Tag: Goldman Sachs

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Article: Dick Fuld’s Vendetta Against Short-Sellers—and Goldman Sachs

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Dick Fuld’s Vendetta Against Short-Sellers—and Goldman Sachs

Heidi N. Moore

Wall Street Journal, 7 October 2008

Fuld didn’t let up on his hatred for short-sellers–primarily David Einhorn–even after his company filed for bankruptcy last month, and he believed the shorts were part of a cabal driven by Goldman Sachs Group.

In April, Fuld reported back to general counsel Thomas Russo about a dinner with Treasury Secretary Hank Paulson that Lehman had a “huge brand with treasury,” which “loved our capital raise” and, in perhaps an oblique reference to short-sellers, that Treasury “want to kill the bad HFnds + heavily regulate the rest.”

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Article: Calling Out the Culprits Who Caused the Crisis

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Calling Out the Culprits Who Caused the Crisis

Eric D. Hovde

Washington Post via Wayback, 21 September 2008

Looking for someone to blame for the shambles in U.S. financial markets? As someone who owns both an investment bank and commercial banks, and also runs a hedge fund, I have sat front and center and watched as this mess unfolded. And in my view, there’s no need to look beyond Wall Street — and the halls of power in Washington. The former has created the nightmare by chasing obscene profits, and the latter have allowed it to spread by not practicing the oversight that is the federal government’s responsibility.

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Article: SEC and FSA Take Actions Against Short Selling

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SEC and FSA Take Actions Against Short Selling

Cary J. Meer, Christina E. Anzuoni, Manjinder Cacacie, Kay A. Gordon, Mark D. Perlow

K&L Gates, 19 September 2008

On September 17 and 18, 2008, in a series of emergency measures, the Securities and Exchange Commission (“SEC”) adopted two new rules, issued two orders (including a temporary ban on short sales in financial securities), amended Regulation SHO and Rule 10b-18, and announced enforcement initiatives aimed at preventing “naked” short selling and compelling disclosure of short positions. In the view of the SEC, but not of all observers, “naked” short selling and other manipulative trading practices have contributed to the recent turmoil in the markets and sudden declines in securities prices, particularly in the financial sector. “Naked” short selling is the practice of selling a security short without having borrowed the security.

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Paper: The Counterfeiting of Shares of Fannie Mae and Freddie Mac

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The Counterfeiting of Shares of Fannie Mae and Freddie Mac: Where are Our Regulators and Who are They Protecting?

17 September 2008

Fannie Mae and Freddie Mac are publicly traded Government Sponsored Enterprises (―GSEs‖), a quasi – partnership between the private sector and the government. The shares of the GSEs trading in the public markets have been counterfeited and deliberately manipulated. This is not rocket science; known ownership of the GSEs shares exceeded the number of shares that were available. Counterfeiting shares of the GSEs caused their stock prices to collapse. The regulators turned a blind eye to the takedown, encouraged it or were not effective enough to recognize it and enforce the laws against market manipulation that have existed since the 1930s. The industry and the regulators have little room for a plausible deniability claim that they did not know what was occurring in the trading of the GSEs.

PDF (33 pages): The Counterfeiting of Shares of Fannie Mae and Freddie Mac: Where are Our Regulators and Who are They Protecting?

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Article: Did It Help to Curb Short Sales?

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Did It Help to Curb Short Sales?

Floyd Norris

The New York Times, 12 August 2008

A rule that made it harder to short some financial stocks and that may have helped raise prices and reduce the volume of shorting in those stocks expired Tuesday, as the Securities and Exchange Commission considers whether to tighten the rules on all short selling.

It may be a coincidence, but the announcement of the rule on July 15 coincided with the bottom of the bear market for financial stocks, which leaped that day and are now well above where they were. And the final day proved to be a very bad day for those shares.

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Article: Bringing Down Bear Began as $1.7 Million of Options

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Bringing Down Bear Began as $1.7 Million of Options

Gary Matsumoto

Bloomberg cited by RGM Communications via Wayback, 11 August 2008

On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street’s devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse.

In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.

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Article: SEC Moves to Curb Short-Selling

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SEC Moves to Curb Short-Selling

Kara Scannell and Jenny Strasburg

The Wall Street Journal, 16 July 2008

The Securities and Exchange Commission took unprecedented action against short sellers on Tuesday, acting on a widespread concern that negative bets against bank and brokerage stocks might be exacerbating the financial sector’s woes.

In a dramatic emergency order, the SEC said it would immediately move to curb improper short selling in the stocks of struggling mortgage giants Fannie Mae and Freddie Mac, as well as those of 17 financial firms, including Goldman Sachs Group Inc., Lehman Brothers Holdings Inc.,…

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Article: Bringing Down Bear Stearns

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Bringing Down Bear Stearns

Bryan Burrough

Vanity Fair, 30 June 2008

On Monday, March 10, the rumor started: Bear Stearns was having liquidity problems. In fact, the maverick investment bank had around $18 billion in cash reserves. But soon the speculation created its own reality, and the race was on to keep Bear’s crisis from ravaging Wall Street. With the blow-by-blow from insiders, Bryan Burrough follows the players—Bear’s stunned executives, trigger-happy reporters at CNBC, a nervous Fed, a shadowy group of short-sellers—in what some believe was the greatest financial scandal in history.

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Article: Lawsuit Filed Against Major Financial Institutions Alleging a Conspiracy to Engage in Illegal Naked Short Selling of TASER International Inc. and to Create, Loan and Sell Counterfeit Shares of TASER Stock

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Lawsuit Filed Against Major Financial Institutions Alleging a Conspiracy to Engage in Illegal Naked Short Selling of TASER International Inc. and to Create, Loan and Sell Counterfeit Shares of TASER Stock

MarketWatch cited by RGB Communications via Wayback, May 28, 2008

Today the legal consortium of The O’Quinn Law Firm and Christian Smith & Jewell, both of Houston, Texas and Bondurant, Mixson & Elmore, LLP of Atlanta, Georgia filed a Complaint in the State Court of Fulton County, Georgia on behalf of certain shareholders of TASER International Inc. (“TASER”) against eight of the largest Wall Street firms, including Bank of America Securities LLC, Bear Stearns Securities Corp., Credit Suisse USA Inc., Deutsche Bank Securities, Inc., Goldman Sachs Group, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley & Co. Inc., UBS Securities LLC.

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Article: The Secret Bailout of J. P. Morgan: How Insider Trading Looted Bear Stearns and the American Taxpayer

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The Secret Bailout of J. P. Morgan: How Insider Trading Looted Bear Stearns and the American Taxpayer

Ellen Brown

Global Research, 14 May 2008

The mother of all insider trades was pulled off in 1815, when London financier Nathan Rothschild led British investors to believe that the Duke of Wellington had lost to Napoleon at the Battle of Waterloo. In a matter of hours, British government bond prices plummeted. Rothschild, who had advance information, then swiftly bought up the entire market in government bonds, acquiring a dominant holding in England’s debt for pennies on the pound. Over the course of the nineteenth century, N. M. Rothschild would become the biggest bank in the world, and the five brothers would come to control most of the foreign-loan business of Europe. “Let me issue and control a nation’s money,” Rothschild boasted in 1838, “and I care not who writes its laws.”

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Article: The ‘Phantom Shares’ Menace

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The ‘Phantom Shares’ Menace

John W. Welborn

Securities & Exchange,  24 April 2008

In 1985, the National Association of Securities Dealers (nasd) commissioned Irving M. Pollack, a securities law expert and former Securities and Exchange commissioner, to conduct a comprehensive review of short selling in nasdaq securities. The nasd sought to determine what, if any, additional short selling regulation was needed for the nasdaq market. The result was the now-famous “Pollack Study,” which described the short selling landscape of the day and made important recommendations regarding the disclosure, reporting, and settlement of short sales.

PDF (10 pages): The ‘Phantom Shares’ Menace

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Article: Refco – When Smart Money Isn’t So Smart

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Refco: When Smart Money Isn’t So Smart

Matthew Goldstein

Bloomberg, 16 July 2007

The titans of the private equity world fancy themselves smarter, shrewder, and more sophisticated than any one else on Wall Street. Investors have bought into the sentiment as they’ve scooped up the shares of the private equity firms that have gone public recently: Blackstone Group (BX) and Fortress Investment Group (FIG). But a recent report on the spectacular collapse of Refco—the once-dominant commodities broker that was laid waste by a massive accounting fraud—paints an unflattering portrait of the private equity firm that engineered Refco’s August, 2004, leveraged buyout and its initial public offering a year later (see BusinessWeek.com, 7/11/07, “Kill the Private-Equity Tax Break”).

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Article: Overstock attempts to uncover malicious naked shorts

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Overstock attempts to uncover malicious naked shorts

Keith Hahn

Dealbreaker, 25 April 2007

Patrick Byrne, the CEO of Overstock.com, is seeking $3.5bn in damages from 10 prime brokers for intentionally manipulating Overstock’s share price through naked shorting. The big names charged are Bear Stearns, Citigroup, Credit Suisse, Goldman Sachs, Merrill Lynch, and Morgan Stanley.

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Article: Goldman to pay $2M to settle SEC case

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Goldman to pay $2M to settle SEC case

Associated Press, 14 March 2007

Goldman Sachs Group Inc.’s clearing unit has agreed to pay $2 million in civil penalties to settle allegations that it allowed customers to illegally profit by selling securities short just before public offerings of stock, regulators said.

It marks the first settlement of a Securities and Exchange Commission and NYSE Regulation Inc. case alleging that a prime brokerage firm played a role in a type of abusive short-selling practice that has prompted some companies to launch a high-profile campaign against “naked” short selling. That involves selling borrowed shares without having first borrowed the shares.

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Article: Goldman Snared In Naked Shorting Probe

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Goldman Snared In Naked Shorting Probe

Liz Moyer

Forbes, 14 March 2007

One of Wall Street’s biggest prime brokers has been taken to task by the Securities and Exchange Commission and the Big Board for not catching on to its customers’ illegal trading activities.

Goldman Sach’s clearing and execution division is paying $2 million to settle accusations it relied too heavily on what its customers told it without investigating trading activity that showed signs of something being amiss.

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