Posted on 09/03/2005 8:02:05 PM PDT by 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
You have no knowledge nor understanding about futures and neither does Dateline and CNBC is a COMMIE channel. This is article is mostly garbage.
Delta has been in trouble for years and years and years and YEARS!
You really shouldn't post about things you haves no knowledge of.
Those margin investors signed a hypothecation agreement. The agreement states that the firm can "loan" their shares for other sales, just as the investor can "borrow" from others.
I don't like short selling and I wouldn't engage in it--I'm not a trader--but I'm not sure how you can say that brokers are doing this without the permission of the stocks' owners.
Psssht.
I noticed you are new to Free Republic. Could you please be more honest in the future? The purpose of naked short-selling, a techinique used by hedge funds, is to cheat the unsophisticated investors out of their money. It is fraud.
PF, it really is my honest and sincere opinion that this article is an overblown pile of b.s. I mean, just look at the title: "STOCKGATE, the biggest scandal to hit the markets yet!" The "biggest scandal"? In the entire history of "the markets"? Really now. When someone is laying it on this thick, I say keep your eyes open and one hand on your wallet at all times.
What you are describing, when you get rid of the fancy terminology that makes you feel better, is fraud. Plain and simple. Just because it has become more prevalent doesn't make it right. It's like looting --"hey, everyone else was doing -- even the COPS!!"
IGB, I simply don't believe that short selling is an inherently fraudulent activity, and it just may be that you and I have different opinions on this. As far as terminology goes, I think the terms "naked short" and "counterfeiting" bring more heat than light to the discussion. As SAJ suggests, "willful failure to deliver" is really what the problem is all about.
For willful failure to delivers among market makers, which is typically in thinly-traded stocks where it is difficult to adequately make a market without occasionally doing it, the SEC clearly has their eye on the ball and is paying close attention to it. I say give them a chance to do their job.
If, as some are alleging, the big wall street firms are in fact allowing their hedge fund customers to carry open "failed to deliver" positions on equity securities for weeks or months or longer, then these firms are not following the existing regulations. I view this as a systemic credit exposure, and not a fraud, concern -- I don't care a whit if a hedge fund goes bankrupt because they guessed wrong on short sales, but I do not want to see them taking down the big wall street firms with them and disrupting the markets. Existing laws prohibit the wall street firms from allowing these open fail-to-deliver positions, which in economic substance is an extension of credit by the firms to these hedge funds, unless this is done using a margin account, which requires 150% margin on short equity sales, and which therefore protects the wall street firm and the markets at large if these hedge fund customers fail. I say if these allegations are true, then let's enforce the existing laws and kick a few back office butts at the wall street firms, if need be.
When NEITHER of two sides of a transaction hold actual certificates, how can such a practice be condoned? Have we pushed the multi-million dollar mathemeticians to the brink of inanity with an ever-increasing desire to come up with new ways to play the game?
You can bet the the originators of the idea of naked short-selling did not have the best interest of the companies they were trading in nor the real stockholders of said companies at heart.
When the markets become PURELY about personal gain without any sense of fiscal discretion, people will leave in droves, and not come back.
It reminds me of the fatherly broker figure in the movie with Charlie Sheen...There has to be a sense of fiduciary responsibility....somewhere.
That's not correct. In order to sell short I must first call our Margin Department's Stock Loan area to see if the firm holds enough shares for existing clients in margin accounts. If not, we cannot do the short sale. If so, it is approved.
At no time can the broker enter a short sale and later figure out how to borrow the shares to deliver.
Exactly! The Margin agreement that is signed allows the firm to loan your shares. Considering typically they have paid for half of them and you've paid for the other half...
If you don't want your shares loaned, don't buy them on Margin and don't keep them in a Margin account.
Pay for your trades in full and keep them in a cash account. Don't borrow against them and they can't legally be loaned.
If all broker-dealers followed your firm's procedures we wouldn't be finding as many fails in the interdealer market.
Let me simply ask us to consider whether this is a realistic principle from which to proceed.
The Founding Fathers understood that human beings will tend to look out for their own narrow self-interest, and that is why we are so fortunate to have a government with so many checks and balances. This is because, I believe, they understood the scriptures, and that there is no better understanding of human nature than that given us by the Holy Spirit, who said "the heart is deceitful above all things and desperately wicked; who can know it?"
The same principle in my opinion applies to the markets, including the financial markets. In designing our laws and regulations, we have to assume that all participants are looking out for their own narrow self-interest and will cut corners if they can, and proceed from there.
I am all for vigorous enforcement of the securities laws, and believe it is good thing for wall street to be read the Riot Act from time to time. However, when issues are misportrayed and overhyped in order to mislead people, we tend to get bad regulation as a result. The classic example in my mind is Sarbanes-Oxley. When confidence in the markets is undermined, politicians will do something, anything. While some of Sarbanes-Oxley included needed reforms, other parts were simply grandstanding sound-bites translated into law that produced enormous costs with little benefit, in my opinion.
Riiight couldn't have you "doing your thinking for you." How lame can you get?
No, I can't, because I don't believe in buying on margin. Why do people do it? I have no idea: they probably don't read through the margin form before signing it, and they don't have a broker that explains the consequences of what they are doing.
People do a lot of stupid things. People take out interest-only mortgages. People get second and third mortgages on their home. People run up horrific credit card bills and live paycheck-to-paycheck.
All of these things are legal. They're just not very wise choices for most people.
It is this lack of knowledge which the manipulators take advantage of. Short selling should be made illegal.
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