STOCKGATE, the biggest scandal to hit the markets yet!

Investigate The SEC ^ | 6-1-05 | Kevin M West

[abletruth]

What’s worse than Enron and Worldcom?

STOCKGATE, the biggest scandal to hit the markets yet!

By: Kevin M. West

Americans saw the television airwaves lit up this week with closure coming to the Worldcom fiasco by way of the CEO finally being held accountable for the crimes committed. Now we can finally sit back and say to ourselves “justice has prevailed and our SEC is really on top of their game”. Or can we?

The SEC has gone after Worldcom, Martha Stewart and Enron, but what about the biggest fraud in the market? Are they attempting to really go after the big guns, or is that smoke and mirrors hidden by these relatively small fish?

What could be bigger, you ask? We are happy you asked. Let us first show you a video of Senator Bob Bennett explaining this GIGANTIC hole in our market that is sucking trillions of dollars out of our country and out of investor’s pockets. Senator Bennett tells (watch the video at http://www.americaneedstoknow.com/senator_bennett.htm) SEC Chairman, William Donaldson, that the fraudulent action of naked short selling needs to be stopped! Senator Bennett explains that naked short selling is the selling of shares that haven’t been borrowed (as in the normal practice of short selling, the legal kind) and that don’t ever planned to be borrowed.

So, you ask, naked short selling is actually the selling of fake, counterfeit and non-existent shares to the investing public? Fake shares for real money, isn’t that a crime? YES, it is!

Now that you know that naked short selling it is NOT some sort of a conspiracy theory. It’s also not an excuse thought up by devastated investors looking for an explanation of why they lost their life savings through bad investments nor is it a hype used by stock promoters to have an excuse for their failing company. These are reasons that some of our tax paid government employees like Annette Nazareth (head of the SEC’s market regulation division) wants the public to believe. http://www.investigatethesec.com/DP270205.htm

Do we have your attention?

The SEC admits that naked short selling exists. They confirm this by putting Regulation SHO into effect this past January. So, for them to say it isn’t a problem is ridiculous. Of course, that regulation is so simple to get around that a child could figure out the loopholes in it. And, not only has the regulation proved worthless, but the SEC even GRANDFATHERED in these criminal acts that happened before this year! Would the Secret Service or FBI let you or I make counterfeit shares and sell them world wide on the open market and then tell us that we are forgiven from the past crimes, just don’t do it anymore…. “Please, with honey and sugar on it”. Of course not.

Why is the SEC not worried about this problem? We believe the SEC has suddenly become worried about this problem, because it can no longer be swept under the carpet. But now, the problem is so large that it could possibly bankrupt the entire market. If you thought Worldcom and Enron were huge frauds, you haven’t seen anything yet! We are talking TRILLIONS of dollars stolen from investors and businesses over the past several years. And where does this kind of money go? Not to the “Good Guys”, you can bet.

We have heard many stories of people that have lost entire savings and retirement accounts due to this atrocity. Families just like yours that have invested into good companies with brilliant ideas and products. Ideas and products that could have made this world a better place. What happened to these companies and the people that invested into them? They lost everything to a market full of fraud and corruption. Fraud and corruption so deep, it has to be protected at the highest levels. Once these businesses are bankrupted because of these crimes, the evidence vanishes with them. The criminals never have to pay and you never recover an investment that should have never gone bad.

Are there some bad companies and investments out there, sure there are. But the REAL bad companies and people are the very ones we trust to make sure our investments are safe. Trillions of our investment dollars are in the hands of crooks that are allowed to regulate their own actions. (SRO’s)

Can you imagine giving your life savings to a criminal to invest for you and let them be responsible to only themselves for taking care of your investment? Guess what, if you invest any money into the market, that’s exactly what you are doing every single day! See, the market is basically run on a merit system called an SRO or Self Regulatory Organizations. But I thought the SEC was in charge of regulation, you say. That’s funny, so did we!

Can you imagine what these unregulated, SEC protected and fearless thieves are waiting to do with trillions more dollars from social security funds that the President wants to give them? We don’t even want to think about it.

Now then, you think you may want to get your Senators and members of Congress behind Senator Bennett and get this fraud taken care of and put the REAL criminals in jail?

Stand up America, and take your country back!

Respectfully,

Kevin M. West

www.americaneedstoknow.com/stockgate.htm

Petition Status Report *Audio Clip* Bear Stearns implicates Regulators in Cover-up to protect Wall Street Fraud : 5 minutes excerpt of 1

[Texas Songwriter]

How is this differentiated from selling derivitives?

[Retief]

Secondly, the far narrower allegation that some folks may not properly be enforcing the delivery-versus-payment rules in the margin regulations against their hedge fund customers is a matter for the SRO and SEC enforcement divisions - send them the evidence and if it holds up in enforcement proceedings, hang 'em by the yard arm, I say.

Take a look at the Reg. SHO lists. Fail-to-deliver's are supposed to closed out within 13 days, and companies have been on those lists for months. What do you do when the SRO's and the SEC enforcement divisions aren't doing their jobs? Wait for a catastrophe before somebody finally wakes up and does something about the problem?

Think of naked short selling as naked short writing:

Writing Naked Checks

I dropped off a check at my broker dealer to pay for my stock purchase, but asked him to not cash it.

"Don't worry", said I, "the check proves you are the beneficial owner of a block of money in my account and it is more convenient to keep the money in my account in electronic check form. I'll keep it safe for you."

My broker was insistent that he receive cash proceeds, so I told him that if he paid me a $40 handling fee and waited 4 - 6 weeks, I would pull his cash for him.

I explained to him that sometimes it isn't possible to pull the cash as there are actually more checks outstanding then cash available to honor those checks. Lucky for me, the regulators came out with a rule in January that I don't have to honor checks written before the beginning of the year as that could create financial hardship for me.

The rule tried to dissuade me from writing new bum checks - I'm supposed to put money in my account within 13 days, but I get around that by kiting checks with my buddies.

I asked him again. "Are you sure you want to pull your cash? Most of my other creditors are happy to keep my payment in electronic, check form.", but it seems he doesn't trust me and would rather he be the actual owner of the cash rather then just the beneficial owner.

For some reason, he was unhappy that some of the checks I had written were naked and were not backed by cash and he wanted to cash his first before the other creditors found out.

Folks, ask for your certificate, which proves you own your shares. In reg SHO companies, there aren't enough certs. to go around, so it will be "first come, first served".

***

There's this guy named Bob O' who is campaigning against my check writing practices. He's started a group, NCANCB, or the National Coalition Against Naked Check Buying.

He's a nut case who doesn't understand that most of the checks I don't honor are for crappy stocks that I bought. I mean if these companies were well run and well managed, I'd be happy to put up cash to back up my purchase, but it is definitely the companies' fault that people like me write bum checks to buy their shares.

I mean, if Bob O' had his way, I'd have to put up cash to honor all my checks and it would financially benefit the people I wrote those checks to.

NCANCB is all about putting money in the pockets of the naked check holders. It's all about financial benefit to them, without consideration of the hardships it might cause me.

[SAJ]

Derivatives are legally binding contracts between 2 parties.

Shares represent proportional ownership in a company, something along the lines of a title to an automobile.

The two are very different.

[SirJohnBarleycorn]

Look, I'm the first to consider going against the received wisdom when there is a reasonable argument to listen to. If someone will offer a coherent explanation of why short selling, in principle (apart from credit, suitability and enforcement issues), is bad for the markets or the economy generally, I'll listen to it. I have yet to hear it made.

[staytrue]

all shorts are pond scum

I'm short 2000 barrels of crude oil. Am I pond scum ?

[the invisib1e hand]

Short selling is necessary. But not because a concensus of economists say that it is. It's just common business sense.

[the invisib1e hand]

I'm short 2000 barrels of crude oil. Am I pond scum ?

you are if you spring a leak.

[js1138]

You have the right screen name for this thread.

[SirJohnBarleycorn]

Hey, I like bashing the dismal scientists as much as the next guy, but economists are in fact experts in their field and we should pay some minimum amount of attention to what they say. My view of the Great Depression is essentially a failure by the powers that were to properly understand macroeconomics.

[staytrue]

I'm short 2000 barrels of crude oil (2 futures contracts). I guess I'm naked because I did not borrow the crude and I don't own the crude. I do put up a margin requirement.

I believe I can short the sp500 index too. I can go short 1 contract which is about 250,000 dollars worth of stock. Further, I would be naked in that I did not borrow 250,000 dollars worth of sp stocks.

[SAJ]

(more, sorry...) The reason they're different, and the reason why naked short selling is a major problem, is this:

There are only X number of shares issued for any given company. Say, 10 million, just to have a number. That's all there are, that's all that have been ''issued'', as the term goes. Fine. Suppose I own all these shares, sell them to you, and now you own them. Normal transaction, no problem.

However, suppose Willie Green comes along after getting off a train and wants to sell your company's shares short, let's say a million shares. OK, his brokerage tries to borrow the shares -- from you in this case, since you're the only owner of shares in your company -- and can't. Normally, that's the end of the story, and Willie goes about his other business.

In naked short selling, the brokerage goes ahead and executes Willie's order (first mistake, and criminal if it happens regularly), with someone buying the million (putative) shares that Willie's selling. Now, what does the scoreboard look like?

You own 10 million shares, and whoever was on the other side of Willie's transaction owns (or THINKS he owns) 1 million. Bang! A million shares have (notionally) been created out of thin air, and you, who own the company outright, didn't have a thing to say about it.

Derivatives, as noted, are a contract. They can be and are created and destroyed (''closed out'' is the usual term of art) on a daily basis, and in any quantity whatever that is satisfactory to the parties involved, and to the exchange on which the transaction takes place. VERY different beast.

Hope that little explanation is of some use to you!

[the invisib1e hand]

I believe I can short the sp500 index too. I can go short 1 contract which is about 250,000 dollars worth of stock. Further, I would be naked in that I did not borrow 250,000 dollars worth of sp stocks.

but you're short the index so you'll either have to buy it back or deliver the shares by contractual obligation. the demand for the shares is built into the contract. it's not "naked shorting."

[bluefish]

all shorts are pond scum

And all pump and dump longs are angels, right? Get a clue before making idiotic blanket statements like that.

[justshutupandtakeit]

My comments were limited to STOCK shorting. As to the scenario you describe I would have to do further analysis as to whether things are borrowed with the knowledge of their owners or it they are the result of fraudulent brokerage activities.

But at first glance I don't see shorting futures contracts to necessarily to be an abrogation of fiduciary responsibility.

[SAJ]

Shorting derivatives (and a futures contract IS a derivative) is absolutely not the same thing as shorting stock shares, period. A derivative is a contract. Stock shares represent ownership, and there's only so much ownership to go around, for any given company.

You're not naked, you're just short crude. Buy it back any day you like, and the transaction is settled, done, finis. Naked stock shorts never get settled...and that's the difference AND the problem.

[bluefish]

Wow!! I don't know how serious of a problem naked short selling is, but the large number of exclamation points in this article causes me to question how seriously I should take it!!!! The alarmist tone reminds me of articles found in Weekly World News!!!

[Mind-numbed Robot]

I know little of the financial markets but I grew suspicious of shenanigans during the /Clinton administration and especially of Robert Rubins involvement. It was during that time that we had the Enron, Global Crossing, Worldcom, et all, as well as the tech market runup and bust.

I have always been of the opinion that the left sees "capitalism" as crooked and, as a result, when they get power they are truly crooked. The tricks taught by the Harvard economists to the Russians during their transition from Communism to free markets is another example. They showed the oligarchs how to grab the good stuff cheap and control the rest through supposed free market principles. Instead they were studies in corruption.

What part is George Soros likely playing in the games being described here? The left is trying to bring the country down by abusing our freedoms and exploiting our markets.

Seems foolish on their part to destroy what they want to control but they are also playing footsie with the Islamist terrorists who will destroy them, too, if they can.

I know how conpsiratorial that sounds but there is a lot of circumstantial evidence that supports it.

[justshutupandtakeit]

I have thought this through quite thoroughly and recognize short selling as a fraud perpetrated on real investors. These people have NO incentive to knowingly "lend" their stocks and don't.

There is no doubt that those sophisticated enough to profit by it can rationalize many facts away including the fact that by lowering the return on stocks held by real investors the speculators raise the cost of capital and lower capital formation by discouraging investors.

As I said there are legitimate ways of speculating against stock prices without cheating the owners of stock.

You can keep your pretentious platitudes and save them for some 20 year old, son.

[justshutupandtakeit]

As I said other countries have banned short selling in their stock exchanges so that is not an issue. There is no doubt that this is the activity of specialists.

[sarasmom]

Oh gee, the unethical speculative white collar criminal "looters" are going to loose their imaginary money yet again.
Shocked and appalled, I am NOT.
Sympathy level-zero.