the DTCC keeps two set of books, as your example indicates.

Now I am wondering about the counterfeiting hedge funds:

>> Do you think they keep “TWO SETS OF BOOKS?”

>> Or do they keep only ONE SET OF BOOK, which does NOT even show that they are have FAILED TO DELIVER WHAT THEY SOLD?

Either way, it looks to me that the counterfeiting hedge funds are guilty of some type of crime for Not Revealing to its investors that they routinely FAIL TO DELIVER WHAT THEY SELL.

If the counterfeiting hedge funds are purposefully not revealing material financial facts to its investors, which could cause the fund to collapse, it seem that they have legal problems.

What he means is that instead of requiring the delivery of the actual stock before the seller receives payment, the seller only has to provide collateral before receiving payment.

So, for example, if a market maker has to put up 102% collateral, they can short $10 million worth of penny stock and put up $10,200,000 instead of share certs. (That’s the collateral.)

In exchange, they receive back $10,000,000 (that’s the payment). They are only out of pocket $200,000.

A year later, the penny stock is death spiraled into oblivion and is only worth $100,000 and their new “marked to market” collateral is $2,000. They still have the $10,000,000 proceeds from the original sale, but they can reduce their collateral to $2,000, wiring $9,998,000 to some offshore account before closing shop, declaring bankruptcy and letting the taxpayer figure it out. They aren’t out of pocket a dime, and have squirreled away the bulk of the sale proceeds.

Can you imagine if any other asset was sold that way?

Imagine I purchase a car for $100,000 and the dealer hands me an envelope. I’m expecting the keys to be inside, but instead, I find 70 one hundred dollar bills neatly stacked inside. I ask the dealer for an explanation and he explains, oh when you purchase a new car, it depreciated 30%, so the $70,000 is what you get for your purchase.

I demand delivery of the car and the dealer explains, that under the current system, you get collateral rather than delivery.

I sue and five years later I win and the dealer explains to the judge that now the car is only worth $25,000 and the judge asks me to give $50,000 from the original $75,000 back to the dealer. I still don’t have my car.

It’s idiotic and doesn’t pass common sense, but much of what goes on at the DTC is exposed as utter nonsense when the light of day is shined on their gobbledy gook acronyms, rules and procedures that are only there to obfuscate their plain day theft of your money.

If the broker has a “call” on stock, it is treated as a long position, when it should be treated as an undated derivative.

In my mind, the DTCC is potentially liable for fraud for claiming a call is a long position, but they’ve been smart enough to spread the responsibility among the DTCC holding company, the NSCC, DTC, Cede & Co., the clearing participants and the broker dealers with these entities spread in different jurisdictions, so no one regulator can see the whole picture.

Dr. Jim DeCosta,

What does >> b/d << mean in this sentence:

The buyer’s b/d will be given a “long” position in these shares and these shares will be correctly debited from the “participant’s shares account” of the “donor” firm at the NSCC.

Thank again for explaining how crimes are being committed against the American People!

Acronyms:
NSS Naked Shorting (Selling without owning or borrowing)
DVP Delivery versus payment
CVP Collateralization versus payment
DTCC Depository Trust & Clearing Corporation
DTC Depository Trust Company
NSCC National Securities Clearing Corporation
FTD Fail to deliver
FTR Fail to receive
RTD Refusal to deliver
T + “x” X business days hence from time of transaction
SEC Securities and Exchange Commission
CCP Central counterparty
CPR Customer protection rule
SBP Stock Borrow Program
SRO Self-Regulatory Organization

Frauds wherein the CCP pleads to be “powerless” to “execute” on the delivery obligation that it just “assumed” are called “straw man” frauds because of the sudden paralysis that seems to have occurred in between the “discharging” and “assuming” phases of “novation”.

“B” the other party with the right to buy-in “S” says heck no I’d rather have the use of my client’s funds to earn interest and count towards my net capital reserves which have an anti-fraud purpose behind their existence. Nobody’s left with the power to order the buy-in.

The NSCC gives “B” the CHOICE to wait for the “eventual” delivery and take the client’s money or to file an “intent to buy-in “S”. They obviously will choose the money and from then on aim their buy orders at a party likely to naked short sell into the buy order.

How can the NSCC with the congressional mandate to “promptly settle” all transactions be allowed to bribe the buying firm into not ordering a buy-in? Worse yet the bribe is paid with the investor’s money. Why doesn’t the investor make interest off of his own money UNTIL delivery occurs? Whatever happened to the T+3 “settlement date” originally contracted for? Whatever happened to the fiduciary duty of care of the buying firm taking a commission to make sure that his client got what he paid for? Instead of fulfilling his duty of care he gets the use of the money of a guy that just paid him a commission as his “agent”.

How can the NSCC be POWERFUL enough to “discharge” the original delivery obligation and then turn around and plead to be “powerless” to do what is needed to execute on the obligation it just assumed. Kryptonite?