Problem of Naked Shorting; Corruption in US Financial System (as of Oct
2008); and what Dr. Patrick Byrne / DeepCapture is doing to fight it. [and related sites]
October 2008
by Reza Ganjavi
Dr. Patrick Byrne: “It’s not a little corruption at the edge of the system, it’s the system!”
Related sites :
http://www.thesanitycheck.com
http://investigatethesec.com
http://www.thefaulkingtruth.com/
http://www.rgm.com/shortselling.html
If you don't know what shorting and naked shorting in the context of the stock market is, please Google the subjects.
The SEC’s charter is to protect the investors against abusive
behavior but it has done very little so far. It
has not brought a single case against illegal naked shorting.
Chairman Cox has said: “Illegal naked short selling is specially a threat
to smaller public companies whose relatively thin market capitalization
can be more easily manipulated.”
Chairman Cox: “The extreme abuses that are reflected in
securities being chronically listed on Reg Sho’s threshold
security list for months and years at a time is ample evidence that
there is also fraud in the market that needs to be arrested.”
A couple of months ago when the financial turmoil heated up, the SEC
temporarily banned naked short selling for 19 financial companies. Not
all companies but just 19.
Richard Baker, a former representative and member of House Financial
Services Committee who is now the CEO of “Managed Funds
Association” which is the main US trade association for the hedge
fund industry complained about this ban in an interview with Bloomberg
with some arguments such as: “we don’t know what the SEC is
trying to fix”. Really? Nothing is broken right?
And Mr. Bush’s SEC, as it stands today, has failed to properly
police Wall Street. Want a good examople? Take a look at the naked short list.
Deepcapture.com does a great job of exposing naked shorts. Take a look at: “Deutsche Bank Sold Massive
Amounts of Phantom Stock” story on that website.
There are so many examples. There is so much corruption on Wall Street
and such a cleanup job to do. Hopefully in the administration will
clean up this mess.
When a hedge fund pays over $100M per year in commissions it has clout.
When SEC doesn't act, things get worse. SEC is supposed to be policing
Wall Street. Wall Street has not and will not police itself.
Secretary Hank Paulson: “Naked short selling is wrong anywhere.
Any investor, before they sell short, should line up the stock, and
that goes without saying.”
=====================
Allegation: SEC officials provided confidential information to former colleagues working on Wall Street.
Interestingly enough the Washington Post reported today that :
"Senate investigators are looking into allegations that the head of
SEC’s enforcement division, Linda Thomsen, gave information about
investigations into Bear Stearns to the general counsel of J.P. Morgan
Chase."
Senator Charles Grassly wrote a letter to the SEC requesting feedback on this allegation and wrote:
"Such conduct would reinforce the appearance that Enforcement
decisions, and disclosures of information about them, are sometimes
based not on the merits, but rather on access to senior officials by
influential representatives of power brokers on Wall Street."
There we go.
Speaking of Linda Thomsen, I wrote a hot letter to her last night and
copied the SEC commissioners and some members of the congress. I was
and am completely fed up with the fact that SEC enforcement division
has not brought a case against any naked shorting abuses.
Here's the letter: <>
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