Yet another naked shorting disinformation campaign laid bare

    It’s difficult to overstate the influence of Wikipedia these days, particularly when it comes to informing media coverage. A recent experiment, carried out by a student in Ireland, makes this very clear. So it should come as no surprise that those who wish to minimize the perceived impact of illegal naked short selling on markets and the economy as a whole have made the online encyclopedia a major point of focus.

    Recently, yet another effort to infiltrate and alter the content of Wikipedia by a proponent of illegal shorting came to light and was foiled. As before, the infiltrator was former Business Week reporter Gary Weiss (whom a senior contributor recently termed “one of [Wikipedia’s] most slippery sockpuppeteers”), operating for over a year in complete defiance of an edict specifically banning him from the site based on his very well-documented history of abusing Wikipedia for his own conflicted purposes.

    In the past (as you can read about here), we know Weiss spread misinformation relating to stock fraud via Wikipedia on behalf of the Depository Trust and Clearing Corporation (DTCC), the Wall Street firm considered a key enabler of illegal short selling. Exactly who’s sponsoring Weiss these days is unclear; however, as the evidence that follows will demonstrate, his concerted effort to whitewash DTCC’s Wikipedia article makes that company the prime suspect.

    Now that his ruse has been uncovered – yet again – the focus becomes one of identifying and repairing the damage done. A brief review of some of the thousands of changes made by Weiss will give you a sense of both the scope of the problem and the nature of his motives. I’m organizing the following tiny sampling of Weiss’s Wikipedia edits by topic, with the content as it originally appeared on the left, with Weiss’s changes on the right. Words added or removed appear in red.

    As you read what follows, ask yourself two questions:

    1. Which version, be it the left (before Weiss) or the right (after Weiss), better reflects reality and serves readers (particularly journalists) seeking to form an opinion?
    2. What might be Weiss’s motive for obsessively making these changes (and literally hundreds more like them)?
    Wikipedia Article Before After
    Depository Trust & Clearing Corporation While there is no dispute that illegal naked shorting happens, there is a fight as to the extent to which DTCC is responsible. Some blame DTCC as the keeper of the system where it happens, and charge that DTCC turns a blind eye to the problem. Critics blame DTCC as the keeper of the system where it happens, and charge that DTCC turns a blind eye to the problem.

    Depository Trust & Clearing Corporation In 2007, WayPoint Biomedical sued DTCC for DTCC’s refusal to comply with a subpoena request for documents that Waypoint needs to track trades in the company’s shares.

    Depository Trust & Clearing Corporation The DTCC has also denied having any relationship with financial journalist Gary Weiss. Weiss is alleged to have manipulated an account on Wikipedia, with assistance from several Wikipedia administrators, to promote naked short selling on the website from January 2006 to March 2008. (added by others and removed by Weiss five times)

    Depository Trust & Clearing Corporation DTCC has been sued with regard to its alleged participation in naked short selling. Further allegations about DTCC’s possible involvement have been made by Senator Robert Bennett and discussed by the NASAA and in articles — disagreed with by DTCC — in the Wall Street Journal and Euromoney. DTCC has been sued over alleged participation in naked short selling.

    Depository Trust & Clearing Corporation The U.S. Securities and Exchange Commission (SEC), however, views naked shorting as a serious enough matter to have initiated two separate efforts to restrict the practice.

    Naked short selling Author and reporter Gary Weiss maintains that the SEC enacted Regulation SHO in part due to pressure from a handful of small and microcap companies. He also cites economic justifications for naked short selling and downplays its significance as a problem for the market.
    (note: upon making this change, Weiss also added a link to his book, referring to himself as a source of “notable media opinions.”)

    Naked short selling Amidst growing concern in 2008 about the effect of naked short selling on faltering companies, the SEC issued a temporary order restricting short-selling of the shares of 19 financial firms deemed systemically important. Shortly following the failure of Lehman Brothers in September of 2008, the largest bankruptcy in U.S. history, the SEC expanded the temporary rules to remove exceptions and to cover all companies. As part of its response to the crisis in the North American markets in 2008, the SEC issued a temporary order restricting fails to deliver in the shares of 19 financial firms deemed systemically important. In September of 2008, the largest bankruptcy in U.S. history, the SEC expanded the temporary rules to remove exceptions and to cover all companies.

    Naked short selling During hearings on the 2008 financial crisis before the House Committee on Oversight and Government Reform, former Lehman Brothers CEO Richard Fuld said a host of factors including a crisis of confidence and naked short selling attacks followed by false rumors contributed to both the collapse of Bear Stearns and Lehman Brothers. During hearings on the 2008 financial crisis before the House Committee on Oversight and Government Reform, former Lehman Brothers CEO Richard Fuld said a host of factors including a crisis of confidence and naked short selling attacks followed by false rumors contributed to both the collapse of Bear Stearns and Lehman Brothers. However, Fuld’s testimony was generally derided as self-serving.

    Naked short selling Rolling Stone magazine featured naked shorting in an article, “Wall Street’s Naked Swindle” by Matt Taibbi, in October 2009. In the article, it was reported that an unknown investor had shorted $1.7 million worth of Bear Stearns stock through a variety of options. For the item to make a profit, Bear Stearns would have had to have lost half its value or more in less than nine days. When Bear Stearns collapsed, the options were worth $270 million, or 159 times its previous value. Rolling Stone magazine featured naked shorting in an article, “Wall Street’s Naked Swindle” by Matt Taibbi, in October 2009.

    Naked short selling Rolling Stone’s Matt Taibbi presentation on Naked Shorting

    Naked short selling In an October 2009 article in Rolling Stone magazine, journalist Matt Taibbi wrote that there had been an attack on Bear Stearns and Lehman Brothers in March 2008 employing “naked short-selling”.

    Naked short selling Effective September 18, 2008, amid claims that aggressive short selling had played a role in the failure of financial giant Lehman Brothers, the SEC made permanent and expanded the rules to remove exceptions and to cover all companies. Effective September 18, 2008, the SEC permanently removed an exemption for market making in options on stocks, and making an explicit anti-fraud regulation relating to that activity. The stringent delivery requirement is temporary.

    Naked short selling https://www.deepcapture.com/ Blog devoted to naked shorting practices

    Robertson v. McGraw-Hill Co. In the article, Weiss described…Weiss claimed…Weiss told how…Weiss described…Weiss’ report was distributed…Weiss’ predictions… The article described…it claimed…The article told how…it described…the article was distributed…the article’s predictions

    Robertson v. McGraw-Hill Co. In the suit, Robertson requested $1 billion in damages for, in Robertson’s words, “false and defamatory statements” contained in Weiss’ article. Media response to the suit noted the unusually high damages demanded for a libel suit and speculated that the case would be watched with concern by the publishing industry. The suit was subsequently settled without payment of damages, and Robertson’s fund closed in March 2000.

    Michael Milken Starting in June 2009, a series of articles by Mark Mitchell were published on a website called Deep Capture about Milken’s ties to a select group of hedge funds and the stock manipulation of a company called Dendreon (NASDAQ:DNDN). Dendreon has developed a drug called Provenge that enables the human body’s immune system to better fight prostate cancer. (removed by Weiss and replaced by others at least three times)

    If there is a silver lining to this cloud, it’s the following: Wikipedia’s current ruling Arbitration Committee, which has the unenviable task of, among other things, dealing with Weiss and his continued efforts to subvert their authority, is genuinely interested in doing the right thing in this situation. Though you might take that for granted, I can assure you that this has not always been the case. Indeed, at one time, Wikipedia’s ArbCom seemed to go out of its way to enable Weiss’s abuse of this most important social media platform, resulting in (if you can believe it) an even greater number of yet more dramatically skewed and self-serving changes to these articles by Weiss.

    Wikipedia has come a long way since then.

    Finally, it seems unlikely that Portfolio.com, where he authors a business column, is aware of Gary Weiss’s actions. They would probably appreciate knowing more. If you agree, consider sending a brief and informative note to Condé Nast Publications Group President David Carey: David_Carey@condenast.com.

    Postscript: If you’re at all unclear on why you should be bothered that DTCC seems to have hired former journalist Gary Weiss to cover-up the crime of illegal of naked short selling, I strongly suggest you check out Lila Rajiva’s recent post on the composition of that company’s board of directors.

    _____________________

    And now, for what long-time readers of DeepCapture.com will recognize as my favorite part of writing about Gary Weiss: a little running up of the score (piling on with additional insights that don’t necessarily make the case on their own, but certainly make the case much more entertaining).

    After discovering the Wikipedia edit placing Gary Weiss within the Fort Knox-like DTCC (see this for the explanation, if you didn’t already follow the link above), I sent DTCC spokesman Stuart Z. Goldstein the following email:

    From: Judd Bagley
    To:
    Stuart Goldstein
    Sent:
    Wed, 31 Jan 2007 10:24 PM
    Subject:
    media inquiry
    Mr. Goldstein,
    Yesterday I received some information suggesting Gary Weiss either is or has been hired or retained by the DTCC (or DTC or NSCC). Can you confirm the existence of a professional relationship between Gary Weiss and your organization?

    More than two days passed with no response. Finally, I received the following:

    From: Stuart Goldstein
    To: Judd Bagley
    Date: Fri, Feb 2, 2007 at 12:00 PM
    Subject: your inquiry

    *** Body Not Included ***

    That’s right…the body of the email read only “*** Body Not Included ***”

    With that, I responded:

    From: Judd Bagley
    To: Stuart Goldstein
    Date: Fri, Feb 2, 2007 at 1:20 PM
    Subject: Re: your inquiry

    Mr. Goldstein,
    Thanks for your reply, though the body appears to be missing…may I trouble
    you to re-send your reply?

    Goldstein’s record-breaking response (especially considering his earlier reply took two days to arrive) hit my inbox three minutes later:

    From: Stuart Goldstein
    To: Judd Bagley
    Date: Fri, Feb 2, 2007 at 1:23 PM
    Subject: Re: your inquiry

    My response to your question is no.

    On the surface, this would seem to be Goldstein denying a relationship between DTCC and Weiss. The problem is, I didn’t ask a yes or no question. I asked him to confirm something specific, to which he responded “no.” The answer didn’t fit.

    I twice asked Goldstein to clarify his response, and was twice ignored.

    That’s when I realized I’d been played.

    Goldstein’s quick reply of “My response to your question is no” was probably calculated beforehand as his response to my inevitable request that he re-send the reply which read only “*** Body Not Included ***”.

    He got me.

    Here’s how this applies to Weiss.

    Weiss’s most recently-banned Wikipedia sockpuppet, known as JohnnyB256, generally began to arouse suspicion in September, following a series of extremely slanted edits to the Wikipedia article on DTCC. At that time, multiple Wikipedia editors asked JohnnyB256 if he had a relationship with Gary Weiss. JohnnyB256 avoided answering the question (other than to dismiss it as “unmitigated gall”) until a senior Wikipedia administrator known as Lar inserted himself into the conversation to say he felt it was a “reasonable question.”

    JohnnyB256 then responded, in a way that was unambiguously directed to Lar alone, saying, “The answer to your question is ‘no’.”

    Only problem is, Lar was the one person who never asked him the question. Unfortunately, nobody picked up on this serpentine strategy at the time, allowing JohnnyB256 to claim he’d already answered the question of  a link to Weiss when it came up from time to time.

    Anybody else suspect Weiss and the DTCC are using the same playbook?

    This post was written by:

    - who has written 104 posts on Deep Capture.


    Contact the author

    64 Responses to “Yet another naked shorting disinformation campaign laid bare”

    1. harveywalbinger says:

      Great job keeping the heat on this little worm.

      Not sure I agree about Weiss’ current employer being unaware of his behavior. I’m to the point that unless I see credible evidence of innocence, I believe it’s a safer bet to assume complicity.

    2. curious says:

      Taking the spotlight off of Weiss for a moment and perhaps aiming it at where it should be aimed would not the engaging of Weiss’s cover up services by the DTC imply that they know very well how corrupt their system is in regards to short sales otherwise why would they risk getting caught employing Weiss? It appears they are in active cover up mode which is ususally the easier to prove crime in the long run. Let me guess, the DTC is too big or too critical to the markets to be allowed to fail. I’ve seen this movie before.

      Judd, is your tieing Weiss to the DTC rock solid?

      • harveywalbinger says:

        If I may be so bold as to answer on Judd’s behalf…

        http://antisocialmedia.net/wikipedia-and-the-whereabouts-of-weiss/

        This link provides powerful evidence that Weiss has been waging engaged in an ongoing effort to manipulate social media (WIKI entries) related to ANSS to paint a more favorable picture for ANSS practitioners. And that this manipulation of social media was done on behalf of the DTCC organization (since Judd proved the “mantanmoreland” edits came from DTCC), or at the very least on behalf of individuals within the purvey of DTCC (if you want to give DTCC the benefit of the doubt that the organized effort to manipulate social media does not encompass the DTCC in totality but rather just a subset).

      • Judd Bagley says:

        Rock solid? Well, let’s just say they could be other explanations, but they would have to be really, really complicated.

        • Rocky IIIX says:

          LOL really Really REALLY complicated!

          It looks more and more like GW is now the DTC’s sacrifical lamb. Diverting attention seems to be the order of the day

          IMO the DTC makes AIG look like a healthy company @!@

      • anon says:

        Regardless of how “rock solid” you think the Weiss / DTCC scenario is, please don’t forget to remember that the DTCC is lobbying right now to have a single trade repository for each asset class. In other words, THEY want to be that single trade repository. THEY want to be the little black box that scams the market… See, when you know the trade information they know — You don’t need to actually do your homework, you can make money based purely on gaming everyone else.

    3. RIcky Petea says:

      Are you sure Conde Nastie currently employs Weiss?

      • Judd Bagley says:

        Conde Nast owned the print magazine Portfolio, which folded earlier this year (Weiss having penned the final cover story, as it happens). It was then resurrected online only as portfolio.com, a joint venture between American Business Journals and Conde Nast.
        Because CN invited Gary to the party, I suspect they’d be the guys to tell about what he’s doing down in the basement when they’re not watching.

    4. harveywalbinger says:

      FWIW I’m relatively certain “Conde Nast” does NOT translate to “La Cosa Nostra” in any of the popular romance languages.

      However, regardless of whether or not this is a correct translation it seems a fitting name for the clandestine employer of Weiss…

    5. Bob says:

      Judd,

      How do you know for sure that it was Weiss behind these edits? You’ve made the clear factual statement that it was him, but haven’t explained how you arrived at that conclusion. If you’re right (and I’m assuming you are given Gary’s history on these issues), an explanation of the basis for your conclusions would make your point much more powerfully.

      • anon says:

        I actually added one of the edits to Wikipedia that Weiss ended up removing. I was able to confirm independently of Judd that Weiss made the text removal. There are those at Wikipedia with access to be able to prove Judd correct as well…

      • Judd Bagley says:

        Bob,
        I tend to agree with you that an explanation of how Weiss got busted would be a powerful addition to a post on the topic. I decided not to add it to this one for three reasons:
        1- feedback I’ve received on prior posts where folks say that stuff makes for difficult reading (coupled with the fact that there are not many left unconvinced about Weiss and his tactics).
        2- the fact that Weiss himself reads this stuff and adapts his methods to avoid detection in the future (which is probably the same reason Wikipedia’s ArbCom cited “private evidence” when blocking Weiss most recently).
        3- the fact that JohnnyB256 was banned as a sockpuppet of Mantanmoreland (see the notice on his userpage here) and the link between Weiss and Mantanmoreland has been proven on Wikipedia far beyond any reasonable doubt. If you have an hour or two to kill, you can read through it all here. Or, you might read my recent post revealing how Wikipedia founder Jimbo Wales himself made it clear that he was convinced by my evidence linking Gary Weiss and Mantanmoreland, adding, “The evidence that Weiss has sockpuppeted all over the Internet is pretty compelling.”

    6. anon says:

      In all the posts above, I forgot to mention that Gary Weiss used to have a Verizon account in New York City that he accessed the Internet through back in 2006… He had the IP of 70.23.106.219 on Feb 3, 2006.

      • Judd Bagley says:

        February 3rd through 5th, 2006 to be precise.

        That’s something we know thanks to the many emails in our possession between Weiss and known stock manipulator Floyd Schneider.

        You can read more about the insights gleaned from those emails here.

    7. Jim Hall says:

      Weiss’ frenetic editing of Wikipedia is akin to the way cockroaches scramble for table scraps.

      And both the roaches and Weiss share some kind of perverse dignity of commitment.

      However, at least the roaches can be excused for their behavior…

    8. hangthemall says:

      Ratting against Raj
      Ex-McKinsey partner may sing vs. Galleon CEO
      By KAJA WHITEHOUSE

      Last Updated: 4:22 AM, December 31, 2009

      Posted: 1:02 AM, December 31, 2009

      The feds may have a canary in their cage.

      An ex-senior partner at McKinsey & Co., who was caught up in the recent insider-trading scandal involving hedge fund Galleon Group, has taken the first steps toward what may be a guilty plea, according to court filings.

      That means Anil Kumar, one of the dozen-plus people who have been slapped with criminal charges in the case, could become a star witness against Galleon bigwig Raj Rajaratnam.

      Yesterday, government prosecutors put in a request to the US District Court of the Southern District of New York that was signed by Kumar’s attorney, Robert Morvillo.

      The document, which consisted of a single sentence, informed the court that the US Attorney’s office will file “an information,” in what legal experts say is Kumar’s first step toward waiving his right to be indicted by a grand jury.

      The filing suggests that Kumar, 51, may plead guilty — or that he may have reached a deal with prosecutors.

      Kumar’s lawyer, Morvillo, didn’t respond to a request for comment.

      Prosecutors allege that Kumar passed along tips about companies to Rajaratnam, who had become a friend when they were both attending the Wharton School at the University of Pennsylvania.

      Among the tips Kumar is accused of passing along to Rajaratnam was one about the timing of chipmaker Advanced Micro Devices’ plans to spin off its manufacturing unit.

      As a consultant for McKinsey, Kumar was working on the deal for AMD, and allegedly told his college pal that the separation would happen the week after Labor Day 2008. He also advised Rajaratnam to buy AMD shares, and allegedly bought shares himself.

      In total, Galleon’s alleged insider-trading scheme resulted in $20 million in ill-gotten gains.

      Rajaratnam denies any wrongdoing.

      So far, four people have agreed to be witnesses in the government’s case against Rajaratnam and his firm. They include Roomy Khan, an ex-Intel worker, and Steven Fortuna, Ali Far and Richard CB Lee, all of whom are hedge-fund managers.

      The four have pleaded guilty to insider-trading charges and conspiracy and are working with the feds in hopes of getting lighter prison sentences.

      Earlier this year, Ponzi king Bernie Madoff waived indictment as did his accountant, David Friehling.

      Madoff eventually pleaded guilty and was sentenced to 150 years in federal prison.
      kaja.whitehouse@nypost.com

      PRINT EMAIL SHARE
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      RSS The feds may have a canary in their cage.

      An ex-senior partner at McKinsey & Co., who was caught up in the recent insider-trading scandal involving hedge fund Galleon Group, has taken the first steps toward what may be a guilty plea, according to court filings.

      That means Anil Kumar, one of the dozen-plus people who have been slapped with criminal charges in the case, could become a star witness against Galleon bigwig Raj Rajaratnam.

      Yesterday, government prosecutors put in a request to the US District Court of the Southern District of New York that was signed by Kumar’s attorney, Robert Morvillo.

      Anil Kumar, the former McKinsey & Co. partner who is a defendant in theGalleon Group inisder-trading case, yesterday moved toward copping a plea.
      The document, which consisted of a single sentence, informed the court that the US Attorney’s office will file “an information,” in what legal experts say is Kumar’s first step toward waiving his right to be indicted by a grand jury.

      The filing suggests that Kumar, 51, may plead guilty — or that he may have reached a deal with prosecutors.

      Kumar’s lawyer, Morvillo, didn’t respond to a request for comment.

      Prosecutors allege that Kumar passed along tips about companies to Rajaratnam, who had become a friend when they were both attending the Wharton School at the University of Pennsylvania.

      Among the tips Kumar is accused of passing along to Rajaratnam was one about the timing of chipmaker Advanced Micro Devices’ plans to spin off its manufacturing unit.

      As a consultant for McKinsey, Kumar was working on the deal for AMD, and allegedly told his college pal that the separation would happen the week after Labor Day 2008. He also advised Rajaratnam to buy AMD shares, and allegedly bought shares himself.

      In total, Galleon’s alleged insider-trading scheme resulted in $20 million in ill-gotten gains.

      Rajaratnam denies any wrongdoing.

      So far, four people have agreed to be witnesses in the government’s case against Rajaratnam and his firm. They include Roomy Khan, an ex-Intel worker, and Steven Fortuna, Ali Far and Richard CB Lee, all of whom are hedge-fund managers.

      The four have pleaded guilty to insider-trading charges and conspiracy and are working with the feds in hopes of getting lighter prison sentences.

      Earlier this year, Ponzi king Bernie Madoff waived indictment as did his accountant, David Friehling.

      Madoff eventually pleaded guilty and was sentenced to 150 years in federal prison. kaja.whitehouse@nypost.com

      Read more: http://www.nypost.com/p/news/business/ratting_against_raj_nQ4lpI6TJAr7hnPLEOilSI#ixzz0bHjyRtF3

    9. hangthemall says:

      we need more cheese to feed all these rats.. When will they get the BIG RAT.

    10. Mark Ancona says:

      In my humble opinion, Weiss and his ilk are aided and abetted by the very people who would be protected by this disinformation. Naked shorting is not only rampant, but IMHO is a large part of the action in todays trading pits.

      GATA has been fighting for years to initiate an investigation of naked shorting in gold and silver for years, but all complaints fall on the deaf ears of SEC employees who are just biding their time until they too can become an employee of the great and powerful GS.

      This is precisely the incest that must be stopped within our government. The TBTF’s in our country have the power to destroy a company through naked shorting without ever having spent an actual dime through naked shorting their stock and placing huge negative derivatives bets on them.

      Come November, it is incumbent upon us all to recognize that scumbags like Harry Reid, Barney Frank, Nancy Pelosi, Charlie Wrangel et. al., are the problem, not the answer. We need to end the careers of these career politicians and neuter their ability to remain complicit in the raping of American Citizens.

    11. Jim Hall says:

      I believe that the SEC, DTCC, and the Fed must be subjected to an intense audit in the name of national security.

      Even if that means we have to hit a big red reset button on the economy and start all over again from the Stone Age.

      Meantime, who will step up and conduct an immediate financial audit of all members of the senate?

      • harveywalbinger says:

        I am sad to say it but, I’m coming to the conclusion that the problems this country currently finds itself in does much more to marginalize the ANSS problem than Gary Weiss or Sam Antar or Steve Cohen or Jim Chanos, et al could ever possibly do. Don’t get me wrong, I’m convinced these A-holes did their very best to screw over anyone & everyone that dabbles in the markets they are involved with through fraudulent means. But the totality of our national concerns are so huge that ANSS may very well just be a blip on the radar, and is rather a symptom of the broad sickness.

        http://www.usa.gov/Agencies/Federal/All_Agencies/index.shtml

        It’s no wonder the USA carries a huge annual deficit. Our government has grown morbidly obese &, in a sense, has become self-aware. In regard to an audit… While we’re at it, why not throw the ATF, DEA, DOD, DOE, DOJ, EEOC, EPA, FAA, FDA, FDIC, FEMA, etc, etc, etc.. The list of worthless acronyms is almost limitless. I’d like to see an all encompassing government-wide audit. This would provide opportunity to identify where duplicitous functions exist so the duplicity could be eliminated. Like that would ever happen…

        Our “leaders” should question the constitutionality of all this gubmint fat. But it’ll never happen. It’s too big. Too big to stuff this genie back in the bottle. Too big to comprehend… And it would be alot to expect from a congress that doesn’t (sometimes even get a chance to) read the fucking legislation they are voting on. They put to vote whatever their lobbyist buddies provide them. All that influence peddling has bought a huge gubmint that is obviously, blatently subservient to the whims of special interests, as opposed to the interests of their constituents.

        I don’t think we’d be such bad shape if there were more patriots working in gubmint for the betterment of the USA. Unfortunately the true American patriots get sent abroad to fight on behalf of our career politicians who (unbeknownst to our soldiers) are working in the interests of a clandestine authority. Don’t hold your breath on ever seeing a meaningful audit of the FRB, let alone a gubmint-wide audit. Each of the thousands of gubmint agencies is run by a career beaurocrat, who’d no doubt ask himself first & formost “how does this audit help me to stay in power?” before deciding to support an audit. No way a gubmint-wide audit will ever occur. It’s too big. Even if it had well intentioned support, it would be the mother of all clusterfucks. Clusterfucktabulous is an apt term to describe our National predicament.

        I’d wager that a new global gubmint will emerge before we ever see an audit of the FRB. And that new central bank authority (and it’s supplicants) won’t be subject to audit either.

      • Concerned says:

        I agree. Even if it means the markets have to shut down. Too much is at risk and with the Dow up as it is, if there is a new calamity I’m not sure the system will be able to handle it.

        I’m out and will remain until there is real change.

    12. Jim Hall says:

      Shapiro receives glowing review for being useless:

      http://www.businessweek.com/magazine/content/10_02/b4162024089183.htm

    13. rtway says:

      In light of all that has happened in our government and the financial markets in the last 10 yrs. I think a conclusion of the state of our country is that we are no longer world leaders but rather world crooks.

    14. sean says:

      A little off topic: Remember when CNBC’s Kudlow and Kramer did this to Patrick only a few years ago and to many guests since them. Their time is coming, Arianna calls out Kudlow bigtime and embarrases him on his set.

      http://www.huffingtonpost.com/huff-tv/arianna-calls-out-kudlow_b_408480.html

    15. sean says:

      Deepcapture, it seems as if the not so main stream media is finally getting it..Patrick it seems as if your confidence and hope may have been misplaced.

      SEC’s Schapiro Depicted As An Easily-Influenced, Failed Wall Street Regulator – As Predicted

      http://www.huffingtonpost.com/2009/12/30/secs-schapiro-depicted-as_n_407263.html

    16. Tar_&_Feather_Them says:

      lil’ gw is a rotten POS. The brokerge houses are all tied together under the alias of the DTCC. How stoopid do they think we are?

    17. ted says:

      As the result of 40 years of known and secret sales of gold bullion by central banks to suppress gold prices, demands are made by those who have allowed the US and to hold their gold and they are asking for physical delivery. After delays on requested delivery, the sale of melt bars, which are not good delivery, and the discovery of gold plated tungsten bars, owners are suspicious that maybe their gold isn’t really in a US or UK depository. As a result there is enormous pressure for delivery. We know there are gold-like bars at Ft. Know. We do not know if they are real because there has been no audit since 1954. Furthermore we don’t know who they belong too. This has caused great concern for those owning gold and hence, a demand for gold bullion. The same shortage has shown up on Comex and the LBMA, where instead of physical gold delivery the exchanges are offering cash bonuses, not to take delivery or in the case of Comex are being offered shares in the gold ETF, GLD. For these alternatives to be offered tells us the exchange members are naked short. That has to eventually drive a percentage of the players away. How long will it take for investors to smarten up over the issue? We don’t know, but next year should bring chaos to the currency and gold and silver markets and that could be the trigger that creates a delivery crisis in gold and silver. Then again, it could be commodity price inflation that causes a breakout over the highs of two years ago with the driving force food prices followed by base metals. We are guessing on timing, but the threat is certainly there. Another even possibility is the failure of monetary and fiscal policy in Europe and the UK, which we have mentioned extensively. If Greece breaks down in 2010, several other eurozone nations could follow ending the euro.

    18. anon says:

      I’m just going to lay my cards on the table. I hate Wikipedia and I think it is just shows the insidious nature of our ridiculous believe that markets regulate themselves that everytime you do a web search, wiki shows up at the top of the list. This is insane people! It would be like going into a bar at 1 AM and picking someone at random to drive you home. Have a safe trip!

    19. sean says:

      Anon. I myself cannot ever remember using Wiki.. for anything. I will remain forever ignoorant if that is the case!!! Especially now that their captured nature has been exposed.

    20. DB says:

      It’s fascinating that the definition for ‘naked short selling’ under the “Thought Leadership” section of DTCC.com doesn’t include a word about the practice being illegal. Here’s their definition with a link to the page –

      “Short selling is a trading strategy where a broker/dealer or investor believes that a stock is overvalued and is likely to decline. It is an integral part of the way our capital market system works. Basically, it involves borrowing stock that you don’t own and selling it on the open market. You then buy it back at a later date, hopefully at a lower price, and as a result, making a profit.

      Naked short selling is selling stock you don’t own, but not borrowing it and making no attempt to do so. While naked short selling occurs, the extent to which it occurs is in dispute.”

      http://www.dtcc.com/leadership/issues/nss/index.php

      Isn’t their job to know “the extent to which it occurs”?

    21. Anonymous says:

      From the last link,

      The hypocrisy and fraud of the oligarch rule corporate media story line is now nearly impossible for an educated, informed adult to digest. As Jim Grant pointed out recently, according to Section 19 of the Coinage Act of 1792, the penalty prescribed for any official who fraudulently debased the people’s money is death, yet in 2009 debasing the people’s money resulted in a “man of the year” award from the self serving corporate media who will be next in line for a bailout from the people for their good service to the new oligarch rule. This organized crime, this theft, occurring right out in the open, may explain why employees of the largest US financial institution are now not allowed to gather in groups larger than 12 outside and their executives are carrying firearms. In an affront to the intelligence and sensibility of any citizen of this planet, the new US president expanded a war he was elected to end and started a new frontier in Pakistan, for that he was awarded a Nobel Peace Prize. The people who were awarded hundreds of billions of dollars of the people’s money because they lost all their money are skimming millions and billions off the top for themselves and their associates in what they call “bonuses”. 2009 has been a year of egregious assault on the American public by the people in charge.

    22. pontiyak says:

      I’ll say it again…time to kill the creature from Jekyll Island.

    23. Fred says:

      Naked Short Selling and the Stock Borrow Program

      The DTCC has a Faq on this. It seems difficult to refute as to specific factual claims. If they have misrepresented anything, they could be sued. It would be good if someone with detailed expertise would comment. One claim is that the same shares can not be loaned to more than one participant broker/bank.

      See

      http://www.dtcc.com/news/newsletters/dtcc/2005/mar/naked_short_selling.php

      • davidn says:

        They don’t lie because they speak in technicalities.

        – keep in mind, that the DTCC (parent), NSCC (does the clearing) and DTC (keeps track of what clearing brokerages own the shares) are three different companies. For example, the NSCC could have huge fails and it would be accurate for them to say the DTC has no fails.

        – the beneficial shareholder is the clearing brokerage, not you and the trade is the one trade per day in the net settlement system, not the trades we make

        – the only shares are the ones owned by Cede & Co. You don’t own shares (unless you pull your certs.) The beneficial owners of the shares are not you. It’s the DTC clearing house participants

        These guys talk like lawyers and the info in their FAQ’s shouldn’t be taken to have the every day English meaning. If there’s a specific FAQ that seems wrong, I can translate their lawyer wiggle language into every day English.

        In answer to your question, they don’t lend shares. They lend entitlements. You are not a shareholder. You are a holder of entitlements with a long position.

        The shareholder (unless you pull your cert.) is Cede & Co., a mysterious private corporation, with unknown shareholders and unknow jurisdiction. The DTC assigns those shares to their participants, who are large clearing brokerages.

        Those clearing brokerages play hanky panky with swaps, repos, etc. to create entitlements out of thin air and further down the chain, secondary clearing brokerages and even your own brokerage don’t bother owning enough entitlements to back what their own shareholders think they own.

        The whole thing is a ponsy scheme, so they need to lie through technicality and hope you come to the wrong conclusion based on what they say which is technically accurate.

        • davidn says:

          I should add that they include debt including Federal, State and Municipal debt, then create statistics based on including debt transactions.

          They will say fails are only X% in dollar value, but they base it on the dollar value including debt to create a misleadingly small percentage number.

        • Concerned Retail Investor says:

          Thanks for the clarification of such a murky system in what is supposed to be a Free market

          I think when most people talk about DTCC or the clearing house, they are referring to the backroom offices where trades are taken care of.

          Wow, I’m not sure many know about Cede & Co. …..do you think the White House is aware of them ? Wouldn’t it be wise that they did ? For all we know, zee terrorists might be in charge.

          • davidn says:

            The privately owned NYSE set up the “Stock Clearing Corporation” which as far as I can tell became known as Cede & Co. Cede could mean “cede: to give up ownership” or CEntral DEpository.

            IE., the people behind the NYSE own Cede & Co.

            It is described as the “nominee” of the DTC, but it isn’t described in their annual report and if you phone the DTC, they won’t answer basic questions about who owns it, what it’s jurisdiction is or even whether it is a private company or a non profit entity.

            There’s a chain of corruption.

            Your brokerage owes you shares which may or may not be backed by something real.

            The brokerage has an account at a clearing brokerage that may or may not back that with something real.

            The clearing brokerage has an account (possibly their own) with a participant at the DTC which may or may not be backed by something real.

            The participant has an account at the DTC which IS backed by something real (that’s why the FAQ can claim all is well), but the DTC doesn’t own any shares.

            They only do the bookkeeping for Cede & Co. which is the ACTUAL REGISTERED OWNER on the company’s shareholder list. Only Cede & Co. has the right to vote those shares or receive dividends as they are the only REAL shareholder.

            That’s why you have to understand the difference between an entitlement and a share. You can pull a cert. and become a shareholder, but if you don’t, you only own an entitlement.

            This scam was set up in the 1970’s, temporarily, where Congress expected a central depository would have competition.

            Instead, no one audits how they vote their shares (they control the board of directors of every corporation as there is no law they have to vote the way entitlement holders direct them to vote as they are the REAL shareholder) and no one stops them from pledging these shares as collateral for various ponsy schemes.

            It’s really, really bad and in my mind, the problem of the VERB (naked short) is the tip of the iceberg. The real problem is the NOUN (custodians only fractionally back the ownership they “guarantee” is backed 100%).

    24. Concerned Retail Investor says:

      Judd, is there any connection with Goldmans much vaunted and secretive trading software and the DTCC.

      Somehow Goldman is able to manipulate an outside order by placing an insider order before it hits the DTCC.

      If they can do it going in, they mist be able to do it going back to the client. In essence double dipping on trades.

      And if there software is doing this type of trading , wouldn’t that be defined as “Insider trading”. After all, they have insider knowledge of a trade at a certain price and manipulate the trade by trading the same order.

      I really don’t like this system, and i dislike the fact that politicians are quickly dismissive of expert witnesses.

      i look forward to your insights.

      Thanks again

      Concerned

      • davidn says:

        The best way to think of it is that Wallstreet insiders, GS being among them, own the DTC and their PR firm, the SEC, which was set up in the 1930’s to stop congress from regulating the stock market.

        The parasitic wealth generated is enough to determine which politicians get regulated and which don’t.

        The control of boards (because they don’t have to vote the way entitlement proxies direct them to vote, because those proxies are not backed by real legal rights) allows them to control the media.

        Read some of Ney’s work from the 1970’s and you will realize that this counterfeiting is a CANCER on productive America that actually works for a living.

        • davidn says:

          errata:

          should be “which politicians get elected”

        • Concerned says:

          Thanks for the response. But the question remains. Since the trades are being manipulated ( handled ) once a seller/buyer initiates an order, the software knows/broker knows what the price is. If it is manipulated , doesn’t that constitute insider trading at its basic level.

          I understand many people put “market orders’ and give the brokerage the direction to get whatever price it can, doesn’t that imply, the BEST price.

          With what i’ve read about Goldman’s software, it seems they didn’t get the best price for the client, the software assured Goldman a slice of the trade by inserting a trade between the original buyer and seller…all dome at millisecond speeds and very small percentage natch, but still preformed with knowledge and certainly not at the best price for the investor.

          kinda like getting a real estate agent to put an offer on a house, he buys it ( without registering the buy ) then sells it to you. i don’t think this is allowed.

          I don’t think the “software buy” registers anywhere let alone on level 2 trading

          • Anonymous says:

            Insider trading is only banned for the retail investors (the prey). The prime brokerages (the sharks) insider trade all the time to create liquidity.

            The basic idea is that retailers act as a herd, all buying or all selling, so the people that own the casin..err..I mean stock market have special rules for themselves.

            For example, market makers will routinely execute all the buy market orders on open, run the stock up, short from their personal account, then execute all the market sell orders.

            People don’t want to admit that the system is gamed and that the SEC and congress are owned by the people that benefit from the gamed system, but unfortunately, that’s reality.

            What GS was doing was deadly illegal, so the SEC is changing the rules to make it legal.

            • Concerned says:

              What GS was doing was deadly illegal, so the SEC is changing the rules to make it legal.

              Ok if it was illegal, why isn’t it being investigated with charges pending.

              The Sec can change all the rules they want, but, when GOldman employed their software, it was illegal as you say.

              If it was illegal than you are implying a law was broken. Can you point to which law ? If so, where’s the enforcement ? Is it insider Trading or something obscure and legally incontestable.

            • Dela says:

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    25. bbhindyou says:

      The dtcc has job openings!
      Dr De Costa should apply!
      Several others here would clearly have a better handle on reality than those currently working for the dtcc,the application has a place to include a resume I sugest a few of the choice research peices I have seen here…
      Then they could not say we did not tell them!
      Shoot we even sent them our research and offered to work for them!
      It is only right to help those in need.

    26. sean says:

      If there were only a pattern..

      YRC’s Near-Death Was Wall Street, Old-Style
      In the battle between the truckers and the hedge funds, the truckers won. The fact that YRC Worldwide almost went bust because of credit-default swaps shows how little has changed on Wall Street.

      The struggle for survival at YRC, trucking company best known for its Yellow and Roadway-branded big rigs, attracted scant media attention in the waning days of 2009.

      YRC did survive, but only after the last-minute intervention of the Teamsters union, which threatened to protest at the office of one Park Avenue hedge fund.

      The fight revolved around credit-default swaps, the Wall Street invention that allows investors to profit when a company goes bust. Made famous for bringing down American International Group, credit-default swaps act like insurance policies on debt, and may make a company worth more dead than alive, at least to some investors.

      That’s what happened with YRC. The company says that a small group of traders tried to push it into bankruptcy, hoping to collect on credit-default swaps that paid only after a filing. It took the help of the union to cajole bondholders to support an out-of-court restructuring.

      read the rest on the link below.

      Email dennis.berman@wsj.com

      http://online.wsj.com/article/SB10001424052748704350304574638750418217422.html?mod=googlenews_wsj

    27. Anonymous says:

      Now, is’nt this SPECIAL? What a suprise. The Hedge fund manager that employed Alan Crookspan (after his retirement a head of the Fed) and coicidentally made more money than anyone I’ve ever heard of is about to become the world’s richest man.

      If Gold Goes To $5000, John Paulson Could Become The Richest Man In The World…

      http://www.businessinsider.com/paulsons-gold-bet-will-make-him-one-of-the-richest-billionaires-by-2015-2009-12

    28. sean says:

      A little off topic but I thought that you guys could use a laugh..

      Volcker, Former Fed Chief, Predicts Congress Will Act To Separate Banks And Traders
      Ford Sales Down 15% In 2009; Chrysler Reports Worst Year In 4 Decades
      WATCH: Only 45% Of Workers Are Satisfied In Their Jobs, A Record Low
      Buffalo Becomes Epicenter For Debt Collector Harassment
      WATCH: Barney Frank: Fannie, Freddie Basically ‘Public Policy Instruments Of Government’
      NYT On Housing Crisis: ‘Things Didn’t Have To Get This Bad’ But We Can Still ‘Avert The Worst’
      Public Pension Funds Face Enormous $2 TRILLION Shortfall, Shoddy Accounting Blamed
      Banks Race To Raise Credit Card Fees
      Your request is being processed…

      Judge Rakoff Slaps Bank Of America Again – And Loves Ballroom Dancing (VIDEO)
      digg Huffpost – Judge Rakoff Slaps Bank Of America Again – And Loves Ballroom Dancing (VIDEO) stumble reddit del.ico.us

      Read More: Bank Of America, Bofa Merrill, Jed-s-Rakoff, Merril Lynch Bonuses, Rakoff, Business News

      Get Breaking News Alerts

      never spam
      Share Print CommentsJudge Jed S. Rakoff is at it again. In his latest salvo in Bank of America’s civil trial with the SEC over the Merrill Lynch bonus scandal, Judge Rakoff blasted the bank’s attempts to use news reports as evidence at trial.

      To recap, the SEC is suing Bank of America for misleading investors about its intentions to pay out year-end bonuses to Merrill Lynch employees. While it was buying Merrill, the bank maintained in its regulatory filings that no bonuses would go to Merrill workers.

      At issue in the most recent court proceedings is whether or not media reports of the bonuses could be used as evidence. According to this ruling, Bank of America is apparently arguing that, because several prominent media outlets reported that Merrill bonuses would be doled out, the bank was absolved of, um, having to tell the truth.

      From Rakoff’s ruling:

      “In effect, the bank is arguing that, even though it expressly warned its shareholders to disregard the media, it can now defend itself by asserting that a reasonable shareholder would have disregard these warnings and, by consulting the media, perceived that the bank’s alleged lies were immaterial. Even a zealous advocate might perceive that such an argument hints at hypocrisy. “

      • Jim Hall says:

        Going after the banks is nothing but protective cover for the hedges who won’t be happy until they destroy our economy.

        And I’m certain they are rearming for another assault.

    29. sean says:

      Another crook joins the SEC..

      New inspection chief at SEC

      When they talk about “a major sweep of hedge fund firms,” do ya’ think they mean “sweep” as in “sweep under the rug?”

      SEC Gets New Inspections Chief

      January 6, 2010

      The Securities and Exchange Commission has named Carlo di Florio its new head of inspections as the agency plans a major sweep of hedge fund firms.

      SEC Chairman Mary Schapiro appointed di Florio director of its office of compliance inspections and examinations. That body took the brunt of the criticism for the agency’s failure to detect Bernard Madoff’s $65 billion Ponzi scheme, leading to the resignation of di Florio’s predecessor, Linda Thomsen, who had headed the office since 2005.

      Di Florio joins the SEC from PricewaterhouseCoopers, where he served as a partner in its financial-services regulatory practice.

      http://www.finalternatives.com/node/10127

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