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Clarification of the ramifications of the new UT FTD reporting bill.

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 5/26/2006 9:48 AM

It seems from my inbox that there are a host of legitimate questions stemming from the new UT law requiring reporting of FTDs. Here's my best take on making sense of it:

1) To be a protected company, one has to be publicly listed, on Reg SHO, and be domiciled or headquartered in Utah.

2) Any Utah broker has to report FTDs, whether they occur in Utah or not. So if Goldman has a fail in a Manhattan account they still have to report it in Utah. In fact, they have to report failed buys and sells. Thus, 1 million ftd's/day at the main BD's turns into 2 million reports they have to make.

All the main brokers are licensed in Utah. In fact, given that Utah has a special Industrial Banking law (the only one like it in the 50 states), and special (i.e. liberal usury laws), all the credit card companies (Discover, AMEX, Advanta) have operations in Utah - many are headquartered there. Technically, Discover is headquartered in Utah. They cannot move. Or rather, it would be very, very difficult for them to do so.

And those CC companies and banks are mostly owned by Wall Street.

What is Wall Street's next move? Well, the SEC can't mount a convincing preemption case, as the new law is entirely harmonious with existing federal regs and laws - it merely requires an additional level of reporting for violations of the federal delivery rules. That is not inconsistent with anything the SEC has created, and they would have to create a new set of conflicting rules in order to create an argument for preemption. I doubt that will happen, as the only justification would be because they want to protect those violating the laws they are chartered with upholding - a quandary, as 'twere.

So the front door is out. Utah wouldn't have had to pass the law if the SEC was doing its job. That's a fact.

A broker could sue, but then he would be subject to discovery, which I'm betting nobody wants. At least nobody on Wall Street wants. So I don't expect to see that.

That leaves the Securities Industry Association, who as we have said before, reneged on their agreement once they got the date extended and written into the passed bill. That will no doubt come up in any suit, as will a host of other uglies the industry would probably prefer to keep quiet.

Don't really know what else they can do at this point, but they are very smart fellows, and will no doubt work tirelessly to try to figure out how to keep draining the resources of Main Street America with impunity.

Count on that.

But this is a huge step, as any suit is going to cause a firestorm of publicity for the market reform movement, and the FTD issue, bringing with it the unwanted scrutiny the industry has so long fought to avoid.
Copyright ©2006 Bob O'Brien
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Comments (62)
Re: Clarification of the ramifications of the new UT FTD reporting bill. By gregcable2002 on 5/26/2006 12:17 PM
We are on the road to reforming the markets and some heads will roll,hats off to the governor of the great state of UTAH.My next family vacation destination.Independence day is coming.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bobo on 5/26/2006 12:32 PM
I second the vacation in Utah idea.

Also, see if you can get your account transferred there. It's all done online these days anyway. Support your Utah broker!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By upwardmo on 5/26/2006 4:16 PM
Watch them all move offshore.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By n-tres-ted on 5/26/2006 4:19 PM
The thought dawned on me that this Utah law, as applied to OSTK, for example, may have the effect of shutting down most trading in OSTK, even the long sales. If the brokers are aware that shares in the accounts of their clients are merely electronic entries, those electronic shares cannot be sold because the shares cannot be delivered. Sounds like the 800K trading volume days for OSTK are going to be over come Oct. 1.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Wonder Boy on 5/26/2006 4:20 PM
greg---

I saw the results of a poll on tv the other night that said that 96% of the populace were willing to vote their representatives out of office. I suspect a lot of that is 'talk', but that is an 'extreme result'. Personally, I am getting tired of sending e-mails to folks that don't seem to listen, but they do track those as responses to different categories so maybe it is worth the effort.

You know, I find it strange that a few months ago Cynthia McKinney was complaining about the Capitol Police abusing her and today they were so happy to have them around because of a nail gun! Perspectives can change.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By gregcable2002 on 5/26/2006 4:44 PM
wonder We need to keep educating those we think should know whats going on,more and more investors are getting on board this freedom train and when we get discouraged we need only to look at how far we've come in a very short period of time.I'm extremely encouraged by all thats happening now.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By gregcable2002 on 5/26/2006 4:48 PM
The devils are in a state of panick now.Have a great weekend .
Re: Clarification of the ramifications of the new UT FTD reporting bill. By skucount on 5/26/2006 4:57 PM
Well, this is all great. While we are all smiling over the weekend, the bastards will be frowning. This is all just beautiful, beautiful, beautiful.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Very Interested Observer on 5/26/2006 10:36 PM
What Wall Street will do is to have the SEC remove Reg SHO, - no Reg SHO listing by the company, no threshold event, thus the Utah law becomes nothing as it can never be activiated. Thus any new law passed by any other state should not contain a Reg SHO threshold for activiation.

So look for the SEC to declare Reg SHO not working, they will remove it, indicating that they will "study" another approach.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By InTheKnow on 5/27/2006 1:51 AM
It's about time a state took charge and championed the individual investor. We're all mad as hell and aren't going to take the crooks bullshit anymore!

SETTLE THE TRADES or SETTLE IN JAIL!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By InTheKnow on 5/27/2006 2:19 AM
These scumbags have been running a Ponzi scheme for years. It's about time the States start shutting them down!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bryedge on 5/27/2006 2:41 AM
Societies exist under three forms, sufficiently distinguishable: (1) without government, as among our Indians; (2) under governments, wherein the will of everyone has a just influence, as is the case in England, in a slight degree, and in our states, in a great one; (3) under governments of force, as is the case in all other monarchies, and in most of the other republics.

To have an idea of the curse of existence under these last, they must be seen. It is a government of wolves over sheep. It is a problem, not clear in my mind, that the first condition is not the best. But I believe it to be inconsistent with any great degree of population. The second state has a great deal of good in it. The mass of mankind under that enjoys a precious degree of liberty and happiness. It has its evils, too, the principal of which is the turbulence to which it is subject. But weigh this against the oppressions of monarchy, and it becomes nothing. Malo periculosam libertatem quam quietam servitutem. Even this evil is productive of good. It prevents the degeneracy of government and nourishes a general attention to the public affairs.

I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical. Unsuccessful rebellions, indeed, generally establish the encroachments on the rights of the people which have produced them. An observation of this truth should render honest republican governors so mild in their punishment of rebellions as not to discourage them too much. It is a medicine necessary for the sound health of government.

Thomas Jefferson
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bryedge on 5/27/2006 2:51 AM
A truly GREAT DAY!
http://www.sltrib.com/business/ci_3871061

" SB3004, which overwhelmingly passed the Legislature during Wednesday's special session, targets stockbrokers, dealers and investment consultants who engage in alleged naked shorting - an illegal practice in which shares supposedly on loan are sold but not delivered. "


"The new law, which goes into effect July 1, will require sellers involved in such transactions to report to the Utah Division of Securities and reveal the identities of all parties, including dates, locations and prices involved in the sales. "
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Totalknowledge on 5/27/2006 5:05 AM
I wish they had put a provision in the law saying if you request paper certs and dont recieve them within 10 days they could fine brokerage firms and you would have the rite to get your money back if you so chose to. if the trade was under price you paid because of naked shorting.. that certainly would create a run on certs and show how big the problem is..If you bought a car and they didnt deliver for 10 days you certainly would be on the phone with the better business bureau immediately..I tore up my Discover card Morgan Stanley hope the rest of you bloggers do as well...
Re: Clarification of the ramifications of the new UT FTD reporting bill. By upwardmo on 5/27/2006 5:33 AM
Is it correct that the law goes ino effecxt July 1, and not October 1, as previously reported? Or do the miscreants have until October to clear up their messes?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By dave on 5/27/2006 6:36 AM
It says July 1, unless I am missing something.

http://www.le.state.ut.us/~2006S3/bills/sbillint/sb3004.htm
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bryedge on 5/27/2006 6:53 AM
Yes, the article does say July 1. How exciting that we will not have to wait months for the law to go into effect. With the strong possibility of lawsuits, it also means that Morgan Stanley's leach lawyers will be scrambling to prevent the law from going into effect.

Something else that is very entertaining was the "crawfishing" Morgan Stanley started doing.

In the article dated May 25, Morgan Stanley's comments were:
Tony Taggert, an officer for Morgan Stanley – which operates an industrial bank in Utah and employs almost 5,000 with Discover Card operations here – promised a lawsuit on behalf of the Securities Industry Association if Huntsman signs the measure.

In the latest article the word from Morgan Stanley was:

Mark Lake, a spokesman for Morgan Stanley, said his brokerage had prematurely been linked to declared foes of the bill. "We have not taken a stand, and we have no further comment at this time," he said.

I wonder if Tony Taggert was called on the carpet for telling the world how Morgan Stanley REALLY feels about this legislation.

I just love this!!!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By gregcable2002 on 5/27/2006 8:13 AM
so what if the sec tries to cancel reg sho,we already have enough evidence to move forward .The state of Utah is still going to find out exactly who the culprits are in the ponzi scheme and make them pay.The will of the people of the great state of Utah have spoken and the sec can't do jack about it.I'm sure were going to hear something to the affect of trade stratagies being protected and the crooks will try to remain hidden as long as possible,but it's to late,they cover the trades in a timely manner,which they make me do,everything will be great.They may have to sell off a luxury home,car or boat to cover,but cover they will.IMHO
yahoo message board bigots By has anyone noticed on 5/27/2006 8:50 AM
why is it ok to bash Mormons?

how is that any different than any other form of xenophobia?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By browntrout on 5/27/2006 9:00 AM
Confusion over start date July 1 or Oct 1 of Utah law? Answer is (D) the failure to settle described in this Subsection (2)(d) occurs on or after October 1, 2006.
From the amended and signed bill.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Wonder Boy on 5/27/2006 10:02 AM
http://biz.yahoo.com/ap/060526/naked_shorting.html?.v=2

As I see it, this is the operative statement in this article that might attract the attention of 'Joe'
'where brokers send IOUs they can't honor through a stock clearinghouse when they run out of shares to lend for short selling.'

The average person understands that the market involves 'risk' and they are willing to accept that in hopes of achieving a decent return from capital gains or dividends. What they don't understand and are not told is that the SEC is corrupt, the Congress is bought and paid for by Wall Street, and they are NOT getting delivery of what they 'thought' they paid for!

What we have is a 'Conjugal Congress'---Not one of us 'married' any of these morally deficient, mentally defected, real world challenged individuals that we 'think' have our best interests in mind. Therefore, they have no right to screw me with every bill they pass and vote themselves raises in the wee hours of the morning just because they 'can'.

If the SEC wishes to eliminate Reg SHO---bring it on! It will be the culmination of their uselessness, the incompetency of the Conjugal Congress, the waking up of the American people, and the realization that we have the ability to do many things better at a much lower cost.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By InTheKnow on 5/27/2006 10:15 AM
I'm waiting for the Guns and Badges with baited breath...

SETTLE THE TRADES or SETTLE IN JAIL!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By teacheric on 5/27/2006 10:30 AM
If the SEC tries to eliminate reg SHO with some other sort of regulation, let's not fall for it no matter how good it sounds. As proven this year, regardless of what the regulation says, they are not going to enforce it. They could come out with something that eliminates SHO and says all shares must be delivered within 3 days or bought in automatically or face a $1,000 fine for each share undelivered per day. It wouldn't matter because they won't follow through with their lies. I say we ignore what the SEC has to say as they have ignored us. They are part of the problem, and will do nothing to help the small investor because it is not in their best interest, period.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By fotd on 5/27/2006 12:59 PM
The Utah law may never be enacted but, by gum, it will certainly help to draw attention to this issue. In the not-too-distant future politicians will be running on this issue. Bush should preempt them.

Bush's Ownership Society

"...if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country."

-President George W. Bush, June 17, 2004

Considering the opposite of ownership, how good IS it to have large institutions with a financial interest in the destruction of value? I'm all for the liquidity legit shorting provides but the current situation is clearly antithetical to Bush's stated philosophy.

In that spirit, I propose a law or reg that mandates at least 50% of any borrow proceeds go directly to the owner of the stock loaned for shorting. I propose that ALL purchases of stock on any U.S. exchange require the purchaser to assign a "for loan" or "not for loan" status to their shares upon purchase. The shareholder would agree to forfeit voting rights upon any loan and the brokerage would be required to provide regular statements on any revenue generated from loaned shares. Of course, paper shares would have to be "not for loan." Everything else would be electric and a breeze to account for.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By robelita on 5/27/2006 6:32 PM
bryedge,

I have made reference to that statement by Jefferson many times in the course of political dissertations I have made (on this blog as well). Jefferson saw the potential for tyranny in our system of government and thought the rebellion card was appropo as a check and balance on abuses.

Unfortunately, with our current two-party system there's little hope for significant change which is why I advocate the clearing of Congress and bringing in Independents and third-party candidates. I would to see Libertarians make some headway.

BTW-did you know Jefferson was a Democratic-Republican. Little did he know then how similar the splinter parties would become ;)
Re: Clarification of the ramifications of the new UT FTD reporting bill. By robelita on 5/27/2006 6:38 PM
From an RB message board:

Stockgate: Taking it to the States
by Mark Faulk
Utah Gov. Jon Huntsman, Jr. just signed a new state law that calls for stiff penalties against brokers, clearing firms, hedge funds, and anyone else who sell and then fail to deliver stock to customers, in effect creating counterfeit shares that artificially depress the value of company and shareholders’ stock. On the very same day, it was reported inn the New York Times that the top 26 hedge fund managers all earned over $130 million dollars each, and the top two managers made more than a billion dollars apiece. That’s 25,000 times what the average wage earner in America earned last year.

Well guess what? Now it’s our turn. Since our federal government and Congress have abandoned its own citizens in favor of the big money special interest groups, it’s up to the states to do the right thing for their citizens. Every state in America should pass similar legislation, and every voter in America should demand that their elected officials take decisive steps to protect America’s economy, employee and tax base, retirement accounts, and shareholders’ investments. This is how the Faulking Truth put it in our commentary from May 25th, entitled “The Circle of Greed: The Cloak of Invisibility”:

In the meantime, the state of Utah, after growing tired of waiting on a federal government that favors invisibility over transparency in almost every aspect of our financial system, overwhelmingly passed their own law dealing with another type of stock market fraud, stock counterfeiting, also known as “naked short selling.” HB3004 passed both the State Senate and the House with little debate, giving state securities regulators, publicly-traded companies, and individual investors legal recourse against brokers, clearing firms, hedge funds, and anyone else who fails to deliver stock purchased by shareholders. It is a practice that has flourished unabated for years, costing companies, communities, taxpayers, and individual shareholders trillions of dollars, due largely to…you guessed it…a lack of transparency in the stock market system. It’s just another version of the federal cloak of invisibility.

The Utah bill is a landmark piece of legislation, one that hopefully will be enacted in one form or another in every state in the country, since the federal government has done absolutely nothing to stop rampant fraud in the stock market. In fact, our leaders in Washington have shown time and again that when it comes to protecting the small investor against fraud on both sides of the market, that they would rather change the rules to hide the crime then arrest the criminals who are robbing America blind.

So what now? Overstock Chairman and CEO Patrick Byrne said about the new Utah law: "I predict this will make Utah the most attractive state for entrepreneurs and small companies in America.”

In other words, this is not just about shareholders’ rights, it’s about our state economies, attracting and protecting the small businesses...and their employees, and their shareholders, and their communities...that are the lifeblood of America’s free enterprise system. Every shareholder, voter, business owner…in fact, every American, should contact your state securities regulators and ask them what they’re doing to pass similar legislation in your state, and what YOU can do to help.

Pretty much what Iv'e been saying here.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By InTheKnow on 5/28/2006 5:45 AM
Can anyone explain to me how naked shorting a stock is any less of a fraud than the "SALAD OIL SCANDAL"?

For those who don't remeber the Salad Oil Scandal here it is in a nutshell...

1. To inspect how much oil a tank held, a giant dipstick was inserted into the tank and then withdrawn and the oil mark on the stick was read.

2. Since oil floats on water, tanks were filled with water and a couple of feet of vegtable oil was floated on the top.

3. Loans were made against the phantom oil tank capacity.

Just plain fraud, plain and simple, just like naked shorting. Nothing there!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By searrows on 5/28/2006 8:32 AM
I was curious as to what the vote was on this bill. Was it unanimous? What was the breakdown between Democrats and Republicans?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By searrows99 on 5/28/2006 8:38 AM
What was the vote? unanimous What was the vote breakdown between Democrats and Republicans?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By yoda on 5/28/2006 12:31 PM
I noticed an article that lists "National Coalition Against Naked Short Selling" as a source.

http://www.journalstar.com/articles/2006/05/28/business/doc44776d5bd5689887102726.txt

The NCANSS stuff is near the bottom

"A naked short sale is a manipulative trading technique. It takes advantage of a structural deficiency in the system that allows a transaction to occur, and all moneys to be paid, before delivery of the stock occurs...."

Looks like the word is getting out.

Congrats for your work so far EB and others.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Re: Can insiders lend shares to shorts? on 5/28/2006 3:09 PM
Re: Can insiders lend shares to shorts?
by: topangan90065

from topangan90065's link at:

http://www.chicagogsb.edu/capideas/win02/market.html

The chief obstacles to arbitrage in these cases were short sale constraints, which make shorting very costly or impossible. In some cases, institutions or individuals may be unwilling to lend their shares to short sellers, the cost of borrowing the share may be too high, or the demand for shares may exceed what the market can supply, creating a price which is too high.

Many investors were interested in selling the subsidiaries short for the six cases in question. In the case of Palm, at the peak level of short interest, short sales were 147.6 percent, indicating that more than all floating shares had been sold short. Given that the typical stock has very little short interest, it is extremely unusual that more than 100 percent of the float was shorted.
more than all floating shares had been sold short By short sales were 147.6 percent on 5/28/2006 3:12 PM
Re: Can insiders lend shares to shorts?
by: topangan90065

from topangan90065's link at: www.chicagogsb.edu/capideas/win02/market.html


The chief obstacles to arbitrage in these cases were short sale constraints, which make shorting very costly or impossible. In some cases, institutions or individuals may be unwilling to lend their shares to short sellers, the cost of borrowing the share may be too high, or the demand for shares may exceed what the market can supply, creating a price which is too high.

Many investors were interested in selling the subsidiaries short for the six cases in question. In the case of Palm, at the peak level of short interest, short sales were 147.6 percent, indicating that more than all floating shares had been sold short. Given that the typical stock has very little short interest, it is extremely unusual that more than 100 percent of the float was shorted.

here it is again:

In the case of Palm, at the peak level of short interest, short sales were 147.6 percent, indicating that more than all floating shares had been sold short.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By PhantomCertificates on 5/29/2006 5:39 AM
Hmm, I just read the new law and I think this has some pretty far reaching consequences even if Utah is the only one that enacts it. Here's a few scenarios to illustrate my point:

1) Suppose Joe 6-pack bought shares and has essentially bought an ftd. The broker never bought in the shares and he basically has a ledger entry at his brokerage. Joe now tries to sell his IOU to Jane 6-pack who happens to live in the great state of Utah. Ut oh, Joe finds out he doesn't in fact own any shares and discovers he's been lied to when he originally bought his shares. Now Joe, not being from Utah and not having access to where his shares came from, has an issue with his broker, and since this is an issue of fraud, it is not something his broker can handle through arbitration. From one lawsuit, becomes two. Everyone will a IOU ledger entry suddenly becomes a major liability to the broker that didn't call in the shares like they were originally supposed to do. The bigger the ledger full of IOUs, the bigger the problem.

2) Broker A needs to clear some of his outstanding IOUs on his ledger and wants to pawn them off on Broker B like they've done so often in the past. Now Broker B has a delema. What used to be a free ride with only the complicit SEC watching, now becomes an issue with the state of Utah also knowledgable of the ftd events. The brokers that have these large ledger issues are less likely to see such receptive places to dish them off to.

3) With a stock such as Overstock, there probably aren't any real shares that actually trade any more (or at least the percentage is so low that this is practically the case). Ever time an individual sells their shares from a margin account where the shares have been loaned out via the SBP of the DTCC, those shares now need to be bought in, but from where? One buy in is likely to trigger more and more demand for the shares and essentially kick off a short squeeze almost immediately just to unravel all the IOUs propogating the present system.

I'm starting to get the feeling that this rather simple law from just the one state could end up blowing up some of these hedge funds and brokerage houses. The brokers can't just sweep the problem into ex-clearing imo. They have too many liabilities in the IOUs on their ledgers to be able to arrange that. October 1st is going to be a very interesting day. I'm looking forward to it.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Blackbart on 5/29/2006 6:17 AM
PhantomCertificates- I agree with your interpretations on the new Utah law. With estimates of between 7 and 15 million illegal shorts in Overstock and an estimated true float of between 4 to 6 million shares it is going to get very interesting as we approach Oct 1. I believe the brokers when finally faced with some rather large fines will become ruthless in their pursuit of closing out their own FTD's in order to avoid disclosing their role in this fraud. The questions are is who will have the chairs when the music stops and at what price?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By InTheKnow on 5/29/2006 6:22 AM
Who in there right mind will wait until Oct 1, if that is the date to begin with?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By blackbart on 5/29/2006 6:58 AM
InTheKnow- I imagine they have already commenced. Higher prices are one way to obtain shares. Another way is to try and panic current shareholders out. I expect to see a massive slam campaign by the financial press to discourage shareholders. The good news is they have done that already in the past and will have limited effect on shareholders who stayed the course.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By mig on 5/29/2006 7:16 AM
Bobo

This may be a little off the topic, but I just had to raise a red flag and was not sure how else to contact you about it. The internet service providers are trying to push a bill through congress that would allow them to charge like the cable tv companys do. They want to be able to charge a set fee for a set of a couple hundred websites, and then charge like a pay per view for any of the nonstandard websites.

This would mean informational blogs such as yours would be essentially shut off from the public, and the American free speech the citizens have enjoyed through the internet will be severely curtailed. We have to make sure that congress doesn't pass this bill or this forum for the American people to assemble and fight for what is right will no longer be available.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bbhindyou on 5/29/2006 11:53 AM
mig I was looking for something like this to happen.The reason we will be given that these types of communication must be stopped WONT be the real reasons .The real reason will be the impact of blogs like this one.I wouldent put it past them to create a situation that makes bloggingb a tool of the enemy.Our right to interact this way will soon be gone.It's just to dangerous to the current power structures agenda .Our rights are being eroded and soon will be gone.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By millerd1 on 5/26/2006 12:32 PM
So if we all changed my brokerage accounts to a Utah office. What then the fines mount on the basis of how many shares are handled out of the Utah operation?

1. The core model needs to be a "how to" manual written explaining why and how to get it done, then provided that to the companies with high SI, or are or were on the Reg SHO list. Arm them with how it was done, and what it should mean for them in their states. Get the NASAA representatives to carry that ball to them, suggesting they have the state NASAA reps support into their respective state legislatures.

2. Eagletech is out of Florida aren't they, but a small company? Fa. wants to protect their retirees assets at all cost. Should be a slam dunk in Fa. even without a big company behind it.

3. If Delaware gets a law done, 90% of all the US chartered companies should be covered. Delaware is highly respective of citizen rights.

4. Ca. has to be a great place to get this done as well.

5. The AARP should want to protect their member assets and jump on this as well, in every state. AARP has their own lobbyist already employed.

6. Working on his first million should have an in with the retired military community through USAA and the retired officers association writings. He could write a news piece for the retired officers magazine to get the word spread far and wide.

7. Providences in Canada with unrealized prospective high mining revenue streams should also be interested. Our penny stock friends from Canada might also be able to get their Providences to pass similar legislation.

8. Can you think of a Texas home office for any of the high SI members, or any that are or were on the Reg SHO list? Prepaid Legal is Ok. based, I believe.

The core is a written manual on why to do it and how to do it.

Well done my friend!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By browntrout on 5/26/2006 12:36 PM
It is my understanding that the brokers have to report the fail AND the failing party's name? If that is so the first attack will be against the disclosure claiming it is unfairly disclosing info about the firms clients. They do this in every lawsuit and eventually it gets thrown but we may be looking at several years of delay. Hope not.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By et on 5/26/2006 12:38 PM
I have once again sent emails to a Reg SHO listed company with information from this site. Thank you for all you are doing. This company has been on the list for 237 days.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bobo on 5/26/2006 12:46 PM
trout: Any legal challenge will add fuel to the fire, and will be positive to raising visibility. Plus, UT judges probably aren't that receptive to a bunch of NY guys doing frivolous stalling tactics.

Call that a huge hunch based on the events of the last 24 hours.
The failing party is the NSCC By tommytoyz on 5/26/2006 12:50 PM
Within the DTCC system, one of the failing parties is always the NSCC to the buying broker. We want to know who failed to the NSCC in the first place and I hope the reporting requirements cover that.

Ditto for the ex-clearing system. We need to know who originally fails to the market, not just the cascading players that get involved.

I hope this covers it. NFI should be covered, I think. They do mortgages in Utah, but I don't know if they have any employees there.
Tom
Re: Clarification of the ramifications of the new UT FTD reporting bill. By n-tres-ted on 5/26/2006 12:51 PM
Bobo,

I have a different read on the Utah bill re what it requires for trades to be covered. Here is what the bill says:

"the trade is in a threshold security of an issuer:
60 (I) domiciled in this state; or
61 (II) with its principal office located in this state; and..."

Being domiciled there means the corporate charter was issued by Utah. And principal office requires more than just an office opened with a presence of a few people; it means the corporate HQ. So that limits it to OSTK and a few other traded companies, but it catches trades done anywhere, I think.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By rick on 5/26/2006 1:00 PM
Oh how I wish the effective date was next Tuesday.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By dave on 5/26/2006 1:07 PM
I think I may buy some OSTK calls...

As great as this news is, I'd like to see the fines followed up with arrests.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By JustMe on 5/26/2006 1:10 PM
I was going to say exactly what n-tres-ted just said, I think you got it wrong about the presence test Bob, there isn't a presence test.

It should be interesting to see how this plays out between now and October.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bryedge on 5/26/2006 1:10 PM
browntrout,
Personally, I would be surprised if lawsuits were NOT filed,
HOWEVER,
the exposure of those suits will be HUGE.
It is no longer a "tinfoil blog" but a STATE GOVERNMENT demanding disclosure for the protection of the "common folk".
THIS IS HUGE!! I am almost giddy......no, I am giddy!!

Hey, Bob, no offense intended about the "tinfoil" comment.

THIS IS HUGE!!!!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bobo on 5/26/2006 1:14 PM
n-ter-ested: You are correct, and I was not. I have modified the article to be consistent with what the law actually says, versus what I wish it said. Never blog while celebrating with champaign. Or MD 20/20.

So Donn is correct. We need to figure out a template for other states to follow. Actually, we need to target 5 states with strong companies on the SHO list who can spearhead this.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By HailUtah on 5/26/2006 1:15 PM
Great skiing in Utah love Alta and Snowbird as well as the Canyons tell the Govenor Ill be back next winter was just there last March i loved it..Im glad we have someone with a spine why is Morgan Stanley crying they must have lots of dirt to hide...Well the crooks of Wall Street have finally met there match hail Mr Utah
Re: Clarification of the ramifications of the new UT FTD reporting bill. By robelita on 5/26/2006 1:16 PM
bobo-the next state should be Nevada.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bryedge on 5/26/2006 1:27 PM
n-tres-ted, BobO,

Even if the Company has to be chartered in Utah, the ramifications of Overstock being saved by disclosure will be leverage for any other company lilsted on the SHO list.
The SEC will be hard pressed to deny 49 other states, what is available in Utah.

Keep that champagne flowing Bob. Here's a toast to you!!!
Re: Clarification of the ramifications of the new UT FTD reporting bill. By z3peru on 5/26/2006 2:24 PM
Krispy Kreme has been on the Reg SHO list longer than OSTk , and headquarters is located in Winston-Salem, North Carolina.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By teacheric on 5/26/2006 2:26 PM
If one of the requirements is that the company has to be a reg SHO listed stock, then I'd expect OSTK to somehow magically fall off the SHO list. It magically happened to NFI for a while.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Wonder Boy on 5/26/2006 3:07 PM
I would suggest AZ. Taser is located there and has a fiesty management. They have been on the SHO list since the beginning. (For a while, the symbol changed from TASR to TASRE due to an announced delay in financials, but this seems to have screwed up the count.) USA Today and the Arizona Republic (owned by USA Today) have published false articles and the Arizona Republic quoted Gradient many times----MANY TIMES. They have had a world of lawsutis brought against them and either won them or had them dismissed with prejudice! Take a look and see what you all think.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Wonder Boy on 5/26/2006 3:21 PM
<>

I feel that this will be where WS concentrates since it requires reporting things that they have been fighting to NOT report for years.

Still, I feel heartened ! We have the hedge funds sueing the Broker/ Dealers over basically the same thing we have been complaining about. We have a NASTY, THREATENING letter from the SEC Counsel to a JUDGE that is about as toothless as the SEC. We have ONE state that is telling Wall Street 'FU--Nasty Letter to Follow'. Robin Hood stole from the rich to give to the poor. Why shouldn't we steal from the rich to make people whole?
Re: Clarification of the ramifications of the new UT FTD reporting bill. By upwardmo on 5/26/2006 3:28 PM
I am happy about the new law, but concerned that the fails will simply move to ex-clearing or off-exchanges, or start getting deliberately misreported. I believe there are way more FTDs out there than show up on Reg SHO--and if being on that list is a criterion for action under the law, the miscreants will cimply figure out ways to sidestep it.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Wonder Boy on 5/26/2006 3:29 PM
It also cited the National Securities Markets Improvement Act of 1996, which prohibits states from imposing operational and record-keeping requirements that aren't required by federal securities law


This is what did not post in my last post--between the <>
Re: Clarification of the ramifications of the new UT FTD reporting bill. By bryedge on 5/26/2006 3:32 PM
BobO,
Just got an email from Bob Mims of the Salt Lake Tribune. He said he got the word from the Governor's office "just in time for me to write a story for tomorrow's Trib."

I wished him a Pulitzer
Re: Clarification of the ramifications of the new UT FTD reporting bill. By Wonder Boy on 5/26/2006 3:48 PM
just another brain fart----

There are a lot of 'common folks' that are infuriated with Congress over different subjects--graft, corruption, immigration, profound stupidity, etc. Consequently, we have representatives and a number of senators seeking election this fall and these guys are spastic over keeping their jobs!

Is there a way we can organize things by state, by representative, etc. and publish their foibles and piggyback on those with a 'new but CRITICAL issue' that is basic to each persons future, retirement funds, social security, etc.? Perhaps a demonstrated change at the 'top levels' will send a message to the 'dog'.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By gregcable2002 on 5/26/2006 4:03 PM
Wonder.it's happening here in Missouri as we speak.This is a all out war and soon more states will climb on board.The wheels of justice turn slow but sure.
Re: Clarification of the ramifications of the new UT FTD reporting bill. By jcline on 5/26/2006 4:04 PM
Multiple states SHOULD follow , and do so rather quickly. If MS thinks they can just move out of state because they don't want to play ball, then maybe 30+ states should all pass similar bills in the the next month or two. Kinda limits the demographics available for a move. Talk about a "short squeeze"!

It isn't rocket science....... just settle the trades!

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