I’m also surprised at DeCosta’s definition of buyin. I thought buyin could only refer to a borrowed share which the owner demanding the return causing a buyin. Who else would demand a buyin?

Very, VERY impressed with what Patrick, Judd et al have achieved to date.

No surprise whatever at the grossness of the corruption revealed either.

On the analysis of naked short selling and proposed measures to prevent it whilst allowing for ‘non-abusive’ short sales, for want of a better term. I’m just a simple soul, so forgive the simplicity of my proposed solution:

It is simply to make FTD analogous to any other type of contract default. No exceptions. Anyone defaulting is barred from further market participation until the default is settled to the satisfaction of the contracting parties.

I fully appreciate the horrendous complexity of the present interlocking clearing system – aggravated by cross-jurisdictional issues too – but ANYTHING that cannot be adjusted to accommodate that simple readily understood principle has no place in the system.

House Website:
https://writerep.house.gov/writerep/welcome.shtml

Senate Website:
http://www.senate.gov/general/contact_information/senators_cfm.cfm

Congress and State Officials can be contacted via this website:

http://www.usa.gov/Contact/Elected.shtml

Eureka!

You have found the irrefutable statement for all to read and understand!!!!!!!!!!!…..

“What are we left with in these attacks? We’re left with the anomaly that BOTH buy and sell orders driving the share price down. Now that’s one meticulously-designed “fraud on the market”.”

Thank you!

Thank you for the link…..

Here is a text copy of the letter vis OCR:

United States Senate
WASHINGTON, DC 20510

April 1, 2009

The Honorable Mary L. Schapiro
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Dear Chairman Schapiro:

We were pleased to hear in January of this year that you were committed to a review of the uptick rule. More than two months have passed, and while we understand that the SEC has begun its review, the financial markets are still waiting to know if the SEC will restore an uptick rule, and whether it will take additional steps to address abusive short selling practices.

American investors are looking to the SEC’s meeting on April 8 to address these issues. It is urgent that we restore the integrity, efficiency and fairness of our securities markets by preventing manipulative short selling. Investors need to know that the market fairly values the actual shares issued by a company and that their transactions will not be distorted by manipulative naked short sellers creating “phantom shares.”

Because of our concern about abusive short selling practices, we were especially troubled by the response of the Division of Enforcement (the “Division”) to a recent report from the SEC’s Inspector General (the “IG”) entitled “Practices Related to Naked Short Selling Complaints and Referrals,” which detailed the results of an audit of the Division’s policies, procedures, and practices for processing complaints about naked short selling.

In the report, the IG found that despite receiving more than 5,000 complaints about abusive short selling, the Division had brought no enforcement actions. Further, the IG made eleven suggestions for improvements in processing and analyzing naked short selling complaints, yet the Division agreed with only one of those eleven recommendations.
Equally troubling is the Division’s reluctance to agree with the IG and the Commission itself that naked short selling is harmful. As the IG notes, the “SEC has repeatedly recognized that naked short selling can depress stock prices and have harmful effects on the market. In adopting a naked short selling antifraud rule, Rule 1Ob-21, in October 2008, the Commission stated, `We have been concerned about ‘naked’ short selling and, in particular, abusive ‘naked’ short selling, for some time.”

In response to the IG report, however, the Division stated “there is hardly unanimity in the investment community or the financial media on either the prevalence, or the dangers, of `naked’ short selling.”

As the new leader at the SEC, you have an opportunity to clarify the Commission’s commitment to end abusive short selling. We hope that your April meeting produces an unambiguous commitment to promulgate and enforce regulations that put an end to naked short selling. At a minimum, those regulations should address the need for an uptick rule, as well as a pre-borrow requirement to prevent naked short sellers from artificially depressing or diluting stock values.

To be clear, we are not opposed to short selling itself, which can enhance market efficiency and price discovery. But naked or abusive short selling has gone unaddressed for too long and simply must end if the SEC is to restore investor confidence in the markets. In the absence of a strong message from the SEC, we believe Congress will need to consider legislation that directs the SEC to do so.

Thank you for considering our views.

Sincerely,

EDWARD E. KAUFMAN
United States Senator

JOHNNY ISAKSON
United States Senator

JON TESTER
United States Senator

SAXBY B. CHAMBLISS
United States Senator

CARL M. LEVIN
United States Senator

ARLEN SPECTER “uptick rule”
United States Senator

It’s the reason you could fish the last Cod in the Atlantic before the fishery collapsed and the price of fish didn’t go up to help conserve the resource.

Here’s naked shorting of gold:

http://seekingalpha.com/article/129128-did-the-ecb-save-comex-from-gold-default

In a market with integrity this casting of negative votes (short sales) has some “natural” governors that deter abuses in the voting process. First of all there are a finite number of shares that are legally borrowable. Secondly, as that “supply” of legally borrowable shares dwindles the price to “rent” these shares which is part of the legal short selling process goes up due to the effects of supply and demand.

The share prices of corporations under attack by abusive naked short sellers are also determined by a voting process. The “natural” governors that deter abuses are missing, however. There is an unlimited number of “securities entitlements” that can be generated by those selling nonexistent shares and refusing to deliver that which they sell. Due to the wording of UCC Article-8 these readily sellable “securities entitlements” for all intents and purposes give rise to readily sellable “shares*” of a corporation. The only difference between a “share” of a corporation and a “share*” of a corporation is that a “share*” of a corporation has no TECHNICAL “legal owner” and is not TECHNICALLY “outstanding”.

Since these two properties have absolutely nothing to do with share price determination then in essence failures to deliver give rise to “securities entitlements” which give rise to the “issuance/release” of “shares”. Since both “shares” and “shares*” of a corporation are both readily sellable then both depress the share price of a corporation from a dilutional effect with equal effect.

What this results in during this “voting” process that determines share prices abusive naked short selling basically allows the “stuffing of ballot boxes” with an infinite number of extremely easy to generate negative votes. All you have to do is to refuse to deliver that which you sell!

Fortunately there is a remedy to these “voting” abuses. They are referred to as “buy-ins” and they are the ONLY known cure for delivery refusals. In a “buy-in” the party refusing to deliver that which he sold is FORCED to. “Buy-ins” are another “natural” deterrent to these abuses as they can become rather expensive.

Unfortunately the party with 15 of the 16 sources of empowerment to execute “buy-ins” (the NSCC management) is employed by the parties refusing to deliver the securities that they sell and they absolutely plead to be “powerless” to execute “buy-ins”. This is despite their having attained a monopoly on 15 of the 16 sources of empowerment to execute “buy-ins” and their congressional mandate “to act in the public interest, provide investor protection and to “promptly settle” all securities transactions. To put it mildly their pleading to be “powerless” is rather suspect as the financial beneficiaries of these thefts of investor funds are the abusive NSCC “participants” that are their bosses.

So what are we left with? We’re left with all of the “natural” deterrents to these thefts having been surgically excised and the share prices of corporations unfortunate enough to have been targeted for one of these attacks subjected to be easily manipulated into a self-propagating “death spiral”. Is the surgical excision of the natural deterrents to these thefts plus the refusal to provide the only cure available purely happenstance? When the financial beneficiaries of this surgical excision and the refusal to provide the ONLY known cure are the bosses of those doing the excising and the refusing then I might posit that the share prices in certain corporations have been essentially “rigged” to go nowhere but down due to this “stuffing of the ballot box”.

The premise of the voting process determining share prices is based upon positive votes causing a price enhancing effect and negative votes causing a share price depressant effect. But note what happens in abusive naked short selling crimes. When a buy order is naked short sold into and the failure to deliver (FTD) procreates a readily sellable “securities entitlement” and UCC-8-501 converts this “securities entitlement” into what amounts to as a share price depressing readily sellable “share” then in essence the share price buoying effect of a buy order has been converted into a share price depressing readily sellable “share” as if by magic.

What are we left with in these attacks? We’re left with the anomaly that BOTH buy and sell orders driving the share price down. Now that’s one meticulously-designed “fraud on the market”.

FBI: Ponzi, Ponzi everywhere. . .
Press Release
For Immediate Release
April 1, 2009
Washington D.C.
FBI National Press Office
(202) 324-3691

Highlighting Recent FBI “Ponzi” Scheme Investigations
Given current market conditions, there has been no shortage of Ponzi investment schemes, perpetrators, and victims. These schemes are varied in their methods, but usually lure investors with the false promise of high financial returns or dividends not available through traditional investments.
This type of fraud is named after Charles Ponzi, who operated an enticing scheme in the early twentieth century that guaranteed investors a 50 percent return on their investment in postal coupons. Instead of investing the money he received, Ponzi simply used it to pay “dividends” to initial investors and pocketed the rest himself. The scheme fell apart when investors grew suspicious and funds dried up, making it impossible to make additional payouts and keep the ruse going.
“Too often investors are blinded by dreams of untold wealth,” said Assistant Director Kenneth W. Kaiser of the FBI’s Criminal Investigative Division. “These schemes highlight the need for law enforcement and regulatory agencies to be ever vigilant of white-collar crime both in boom and bust years. We also want to remind the public to exercise due diligence in selecting investments and the people with whom you entrust your money.”
“The bottom line is that individuals must approach investment opportunities with a dose of healthy skepticism,” said Supervisory Special Agent Stephen Kodak of the FBI’s National Press Office. “People are often to willing to suspend their disbelief if they think they will receive a fantastic payout. Just remember: if it sounds too good to be true, it probably is.”
There is no need to look much further than recent “Ponzi” scheme investigations to realize the scope of this matter. Recent press releases are listed below, with more available at http://www.fbi.gov.
On 01/05/2009, four Florida defendants were charged in a $1 billion Ponzi investor fraud scheme.
On 01/23/2009, a Broomall, Pennsylvania man was charged in a large-scale investment fraud that he used as a pyramid, or “Ponzi,” scheme to defraud investors of tens of millions of dollars between 1996 and 2008.
On 01/26/2009, a Heber Springs, Arkansas man was sentenced to federal prison for defrauding investors of $43 million in a Ponzi scheme.
On 01/26/2009, a North Haven, Connecticut man was sentenced to 48 months of in prison, followed by three years of supervised release, for operating a multi-million dollar Ponzi scheme in which he solicited investments for fictitious investment programs.
On 01/27/2009, the President of a Long Island, New York investment firm was charged in a $370 million Ponzi scheme.
On 02/05/2009, a grand jury in Seattle, Washington indicted three men for operating a $65 million Ponzi scheme.
On 02/24/2009, the New York FBI Field Office arrested an individual based on the operation of an international, Internet-based “gold unit” Ponzi scheme.
On 02/24/2009, a Forest Lake, Minnesota man was sentenced for his role in defrauding 519 people nationwide out of approximately $30 million in a Ponzi scheme operated under the name of the Joshua Tree Group.
On 02/27/2009, a former Brentwood, Tennessee financial advisor and owner of Park Capital Management Group (“PCMG”) admitted to operating an elaborate Ponzi scheme to defraud investors who deposited funds with PCMG for investment in brokered stocks and other marketable securities.
On 02/27/2009, a Chicago businessman was charged with luring two dozen investors into investing $4.7 million in commodity trading pools and using the money instead to fund two nightclubs, to pay gambling debts and other living expenses, and to make Ponzi-type payments to earlier investors.
On 03/04/2009, two Arizonans and two others were indicted for a Ponzi fraud scheme. A 90-count indictment alleges at least 300 victims invested $8 million during the scheme.
On 03/09/2009, a Marblehead, Massachusetts investment advisor was charged with wire fraud in connection with a Ponzi scheme to defraud two of his clients of more than $750,000.
On 03/12/2009, Bernard L. Madoff pled guilty to an 11-count criminal information and was remanded into custody related to a massive multi-billion dollar Ponzi scheme.
On 03/12/2009, Dennis R. Bolze was arrested in State College, Pennsylvania on federal wire fraud and money laundering charges associated with a Ponzi scheme.
On 03/18/2009, an Atlanta, Georgia currency trader was charged with operating a $25 million Ponzi scheme.
On 03/20/2009, Anthony Vassallo of Folsom, California was charged for his role in a massive Ponzi investment fraud scheme that brought in more that $40 million from 150 investors, many of whom he met in his church.
On 03/31/2009, Manyu Ogale was sentenced to 10 years in prison on a federal charge of mail fraud arising out of a Ponzi scheme under the guise of a foreign currency “hedge fund” that defrauded investors out of more than $23 million.

They have a large long position in a different account in a different country they can use to tick the stock up before executing their naked short.

http://www.asensioexposed.com/longshort.htm

The only thing that will solve the problem is to make it illegal (arrestable) to claim you have someone’s shares in custody when you don’t.

Require each of your brokerage, clearing brokerage and DTC to own what they claim to own on behalf of us investors.

If the trade hasn’t settled, they need to put an asterisk next to that company on every investor at the brokerage that owns that stock saying that there isn’t enough to go around.

The memo is located here.

http://investigatethesec.com/drupal-5.5/?q=node/639

http://www.theatlantic.com/doc/print/200905/imf-advice

As fund manager, you pay yourself 2% of assets ($400,000) and 20% of profit ($3,800,000)

Imagine you short some crappy penny stock when it is trading high and sell 10 million shares at high prices, say averaging $2 as you drive it from $5 to $.10.

You owe $1 million collateral for those 10 million shares, but you’ve generated $20 million in revenue. You can pull out $19 million to invest elsewhere.

As fund manager, you pay yourself 2% of assets ($400,000) and 20% of profit ($380,000) for each year you can hold that penny stock at a dime by overwhelming buys with no counterfeit shares.

Now, the crappy little company turns out to be good and cures cancer and the stock runs to $20. You pull a Madoff and close the fund down. You keep your performance pay for the last ten years and let the system (taxpayer) deal with the mess.

Rich investors sue Queen’s bankers
Over 500 Coutts customers who lost millions are fighting backRobert Watts
MORE THAN 500 of the richest people in Britain are planning legal action against Royal Bank of Scotland (RBS) for losses of more than £200m from investments through Coutts, the Queen’s bankers, which it bought in 2000.

The claimants include five members of the House of Lords and up to 10 chief executives and finance directors of FTSE 100 companies.

The action is being master-minded by Sir Keith Mills, the entrepreneur who helped to run London’s successful bid for the 2012 Olympic Games and who says he has lost as much as £30m in interest……

http://www.timesonline.co.uk/tol/news/uk/article5993101.ece

Just a thought!!!

http://www.guardian.co.uk/business/2009/apr/01/hedge-fund-madoff-fraud-charge

Let’s say that the stock backs down to the $9.50 level after a week of trading since the naked short position was established. A truly bona fide MM would have been covering the preestablished naked short position at perhaps the $9.80 level because as the share price was dropping the “injection of liquidity” was needed from the buy side.

If the MM were to post a bid at the $9.50 level for 1 million shares then it could lock in a healthy 5% gain over the course of 1 week which annualizes out to about a gazillion per cent annually. What typically happens is that the theoretically bona fide MM is nowhere to be found if the share price were to drop all the way to the $2 level. Why? Because its only deterrent from selling bogus shares all day long and NEVER delivering that which it sold is the fear of a buy-in. Since the NSCC management has cleverly gained a monopoly on the sources of empowerment to execute buy-ins and yet proffers to be “powerless” to execute buy-ins then a MM would be an idiot to EVER deliver that which it sold.

The trouble with buying back that which you previously sold is that the share price moves up in the process. On paper a corrupt hedge fund manager or abusive MM look like geniuses after selling shares at $10 while the stock is sitting at $1. The hedge fund manager will be periodically paid his 2% of funds under management and 20% of all profits based upon the marked to market status of his investments. What people forget to realize is that covering an enormous naked short position starting at the $1 level might drive the share price up to $15. But if those empowered to buy-in your failed delivery obligation happen to be your employees (NSCC management) and plead to be “powerless” to do it then you’d be crazy to ever cover a naked short position or to ever deliver that which you sold.

The larger publicly-traded MMs have shareholders to appease. Their success is also measured in a marked to market fashion. Their pay structure is often associated with options which in turn are associated with the current share price of their marketmaking firm. If I were a clever market maker executive I would run up gigantic naked short positions up and down Wall Street, cash in on my options and head for the hills and let my successor inherit these “open positions”.

What’s the common denominator of all of Wall Street? It’s insatiable greed even if you are working under a microscope like those that attacked Lehman Brothers and Bear Stearns. Does the increase of previous high water marks for failures to deliver 57-fold not seem just a little bit obvious as the employees losing their jobs were cleaning out their disks. The fact that the MMs that had previously established naked short positions in these stocks were still piling on all the way down now reveals that their earlier accessing of the “bona fide MM exemption” was done illegally. They could have locked in monstrous profits by reinjecting liquidity from the buy side at perhaps the $5 level but the insatiable greed common to all Wall Streeters took over and the ensuing “pig piling” of FTDs upon each other while continuing to illegally access that exemption accorded only to truly bona fide MMs.

Although possible, it is unlikely that Canadian regulators will pass significant, permanent restrictions on short-selling, as the current rules appear to address the concerns that led to the restrictions in the United States.

http://www.langmichener.ca/index.cfm?fuseaction=content.contentDetail&id=10505&lid=0

The Canadian brokerage wouldn’t have an account with the DTC. Their account would be with the CDS, which represents all of Canada. The CDS, in turn, would have an account at the DTC.

The DTC let’s foreign depositories, such as CDS, Clearstream, Euroclear, etc. have negative balances at the DTC to support arbitrage on stocks that trade in more than one country.

That’s why companies get listed in Berlin without their permission, to facilitate taking advantage of the arbitrage loophole, which allows foreign depositories to have negative positions.

More likely, though, the foreign depository has a positive position. Let’s say there are 10 million shares long to shareholders in Canada. The CDS could show a positive balance of 1 million shares and American regulators would have no way of knowing that the CDS is short 9 million shares.

Those 1 million real shares can be lent by the DTC in America, but also lent by the CDS in Canada, so both sides think they are borrowing real shares.

Finally, naked shorting of stocks that don’t trade in Canada is legal in Canada even though naked shorting of Canadian stocks is banned.

Now that I understand better HOW the Billionaire Hedge Fund Owners are using the Market Makers Exemption to manufacture stock shares…

I now appears to me that ALL Hedge Funds that are using a corrupt Market Makers exemption for locate and pre-borrow are operating a PONZI Scheme!!!!!!!

And ALL Market Makers using their exemption with Guest Hedge Funds to steal funds from investors by REFUSING to DELIVER what they SOLD or by themselves are operating a PONZI Scheme!!!!!!!

BOSTON (Reuters) – Massachusetts’ top securities regulator charged hedge fund firm Fairfield Greenwich Group with fraud for allegedly lying to investors about confessed swindler Bernard Madoff’s phony management business.

The action on Wednesday marks the first charges against one of Madoff’s feeder funds, which funneled billions of dollars into the disgraced Wall Street legend’s long-running Ponzi scheme.

William Galvin, Massachusetts’ secretary of state, accused Fairfield Greenwich, a prominent hedge fund firm in Connecticut, of failing to check how Madoff generated the strong and steady returns he said he made year after year.

“The allegations against Fairfield in this complaint outline a total disregard for such (fiduciary) responsibility which helped the Madoff scheme to stay afloat for so long,” Galvin said in a statement.

Galvin wants Fairfield Greenwich to return the money that Massachusetts investors lost in the scheme and return the performance fees they paid the firm. He is also seeking an administrative fine against Fairfield.

Fairfield Greenwich’s Sentry Funds had placed about $7.2 billion, or 95 percent of its assets, with Madoff, whose fraud appears to have totaled about $65 billion.

Galvin found that Fairfield Greenwich insiders pumped $14.8 million into Madoff’s business only days before the 70-year-old former Nasdaq stock market chairman confessed to authorities that his business had been a fraud.

Madoff, who was jailed on March 12 after pleading guilty, will be sentenced on June 16.

(Reporting by Svea Herbst-Bayliss; Editing by Lisa Von Ahn)

( http://news.yahoo.com/s/nm/20090401/us_nm/us_madoff_massachusetts )

Now you can appreciate why I insist that EDUCATION is the ONLY chance we have of ending this crime wave.

I’ll bet the average guy at the Fed and the Treasury know all about FTDs and “securities entitlements” and the weaknesses of UCC 8-501, etc. That’s the problem in NSS there’s a sufficient level of complexity involved such that none of the regulators seem to have the time or the will to get up to speed on how these thefts occur. So what do you do? You rely on “self-regulation” and let the DTCC regulate themselves. So what does the DTCC do over the years? They rig the market so that the owners of the DTCC, its “participants”, can easily reroute the funds of less financially-sophisticated investors into their own wallets.

If you add a little transparency to what’s going on behind the scenes in the lending departments you’d also gain a lot of enlightenment. Who are the parties that seem to be awfully obsessed with secrecy? The hedge funds, the DTCC, the market makers, the lending departments, the prime brokers, the “ex-clearing” guys, etc. If only there were a pattern!

That information is readily available with the use of software that has been developed. The problem is that due to “privacy” issues and “proprietary trading methodologies” issues the trading data is only accessible to the SROs and the regulators. Another problem is that only an UNCONFLICTED SRO or regulator would be interested in commissioning those studies. Have you seen any around lately?????? Your choices are the NSCC subdivision of the DTCC, FINRA, the SEC Enforcement Division and the exchanges. Good luck sir!

You stated:

“What is also interesting is that abusive NSCC participants do have the ability to see the number of preexisting “manhole covers/shares” currently weighing down on a corporation. They would obviously be interested in naked short selling corporations with a large amount of preexisting “manhole covers/shares” because their naked short sale order might be the one that breaks the springs supporting the roof. ”

How do the “abusive NSCC participants” know this?

Record Fine for Soros Fund On Hungarian Transactions
Agence France-Presse – 3/27/2009 10:43 AM GMT
Record fine for Soros Fund over Hungarian transactions
Hungary’s financial supervisory watchdog announced Friday it had slapped a 1.6-million-euro fine on an investment fund founded by US billionaire George Soros, for manipulating the market.

The PSzAF said it had fined Soros Fund Management LLC for transactions on the Budapest stock exchange on October 9 that led to a “significant loss in value” of Hungarian OTP bank stocks, which fell in days from 4,000 forint (13.2 euros, 17.86 dollars) to 2,500 forint.

The PSzAF “is imposing a 489-million-forint fine on Soros Fund Management LLC… for violating the rules regarding the illegal manipulation of financial markets,” the supervisory authority said in a statement on its Internet site.

The Soros Fund has 30 days to pay this record fine.

The PSzAF said the fund started putting OTP shares up for sale at 4:27 pm on October 9, just minutes before closing.

“The timing, the number and the effects of these transactions on the market point without any doubt to a an illegal market manipulation,” it added.

OTP, Hungary’s biggest bank, was already hit hard by the financial crisis, like many other banks, but then saw its share value crumble in a few days after October 9.

In a statement Friday, Hungarian-born Soros responded he had been informed of the fine but insisted that he was not involved in the transactions.

“I no longer control the Soros Fund Management’s operations, I retired last year and now only oversee the transactions to do with my private account,” he said in the statement, published by Hungarian news agency MTI.

“Soros Fund Management is cooperating with the Hungarian authorities and has also launched an internal investigation” into the illegal transactions, he noted.

He added he was “deeply sorry the Soros Fund Management had carried out such a transaction.”
http://news.id.msn.com/business/article.aspx?cp-documentid=2954977

Ab