Yesterday bobswern posted up that Matt Taibbi was set to cut loose on Naked Short Selling.
Here is where rubber hits the road.
At least 300 companies have been attacked with illegal NSS schemes. Stocks and core businesses are damaged.
Taibbi's blog offers this tidbit of Goldman, Sachs lying: An Inside Look at How Goldman Sachs Lobbies the Senate.
.pdf of the Goldman skulduggery is found HERE.
USDOL sees six unemployed job seekers for every one permanent job opening.
Many kossacks expressed dismay at financial system complexities. This diary charts overall patterns.
Certainly, these NSS/media-driven attacks can ruin good companies. For more on the wonderland of high-finance-cum-criminality -- complete with Mafia-connected felons, mirroring the Goldman lobbying -- go through a looking glass and down the rabbit hole --> Below The Fold :::
Bob's diary is HERE.
Taibbi's Naked-Shorting Rage: Goldman's Lobbying, SEC's Fail.
The point gets made that massive sales of a company's stock can drive that stock down. Then a bandwagon effect can get rolling. But the key to these attacks, to make them hyper-profitable, is a pattern of illegal acts. Simply: felonies under state and Federal law:
The crimes are the work of Wall Street hedge fund managers and brokers who engage in a common trading strategy known as short-selling. A short sale is a way of making money when the price of a stock goes down. You borrow shares from someone else and immediately sell them off. If the price drops, you buy the shares back and return them to the original owner, pocketing the difference. If a company goes out of business, short-sellers hit the jackpot.
This is perfectly legal and unobjectionable. But some short-sellers do not play by the rules. A small group of powerful hedge fund managers stop at nothing to annihilate the companies they sell short. Their tactics include: blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft.
Their most egregious trick is to sell "phantom stock." By exploiting a glitch in Wall Street’s computerized trading system, and a loophole in federal regulations, some hedge funds sell virtually unlimited amounts of stock that they have not yet borrowed or purchased. This is often referred to as "naked short selling." Hedge funds use this tactic to flood the market with supply and drive down prices – which is blatantly illegal.
From Mark Mitchell, reporting Patrick Byrne CEO of Overstock.com and the Easter Bunny (a.k.a. Bob, Bob O'Brian, bob whatever-the-blog-likes). The organizational ID's go to Market Reform Movement and a deepcapture.com web site.
Is bobswern the Easter Bunny ??? Don't ask me.
Alrightie, then. Let's move along to the Bush Administration and the Securities Exchange Commission and an astonishing defense of counterfeiting -- that is, printing up stocks and selling these stocks where the attacker has no such stock on hand to complete the contracted delivery and doesn't obtain the stock within 13 days:
IV. A. 7. F. Grandfathering Under Regulation SHO
The requirement to close-out fail to deliver positions in threshold securities that remain for 13 consecutive settlement days does not apply to positions that were established prior to the security becoming a threshold [ = a Naked Short Selling attack ] security. This is known as "grandfathering." For example, open fail positions in securities that existed prior to the effective date of Regulation SHO on January 3, 2005 are not required to be closed out under Regulation SHO.
The grandfathering provisions of Regulation SHO were adopted because the
Commission was concerned about creating volatility where there were large pre-existing open positions. The Commission will continue to monitor whether grandfathered open fail positions are being cleaned up under existing delivery and settlement guidelines or whether further action is warranted.
V. 11. Can I obtain fails information?
Currently, threshold lists include the name and ticker symbol of securities that meet the threshold level on a particular settlement date. Some investors have requested that the SROs provide more detailed information for each threshold security, including the total number of fails, the total short interest position, the name of the broker-dealer firm responsible for the fails, and the names of the customers of responsible brokers and dealers responsible for the short sales.
The fails statistics of individual firms and customers is proprietary information and may reflect firms' trading strategies. The release of this information could be used to engage in unlawful upward manipulation of the price of the securities in order to "squeeze" the firms improperly.
Normal clearance is 3 days. The oddball 13 day rule for outstanding Naked Shorts is astonishing, by itself.
These two "grandfathering" and "cover-up" rules went full throttle to encourage overt criminality.
What else ???
The SEC voted to eliminate the "old pre-clause" grandfather clause in August 2007. That rule change became effective December 5, 2007. The workaround for the criminals looks to be moving their "phantom" trades to Dark Pool systems -- several of which have never reported FTD events to the public agencies.
For background: "phantom" stock shares became possible when printed stocks went over to computer entries. This process is routine, carried out through Depository Trust Company.
Physical stock certificates are an anachronism in modern stock
markets. Today, stock ownership changes are reflected in electronic
book-entry movements among broker-dealers’ accounts at the Depository Trust Company (DTC), a central stock depository and member of the Federal Reserve System. The DTC acts as a custodian for the majority of securities issues.
The DTC emerged in response to the "paper crisis" of the 1960s, when stock transfer volume in the United States grew so large that issuers, transfer agents, exchanges, and brokerages were unable to process efficiently the paperwork associated with stock trades. DTC is a subsidiary of the Depository Trust and Clearing Corporation (DTCC.) The marketplace was overwhelmed by paper and timely transfer became impossible. The securities industry created the dtc in order to make stock transfer efficient and orderly.
The DTC modernized markets through "dematerialization": the transition from physical stock certificates to electronic bookkeeping. With dematerialization came major revisions to the Uniform Commercial Code in 1977, and later in 1994.
The Phantom Shares Menace by John Welborn.
"Security entitlements" have replaced owning real, Honest To God shares.
If you thnk that you own actual, numbered shares, then you are 40 years out of date. What you "own" are a set of rights, a fancy bundle indeed.
Playing with the brokerages' lists of these "Security Entitlements" -- supposedly images of the DTC postings -- is what we're talking about. Basically, the NSS events combine fraud with counterfeiting.
Early-into-the-hunt NSS positions -- entered into illegally with no reasonable means to deliver the sold stock -- are protected from public disclosure by this SEC "grandfathering" decision. Fundamental checks on regulatory misfeasance are blocked with the "cover-up" decision -- blocking firm and customer data from discovery by the targeted firms.
My, my.
Here is a typical one-day Threshold List from 2008 for companies that were under attack with counterfeit (large-scale, undelivered NSS 13-day outstanding) stock sales:
Symbol Security
XXX Description
------ --------------------------
ABH AbitibiBowater Inc
ACF AmeriCredit Corp.
AFN Alesco Financial Inc.
AHR Anthracite Capital, Inc.
ALJ Alon USA Energy, Inc.
ALY Allis-Chalmers Energy Inc.
BHS Brookfield Homes Corporation
BLG Building Materials Holding Corporation
BQR BlackRock EcoSolutions Investment Trust
BZH Beazer Homes USA, Inc.
CAB Cabela's Incorporated
CCC Calgon Carbon Corporation
CIA Citizens, Inc.
CLS Celestica Inc.
CMG Chipotle Mexican Grill, Inc.
CPL CPFL Energia S.A.
CPX Complete Production Services, Inc.
CRZ Crystal River Capital, Inc.
CT Capital Trust, Inc.
CUZ Cousins Properties Incorporated
DB Deutsche Bank Aktiengesellschaft
DFR Deerfield Capital Corp.
DSL Downey Financial Corp.
DSX Diana Shipping Inc.
ETH Ethan Allen Interiors Inc.
EXM Excel Maritime Carriers Ltd.
FED Firstfed Financial Corp.
FLE Fleetwood Enterprises, Inc.
FNB F.N.B. Corporation
FRO Frontline Ltd.
FTK Flotek Industries, Inc.
GBX The Greenbrier Companies, Inc.
GGC Georgia Gulf Corporation
GHL Greenhill & Co., Inc.
GMR General Maritime Corporation
GNK Genco Shipping & Trading Limited
HOV Hovnanian Enterprises, Inc.
HRZ Horizon Lines, Inc.
HTE Harvest Energy Trust
ICO International Coal Group, Inc.
IHP IHOP Corp.
IMB Indymac Bancorp, Inc.
IVN Ivanhoe Mines Ltd.
JRT JER Investors Trust Inc.
KBW KBW, Inc.
KNX Knight Transportation, Inc.
LDK LDK Solar Co., Ltd.
LEE Lee Enterprises, Incorporated
LFC China Life Insurance Company Limited
LPL LG Display Co., Ltd.
LTM Life Time Fitness, Inc.
LXPPR C Lexington Realty Trust
LZB La-Z-Boy Incorporated
MAD Madeco S.A.
MEG Media General, Inc.
MMR McMoRan Exploration Co.
MNI The McClatchy Company
MNT Mentor Corporation
MTH Meritage Homes Corporation
MWA Mueller Water Products, Inc.
NAT Nordic American Tanker Shipping Limited
NCT Newcastle Investment Corp.
NFP National Financial Partners Corp.
NIS NIS Group Co., Ltd.
NLS Nautilus, Inc.
O Realty Income Corporation
PFB PFF Bancorp, Inc.
PFO Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PII Polaris Industries Inc.
PRS Primus Guaranty, Ltd.
RAS RAIT Financial Trust
RSO Resource Capital Corp.
RWT Redwood Trust, Inc.
SIX Six Flags Inc.
SOL ReneSola Ltd
SPF Standard Pacific Corp.
SSD Simpson Manufacturing Co., Inc.
TC Thompson Creek Metals Company Inc.
TIA Telecom Italia S.p.A.
TLB The Talbots, Inc.
TMA Thornburg Mortgage, Inc.
TNK Teekay Tankers Ltd.
TPX Tempur-Pedic International Inc.
TR Tootsie Roll Industries, Inc.
TRI Thomson Reuters Corporation
TWP Trex Company, Inc.
UA Under Armour, Inc.
VMW VMware, Inc.
VSE VeraSun Energy Corporation
WAL Western Alliance Bancorporation
WBPR S Wachovia Corporation
WCI WCI Communities, Inc.
WES Western Gas Partners, LP
WGO Winnebago Industries, Inc.
WHX Whiting USA Trust I
WNR Western Refining, Inc.
WSM Williams-Sonoma, Inc.
XRM Xerium Technologies, Inc.
What vile monsters would use bogus/nonexistent stock to attack Tootsie Roll industries? And IHOP? Have they no sense of decency ?
Securities and Exchange Commission published a list of 300 companies whose stock has been sold, but -- in significant amounts -- never delivered through DTC. In other words, a significant fraction of the stock sold in more than 300 companies is phantom stock -- counterfeit, "phantom" shares. If you thought you owned shares in one of these companies, the chances were that a broker has sold you air to satisfy a crooked hedge fund client.
The sell-side brokerage computer said that you owned the stock, a.k.a. "Security rights," but in reality, you did not.
Well... when these large scale, computerized NSS attacks got rolling, the answers went to mob-connected thugs such as Michael Steinhardt and Marc Rich and Dave Evans and Amr Ibrahim Elgindy (a.k.a. Manny Velasco.)
Amr Elgindy got his start working for Blinder, Robinson, nicknamed "blind ‘em, rob ‘em," a Mafia-linked brokerage whose founder, a gold-chain and diamond-crusted-pinky-ring wearing goon named Meyer Blinder, eventually went to prison for securities fraud. Amr, who also goes by the names Anthony Elgindy and Anthony Pacific, later set up his own operation, establishing himself as one of Wall Street’s most flamboyant short-sellers – and a favored source to one segment of the financial media.
The FBI began investigating Elgindy after receiving a tip from a Solomon Smith Barney broker who said that on September 10, 2001 (that is, the day before the terror attacks on the World Trade Center), Elgindy had placed a call to Smith Barney instructing them to liquidate his kids’ trust funds. He also said, "Tomorrow the Dow is going to drop to 3,000 points." (It was at 9,600 at the time.) The government spends months investigating whether Elgindy has connections to terrorists and advance knowledge of 9-11.
Ultimately, prosecutors indict him for the more demonstrable crimes of racketeering, conspiracy and securities fraud. (He gets 9 years for those crimes, and another 2 years for trying to flee the country.) Elgindy’s many offenses include bribing an FBI agent to provide him with information on agency investigations of public companies (the agent also gave Elgindy information on an on-going 9-11 investigation: Elgindy’s own), manipulative short-selling, and extortion. If the companies paid Elgindy off, he’d agree to stop disseminating false information about them.
But what Elgindy did was small potatoes compared to what followed.
Why let punks run scams and alert the Feds and get caught, when the likes of Jim Cramer, Goldman, Wall Street Journal pukes, and the S.E.C. could crash just about any company in America ???
There's still room for the likes of John Fiero, fined $1 million for NSS "bear raids" against NASD companies -- using info out of Hanover Sterling, which ties back to the Genoveses.
Jim Cramer and Herb Greenberg and Marty Peretz used TheStreet.com and the television CNBC platform to pump the short positions run by dishonest hedge funds and sell-side departments. These NSS schemes might as well use phantom stocks for their "bear raids." They are already breaking Federal law with their phony stories, false/generated reports of wrong-doing to the SEC, and paid-blogger lies in the Internet.
By 2006, the NSS and Failure to Deliver scams had expanded to become a major force in American investment system.
Failures to Deliver on Major Exchanges (2006)
Exchange Peak FTDs FTDs as % of
Average Peak Average Volume
Volume
NYSE 172,707,364 1,701,643,478 10%
NASDAQ 1,337,784,073 15,455,938,738 9% plus pink sheets
SOURCES: SEC, Exchanges
We get some notion of what an honest market can do. Liquidnet, the largest of the generic bank pools, has suspended 103 of its members.
NYSE and NASD ??? Not so much. Never....
FTDs of Select Securities (2004–2006)
Issuer Peak FTDs FTDs as % of FTDs as % of
average volume outstanding shares
Cal-Maine 2,498,529 581% 10.55%
Global Crossing 2,387,641 361% 10.83%
iMergent 289,054 95% 2.38%
Inhibitex 3,129,627 15,091% 10.35%
Krispy Kreme 4,652,372 107% 7.53%
Netflix 459,482 192% 9.41%
Novastar Fin. 3,223,846 788% 50.71%
Overstock.com 3,800,172 407% 18.50%
Vonage 5,662,925 337% 3.66%
SOURCES: SEC, Bloomberg
In Register, the John Welborn piece.
Bloomberg Television in 2007 said that as many as 1,000 public companies were damaged by naked shorting prior to enactment of Regulation
SHO:
A lot of those companies are gone. A lot of them died. This was a fatal attack. Now, some of them were weak when they were attacked. Some of them would have failed anyway. Others wouldn’t have. Again, it’s not up to the naked short sellers to decide. It’s up to the investors that play by the rules.
Skeptics argue that many (if not most) companies harmed by naked short selling suffer from performance problems or poor business models. The SEC’s own "Key Points about Regulation SHO" contains this warning:
There also may be instances where a company insider or paid promoter provides false and misleading excuses for why a company’s stock price has recently decreased.... [T]hese individuals may claim that the price decrease is a temporary condition resulting from the activities of naked short sellers.... Often, the price decrease is a result of the company’s poor financial situation rather than the reasons provided by the insiders or promoters.
Now the illustrious Goldman, Sachs Inc. lobbies to reinstate the "grandfathering" clause and more. Naked Short Selling is presented to ignorant Congressmen as a minor issue.
There's nothing happening here. Move on.
Laissez faire capitalism -- alive and well in 21st Century America.
And if the next stock that gets slammed by one of these Cramer/WSJ/Goldman scams is a major part of your "401" retirement portfolio -- then so be it.
One alternative is to "Key West" the S.E.C. That is, to apply the R.I.C.O. statute to S.E.C. based on overt S.E.C. participation in dozens of the Cramer Gang NSS schemes. There is simply no other way to stop organized criminal activity, where a governmental agency -- be it the KWPD or SEC -- is up to its eyeballs in multi-million dollar crimes.
A little more cocaine dripping off the tip of Florida didn't change much -- back in 1984 when KWPD got itself seized.
S.E.C. participation in NSS "bear attacks" on American companies has ranged from bogus "rules" with enormous loop holes to instigation of bogus investigations of solid companies and bogus leaks of lies.
Indeed, "Key West" the S.E.C.
Take it over with a law enforcement Task Force out of DoJ. Then, enforce the law and make rules to protect American companies, not the criminals in media/sell-side/government.
What else ???