Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
Innovation Mandate: Patrick Byrne Lays It On The Line
Doug Henschen, 10 December 2010
Online discount retailer Overstock.com is recognized as a world-class technology organization. Using advanced information management technology, for instance, it can roll up its profit-and-loss position in two hours, giving executives accurate, up-to-date insight for fast decision-making. Continue reading “Article: Innovation Mandate: Patrick Byrne Lays It On The Line”
Are the Feds Closing in on Billionaire Steven Cohen?
As part of a high-profile insider trading probe, the FBI raided three large hedge funds Monday. Two targets of the raid, Diamondback Capital Management and Level Global Investors have ties to billionaire investor Steven Cohen, a renowned art collector and #87 on Forbes’s world’s richest billionaires list.
Cohen, manager of SAC Capital Advisors, is a giant in the hedge fund world and news of the probe is generating a lot of buzz in the finance world:
Goldman Sachs to Pay $650,000 for Failing to Disclose Wells Notices
Nancy Condon, George Smaragdis
FINRA.org, 9 November 2010
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Goldman, Sachs & Co. $650,000 for failing to disclose that two of its registered representatives, including Fabrice Tourre, had received formal notices from the Securities and Exchange Commission (SEC) that they were the subjects of investigations. Tourre’s “Wells Notice” was issued in connection with the SEC’s investigation of an offering of a synthetic collateralized debt obligation (CDO) called ABACUS 2007-ACI (Abacus).
Choking the Recovery: Why New Growth Companies Aren’t Going Public and Unrecognized Risks of Future Market Disruptions
Harold S. Bradley and Robert E. Litan
Kauffman Foundation, 8 November 2010
We show here that ETFs are radically changing the markets, to the point where they, and not the trading of the underlying securities, are effectively setting the prices of stocks of smaller capitalization companies, or the potential new growth companies of the future. In the process, ETFs that once were an important low-cost way for investors to assemble diversified stock holdings are now undermining the traditional price discovery role of exchanges and, in turn, discouraging new companies from wanting to be listed on U.S. exchanges.
Review by Robert David Steele
6 Star Game Changer….Maybe
November 2, 2010
This is an extraordinary book, combining gifted insights and turns of phrase with serious research that has a point worth fighting for: Wall Street led by Goldman Sachs has ripped off the entire US economy, and they still have most people thinking that politics matters.
The skinny on the 2008 naked short-sale restrictions
Thomas J. Boulton, Marcus V. Braga-Alves
Journal of Financial Markets, 1 November 2010
On July 15, 2008, the US Securities and Exchange Commission announced temporary restrictions on naked short sales of the stocks of 19 financial firms. The restrictions offer a unique empirical setting to test Miller’s (1977) conjecture that short-sale constraints result in overpriced securities and low subsequent returns. Consistent with Miller’s overpricing hypothesis, we find evidence of a positive (negative) market reaction to the announcement (expiration) of the short-sale restrictions. Announcement returns are higher for firms that appear to be subject to more naked short selling in the days immediately preceding the announcement of the restrictions.
Southridge Hedgie Hicks Shrugs Off Regulators Investor Fraud Suits
Teri Buhl, 26 October 2010
Stephen Hicks and his Ridgefield, CT hedge fund, Southridge Capital, were sued yesterday for multiple securities violations by the SEC and the Connecticut Banking Commissioner in Connecticut state and federal courts. Howard Pitkin, head of the CT Department of Banking, has been after Hicks for investor fraud and abuse in its broker dealer business since 2007.
Hicks is fight back- after being ordered to comply with a subpoena from the Banking Commission, Southridge then appealed to the Connecticut Supreme Court but Pitken eventually won the right to review the funds internal records. Pitkin had originally filed a cease and desist order against the broker dealer side of the hedge funds business. Now he wants to shut the whole Southridge opperation down. Continue reading “Article: Southridge Hedgie Hicks Shrugs Off Regulators Investor Fraud Suits”
Connecticut, SEC Sue Southridge Capital for Fraud
Karen Freifeld and Joshua Gallu, 26 October 2010
Southridge Capital Management LLC was sued by Connecticut over $26 million in fees charged investors based on what state Attorney General Richard Blumenthal called false statements about the value of assets.
The investment firm, based in Ridgefield, Connecticut, also was sued today by the U.S. Securities and Exchange Commission and accused of defrauding investors in hedge funds.
SEC Charges Conn. Hedge Manager With Fraud
Matt Ackermann, 25 October 2010
The Securities and Exchange Commission and the Connecticut banking commission have sued a Connecticut hedge fund manager with fraud.
The SEC and Connecticut Banking Commissioner Howard Pitkin charged Southridge Capital Management LLC and its chief executive officer, Stephen M. Hicks, with defrauding investors in million of undeserved fees.
According to a filing in federal court in Connecticut Monday, the SEC alleged that Hicks overvalued the largest position held by funds managed by Southridge and Southridge Advisors LLC. The SEC also said he made material misrepresentations to investors and misused their money to pay legal and administrative expenses of other funds managed by Hicks and Southridge. Continue reading “Article: SEC Charges Conn. Hedge Manager With Fraud”
UPDATE 1-SEC, Connecticut charge fund manager with fraud
Jonathan Stempel, 25 October 2010
NEW YORK, Oct 25 (Reuters) – A Connecticut hedge fund firm was sued on Monday by U.S. and state regulators for allegedly inflating the value of its holdings, allowing it to fraudulently collect millions of dollars of undeserved fees.
Southridge Capital Management LLC and its Chief Executive Stephen Hicks, 52, were sued by the U.S. Securities and Exchange Commission and Connecticut Banking Commissioner Howard Pitkin over their management and financial reporting of several funds.
The SEC said Hicks falsely valued Southridge’s largest holding, speech recognition company Fonix Corp, at $30 million or more based almost entirely on a 2004 transaction in which Fonix bought two companies from an entity he controlled.
It also said Hicks raised $78.9 million over the 2004 to 2007 period after falsely promising investors that more than 75 percent of assets would be put in liquid investments or cash.
Connecticut alleged the overvaluing of fund assets allowed Ridgefield-based Southridge to fraudulently collect more than $26 million in fees from 2004 to 2007. Continue reading “Article: UPDATE 1-SEC, Connecticut charge fund manager with fraud”
Southridge Capital Management Founder Charged With Fraud Though He May Not Know It Yet
BESS LEVIN, 10 October 2010
This afternoon, Connecticut regulators accused investment adviser Southridge Capital and its chief executive Stephen Hicks of “preparing false financial statements” that “inflated the assets of five funds from 2004 through 2007 so that they could charge higher fees,” in an alleged scam that netted them an ill-gotten $26 million.
Additionally, many investors have apparently put in redemption requests as far back as 2001, though none of them have seen a dime. Attorney General said the firm told “lucrative lies” which hurt not only its clients “but also the entire economy.” How is Hicks taking the news? Is he ashamed and/or embarrassed? Is he defiantly calling the charges bogus, telling family and friends he’ll fight them? Is he proud of what he’s done and the alliterative prose he inspired in Blumenthal? Or does have no idea he’s been accused of anything, having only seen a bunch of missed calls on his phone?
SEC Brings Fraud Charges Against Another Hedge Fund
Stephen Taub, 25 October 2010
Another day, another hedge fund accused of wrong-doing by regulators.
The Securities and Exchange Commission Monday charged hedge fund manager Stephen M. Hicks and his investment advisory businesses with defrauding investors in funds managed by Southridge Capital Management LLC and Southridge Advisors LLC by overvaluing the largest position held by the funds. The SEC also alleges that Ridgefield, Ct.-based Hicks “made material misrepresentations” and misused investor money to pay legal and administrative expenses of other funds managed by Hicks and Southridge. Continue reading “Article: SEC Brings Fraud Charges Against Another Hedge Fund”
Rare Element Resources: Potential Short Opportunity
Shareholder Watchdog, 21 October 2010
We have witnessed a fair share of bubbles over the past 15 years: internet stocks, housing, crude oil, and Chinese stocks. We have had some success in identifying “bubbles” in individual stocks and warning the investment community about specific issues (including HUSA at $20.35 see here and PCBC at $5.11 see here). Continue reading “Article: Rare Element Resources: Potential Short Opportunity”
Bank of America: Bondholders’ Naked Play for a “Do-Over” on Mortgages
Marion Maneker
CBS, 20 October 2010
Yesterday’s Bank of America (BAC) bond scare was an interesting reminder of just how much of a mess the foreclosure crisis really is. It may not be the same kind of swoon we experienced two years ago, but the vulnerabilities created by the shoddy mortgage origination and servicing industry will probably haunt the financial system for years to come — like war reparations.
It took a while for the financial world to sort out the meaning of the letter PIMCO, Blackstone and the New York Federal Reserve Bank sent to Bank of America yesterday asking that $47 billion in bonds be “put back” to the bank because of deficient servicing by Countrywide, the Bank of America subsidiary that originated the loans. The markets and the journalistic community can be forgiven for over-reacting.
The ongoing tumult in financial markets and the global economy began when some of our most esteemed financial institutions, our government, and even average citizens abdicated their collective responsibilities, eventually selling out investors and selling off the American Dream itself.
From critically acclaimed investigative journalist and CNBC personality Charles Gasparino comes a sweeping examination of the most volatile, anxiety-ridden era in our nation’s socioeconomic history. The winner of the 2009 Investigative Reporters and Editors Award for Books, The Sellout traces the recent implosion of the financial services business back to its roots in the late 1970s, when Wall Street embraced a new business model predicated on enormous risk.
THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?
