Dendreon’s Cancer Researchers vs. Hedge Funds & The Bootlick Journalists (or, What’s 18 Million Fails Among Friends?)

One of the arguments made with metronomic regularity by those defending illegal stock manipulation then unthinkingly regurgitated by their lapdog financial reporters is this: Prove the harm caused by illegal naked short selling. Well, here is a good example.

One of the arguments made with metronomic regularity by those defending stock manipulation, and unthinkingly regurgitated by their lapdog financial reporters, is this: Demonstrate the harm caused by naked short selling (the fact of its illegality being too conceptually difficult for them to grok). Well, here is a good example.

Dendreon (DNDN) is “a biotechnology company, engages in the discovery, development, and commercialization of therapeutics to enhance cancer treatment options for patients. The company’s product portfolio includes active cellular immunotherapy, monoclonal antibody, and small molecule product candidates to treat various cancers.” For the last few years its operations have burned through $66 million to $80 million per year (a not-unusual pattern for pharmaceutical firms researching and developing cures for diseases like cancer).  As it stands, its balance sheet looks like it could support perhaps one more such year without additional capital raising. However, given the $5 share price at which Dendreon has been hovering, such additional capital raising would dilute the owners about 20%, assuming that it is possible in the current environment.

It turns out that the collapse of DNDN from over $20 to that $5 price was accompanied by massive levels of naked shorting. At one point, 18 million shares were unsettled (about 20% of the ownership of the company). It cannot be repeated too often: That is just the data coming from one crack in the system, the CNS bucket at the DTCC, and does not include any fails accumulating at the brokerages, or diverted by pre-netting, or masked by the Stock Borrow Program, or swept into the ex-clearing system, or stemming from offshore failures. So it is the tip of the iceberg (and perhaps, the tip of the tip of the iceberg).

As is so often the case, manipulations in Dendreon stock coincided with all that we have come to expect: surprise rejection of its drug Provenge by the FDA, endless bashing from the likes of the Media Mob and Jim Cramer the Self-Confessed Crook, and other strange incidents soon to be explored by my Deep Capture colleague, journalist Mark Mitchell.

Dendreon Fails
Click image to enlarge

Of late, this story has taken a happy turn. On April 14 Dendreon released prelimary results of their prostate cancer vaccine trials (details of which will be disclosed at this coming week’s American Urological Association’s (AUA) Annual Meeting in Chicago) showing that Provenge works. It prolongs the lives of men with advanced stage prostate cancer.  Its stock promptly quadrupled, which will make getting financing easy (Investors Business Daily, “Prostate Cancer Drugs Get Street’s Attention“).

I will assume that most readers agree that it is a good thing that Dendreon managed to survive long enough to see this day, and that it would have been a bad thing if illegal stock manipulation had suppressed Dendreon’s stock until they ran out of cash and could raise no more (as they say in intro logic classes: “If not, work the proof out on your own”). Which makes this serve, of course, as answer to the challenge that opened this essay.

Given that, one may then ask of those journalists who defend the right of hedge funds to destroy firms they wish to destroy, that is to say, of DowJones’ Carol Remond and Karen Richardson, of Fortune Magazine’s Roddy Boyd and Bethany McLean (now at Vanity Fair), of New York Times’ Floyd Norris and Joe Nocera, of Herb Greenberg hiding behind vapid emails and Dave Kansas hiding under his desk, of NY Post/Portfolio Magazine’s Dan “Crusher” Colarusso and CNBC’s Jim Cramer the Crook: Do you get it now? Do you understand why illegal stock manipulation is wrong, and can impose costs on society it was your duty as journalists to explore? You purveyors of reportorial Velveeta, you lazy and captured, half-educated and dim-witted, snarky, insufferable, conformist and indolent pseudo-intellectual lickspittles, do you get it now? You are sell-out journalists who grovelled to your sources, missed the story of your careers, and in the eyes of an increasing fraction of the public, rank just below pedophile priests.

If this essay concerns you, and you wish to help, then:

1) email it to a dozen friends;

2) email The Story of Deep Capture to a dozen friends;

3) go here for additional suggestions: “So You Say You Want a Revolution?

  1. Thanks Deep Capture for keeping up the exposure & pressure on naked short selling! The collapse of Lehman Brothers was sure proof that there is no honor among thieves! These cum-bags will sell their own mothers’ to make a dollar!

  2. I, for one, would love to see some of the Wall Street criminals in jail for a long long time. Do they really have that much power, that they can subvert the law with impunity, year after year? Where is the SEC? Where is the Department of Justice? Where is the Obama Administration?

    In any event, the Dendreon story will be fun to watch over the next few days. With any luck, the legitimate shareholders will see a short squeeze of historic proportions.

  3. Thanks Patrick you are the BEST! Individual investors and the general public need to be aware of what these turd balls are doing to destroy companies all for $$$$$. Cramer imho is nothing but a phony big blow-hard! One day I hope the SEC comes a knocking on his front door!

    Disclosure: Long dndn & ostk

  4. Let us hope the general public will not become focused on the distractions our friends are now churning out in order to reinstall the curtain we have managed to lift. Every effort must be expended, as soon as possible, before the gum chewing masses follow the flashing shiny beads. Time is our enemy right now.

  5. Patrick, thank you for bringing this to the fore, again.

    Here’s hoping your so-far exceptionally successful legal battle against the crooks will continue in the upcoming hearings!

    Regarding the Provenge saga, here’s one of the crooks and what his part in the postponement of Provenge approval is.

    Dr. Howard Isadore Scher of Memorial Sloan Kettering in NYC, a major chemo doctor, was invited to served on the FDA Advisory Committee 2 years ago on March 29, 2007. In order to be able to sit in judgment of Provenge, Scher was required to certify, in writing, his Conflict of Interests (COI).

    Scher reported only 3 COI’s to the FDA per his filing in late February available at the FDA website which appears to be composed of ownership of 1 stock and 2 competing industry interest.

    Internet research shows the following for Scher thus far and please particularly note #1 and #17:

    1. NOVACEA: grants & research support;
    … STUDY CHAIR of DN-101;
    … a DIRECT competitor to Provenge
    … since failed clinical trials and halted for too many deaths

    2. GPB BIOTECH: financial conflict of interest per Scher in MedPage

    3. PHARMION: financial conflict of interest per Scher in MedPage

    4. SANOFI-AVENTIS: grants & research support

    5. BRISTOL MYERS SQUIBB: consultant, grants & research

    6. MILLENNIUM PHARMCEUTICALS: grant of research support

    … principal investigator;
    … advisory board;
    … a distant, behind DIRECT competitor to Provenge

    8. INNOVIVE PHARMACEUTICALS: principal investigator

    9. INFINITY PHARMACEUTICALS: principal investigator

    10. BIOGEN-IDEC: jointly held stock with spouse

    11. PFIZER: jointly held stock with spouse

    12. GENTA: scientific advisory board (as of March 6, 2007; since removed from web, but cached)

    13. CONFOMA THERAPEUTICS: scientific advisory board

    14. DEPARTMENT of DEFENSE: Principal Investigator PC Clinical Trials-P1 and P2

    15. AMBRILIA BIOPHARMA INC: Principal Investigator PCK3145, Phase I/II

    16. MEDIVATION, INC: principal investigator MDV3100
    … a distant competitor to Provenge

    … consultant,
    … scientific advisory board;
    … Limited Partner FINANCIAL interest

    There appears to be a significant and disturbing difference between his 3 disclosures to the FDA and the alleged 17 COI’s found so far on the internet.

    It seems incomprehensible for someone with the training and education Scher has to “forget” so many apparent COIs… that is simply beyond all reasonableness and suggests intentional dishonesty or deceit.

    Even more disturbing is the FDA’s Office of Inspector General and others at the FDA to whom this information has been supplied and their apparent failure to investigate these charges that Scher has more COI’s than he disclosed to them.

    When such information is provided and such allegations of potential federal law violation is involved, any ordinary citizen has the right to expect our government to investigate such allegations timely and thoroughly.

    As a “temporary government employee” at the FDA, he is obligated, under Federal law, to provide full and complete disclosure. If he didn’t, he may have the potential for liability for law violation(s) as well as for providing false data to the FDA under which he secured a waiver in order to participate on the Provenge AC meeting March 29th.

  6. So, am to understand from the graph that the blue columns indicate the total cumulative FTDs in DNDN (within the CNS)?

    If so, the graph is a little bit perplexing. The FTDs were pretty much covered by early December. Now, I agree wholeheartedly that this was an illegal trading strategy. But if all the FTDs were covered, and the price still hovered around $5.00 afterwards, I think a good argument could be made that DNDN was worth only $5.00 or so after the FDA delayed approval of Provenge. The FTDs just greatly accelerated the drop to that level. Perhaps if all trading activitly had been lawful, DNDN wouldn’t have gotten to $5.00 until late November. But maybe it still gets there.

    Proving that such an accelerated pace of decline results in a greater loss of share value, or proving that more longs sell in panic in the face of the free fall, or refuse to buy back in while the naked shorts slowly cover, is a tougher proof. Intuitively, I think both statements are probably true. My lawyer’s sense just tells me it would be a very hard proof to make in a Court of law.

    Assume, arguendo, that I’m right about FTDs causing an accelerated rate of decline. If so, traders who sell short without having to worry about locates or interest will be first to the party with the highest volume of sells. Those with nagging little concerns about compliance with the law will be a little slower, and they will have a budget as to how much interest they must pay to borrow the shares. It’s not rocket surgery to see where that goes…the bad will drive out the good over time in the absence of any enforcement, and pretty soon the cop is parked on the median wondering what to do about the torrent of traffic rolling by at 90 mph.

  7. Yes, Patrick, right on the money.

    Let’s also hope that good firms like MNKD, ARAY and other concerns trying to bring life-extending/enhancing products aren’t rendered legless by the naked shortsellers and the equally complicit SEC (whatever the hell that impotent gov’t organ actually is).

  8. Patrick, what bothered me the most was that after the FDA Advisory Committee(AC) voted 17-0 that Provenge was safe and 13-4(with two of the no votes by Howard Scher and Maha Hussain both with major conflicts of interest) that it showed substantial efficiency. The legal short interest jumped form ~28 million shares to well over 39 million shares! Now who in their right mind would short more shares in a company that just received the vote that Provenge just received! After all, the FDA had NEVER gone against a AC vote in a end stage disease who’s only approved drug (chemo) Taxotere was so toxic that 50% of the men refuse to take it! NOW imho the only way you would short more shares is if you had inside info from someone within the FDA that Dendreon was going to receive a CR letter(approvable letter)! And I would bet the ranch that is what indeed happened!

  9. Tony F Also, to add to your post the Novacea $500 million deal with Schering Plough and the price spike in Novacea shares from ~ $4.00 – ~$16.00 after the signed deal! And the fact that Proquest Investments held several Million shares of Novacea! Also, many have said that Mike Milken aka “The Milkman” aka “THE JAIL BIRD” PCR has ties to Proquest?? IMO this needs to be investigated further!

  10. Thanks Patrick. We at Care To Live have been fighting long and hard for men with prostate cancer to get access to Provenge. After a 2 year delay by the FDA for corrupt reasons, involving the FDA, Wall Street, and certain captured journalist, we are approaching another milestone on Tuesday. We are hoping Dendreon’s Provenge is finally going to make medical history and change the way cancer is treated.

    At Care To Live we are advocates for this immunotherapy for late stage prostate cancer, which enhances the bodies immune system to fight the cancer, as opposed to a chemotherapy which poisons the cancerous cells, along with your healthy cells. Provenge is a non toxic, non invasive treatment which requires a few visits to the doctors office. It is a Revolutionary treatment that will radically alter the cancer field, if we can get past the corruption and the chemo cartel.

    Please feel free to contact us when you do your story. We at Care To Live know about the corruption first hand, and can fill in many of the blanks, from the hedge fund whisperer who brought the short reign of terror on us, to crooked Cramer and his delusional love affair with provasic. Thanks for fighting for us “little people”. Without you and the Deep Capture Team and supporters, Wall Street will surely steam roll us all into early graves.

    Rory Kearney
    a not for profit corporation

  11. Thanks, Patrick!

    These small companies are the incubators of ideas that could fuel the future economy, but callous greed has been allowed to stifle them. This must end! Dendreon has been fortunate to survive, but for every Dendreon there have been 10 others that have been killed.

  12. Expanding upon yesquire’s points at 10:40, about how burdens of proof
    in court may require showing that FTD’s are more harmful than their
    power to either amplify or attenuate trends.

    If I were a barrister, I would proffer the following analogies:

    (American) football has rules that players cannot further pile on
    to a downed player. Penalties exist for starting fires with
    accelerants rather than with plain matches, even though the
    pyromaniac lobby might argue that matches don’t start fires,
    people do. And, in a civil society we don’t allow someone
    to beat with a baseball bat someone who is fatally wounded
    from a traffic accident, let alone a gang shooting with malice
    aforethought, thinking that “they were going to die anyway”.

    That SEC regulations allowing FTDs (via the Madoff exception, etc.)
    are crafted by lawyers (after faux periods of “public commentary”)
    is very sad. In matters of life and death, the adversarial system
    can both give and take. Even simple principles like the Hippocratic
    oath “do no harm” has been wrecklessly abandoned here.

  13. “How the Government’s Short-Selling Ban Killed Oil Prices
    Sep 8th, 2008 | By Rick Pendergraft | Category: Oil Investment & Alternative Energy
    The recent ban on naked short selling (between July 15 and August 11) propped up the financial sector, the airlines sector, and the dollar. At the same time they killed oil, says Rick Pengergraft.

    This from Investor’s Daily Edge:” ….
    well worth reading, and viewing the charts @:

  14. Dear Patrick,

    Kudos once again.

    Tommytoyz and I have estimated that there was approximately $3.6 Billion looted from the economy through the shareholders of VeraSun. He has estimated that approximately $800 Million was looted via failed shares of Sears Holding. What is your estimate of how much was looted from DNDN? Just trying to put this in terms that non interested parties can wrap their heads around. Simple math, various random companies, how much some have lost, based on the charts you’ve exposed to us, multiplied by 7,000, the number of companies that have appeared on the SEC’s REG SHO list, a list by the way that was supposed to be used to protect companies from further harm from fails.

    What would your estimate be on DNDN?

    Keep plugging.

    And Thank you.


  15. Dr. Byrne, I have worn out all my friends ears for many years on illegal downside market manipulation. I have been following the fine work of you, Mark Mitchell and Judd Bagley through the DeepCapture.Com website. Of course I send correspondence to the politicians (usually answered with some off-topic prefabricated response). In summary, I support you 100% and hope that some day I may be able to help more in the battle.

    I thought I’d look up DNDN in my brokerage account. Under “Reports and Ratings”, I noticed that “TheStreet” has an April 26 rating of “Sell”. Isn’t that surprising? LOL!

  16. It’s a good try Patrick but the press will ignore you even with these scathing comments. They won’t give you any press much like a hostage taker trying to get his demands published by the media.

    I however sent the best part of your essay to the SEC and the New York Times.

    It will be interesting to see if the press reply in a public forum.

    Best wishes,


  17. Hilarious website. But Madoff is a piker compared to ur-dick Leona Helmsley,
    conspicuous by absence there. Much of Madoff’s money was stolen from
    other greedy types, but at least was spread around the globe to other people,
    though not all of them angels. But the Queen of Mean’s billions are literally
    going to the dogs, according to her estate minions.

  18. From that last article:

    “A paper called “It’s SHO Time!” forthcoming in the Journal of Finance, notes that in 2005, 24 percent of NYSE-listed volume involved short selling, while 31 percent of Nasdaq-listed volume was the result of short selling.”

    This agrees with the SEC REG SHO transcript:

    ““First of all, it was rather surprising to see how large a percentage of sell orders are short sell orders. As you can see there’s roughly 23 percent of all sell orders are short sell orders, a surprisingly large percentage.”

    but leaves out this important quote:

    “there are usually more buys than sells when you look at market depth. Unless the price rises unnaturally, the only way to match it is to increase ask depth by 30%”

    ******** It IS UNNATURAL FOR SUPPLY TO RISE TO MEET DEMAND?!!??!!?! *********

    They also don’t mention that fails to deliver jumped 69.5% from 2005 to 2006, then another 34.6% from 2006 to 2007 with 2007 fails to deliver at least $60.1 billion. I believe this is based on NYSE fails (FOCUS reports), which excludes OTC and Pink Sheet stocks and any trading hidden outside of America or netted x-clearing between partners in crime, so this is a really “lower limit” on the real crime.

    ***** SEC’s own annual report contradicts anything they’ve said about SHO working. *****

  19. ******** It IS UNNATURAL FOR SUPPLY TO RISE TO MEET DEMAND?!!??!!?! *********

    should be

    It is unnatural for prices to rise until Demand meets Supply?!?!?

  20. They had known all along…

    JPMorgan Hit with Madoff Lawsuit

    JPMorgan Hit with Madoff Lawsuit
    Date Published: Monday, April 27th, 2009

    JPMorgan Chase is facing a lawsuit over its dealings with admitted Ponzi schemer Bernard Madoff. According to, the lawsuit alleges that JPMorgan learned that Madoff was running a scam last fall, but kept quiet to protect its own interests.

    Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

    Lots of banks had dealings with Madoff, including JPMorgan. As we reported in January, in 2006, JPMorgan had started offering investors a way to leverage their bets on the future performance of two Fairfield Greenwich Group hedge funds that invested with Madoff. To protect itself from the resulting risk, the bank put $250 million of its own money into those funds. Last fall, JPMorgan began taking its own money out the hedge funds, but never let its investors know.

    According to, Madoff himself had a checking account with JPMorgan. In fact, just a month ago the bank agreed to transfer $2.4 million in a Madoff account to the trustee liquidating his assets. According to The New York Times, Madoff has admitted moving millions of dollars through his checking accounts to give the illusion of active investing, when in fact he purchased no securities at all for his thousands of clients.

    The Madoff lawsuit against JPMorgan was filed by MLSMK Investments Co., a Palm Beach, Florida- based partnership that deposited $12.8 million with JPMorgan from October to December. The lawsuit claims that in the same time period, JPMorgan allowed its brokers to trade with Madoff’s market-making business, which he used to generate legitimate trading volume that satisfied regulator audits and inquiries.

    According to The New York Times, MLSMK Investments’ lawsuit claims that JPMorgan had indications that something odd was going on with Madoff’s accounts. For instance, the average balance in his checking accounts at JPMorgan Chase ran into the billions of dollars between 2006 and the middle of 2008, as nervous customers moved money from seemingly riskier investments and deposited it with Madoff. Then in September 2008, the cash balance “began to drop precipitously,” sometimes hovering near zero until Madoff could transfer fresh funds in his London affiliate. According to the Times, attorneys representing MLSMK said that the erratic activity in Madoff’s accounts should have “raised alarms” at JPMorgan.

    JPMorgan, according to the complaint, “began to grow suspicious of Madoff’s results and embarked on a due diligence investigation of Madoff’s operations,” said. According to the lawsuit, that investigation determined it wasn’t plausible for Madoff to be generating the returns he claimed. According to the MLSMK complaint, JPMorgan’s decision last fall to begin liquidating its position in the Madoff-linked hedge funds was prompted by its due diligence investigation.

    According to, the MLSMK lawsuit charges JPMorgan with racketeering, negligence and breach-of-duty. It seeks $12.8 million in compensatory damages plus punitive damages.

  21. I keep getting asked the same question as to why the DOJ is not more heavily involved in obvious NSS crimes like Lehman’s not so mysterious 57-fold increase in FTDs over their previous highs during the recent “piling on” phase leading to their demise.

    I think the answer is 2-fold. Firstly, look at the recent SEC’s Inspector General’s formal audit of how the SEC Enforcement Division was handling or refusing to handle complaints re: NSS activity. We learned that of over 5,000 complaints received in regards to NSS crimes ZERO resulted in enforcement actions. Of the over 900 recommendations for enforcement actions coming out of FINRA ZERO were related to NSS crimes.

    You have to remember that the SEC looks after “civil” matters and not “criminal” matters like the DOJ does. In order for the DOJ to get involved they usually receive a REFERRAL from the SEC. With the SEC being so “captured” with the financial interests of the banksters of course they’re not going to make any referrals for criminal investigations.

    The other thing is the sheer complexity of our clearance and settlement system. I don’t think there are many at the DOJ that could explain ex-clearing crimes, “central counterparty” malfeasance, “novation” related breaches of duties or “Stock Borrow Program” abuses. Once again this crime wave is all about EDUCATION.

  22. Jim DeCosta,

    I don’t buy the thesis that failures to deliver are too complex for the DOJ lawyers to understand. If you allow the perps to control the conversation, yes. But to sell with no intention to deliver, that’s simply FRAUD.

    Why should the DOJ wait for a referral from the SEC? If the DOJ suspects fraud, or a whistleblower reports it, and the SEC is not doing their job, I don’t see why the DOJ doesn’t move without the SEC.

  23. Without casting aspersions on the firm you mention, the pharma dominated FDA makes the miscreants at SEC look like choirboys by contrast. The ridiculous enforcement actions taken by both the FDA and FTC with the support of the captured medical media is almost like the template for the deepcapture thesis,

    At the end of the day your body is your property. In fact your most basic possesion. The multifaceted malfeasanace in the securities markets you so brilliantly document here ain’t got nothin’ on the frauds and crooks in the “standards of practise” and medical regulation world. Curiously that world is utterly dominated by finance…go figure.

  24. Wall Street have stolen form the entireworld and now the world is getting even!!!

    Italy Seizes Millions in Assets From Four Banks
    Sign In to E-Mail
    LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkBy CLAUDIO GATTI
    Published: April 27, 2009
    With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized about $300 million in assets of four global banks — JPMorgan Chase, Deutsche Bank, UBS and Depfa — whose officials have been accused of fraud.

    The Guardia di Finanza in Milan, the financial police of Italy, took over real estate properties, bank accounts and stock holdings on Monday to assure it could collect from the banks if their officials were found guilty and the banks were held responsible.

    The seizures stem from the banks’ handling of a $2.2 billion municipal bond issue and related financial contracts known as swaps that Milan undertook to retire other debt in June 2005. The lead prosecutor accused the bankers of misleading the city and falsely claiming that the deal would generate savings. If all the costs had been properly included, the prosecutor said, the entire deal would have been illegal under a national law that allows restructuring of debt only if it produces a savings…….

  25. Lets hope that this recent good news sticks and that Dendreon keeps on its upward swing (disclosure, I am neither long or short Dendreon, I merely am interested in their progressions on the treatment of cancer). I am hopeful that they are out of the woods, but it may be too soon to tell. They were placed on the threshold list on 4/14/09, but as of the list posted 4/24/09, they were no longer listed. I am not sure what day the SEC actually removed them, I just know that they aren’t on the most current list.

    I have in recent years been an active participant in the Relay For Life events held locally (I even served on the organization committee for a few years), and from my own observations I never cease to be amazed at just how indiscriminate this disease is. Cancer just doesn’t care if you are young, old, tall, short, black, white, or purple. I can’t help but wonder if Jim Cramer, or George Soros, or any of the “usual suspects” had been stricken with prostate cancer would Dendreon have suffered the same troubles in 2007? Would they have accepted the explanation that it was all due to “fair price discovery” as dictated by the market?

  26. Sarge, your posts, though few and far between have really gotten to me and from what I have read also some others. I appreciate your comments and position. Thanks for your input.

  27. Geithner captive to industry? Looks that way…

    My link also requires a login.
    Alternatively, go to Google and SEARCH for the following, then click on link:

    As head of the New York Fed, Treasury Secretary Timothy F. Geithner built close relationships on Wall Street

  28. Where’s Bobo? He’s gone quiet for a while, following in the steps of Dave’s

  29. If you leave out all the nasty name calling, maybe the SEC would be happier to read and respond.

  30. In response to “Name does’nt matter” Funny, I did not see any name calling by Markopolos and they (The SEC) still ignored him and cost investors and additional 55 billion dollars in losses!! Also where were you to protest when they were call Dr. Byrne names like “Wacky Patty, Dr. Cellophane and others that were much worst and profane. I think this the name calling by Patrick is very well appropriate and desrving in this matter and if you don’t like it , then just don’t read it!! Kudos Patrick, I would love for them to respond to you on this and other past blogs. KEEP AT IT!!!

  31. Kaufman Bill to Punish Financial Fraud Passes Senate

    “Our economy will not recover until Americans’ faith is restored in both our financial markets and the rule of law…Enforcing the law is always a wise investment”

    April 28, 2009

    WASHINGTON, DC – The Senate today overwhelmingly passed bipartisan legislation to bolster existing tools and increase resources available to federal prosecutors to combat fraud, enabling law enforcement to punish those who broke existing laws while deterring future financial crime. The Fraud Enforcement and Recovery Act (FERA), introduced last month by U.S. Senator Ted Kaufman (D-DE) with Sens. Patrick Leahy (D-VT) and Chuck Grassley (R-IA), reinvigorates federal law enforcement resources that have been depleted for the last 8 years – at a time when they’re needed most. It passed by a vote of 92 to 4….

  32. As a follow-up, I would like to see the same failure to deliver information on DNDN after today’s manipulation of the stock price. Proof that Naked Short Selling is just as rampant today as it was 2 years ago. No progress!

  33. Now take a look at what they have done to stall the short squeeze on DNDN. If this is’nt criminal I don’t know what is. How can they get away with this crap!!! If there were only a pattern…

    Dendreon announces PROVENGE extended median survival by 4.1 months compared to placebo (25.8 months versus 21.7 months)Font size: A | A | A2:00 PM ET 4/28/09 |

    1:27 PM ET 4/28/09
    Symbol Last % Chg
    DNDN 11.81 -45.20%
    Quotes delayed at least 15 minutes

    Co announces its pivotal Phase 3 IMPACT study of PROVENGE in men with advanced prostate cancer met its primary endpoint of significantly improving overall survival compared to placebo. The data were presented at the American Urological Association Annual Meeting. The intent-to-treat analysis demonstrated that: PROVENGE extended median survival by 4.1 months compared to placebo (25.8 months versus 21.7 months); PROVENGE improved 3-year survival by 38% compared to placebo (31.7% versus 23.0%); The IMPACT study achieved a p-value of 0.032, successfully exceeding the pre-specified level of statistical significance defined by the study’s design (p-value less than 0.043), and PROVENGE reduced the risk of death by 22.5% compared to placebo; and PROVENGE exhibited a favorable safety profile consistent with prior trials. Co says “With these data, we will advance through the clearly defined regulatory process with the FDA to seek licensure of PROVENGE to fulfill our mission of serving these critically ill patients who currently have few appealing treatment options.”

  34. Now We’re Cooking! by Karl Denninger

    Posted at 08:33
    Tuesday, April 28. 2009

    It’s about damn time.

    Sources say investigators are digging into whether Joseph Cassano, the former head of London-based AIG Financial Products, and two of his top deputies – Andrew Forster, an executive vice president, and Thomas Athan, a managing director – committed securities fraud and other federal crimes, reports CBS News chief investigative correspondent Armen Keteyian.

    At issue: whether they intentionally provided false information about the size of AIG’s loses in the mortgage-backed securities market to the public and auditors.

    Well that’s a start.

    Now go find the “side letters” and start busting people up and down the line, including all their damn counterparties!

    And while you’re at it, make sure you include people like Bernanke, Paulson and Geithner in the list of people who get their asses hauled in front of a Grand Jury.

    Oh, and if you think these clowns don’t have gall, or actually are a bit sheepish these days? You’d be dead wrong.

    And now CBS News has learned that Athan and Forster pocketed bonuses paid out by AIG just two months ago – in the midst of a federal investigation. Sources say they are now negotiating a way to pay them back.

    Is there something wrong with a check – or wire transfer?

    Nor is the storm letting up. In fact, if anything, when it comes to Lewis its headed for Cat 5 territory:

    Both Bernanke and Paulson in mid-December knew Bank of America was obliged by statute to publicly disclose the huge losses Merrill Lynch & Co. had racked up that month. You don’t get to be chairman of the Federal Reserve or, in Paulson’s case, secretary of the Treasury or head of Goldman Sachs Group Inc. without learning this basic tenet of U.S. securities laws. Instead of making sure the public was fully informed of the losses before Bank of America completed its purchase of Merrill on Jan. 1, they did all they could to keep the secret safe.

    Neither Bernanke nor Paulson told the Securities and Exchange Commission, according to the letter Cuomo wrote to lawmakers and regulators. They didn’t tell Lewis or anyone else at Bank of America to do the right thing and obey the law. And while they promised Bank of America lots of money to keep it from calling off the deal, they were careful not to commit any of their agreements to writing for fear this would bind the government into disclosing them itself.

    It didn’t matter that investors were buying and selling billions of the banks’ shares without a clue that Merrill had lost more than $12 billion during the fourth quarter. Bernanke and Paulson had a singular objective — to get the Merrill deal done, on time — even if that meant duping the stock market and threatening to fire Lewis as chief executive officer, along with the company’s board.


    Millions of Americans got bent over the table by men who, it is alleged, actively conspired to knowingly break the law.

    That’s exactly what Ken Lewis alleged in his conversations with Attorney General Cuomo; he said there was an explicit conversation related to avoiding a “reportable event” (a letter from the government), meaning that everyone involved knew that under the law this was supposed to be disclosed and put specific effort and intent into hiding it.

    It doesn’t stop here either. As I have repeatedly pointed out The Fed is not empowered to buy any sort of financial instrument unless it carries the full faith and credit of the government.


    The Fed has purchased billions upon billions of dollars in securities from Fannie and Freddie and unless you can show me some section of the law I have missed I see nothing allowing them to do so, nor to take equity in the Bear Stearns and AIG bailouts.


    The Italians are getting into the act:

    With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized about $300 million in assets of four global banks — JPMorgan Chase, Deutsche Bank, UBS and Depfa — whose officials have been accused of fraud.

    The Guardia di Finanza in Milan, the financial police of Italy, took over real estate properties, bank accounts and stock holdings on Monday to assure it could collect from the banks if their officials were found guilty and the banks were held responsible.

    Dozens of state and local governments in the United States have been victimized by these “deals” in the United States as well, yet Italy is the first to bring an actual enforcement action and seize assets? Why?

    Lawless behavior by both Wall Street executives and government officials appears to have been pervasive, it is outrageous, and hundreds of billions (if not trillions) of dollars has been stolen from the taxpayer as a direct result.

    The people involved appear to have known full well they were doing something wrong at the time as they have made every attempt to hide their actions and refuse to ask the tough questions; if you’re not slithering around with the intent of a viper there is no reason not to act in the light of day!

    Those alleged to be involved must be investigated, indicted, tried, and if found guilty imprisoned with their assets subject to fine and forfeiture, no matter who they are.


  35. Patrick says above:

    “It cannot be repeated too often: That is just the data coming from one crack in the system, the CNS [continuous net settlement system] bucket at the DTCC, and does not include any fails accumulating at the brokerages, or diverted by pre-netting, or masked by the Stock Borrow Program, or swept into the ex-clearing system, or stemming from offshore failures. So it is the tip of the iceberg (and perhaps, the tip of the tip of the iceberg).”

    So it is clear the the Wall Street Counterfeit Machine is allowed by the SEC to HIDE most of its Fails to Deliver, since only the CNS [continuous net settlement system] bucket at the DTCC is reported 5.5 months later.

    What is not clear to me is this….
    Is there anyway to tell what the TOTAL NUMBER of Fails-to-Deliver in the CNS [continuous net settlement system] bucket at the DTC on any given day 5.5 months ago or longer?

    I understanding is that the TOTAL NUMBER for ALL outstanding FTDs is not reported. Is this correct?

    If I understand the DNDN chart above correctly, those numbers are totals on individual days, but NOT the total outstanding FTDs. Is this correct?

  36. So which of the many crooks indentfied within Deepcapture do you think posted this on Yahoo prior to the drop in DNDN today?

    HIGH PROBABILITY MASSIVE BEAR RAID 12 30 pm central today 28-Apr-09 11:22 am DNDN could easily drop 50 % on a massive bear raid its coming.. today @ 12 30 pm central

    Sentiment : Strong Sell
    Rating :
    (51 Ratings)Rate it:

  37. Now this would be a perfect case study into short sales, uptick rules, and market quality. I hope that the broker issue was on the short side and NASDAQ is letting them take a pounding when the market returns. I feel for the people who had stop losses that pulled them out in this clear market raid.

  38. Our friends, the sellers, really got their assets handed to them on this raid. Poor babies. DNDN afterhours. low 7.50 high 27.67 volume (20 minutes before a.h. closes) 32,765,823 last trade 26.24

  39. Also, keep in mind CNS fails are after 98% netting. Every CNS fail represents fifty real shares (multiply fails by 50).

    If the clearing brokerages that net through the CNS also net 98%, then it wouldn’t be unreasonable to wonder if each CNS fail represented 50 x 50 or 2500 real shares.

  40. I had the following question asked of me in reference to DNDN and wasn’t sure of the mechanics involved in a naked short transaction.
    “I understand that naked shorts get away without ever having to cover when they drive a company out of business… but what happens to the naked shorts in a situation like DNDN…? Are they forced to cover eventually, along with the “registered” short positions…? If that’s the case, the price could be accelerated even higher by all the naked + regular short covering. Yes… no?” Please reply so that I can answer this person’s question. Thanks for any effort in advance.

  41. The secret of the banksters, profits are private, losses are socialized, the system breaks down and all citizens pay the price.

    The solution is to get assets in your own name. Pull your share certificate and buy hard assets with your money. Don’t trust the banks and brokerages or the deposit insurance ponzi schemes.

  42. A Thought came to mind this morning about the SEC position on Naked Shorting….

    If the SEC statement that it considers Naked Shorting as illegal were its true position, then…

    – WHY does the SEC HIDE the Fails to Deliver for 5.5 months? ( – Why HIDE what is illegal?)
    – WHY does the SEC allow the Naked Shorts to HIDE the Fails to Deliver in outside the monitored DTCC system? ( – Why allow criminals to HIDE what is illegal?)

    The ACTIONS of the SEC indicate that its true position on Naked Shorting is that it is LEGAL.

  43. I see Gary Weiss has responded to your posting:

    Adding comic relief to the whole situation, meanwhile, are the naked shorting conspiracy types, most recently the wacko CEO of, Patrick Byrne. They’ve put Dendreon on their lengthy list of victims of naked shorting. Forensic Tracy Coenen had a memorable fisking of a recent Byrne blog post the other day.

  44. Back in 2002, companies tried to leave the DTC to avoid being naked shorted to death. The SEC banned the practice because it was starting to work.

    It was replaced by an NASD rule that was starting to work in 2004, then the SEC banned that rule and replaced it with SHO.

  45. Kevin, would’nt it be interesting if the new Wall Street movie would portray the Michael Milliken (sp) character after coming out of jail and setting up his charity stuff as a front for the evil doing of manipulating the stock market from behind the scenes and destroying the American Economy just to show the regulators and the old Wall Street Guard who threw him under the bus that he was smarter and more patient than they were? I just thought that I would throw that out there. Comments anyone???

  46. Anyone care to explain to me how they knew to do this ahead of time? You get the idea everyone knows about this stuff ahead of time to get out without a loss except for us and Joe Louis(Bear Stearns Investor).

    Finra Oversees Auction-Rate Arbitrations After Exit (Update1)
    Share | Email | Print | A A A

    By Darrell Preston

    April 29 (Bloomberg) — The Financial Industry Regulatory Authority, supervising 344 investor arbitration cases over auction-rate bonds, skirted losses from the securities by selling its holdings months before the market collapsed.

    Finra, responsible for educating and protecting investors, owned as much as $862.2 million of the debt before exiting the market in the spring of 2007, less than six months before auctions began to fail, according to spokesman Herb Perone. The Washington-based group is conducting arbitration hearings filed against banks by bondholders stuck in the $176 billion market.

    Investors who were sold the securities as money-market alternatives say Finra, a non-profit corporation owned by banks that oversees 5,000 brokerage firms and 659,000 brokers, failed to protect them. The market froze in February 2008 when banks, which had supported the debt for two decades through periodic dealer-run auctions, stopped buying bonds that investors didn’t want as losses from subprime mortgages spread.
    Click on link for rest of story.

  47. Repo Failure Remedy Drives Away Short-Sellers in Treasuries

    By Liz Capo McCormick

    April 30 (Bloomberg) — Just as Federal Reserve Chairman Ben S. Bernanke revives credit markets, one of his remedies may reduce trading in Treasuries.

    A Fed-endorsed industry recommendation will require traders to pay a three-percentage-point penalty on uncompleted trades, known as fails, starting tomorrow. That may reduce the number of bets on price declines, according to RBS Securities Inc. and Societe Generale SA.

    While the new recommendations are meant to curb disruptions caused when traders fail to meet their obligations, some strategists are concerned it may do more harm than good in the $7 trillion-a-day repurchase market, where dealers finance their holdings. A reduction in trading would be a setback for the Fed as it seeks to lower borrowing costs by pumping cash into the banking system and purchasing as much as $1.75 trillion in Treasuries and mortgage securities.

    “Making short-selling potentially costly can reduce market liquidity,” said Darrell Duffie, a Stanford University finance professor and member of the New York Fed’s Financial Advisory Roundtable. “Financial markets with relatively unencumbered short-selling perform better.”

  48. “These ridiculously hollow institutions continue to engage in sales of USTreasurys with rampant failures to deliver funds in order to maintain cash flow, not mentioned in quarterly earnings reports.”

    The government should nationalize the dirty brokerages and banks for a year or two, clean them up, then IPO out the new clean entities. The thieves need to be fired, then arrested.

  49. Fairly prescient reportage on DNDN, I have to say. Good job, Patrick and team.

    As for the shortminded zombies, what does it take?

    A stake in the heart(I know, hard to find)?
    A .357 slug right in the cerebral cortex (I know, hard to find, again).

    “Making short-selling potentially costly can reduce market liquidity,” as the market goes down the drain, along with our economic lives….

  50. Who is this “Stanford Professor” Darrell Duffie? Does he really believe that selling a security with no intention of delivering is good for the markets? What justification does he have for the outrageous statement: “Financial markets with relatively unencumbered short-selling perform better.” ?

    The academy is also going down the tubes.

  51. I agree with most of the thoughts on:Dendreon’s Cancer Researchers vs. Hedge Funds & The Bootlick Journalists (or, What’s 18 Million Fails Among Friends?) | Deep Capture: exposing the crime of naked short selling about mccormick place chicago ill but must admit I find your idea a little challenging as I have been visiting this since last Thursday and am not sure whether I agree with your thoughts… : )

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