Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
Naked Short Victim Strikes Back
Liz Moyer
Forbes, 2 February 2007
Overstock.com filed a $3.5 billion lawsuit in California state court Friday accusing 10 of the largest U.S. securities firms of participating in a “massive, illegal stock market manipulation scheme” to distort its stock.
Pay No Attention to That Crazy Man on TV
Henry Blodget, Slate, 29 January 2007
It would be impossible to write a “Bad Advice” column about investing without discussing Jim Cramer. I have been through several stages of feelings about Cramer. My initial belief was that the former hedge-fund manager, host of CNBC’s hit show Mad Money, and author of several books about speculating was perhaps the worst thing to happen to the financial security of average Americans since the crumbling of the Social Security system. I developed this theory in the early Mad Money days, when Cramer’s stock-picking track record—if on-air shouts, blurts, and Tourette’s-style tics can ever be called a “record,” which, in a serious context, they obviously can’t—remained close enough to market averages that Cramer was not laughed out of town when he suggested with a straight face that he was giving good advice.
Continue reading “Article: Pay No Attention to That Crazy Man on TV”
Flames Flare Over Naked Shorts
Dan Mitchell
New York Times, 20 January 2007
UNSUSPECTING readers of certain stock message boards may be forgiven for believing they have stumbled into a flame war among 14-year-old boys. But the increasingly vicious online dispute actually involves, among others, the chief executive of a publicly traded corporation and a longtime business journalist.
The chief executive is Patrick Byrne, who in recent years has taken to asserting that a vast conspiracy of securities traders, journalists and government officials is bent on bringing down the stock of his company, Overstock.com, a peddler of excess inventory. The journalist is Gary Weiss, the author and former BusinessWeek reporter who has made a second career out of ridiculing Mr. Byrne on his blog (garyweiss.blogspot.com).
January 12, 2007
Ms. Nancy M. Moms Securities and Exchange Commission 100F Street, NE Washington D. C., 20549-1090
As a follow-up to my previous memo regarding this proposal to eliminate the tick test/ price test, I would like to further emphasize the concerns the public has with regards to the regulations of market making activities as they pertain to this proposed and all other short sale regulations.
Continue reading “Letter: To SEC from Dave Patch on Tick Test”
The Story of Deep Capture
By Mark Mitchell, with reporting by the Deep Capture Team
The Columbia School of Journalism is our nation’s finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession’s gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark. In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.” His exposé reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea.
Introduction By Patrick M. Byrne, Deep Capture Reporter
PDF (69 Pages): Deep Capture Story
Whisleblower Vindicated: Massive Trading Firm Knight Capital Charged With Abusing “Naked Shorts”
David Dayen
The Intercept, 15 December 2016
Back in September, I wrote a seven-part series at The Intercept chronicling how former Wall Street trader Chris DiIorio, determined to figure out how he lost a small fortune on a penny stock, came to the conclusion that gigantic market-making firm Knight Capital, now known as KCG, repeatedly violated federal regulations meant to prevent abuse in what are known as “naked short sales.”
Naked Short Selling: How Exposed are Investors?
James W. Christian, Robert Shapiro, John-Paul Whalen
The Houston Law Review, 10 November 2006
Regulation SHO is a start, but in order to guarantee a fair market place, the SEC must close the loopholes in Regulation SHO and institute comprehensive reforms to the clearing and settlement system. Until the SEC makes these necessary reforms and addresses the DTCC’s mismanagement of the Stock Borrow Program, investors will continue to be exposed to the manipulative potential of naked short selling.
PDF (58 Pages): HLR Naked Short Selling 2006-11-10
SEC Will Be Investigated in Probe Sought by Senate’s Grassley
Otis Bilodeau
Bloomberg via Wayback, 26 October 2006
The U.S. Securities and Exchange Commission, already under scrutiny for its handling of a trading probe that entangled Morgan Stanley Chief Executive Officer John Mack, now faces a broad review by government auditors of its management and methods for policing the financial markets.
The Government Accountability Office agreed last week to investigate the SEC’s enforcement division and compliance department after requests by Senator Charles Grassley, an Iowa Republican who questioned whether the agency gave Mack special treatment. Grassley asked the GAO to examine the SEC’s “planning, oversight, control and other management processes” and gauge whether the agency does enough to oversee regulators at the New York Stock Exchange and NASD.
Bob O’Brien
Bloomberg cited by Sanity Check via Wayback, 26 October 2006
Well, for those who felt that the SEC would continually get away with murder, operating like a fiefdom above accountability to anyone, free to ignore the basics of due process, the rule of law, responsible regulation, etc….News Flash!
The SEC is going to be subjected to the scrutiny of the GAO.
S.E.C. Inquiry on Hedge Fund Draws Scrutiny
Walt Bogdanich, Gretchen Morgenson
New York Times, 22 October 2006
By the evening of June 20, 2005, the government’s investigation of possible insider trading by Pequot Capital Management, a prominent hedge fund, had reached a critical stage.
Throughout the day, Robert Hanson, a branch chief in the Washington office of the Securities and Exchange Commission, had been questioning his lead investigator in the case about taking the testimony of John J. Mack, an influential Wall Street executive.
Outcry grows over naked short sales
Will Shanley
The Denver Post, 14 October 2006
It began as Pederson watched words appear on her computer screen at her Arvada home office. Investors, writing via an Internet chat room, were touting a mining company called CMKM Diamonds Inc.
The Las Vegas-based company, the investors claimed, owned mineral rights to more than a million acres of diamond-rich land in Saskatchewan, Canada. Intrigued, Pederson bought shares worth $15,000.
The decision began Pederson’s involvement in a saga that includes lawsuits, huge financial losses and allegations of fraud on Wall Street and inaction by federal regulators.
NASAA Letter to SEC on Proposed Amendments to Regulation SHO
Joseph P. Borg
NASAA, 4 October 2006
NASAA offers its support of the proposed amendments to Regulation SHO. While we are encouraged that the Commission is adopting a more proactive stance in this area, we believe that much more is necessary in order to regain public confidence in the integrity of U.S. capital markets and protect both the investing public and our nation’s small business interests. NASAA strongly urges the Commission to take all necessary steps to eliminate abusive short selling, and the corrosive practices that surround it, consistent with the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
PDF (22 pages): NASAA Letter to SEC on Proposed Amendments to Regulation SHO
Rule Number S7-12-06: Comments on Proposed Amendments to Regulation SHO
Robert Shapiro
14 September 2006
I am Robert J. Shapiro, chairman of Sonecon, LLC, an economic analysis and advisory firm in Washington, D.C. From 1998 to 2001, I was Under Secretary of Commerce for Economic Affairs. Prior to that, I was Vice President and co-founder of the Progressive Policy Institute and Vice President of the Progressive Foundation and continue to be a Senior Fellow of the Progressive Policy Institute. I also served as the principal economic advisor to Governor William J. Clinton in his 1991-1992 presidential campaign, senior economic advisor to Vice President Albert Gore, Jr. in his presidential campaign, Legislative Director and Economic Counsel for Senator Daniel Patrick Moynihan, and Associate Editor of U.S. News & World Report. I have been a fellow of Harvard University, the National Bureau of Economic Research, and the Brookings Institution. I hold a Ph.D. and M.A. from Harvard University, a M.Sc. from the London School of Economics and Political Science, and an A.B. from the University of Chicago.
PDF (16 pages): Rule Number S7-12-06: Comments on Proposed Amendments to Regulation SHO
Liz Moyer
Forbes, 13 September 2006
The U.S. Securities and Exchange Commission has received a deluge of requests to amend short-selling rules it enacted just two years ago as the New York Stock Exchange continues its efforts to enforce existing regulations.
JPMorgan Chase has become the fifth bank to be censured and fined by the NYSE’s regulatory division for violations of trading rules meant to curb abusive short-selling.
NYSE fines five firms for rule violations
James Langton
Investment Executive, 13 September 2006
NYSE Regulation announced that it has disciplined five firms for a variety of rule violations.
J.P. Morgan Securities Inc. was disciplined for violation of SEC rules on short sales, NYSE order rules and supervisory violations. It consented without admitting or denying guilt to findings of operational deficiencies concerning Regulation SHO, violating NYSE order rules, and books and records and supervisory violations.
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