Podcast: Rexxfield repairs online reputations

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    There are, for the most part, two ways for non-insiders to improperly influence stock prices: either through manipulative trading or the spreading of misinformation.  Both are done with the intention of sparking unwarranted hype or panic in the broader market.

    It was a combination of trade-based and information-based manipulation that led to the sudden collapse of both Bear Stearns and Lehman Brothers. In response, regulators finally made it much more difficult to engage in trade-based manipulation – on the short side, at least – and the result has been a dramatic reduction in the prevalence of the practice.

    What has not been reduced is the prevalence of greed, which I’ve predicted would cause would-be manipulators to shift resources away from trade-based manipulation in favor of its information-based counterpart.

    We all know what this means: more anonymous message board posters and bloggers making unsubstantiated claims about a company’s prospects. Whether done on the long or short side, this is wrong. But what makes it particularly pernicious on the short side is the lasting, negative impact the practice has on the reputations of real people, as a target company’s management is very frequently subjected to particularly libelous claims which inevitably accumulate and darken reputations as determined –more and more each day, unfortunately – by Google and other search engines unconcerned over the accuracy of the information they return in response to queries about real people and organizations.

    That someone can spend years creating a good name for themselves and their company, only to have dedicated, anonymous miscreants tarnish both in a matter of months or even weeks at virtually zero cost is highly suggestive of a system that’s broken.

    And yet it’s the one we’re stuck with.

    Michael Roberts, founder of Rexxfield

    Michael Roberts, founder of Rexxfield

    The good thing about markets is that if needs develop, eventually, enterprising individuals will step in to fill them. In this case, the need is online reputation management and repair, and the enterprising individual is Michael Roberts, founder of Rexxfield, a company dedicated to reorganizing online information in favor of accuracy, fairness and balance.

    Roberts arrived at the Rexxfield concept in the most genuine of ways: as a frustrated target of a vicious internet libel campaign. Eventually, Roberts took the lessons learned through the process of solving his own problems and built a company around them.

    We met recently, and I recorded the conversation. Here are some of the highlights. I’ve also included portions of a chat I had with Patty McPeak, one of Rexxfield’s earliest clients. You may either download the mp3 or listen to it now, by clicking the “play” button below.

    icon for podpress  Deep Capture Podcast: fixing internet libel [18:27m]: Hide Player | Play in Popup

    (By the way, it’s worth pointing out that Michael’s online attacker recently pled guilty to a serious felony and is due in court on another shortly.)

    If you or your company has been the target of an internet smear campaign, contact Michael Roberts at Rexxfield.com to learn more how to regain control of your online reputation.

    Soundtrack (all songs available at Music Alley).
    Dave Lambert Band: Berwick Road
    Jim Fidler: I Still Remember
    Josh Woodward: I’ll be right behind you Josephine
    The Meshes: Irish Eye
    Derek K. Miller: El Campo

    This post was written by:

    - who has written 104 posts on Deep Capture.


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    39 Responses to “Podcast: Rexxfield repairs online reputations”

    1. Lila Rajiva says:

      It’s often not worth pursuing internet slanderers, because often they are sadists who get their kick from their victims responding.

      On topic:
      Please check biggovernment.com for information about Paulson
      s front man on the regulatory front – Eric Stein.
      Paulson’s the invisible hand behind whatever regulation gets crafted, which will surely be more about tying up his competition that about preventing corrupt practices.

    2. Jim Hall says:

      Needless to say, there should be a ‘Truth in Posting’ law on the books, and any company using bashers in any orchestrated fashion should have to register them as ‘lobbyists’.

      Also, last but not least, how about enforcing good ol’ existing defamation law?

    3. Sean says:

      Get rid of ALL FORMS OF SHORTING

      If Jon Stewart gets it why can’t evryone else? See Michael Lewis o to bat for shorts with the “Its good for the market” cliche.

      http://www.huffingtonpost.com/2010/03/16/michael-lewis-the-big-sho_n_500862.html

    4. Sean says:

      Patrick Byrne Radio Interview
      Here is the link to Patrick’s Wall Street Shuffle Radio interview from yesterday. He discusses Wall Street and stock manipulation.

      Part 1: http://www.youtube.com/watch?v=cHejHTvFvvA

      Part 2: http://www.youtube.com/watch?v=gRer-eQpKAc

      Part 3: http://www.youtube.com/watch?v=EhsXj5EyO6k

      Part 4: http://www.youtube.com/watch?v=WxeVtbsJLM4

    5. iStandUp says:

      Here is the ONLY reference I found to Naked Counterfeit Shorting in the new Senate Financial Reform Bill:

      “415. Commission study and report on short selling.
      (a) STUDY.—The Office of Risk, Strategy, and Financial Innovation of the Commission shall conduct a study, taking into account current scholarship, on the state of short selling on national securities exchanges and in the over-the-counter markets, with particular attention to the impact of recent rule changes and the incidence of—
      (1) the failure to deliver shares sold short; or
      (2) delivery of shares on the fourth day following the short sale transaction.
      (b) REPORT.—The Office of Risk, Strategy and Financial Innovation shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of the study conducted under subsection (a), not later than 2 years after the date of enactment of this Act.”
      (p. 382)

      http://banking.senate.gov/public/_files/ChairmansMark31510AYO10306_xmlFinancialReformLegislationBill.pdf

      This is pure crap.

    6. Fred says:

      They should require DTC to disclose sufficient totals of all long and short positions across their participant accounts so that the true number of FTD’s can be determined. That’s the only way to do such a study. You must get the basic raw data so that FTD’s can not be hidden. The number of shares in street name is easy to determine.

      • Anonymous says:

        It’s not as easy as you think. That would just show you the long and short accounts of DTC participants who clear for ten times as many brokerages who each clear for thousands of customers.

        And that doesn’t touch x-clearing or international trades.

    7. Anonymous says:

      Yup the best defense is a good offense and now we have 2 in the deck of cards on cnbc asking where is the justice dept. Got to love it. Sort of like the bank robber asking where the police were. After all had they been doing their jobs we wouldn’t had been able to rob the bank. So a pause and something for all to consider. The actions of a few NEAR COLLAPSEd this financial system and as a result millions upon millions were negatively affected. As we listen to those who try to close ranks and defend the undefendable bhe bottom line should never be forgoten. MILLIONS of innocent investors and non investors have and were and continue to be impacted. So what to do. Put them in jail and let them have their dicourse from behind bars. NOT in front of cameras or before the senate.

    8. Sean says:

      Suprise, suprise.. Is there no shame to their game?

      Ex-SEC Official’s Pitch To Prospective Client: I Promoted The Guys Who Filed Complaint Against You
      Spencer Barasch

      Ex-SEC Official’s Pitch To Prospective Client: I Promoted The Guys Who Filed Complaint Against You

      Justin Elliott | April 26, 2010, 2:22PM

      Spencer Barasch
      “I am friends with and helped promote two of the guys who signed the Complaint against Mark. Someone should tell Mark to look at my profile on my firm website, my SEC press releases, and advise Mark to add me to his defense team.”

      Those are the words of former SEC Fort Worth enforcement chief Spencer Barasch, in a 2008 email pitching his services to a person close to Mark Cuban, the billionaire Texas businessman then facing an SEC insider trading complaint, the Dallas Morning News reports.

    9. iStandUp says:

      To better understand the short entry quoted above in the new Senate Reform Bill – “415. Commission study and report on short selling.” – the following needs to be known:

      SEC Announces New Division of Risk, Strategy, and Financial Innovation
      Professor Henry Hu Named First Director
      FOR IMMEDIATE RELEASE
      2009-199

      Washington, D.C., Sept. 16, 2009 — Securities and Exchange Commission Chairman Mary L. Schapiro today announced that University of Texas School of Law Professor Henry T. C. Hu has been named Director of the newly-established Division of Risk, Strategy, and Financial Innovation.

      The new division combines the Office of Economic Analysis, the Office of Risk Assessment, and other functions to provide the Commission with sophisticated analysis that integrates economic, financial, and legal disciplines. The division’s responsibilities cover three broad areas: risk and economic analysis; strategic research; and financial innovation.

      “This new division will enhance our capabilities and help identify developing risks and trends in the financial markets,” said Chairman Schapiro. “By combining economic, financial, and legal analysis in a single group, this new unit will foster a fresh approach to exchanging ideas and upgrading agency expertise.
      …”

      http://www.sec.gov/news/press/2009/2009-199.htm

      __________________

      This new commission within the SEC is tasked to go study Naked Counterfeit Shorting and produce a study within 2 years.

      I think it is pure crap for Congress to ask for another study to determine if the Wall Street Counterfeit Machine is harming anyone.

      The Wall Street Counterfeit Machine can be used as a weapon of mass destruction as we have seen in regard to the murder of Bear Stearns and Lehman Brothers, since the SEC allows this weapon to be used by its Wall Street Fraternity Brothers to create an INFINITE number of shorts shares to destroy any publicly traded company for profit.

    10. iStandUp says:

      To better understand the short entry quoted above in the new Senate Reform Bill – “415. Commission study and report on short selling.” – the following needs to be known:

      SEC Announces New Division of Risk, Strategy, and Financial Innovation
      Professor Henry Hu Named First Director
      FOR IMMEDIATE RELEASE
      2009-199

      Washington, D.C., Sept. 16, 2009 — Securities and Exchange Commission Chairman Mary L. Schapiro today announced that University of Texas School of Law Professor Henry T. C. Hu has been named Director of the newly-established Division of Risk, Strategy, and Financial Innovation.

      The new division combines the Office of Economic Analysis, the Office of Risk Assessment, and other functions to provide the Commission with sophisticated analysis that integrates economic, financial, and legal disciplines. The division’s responsibilities cover three broad areas: risk and economic analysis; strategic research; and financial innovation.

      “This new division will enhance our capabilities and help identify developing risks and trends in the financial markets,” said Chairman Schapiro. “By combining economic, financial, and legal analysis in a single group, this new unit will foster a fresh approach to exchanging ideas and upgrading agency expertise.
      …”

      http://www.sec.gov/news/press/2009/2009-199.htm

      ———————

      This new commission within the SEC is tasked to go study Naked Counterfeit Shorting and produce a study within 2 years.

      I think it is pure crap for Congress to ask for another study to determine if the Wall Street Counterfeit Machine is harming anyone.

      The Wall Street Counterfeit Machine can be used as a weapon of mass destruction as we have seen in regard to the murder of Bear Stearns and Lehman Brothers, since the SEC allows this weapon to be used by its Wall Street Fraternity Brothers to create an INFINITE number of shorts shares to destroy any publicly traded company for profit.

    11. Dr. Jim DeCosta says:

      I DON’T GET IT!

      1) An entrepreneur has an idea that can benefit people.
      2) He advances that idea as far as he can with his own money and that of friends and family.
      3) He comes to a point wherein he needs access to public money to advance the project to its next stage of development.
      4) He forms a corporation and brings it public via an IPO. People referred to as “investors” buy units of equity ownership in that corporation referred to as “shares” of the corporation.
      5) The entrepreneur gives up a piece of the corporate pie and assumes the ownership of a lesser percentage piece of hopefully a much bigger pie. This is referred to as the “capital formation” process.
      6) These “shares” trade on “markets” that are administered by financially sophisticated “securities intermediaries”.
      7) Regulators and “Self-regulatory organizations” (SROs) are given the congressional mandate to provide “investor protection” to these “investors” that are much less financially sophisticated than the “securities intermediaries” that administer and participate in the markets.
      8) These congressionally mandated providers of investor protection then for some mysterious reason allow financially sophisticated market professionals with no economic interest in these “corporations” whatsoever to place casino style bets against the corporation succeeding.
      9) They then allow the methodology of placing these negative bets (short sales) to enhance the prognosis for the success of the negative bet and decrease the prognosis for the success of the positive bets previously placed by the owners of the corporation that do have a vested economic interest.
      10) This travesty is allowed via the issuance of “security entitlements” every time a failure to deliver occurs on Wall Street and even every time a legitimate “pre-borrow” associated with a legal short sale is effected. Each “curing” of a delivery failure done via the NSCC’s “stock borrow program” (SBP) also results in the issuance of these share price depressing “security entitlements”.
      11) These “derivatives” of legitimate registered “shares” known as “security entitlements” are actually allowed to drive down the value of the “share” from which they were “derived” in a tail wagging the dog fashion.
      12) Allowing the value of the “derivative” (negative bet) to go up as the value of that from which it was “derived” is manipulated downwards obviously sets up self-fulfilling prophecies associated with merely flooding the share structure of the corporation targeted for destruction with delivery failures inducing the issuance of these share price depressing “security entitlements/derivatives”.
      13) The net effect is that these financially sophisticated “securities intermediaries” and their hedge fund “guests” learn that there is much more money to be made in destroying corporations and obstructing the “capital formation” process than in building corporations while utilizing the “capital formation” process.
      14) The question arises as to how these congressionally mandated providers of “investor protection” can obstuct the “capital formation” process and allow these negative bets to be placed and these “derivatives” to be issued by those with no economic interest in the corporation they intend to destroy when the mission statement of the SEC is:

      “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”.

    12. Dr. Jim DeCosta says:

      Shouldn’t the law of the land be that in the absence of bona fide hedging activity no “derivatives” of underlying equity “shares” should be allowed to be created or traded if they might negatively alter the prognosis for the success of the U.S. corporation involved or the value of the underlying equity “share” upon which the “derivative” is “derived”?

      Otherwise the investments of “long” investors with a true economic interest at stake and “skin in the game” will be held hostage by those with superior financial sophistication but no underlying economic interest. One must recall that it is the financially sophisticated Wall Street insiders that make money not only from the processing of these casino style bets but also as the parties placing these bets while leveraging their superior financial sophistication over that of the Main Street “long” investors that previously paid full price for an economic interest in a corpration that had a much better prognosis for success at the time it was purchased as opposed to now.

      • Anonymous says:

        I have no problem with side bets.

        Heck, Vegas could start a new program where people could bet on the success and failure of a corporation the same way people bet on the winner’s of a football game.

        My problem is these side bets should not affect the game. Could you imagine if a football team was handicapped if too many speculators bet against them?

        It isn’t fair. Why should derivatives that are supposed to DERIVE value from the underlying security instead become destructives that instead DESTROY the value of the underlying security?

        As a kid, I knew it was easier to kick down another kid’s sand castle than to build my own, but I knew instinctively that it was wrong to destroy instead of build value.

        Some children, collect billions in bonuses on Wallstreet never learned this childhood lesson. As their kids, wives, coworkers and employees shun and make fun of them behind their back, they lust over their growing bank balances which represent nothing but the theft of value from the working class to the parasite class.

        Wallstreet has become the PARASITE CLASS that BUYS INSURANCE ON OTHER PEOPLE’S HOUSES BURNING DOWN and get richer, the more the rest of humanity suffers.

    13. Anonymous says:

      They say there are certain things that can happen in a man’s life that immobilizes them and stops further emotional development.

      The abused child, beat by his parents at six year’s old will always be that six year old boy.

      The drug addict or drunk that becomes addicted at thirteen is a thirteen year old for the rest of their life.

      The twenty two year old MBA, that graduates and gets a $750,000 bonus out of school for cheating and stealing by betting against his own clients is immobilized as the frat boy that hazes the working class. He never matures from that mode of operation.

      Mark Valentine, who made $750 million in one year from counterfeiting shares in little companies and bragged to people I know, laughing at how the rabbit hole went too deep for any authority, regulator or politician to dare come after him, was arrested in the FBI Operation Naked Short sting,

      http://findarticles.com/p/articles/mi_qa4441/is_200403/ai_n16066020/

      served a couple months of house arrest in his Florida mansion with an ankle bracelet, enjoying the stress free vacation at the pool, then was released to visit his other mansions. None of his several hundred brokerage accounts was closed and he kept all the money. He had the nerve to file for a huge tax loss against the Canadians caused by the collapse of his brokerage, without disclosing his hundreds of secret accounts around the world.

      Look at him smirking as he counts the loot he stole from you before thumbing the law. (Third photo down.)

      http://network.nationalpost.com/np/blogs/fpposted/archive/2007/12/10/scandal-inc-famous-white-collar-crimes.aspx

      He bought down one of the most respected institutional brokerages and turned it into a scam with the money he stole, eventually bankrupting it (Thompson Kernaghan).

      I was told he was one of three lackeys under someone under conveniently bankrupted Bear Stearns, just like conveniently bankrupted Refco.

      Just like dead men tell know tales, dead companies tell know tales.

      Stay tuned to the next message for the lackey boss.

    14. Anonymous says:

      These kids who only make $750,000 per year out of college aren’t the brains behind it.

      I was told that there were three legs and Mark was only one of him and he was under Randolph Pace, the disgraced penny stock boiler room operator. Who told me? Hint, google dead lawyers suing naked shorters and car accidents.

      Who Pace reports to, we can only guess.

      http://www.businessweek.com/news/2010-03-22/sterling-foster-broker-sentenced-in-66-million-fraud-update2-.html

      Stay tuned for part 3.

    15. Anonymous says:

      What’s this?

      Bear Stearns and Randolf Pace are partners?

      They work together where he steers scam introducing brokerages to Bear Stearns and Bear Stearns’ CEO gets rich by lending his name to these scam boiler rooms?

      http://money.cnn.com/1999/06/28/companies/bearstearns/

      Why do the scam clearing organizations like Bear Stearns and Refco go under, then get acquired by the brokerages they have obligations to, without anyone ever covering their counterfeits?

      Remember, dead men tell no tales.

      The legal team that was daring to sue these b’tards believed that it was set up in groups, with one group consisting of Bear Stearns, Randolph Pace and three kids underneath him, one being Mark Valentine. This penny stock division had a goal of getting 100% of retail investment in penny stocks diverted into their bank account.

      There were other groups, that I’m not privy to. Presumably, counterfeiting companies with options, counterfeiting gold, betting and making sure mortgages failed, betting against and bankrupting governments with debt, etc.

      Just phrat boys, collecting their fortunes as they haze the world, because they haven’t left an adolescent way of seeing other people…

    16. hangthemall says:

      Why are penny stock guys all in jail for a pump an dump,,Goldman crew did the same thing.. 100000 times greater

    17. Dr. Jim DeCosta says:

      In the financial press you keep seeing the phraseology “unregulated OTC derivatives”. Abusive short sellers simply make sure that the weapons they use to kill U.S. corporations and the investments made therein are these “derivatives” known as “security entitlements” which places them in the “unregulated” category. This doesn’t change the fact that the SEC, FINRA and the NSCC subdivision of the DTCC have all of the power in the world as well as the congessional mandate to provide investor protection. They willfully choose not to regulate both the illicit creation of and abuse of “derivatives”.

    18. ron doc says:

      Doc, iceburgs only show a small portion of the whole for us to see. They are vast and deep. That is all we see, and likely all we know. All of us, even the most educated are in that spot. No offence but there are things and reasons we have not even touched yet.
      I think Warren knows. What his game is…… is beyond our ability to know right now. I hope he is on the good side somehow.
      Keep digging and know there is much more to find. You have a gift.

    19. ron doc says:

      Dr. D
      You might be interested in this one, SFMI. It looks like one of those rare ones you have spoken of where the naked shorts might have a problem. A small miner heavily NNS’ed that is now going into production. Share price is on a rip and efforts to slow it up have seemed to fail the last week or so. Up 24% today again on big volume.

    20. Dr. Jim DeCosta says:

      In watching the Goldman Sachs boys in front of Congress you can see the integral role of market COMPLEXITY in crimes like abusive naked short selling. COMPLEXITY necessitates the use of “self-regulatory organizations” or “SROs” whose members/participants have a superior knowledge of the markets due to their familiarity on a day to day basis. The use of SROs necessitates the trusting of their “participants” not to leverage their superior knowledge of, access to and visibility of our markets and our clearance and settlement system. In other words you must trust them to ACT IN GOOD FAITH in the midst of trillions of dollars worth of relatively “dumb money”.

      This COMPLEXITY sets up a huge disparity between the financial sophistication of the Main Street “long” investors and the Wall Street securities intermediaries entrusted not to leverage their advantages and superior familiarity. This disparity leads to the need for investors to rely upon those mandated by Congress to provide investor protection (the SEC, FINRA and the NSCC) to perform on their mandate. Unfortunately for investors this COMPLEXITY also forces the regulators of the SROs (the SEC) to trust the SROs in complex matters and to work closely with them. This leads to “regulatory capture” in a quid pro quo fashion as the regulators need to constantly seek counsel from the participants of the SRO with the superior working knowledge of these complexities.

      This COMPLEXITY essentially leads to leverage that becomes accessible to those choosing not to ACT IN GOOD FAITH. Add to this leverage critical mass beyond description, a severe lack of transparency, insatiable levels of greed and the accessibility of unregulated “derivatives” which can be used as weapons and you end up with a flustered Senator asking the Goldman Sachs guys “you just don’t get it do you?” with a blank stare for a response. The blank stare can be interpreted as “what the hell did you think we were going to do with all of these superiorities you bestowed upon us in the middle of all of this dumb money ACT IN GOOD FAITH or something”?

    21. iStandUp says:

      Dr. Jim DeCosta,

      I just came upon something interesting stated by the SEC in its FAQs concerning Naked Shorting in the context of Regulation SHO – See the last bullet point below in answer to the quesiton — “1. Is all naked short selling abusive or illegal?”:

      http://www.sec.gov/spotlight/keyregshoissues.htm

      “Division of Market Regulation:
      Key Points About Regulation SHO
      Date: April 11, 2005

      ……

      V. Answers to Frequently-Asked Questions from Investors
      1. Is all naked short selling abusive or illegal?

      When considering naked short selling, it is important to know which activity is the focus of discussion.

      – Selling stock short without having located stock for delivery at settlement. This activity would violate Regulation SHO, except for short sales by market makers engaged in bona fide market making. Market makers do not have to locate stock before selling short, because they need to be able to provide liquidity. However, market makers are not excepted from Regulation SHO’s close-out and pre-borrow requirements.

      – Selling stock short and failing to deliver shares at the time of settlement. This activity doesn’t necessarily violate any rules. There are legitimate reasons why a seller may fail to deliver on the scheduled settlement date.

      – Selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security’s price. This manipulative activity, in general, would violate various securities laws, including Rule 10b-5 under the Exchange Act. Regulation SHO does not address this issue.”

      ——————

      So the SEC lawyers acting as good Defense Lawyers for their Wall Street Fraternity Brothers stated clearing on April 11, 2005 that contrary to the appearance, “Regulation SHO” was NEVER INDENTED to STOP ILLEGAL NAKED COUNTERFEIT SHORTING.

      In 2005 I thought that the SEC was going to STOP Illegal Naked Counterfeit Shorting with “Regulation SHO” – that was my impression.

      This document states very clearly that the SEC Lawyers were going to use their BEST DEFENSE LAWYER TACTIC, which is/was to DO ABSOLUTELY NOTHING about Illegal Naked Counterfeit Shorting used to manipulate a stock price downward!!!

      The SEC told us from the beginning they would DO NOTHING, and that is what they have basicly done – NOTHING.

    22. Dr. Jim DeCosta says:

      iStandup,

      One of the foundations for abusive short selling crimes is that there truly are a limited number of legitimate reasons why delivery can’t be made by T+3. Therefore UCC Article-8 had to accommodate this reality and its authors deemed that the purchaser of undelivered shares should have the right to sell them. After all, she or he already paid for them. This is the Achilles heel.

      Whenever a failure to deliver occurs at the NSCC the “default assumption” of the NSCC is that this FTD is associated with one of these “legitimate” reasons. Their “default assumption” is also that none of their “participants” would ever game the system by selling nonexistent shares and taking advantage of these “default assumptions”. Due to UCC-8 the purchaser of the undelivered shares is given a readily sellable “security entitlement” and is given the right to sell that which he purchased even if it never got delivered AND EVEN IF IT NEVER EXISTED IN THE FIRST PLACE.

      On T+6 or so you can tell if the delivery failure was of a legitimate ultra short termed nature or what Dr. Leslie Boni referred to as a “strategic” or intentional delivery failure DESIGNED to game these default assumptions. Here’s where the criminality kicks in. When delivery still hasn’t occurred by T+7 or T+10 or T+200 the NSCC has the audacity to pretend to be “powerless” to do what is necessary to fix the delivery failure i.e. “buy-in” the delivery failure so that the buyer can finally get delivery of that which he paid for and so that the trade can finally “settle”.

      There are 15 separate sources of legal empowerment to exercise “buy-ins” and the DTCC and its DTC and NSCC subdivisions have 14 of them i.e. a monopoly. So in essence by the time you can prove the “default assumption” to be faulty the NSCC claims that it is too late to do anything about it. Who are the prime beneficiaries of these thefts? Lo and behold it’s the NSCC “participants”/co-owners and the hedge funds willing to direct them cash generating order flow in order to gain access to these ridiculous “default assumptions”. Whooda thunk? Trust me, there is no form of fraud anywhere on this planet that is as cleverly designed as abusive short selling.

    23. iStandUp says:

      Dr. Jim DeCosta,

      Some time ago there was a link here in DeepCapture.com where Mr. Cox was testifying before Congress and one of the Congress members pointed out to Mr. Cox that NASDAQ had adopted simple rule that stopped naked counterfeit shorting – if a Wall Streeter did not deliver genuine share in T+3 days, the deal was VOIDED, and the buyer’s money was returned to the buyer.

      Would not this simple solution have stopped naked counterfeit shorting?

    24. Dr. Jim DeCosta says:

      iStandUp,

      That’s called “breaking a trade” and it’s extremely rare. Due to the way that the NSCC works (is rigged) the buyer of undelivered shares is blindfolded to the fact that his shares never got delivered. That’s because a “security entitlement”/IOU and a delivered “share” are reflected exactly the same on a monthly brokerage statement i.e. as “securities held long”.

      The clearing firm of the broker of the purchasing client does realize that a delivery failure occurred but he gets to earn interest off of the monetary value of the failed delivery obligation. Thus he is financially incentivised to let the delivery failure stay undelivered for as long as possible. If this clearing firm won’t “buy-in” this delivery failure for financial reasons and the NSCC won’t buy it in and the purchaser doesn’t even know that what he bought never got delivered AND PROBABLY NEVER EXISTED IN THE FIRST PLACE then there’s nobody left to execute the buy-in.

      The “buy-in” is the ONLY solution available when the seller of shares absolutely refuses to deliver that which he sold. The net-net of all of this is that everybody on Wall Street is highly financially incentivised to not only sell nonexistent shares to Main Street “long” investors and refuse to deliver that which was sold but to also make sure those delivery failures never get bought-in. The fear of being bought-in is the prime deterrent to these crimes and the NSCC has gone way out of its way to remove that. What the crooks are left with is all reward with no risk. Pretty clever, huh? It’s especially clever when you realize that the NSCC is the “alter ego” of the crooks themselves.

    25. iStandUp says:

      Dr. Jim DeCosta,

      So to your knowledge, NASDAQ never had a rule to cancel a purchase of xxx stock shares when a Wall Streeter FAILED to fulfill the contract to deliver xxx share in T+3?

    26. Dr. Jim DeCosta says:

      iStandUp,

      The clearing firm of the buyer has an OPTION but no duty to buy-in the delivery failure which essentially “breaks the trade”. It would be crazy to exercise this “option”, however, since it gets to earn interest off of the monetary value of the failed delivery obligation for as long as the securities stay undelivered. The question to ask is who on Wall Street is making sure that the buyers of securities get what they paid for. The actual buyer is highly financially incentivized but is blindfolded by the terminology used on his monthly statement. He doesn’t even know that there was a delivery failure and that he paid full retail price for securities that don’t exist.

      Next we have the buyer’s brokerage firm that took a commission and has a duty of care while acting as the buyer’s “agent”. He too is blindfolded as to the delivery failure. Only the clearing firm he uses knows about it. Note how the duty of care just got essentially vaporized as the only party that owes one (the brokerage firm earning a commission) has also been “conveniently” blindfolded as to the existence of an FTD. Next comes the clearing firm that owes no duty of care to the buyer and holds the right but not the duty to execute a buy-in. It is highly financially incentivized to never buy-in that FTD.

      How about the NSCC with 14 of the 15 sources of legal empowerment to execute that buy-in? It has the audacity to pretend to be “powerless” to exercise buy-ins. The NSCC management are the employees of the abusive NSCC “participants” selling the nonexistent securities. Of course they’re going to look after the financial interests of their bosses when their congressional mandates butt heads with their job security. When you ask them about their role as an SRO they claim that they don’t get involved until AFTER the trade occurs. They’ll tell you to go hash it out with the clearing firm. How about the SEC with the congressional mandate to provide “investor protection”? They claim that the SROs like FINRA and the NSCC are the “front line against market abuses like abusive short selling”. Go talk to them.

      In essence, the parties with the incentive to order a buy-in like the actual buyer has no visibility of the FTD. Those owing a duty of care to make sure their commission paying client got what he paid for have no visibility of the FTD. Those with visibility of the FTD and the power to buy them in (clearing firms and the NSCC management) are given a gigantic conflict of interest in the form of either financial rewards for refusing to opt for a buy-in (clearing firms) or job security in exchange for pretending to be “powerless” to execute buy-ins. As far as the SEC they claim that their job is to delegate these “front line” regulatory tasks to those whose “members” (FINRA) and “participants” (the NSCC) are committing these thefts.

      How about the hedge funds committing these crimes? Who’s going to keep an eye on these generous donors to the politicians overseeing the SEC? Well, they don’t need to be regulated since their wealthy investors are financially sophisticated “accredited” investors. Say what?

    27. Liliana says:

      Dr. Jim DeCosta,

      Some time ago there was a link here in DeepCapture.com where Mr. Cox was testifying before Congress and one of the Congress members pointed out to Mr. Cox that NASDAQ had adopted simple rule that stopped naked counterfeit shorting – if a Wall Streeter did not deliver genuine share in T+3 days, the deal was VOIDED, and the buyer’s money was returned to the buyer.

      Would not this simple solution have stopped naked counterfeit shorting?

    28. Akash says:

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