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Senate Judiciary Hearings Yield Remarkable Testimony

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Posted by:   bobo 6/28/2006 1:24 AM

Well, the Senate hearings yielded some remarkable testimony, from both the witnesses, as well as Senators Specter and Hatch.

Before I launch into my notes, let me say one thing that should be the take-away from my blog. The Judiciary Committee needs to appoint a special prosecutor ASAP to examine the situation described by Gary Aguirre, that took place at the SEC. His testimony was explosive, and has to be investigated. Now. If true, the SEC is too rotten to do the job it is chartered with, and that needs to be assessed, and dealt with immediately. Please take out a moment and send your email or fax to Senators Hatch and Specter calling for a special prosecutor. Do it now, and be a part of taking corrective steps - for the good of the market, and for self-protection.

Also worth noting was that most of the Committee was NOT in evidence, a testament to the difference between Congress in the 1930s, when the Pecora hearings revealed a Wall Street literally riddled with corruption and fraud, and today, where allegations that the SEC is engaging in obstruction of justice doesn't warrant skipping whatever else the Committee members were busy doing.

I missed the first 10 or so minutes, so I'll pick up where I tuned in, which was at the beginning of Blumenthal's testimony.

Now to my notes.

Gary Aguirre single handedly ended the existence of the SEC as we know it with his testimony, IMO - if his charges are true, he is describing influence peddling, obstruction of justice, collusion, and wholesale abuse of the public trust. In his testimony and the ensuing responses to questions directed at him, he detailed his insider trading investigation being shut down due to the political clout of the person suspected of passing insider information, he talked about his supervisor throwing a spreadsheet at him, about interference on a Commission-wide basis, about gross negligence and active collusion to obstruct justice on an institutional basis, about being terminated for being too effective in uncovering a Wall Street fraud. A believable, methodical, considered description of the co-opting of our regulator. He was composed, and his factual exposure of the evidence was all the more stunning for its matter-of-fact quality.

Marc Kasowitz detailed precisely how a short and distort scheme works, and described the damage that is done to the market when hedge funds scheme to manipulate the market using research firms and the media to disseminate false and misleading information, so that their short positions can generate greater financial results.

Compelling testimony came from Demetrios Anifantis, who, from an experience-based perspective, described how the firm he had worked for, Camelback/Gradient, would misrepresent the experience of the firm’s analysts, would want to know whether the client was long or short before they wrote their report, etc. He described a hatchet-job-for-hire firm. In the Q&A phase, he re-iterated his experiences - and Hatch seemed very keen on the name change from Camelback to Gradient.

CT AG Blumenthal was very political, but sent the clear and direct message that if the SEC didn’t do its job, they could expect that the states would.

Hatch plainly said that Reg SHO had failed to curb naked short selling, and that it had further put in place no meaningful penalties to curb the practice. He mentioned the grandfathering of all prior fails as an example where the SEC was acting in conflict with the public interests.

The Department of Justice waffled, and brought up a case brought against Bayou for screwing their investors – a straightforward fraud case – as the only example he could think of where hedge funds had been targeted. Specter got that pretty loud and clear.

Specter directed Biosite CEO Kim Blickenstaff to file a complaint with the Dept. of Justice in his company’s conflict with Sterling Research.

Specter additionally said that he found that civil fines, with no admission of guilt, were suspect, and usually designed to end matters before they got really uncomfortable for the perp. He seemed pretty intent upon taking this issue to the criminal level.

Hatch made the statement that naked short selling seemed like it was a big problem, and that regulators didn’t seem to be doing much to solve it, and that the states were important in this battle.

Specter said that he felt that this matter was of enormous importance, and felt that they were dealing with a topic that could destabilize the markets, and that his feeling was that jail sentences would be a good deterrent.

Hatch asked a number of questions regarding registering stock on foreign exchanges to avoid reporting the naked short selling thresholds.

The over-arching tone of the concluding statements was that what was being described was fraud, and that the Judiciary Committee was very concerned with the pervasiveness, the lack of registration or regulation of the hedge funds believed to be involved in this, the obvious fraudulent aspects of the manipulative devices, and the systemic risk posed as a result of the leverage that the bad apple firms could bring to bear – and the damage that leverage could cause if and when some of them blew up.

Hatch, referring to Rocker and SAC and Chanos, said "A number of invited witnesses declined to appear. We have the authority to compel testimony if necessary."

Owen Lamont gave a canned, shorts are good for your bones and teeth shpiel that avoided any of the allegations before the committee, and further used the post hoc reasoning that because some of the firms that had complained about short sellers were later shown to be frauds, that they should all be considered in that light. Completely expected and predicted.

All in all, the testimony supported the idea of a regulator co-opted by those they police, an industry run amok, large, anonymous pools of money behaving in criminal ways, and research firms violating every possible trust, for the almighty buck.

Pretty much what you would have gotten by reading this blog over the last year. 

Did I miss anything of import? Please update me with the comments – I’m going by my real-time notes.

What were your impressions?

------------

If you haven't downloaded it yet, be sure to read the Intro chapter to my non-fiction book on the markets, Symphony of Greed - Financial Terrorism and Super-Crime on Wall Street.

-----------

Testimony of
Mr. Matthew Friedrich
Chief of Staff and Principal Deputy Assistant Attorney General, Criminal Division
United States Department of Justice

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5386


Testimony of
The Honorable Richard Blumenthal
Attorney General
State of Connecticut

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=4954


Testimony of
Mr. Gary J. Aguirre
Former Investigator
U. S. Securities and Exchange Commission

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5485


Testimony of
Mr. Marc E. Kasowitz
Senior Partner
Kasowitz, Benson, Torres & Friedman LLP, Alliance for Investment Transparency

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5486


Testimony of
Mr. Joseph McLaughlin
Partner
Sidley Austin LLP, Managed Funds Association

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5487


Testimony of
Mr. Kim D. Blickenstaff
Chairman and Chief Executive Officer
Biosite, Inc.

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5488


Testimony of
Professor Owen A. Lamont
Professor of Finance
Yale School of Management

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5489


Testimony of
Mr. Demetrios Anifantis
Former Client Relationship Manager
Camelback Research Alliance, Inc

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5490


Testimony of
Dr. Howard Schilit, CPA
Founder and Non-Executive Chair
Center for Financial Research and Analysis (CFRA, LLC)

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5491


Testimony of
Mr. Jonathan Boersma
Director, Standards of Practice
CFA Centre for Financial Market Integrity

http://judiciary.senate.gov/testimony.cfm?id=1972&wit_id=5492
Copyright ©2006 Bob O'Brien
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Comments (70)
Re: Senate Judiciary Hearings By Wicked World on 6/28/2006 8:38 AM

Looked to me like somebody put the Fear of God in Aguirre.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By eskimo_seal_hunter on 6/28/2006 8:40 AM
Did I understand Spector correctly, that several scheduled witnesses failed to appear, and that "We have the authority to compel their testimony if necessary"?

In other words, the bad guys were a no-show?
Re: Senate Judiciary Hearings Yield Remarkable Testimony By am I right or am I right on 6/28/2006 9:22 AM
The hedge funds use the excuse that they don't want their trading strategies known yet they share reports as gradient customers proving they obviously want to share their trading strategies, since manipulation is much easier with more trading clout. which makes them no longer their competition but their allies. Their true competitor (mark) is the little retail schmuck who is last to know until he reaches for his wallet only to find out the money has been stolen.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Senator " Porkchop" Schumer Said.... on 6/28/2006 9:25 AM
Anyone listen to Schumer? "Oink oink oink, oink oink, oink oink oink!!!" One of the fattest hogs at the trough. Time for this piggy to go to jail.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Tellit on 6/28/2006 9:27 AM
Bobo, your call to action is great.."I encourage all who read this to email Hatch.... speak up folks, do your part...", but I fear many may not read the comments under the blog. How about a new blog rallying the troops and calling for action today to leverage the momentum of the hearings.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Wicked World on 6/28/2006 9:36 AM

I will need to go back and listen again but I understood Aguirre (in his prefacing comments) to say that his * public* testimony today had been altered by himself due to I have no idea what. Did it have something to do with the subject of Bobo's last blog subject? If so, was it *solely* due to that? I'm not trying to weave another web so I'm not looking for answers to these questions.

The body of his comments seemed very weighed and considered, just as Hemingway811 points out. I'm not trying to be negative and I'm not disappointed. I simply believe that the last 24 hours were very eventful for Aguirre and it showed, IMHO.

I believe that his final comment, which he aborted, would have been a doozy.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By mhelburn on 6/28/2006 9:36 AM
As the hearing concluded, I called both Hatch's and Specter's offices and gave them compliments for holding the hearing.

Hatch
Washington DC Office
104 Hart Office Building
Washington, DC 20510
Tel: (202) 224-5251
Fax: (202) 224-6331


Specter
Washington DC Office
711 Hart Building
Washington, DC 20510
Tel: 202-224-4254

I have contacted the Chair of the Ethics Committee and asked for an investigation into Shelby.

The potential for obstruction of justice charges is growing. I wonder if our regulators are calling their own attorneys. They can deny the whole thing, but with the back-up e-mails and the non response to Aguirre's correspondence, they look extremely guilty. No wonder they wanted to keep this under wraps. I'm certain that they didn't want his correspondence to get where it is today. I think that there are going to be some resignations, some prosecutions...some rolling over...

Re: Senate Judiciary Hearings Yield Remarkable Testimony By sevenarrows on 6/28/2006 9:39 AM
I see that there was a live webcast on the committee website. Is anyone aware if it will be archived, or if there is another place the hearing may be viewed? Thank you.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By jo o on 6/28/2006 9:43 AM

pow, pow, pow. now you are talking the language congress officialdom seems to notice.
i feel rays of hope...let the sunshine in. damn, feels good getting the gangsters!
i feel there just mite be some representative power left in the usa for its citizens.
i was beginning to think all gubmint oversite was just a public relations check-off,
no teeth, no power, no justice. why even pay their salaries?
now we must remind them...justice delayed is justice denied
Re: Senate Judiciary Hearings Yield Remarkable Testimony By sevenarrows on 6/28/2006 9:48 AM
Please disregard my quesiton. The link on the Senate Judiciary Committee website is now working for me. Either my settings were funny or they have just archived it.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By bobo on 6/28/2006 9:50 AM
Gasparino is now taking a "show me the evidence" stance. Charlie? I agree with you.

Appoint a special prosecutor, and let him collect all the evidence, and then let's all see it.

Someone should contact Charlie and share that perspective.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By daven on 6/28/2006 9:58 AM
The bad guys (DTCC, clearing houses) were there through their lawyers Sidley Austin.

These guys established case law that your shares don't belong to you from the point of view of the clearing houses. From their point of view, your brokerage is the beneficial owner.

"Approximately ninety percent of all broker-dealers registered with the Securities and Exchange Commission (SEC) hire clearing brokers and utilize clearing arrangements."

"These firms are paid to clear trades, not to watch customers. Clearing firms will charge more or consider leaving the business if they are asked to police sales practices and that will end up hurting the average customer," says Sidley Austin Brown & Wood lawyer Henry Minnerop, who has represented most of Wall Street's clearing firms over the years." (Their customer is the brokerage.)

“Even if one accepts that the complaint sufficiently alleges that Bear Stearns did this with knowledge that these brokers were manipulating the securities at issue, the complaint does not establish Bear Stearns primary liability under § 10(b).”

"The most common form of misconduct leading to firm failure is the outright misappropriation of customers’cash and securities."

"The SEC and SROs do not actively monitor brokers’ financial
health; rather, the financial conditions of broker-dealers are largely selfreported."

"While some violations may be due to a failure to understand
the complexity of Rule 15c3-3, it is likely that some brokers deliberately
flout this rule in order to realize higher gains on customer assets"

"After 1978, “[a]ll customers who left negotiable
securities in their broker’s possession share the risks of misappropriation
and share ratably in remaining customer property.”
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Wonder Boy on 6/28/2006 9:59 AM
It was quite apparent that Aguirre was concerned about the threats from the SEC and that was noted by the Senators. Let's include the SEC letter to Utah as another example of their tactics. Blumenthal made it perfectly clear that the states do have rights to do their own regulation and would if the SEC and Banking Committee cannot clean up their act.

The Senators seemed knowledgeable of the subject and were trying to pull out as much information as was possible.

My biggest hope is that Shelby's turf protection stance and his chastisement of the Judicial Committee really po'ed Specter so that this issue will not just get lost in the shuffle again. From the solicitations to report things to the Justice Department, I think we have a good chance and that the Justice Department will get the word to get busy. If the ball is fumbled here, we are doomed to a world of Shelbys, Nazareths, Brigaglianos, and Coxes.
Re: Schumer By Wicked World on 6/28/2006 10:00 AM

Porkchop,

Here's my takeaway as a regular American and investor. The Judiciary Commmittee has authority over the DOJ which is charged with prosecuting criminals. Therefore the Judiciary has a clear obligation to call a meeting if necessary, like today's, to initiate an investigation when one appears to not be forthcoming. "Porkchop", speaking on behalf of the Banking Committee, declares THIS crime is for Banking to address because it involves *Wall St.* crookery.

Riiiiiiight.

That makes me feel soooo much better. I mean, the Banking Committee prosecutes, convicts, and jails so many Wall St. crooks each year, right?

Nope! Just a lot of looking the other way and fines that babies wouldn't fear and admitting of NO guilt!

"Banking" wants to keep this wrapped up behind their closed doors so that they can continue to do absolutely nothing about it.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 10:01 AM
Wicked World,

Aguirre did indeed begin by stating he had changed his testimony. He cited possible legal action, including criminal, if he testified to anything that had not already been made public.

It was soley due to the intimidation by the SEC. What other reason could he possibly have for altering his testimony?

Here is a link to the written testimony he submitted to the Judiciary Committee:

http://judiciary.senate.gov/print_testimony.cfm?id=1972&wit_id=5485
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Paladin on 6/28/2006 10:05 AM
bobo... I just e-mailed Gasparino to point out the need for a special prosecutor to investigate and share the findings.

Let's see what comes back from him.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 10:08 AM
"I'm certain that they didn't want his (Aguirre)correspondence to get where it is today."

Mary,

I have a serious concern regarding the documentation Aguirre turned over. He stated he has given it to the Banking Committee. Specter told him there was no need to duplicate it for Judiciary & that they could get what they needed from Banking. That means Shelby has control over the documents. What if one or two go missing. Who's to know?
Re: Senate Judiciary Hearings Yield Remarkable Testimony By sevenarrows on 6/28/2006 10:08 AM
Well, I thought I was getting a feed, but it was the live hearing coming up. A call to the Judiciary Committe informed me that the videos are not archived, nor does CSPAN have coverage of this hearing. If anyone runs across a way to view it, I'd appreciate it. Sorry for cluttering this thread.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Little Bo peep on 6/28/2006 10:13 AM
"Jail sentences would be a good deterrent" I am with him.
Excuse me, but didn't we put Martha in Jail?
What she did was like a kid stealing a candy bar
in the candy store compared to this.
HELLO!!!!!!!?

ANYBODY HOME!!!!!!!!?

Easter Bunny to get some of the good eggs to hippty hop down the bunny trail. Perhaps-
you could draft some letters regarding the HERO performances today
and upload them to your site so the good eggs could download. Then they
could sign their names to them in support. Then fire away the emails to
all concerned parties as well as print a hard copy to drop in the snail mail.

Provide the email and mailing addresses also.

Today many recognized we will only use a razor to cut if necessary.
Sharp and Clean. Just the facts.

Mr Gary Aguirre, you sir can STAND TALL and feel the American PRIDE that
was radiant ENERGY today from you.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 10:20 AM
The written testimonies are now available at the Judiciary's website. Just access the link to the Hearing this morning.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By TJB on 6/28/2006 10:21 AM
How did the Morgan Stanley head of compliance know John Mack was being investigated?
Thanks
Re: Senate Judiciary Hearings Yield Remarkable Testimony By majordanger on 6/28/2006 10:23 AM
Looks like Hurricane Hatch is starting to knock down some trees. I hear some Good Ol' Boy OAK starting to crack... Thanks for the addresses, Mary
Re: Senate Judiciary Hearings Yield Remarkable Testimony By piddly_sum on 6/28/2006 10:36 AM
There really needs to be two special prosecutors appointed which are each independent of the SEC (the SEC's Special Council will not cut it):

1. Continue Mr. Aguirre's investigation of insider trading

2. Investigate the obstruction of justice within the SEC
Re: Senate Judiciary Hearings Yield Remarkable Testimony By bobo on 6/28/2006 10:54 AM
Here's an email you can forward to Charlie, if you like:

Gasparino has expressed reservations about the testimony of Gary Aguirre, and calls for the evidence to be presented.

I agree with Charlie on this. I say get a special prosecutor appointed, and give him all the evidence, give Gary immunity from repercussions from his whistleblowing, and then let's make all facts known.

Where I disagree with Charlie is his stance that a widespread conspiracy the likes of Milken/Boesky/Levine is just too far fetched to be believed.

Wall Street's history is FILLED with examples of exactly that sort of conspiracy. Milken, the S&L scandal, Enron, the mutual fund front-running scandal, the analyst scandal, REFCO...how many times does the same lesson have to appear, for him to grasp that this is human nature at work, not some conspiracy theory.

I would advise Gasparino to read Ferdinand Pecora's excellent book describing the landmark hearings that resulted in the creation of the SEC.

From my book, "Symphony of Greed"'s second chapter on the history of the markets, an excerpt:

"In the Spring of 1930, as a shell-shocked NYSE recovered from the 1929 crash, the DJIA rose from a low of 198 to a high of 294; but a fresh storm was brewing on the horizon – the greatest crash of all time. On April 17, 1930, the DJIA started a decline that destroyed an unprecedented amount of investors’ net worths by the time it ended in July of 1932, dropping an astounding 86% during that span. This reflected the global and national depressions of the era, as well as the continued lack of any real checks and balances for the US market – not only did anything go, but huge fortunes were made concurrent with the decimation of the market’s value. It could easily be argued that anyone playing the market on the short side during that period emerged wealthy beyond reasonable imagination, even as the country suffered untold harm.

A series of Senate hearings examining Wall Street’s performance during the crash period resulted in stunning revelations at the hands of the gentleman who presided over them – Ferdinand Pecora.

Pecora exposed every imaginable variant of crookery from some of the largest names of the time, and proved beyond a shadow of a doubt that Wall Street had ridden roughshod over the nation’s rank and file, creating obscene profits for the banks and brokers at the expense of the country. Legendary figures like JP Morgan were grilled during the hearing, and the proceedings were dreaded (rightfully so) by Wall Street.

As an example, Citigroup’s predecessor entity, National City Bank, admitted to virtually every type of egregious fraudulent scheme one can imagine. Then, as now, Wall Street’s royalty literally knew no bounds to their larceny – the first to testify, National City Bank’s President and Chairman Charles Mitchell, admitted that in 1927 and 1928 National City Bank dumped $90 million of garbage Peruvian government bonds on unsuspecting customers of National City Company (a subsidiary of the bank); made unsecured and unpaid loans for millions of dollars to National City insiders to cover stock market losses; that he cheated on his taxes using a bogus $2.8 million loan from National City Company; that he conspired with Cuban President Gerado ("The Butcher") Machado, dumping $31 million worth of worthless Cuban sugar loans by transferring the bad debt to the stockholders of the affiliate without their knowledge (creating a dummy Cuban company, the General Sugar Corporation, to mask the transaction)…

But it didn’t end there. The tales of stock manipulation and collusion were breathtaking. Millions of dollars were made from insider trading and pool manipulations by National City bank insiders, including Percy Rockefeller, who was a board member. Perhaps the most stunning revelation was Mitchell confessing to a series of National City Bank/Anaconda Copper schemes that, at the time, were the biggest frauds in US banking history: Mitchell, Rockefeller and Anaconda Mining President John D. Ryan set up a jointly owned account holding about 1.5 million shares of Anaconda Copper Company stock, which was then was then aggressively advertised and sold through the National City affiliate. Simultaneously, the stock was run up by the group, from $40 at the end of 1928 to $128 in March of 1929. They then dumped the stock, resulting in one of the worst savagings in Wall Street history – that single episode cost the public over $150 million 1929 dollars. It was clear that was not an isolated event, and that Mitchell was describing the norm, not the exception, on the Street.

Pecora later wrote, referring to the retail investor, that the poor sucker was, "surprised to find all of this going on, who had somehow believed that everything on Wall Street was regulated, overseen, and safe. He has reckoned without the ingenuity of the legal technicians and the complaisance of governmental authorities toward powerful financial and business groups."

As the hearings wore on, Congress recognized that the market situation had reached a crisis point. Late that year it passed the Securities Act of 1933, which governed the information that companies had to divulge if participating in the public markets, and in 1934 it created the Securities and Exchange Commission (SEC). The charter of the new SEC was to placate the growing anti-Wall Street sentiment that the hearing revelations and the economic landscape had created, and to send the message that there was a watchdog organization presiding over the industry, keeping everyone honest. That was the theory, which was put to the test shortly thereafter, in the second worst crash in the market’s history: the 1937-1938 crash, wherein the DJIA shed 49.1% in one year. Apparently all the new regulations hadn’t changed things as much as Congress had hoped, given the magnitude of that drop. The following year, in 1939, the markets again crashed, losing 40.4% from September of ’39 through April of 1942. Volatility was as bad as it had ever been, and the SEC’s efforts coupled with the best intentions of Congress had demonstrated negligible impact in improving the situation."

I think that Charlie needs to open a history book and familiarize himself with the actual history of the Street, before he declares that it is unprecedented for large-scale conspiracies to take place there.

It would be more accurate to describe it as fairly common.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Paladin on 6/28/2006 10:58 AM
From Reuters...

By Kevin Drawbaugh

WASHINGTON, June 28 (Reuters) - Democrats in the U.S. House of Representatives plan to introduce a bill to reverse last week's court decision that invalidated a Securities and Exchange Commission rule requiring hedge fund advisers to register with the agency, said a top lawmaker on Wednesday.

Massachusetts Rep. Barney Frank said the bill, which is still being drafted, "will give the SEC clear authority to require registration and monitoring" of hedge fund advisers.



In a statement made available to Reuters, Franks said he plans to introduce the bill as early as Thursday.

Last week, a federal appeals court threw out an SEC regulation requiring most U.S. hedge fund advisers to register, which had been the SEC's first step toward policing a secretive industry that has doubled its assets in the past five years.

"Given the increasing size of hedge funds and the growing role they are playing in the economy, it would be a grave error to allow the court decision denying any authority by the SEC to stand," Frank said in the statement.

"At the very least, Congress should give the SEC the power it has sought to require registration," he said, adding that Congress should also consider whether the agency needs more authority.

link: http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-06-28T175143Z_01_N28375656_RTRIDST_0_CONGRESS-HEDGEFUNDS-BILL-UPDATE-1.XML
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Little Bo peep on 6/28/2006 11:01 AM
Bunny do you really think the attention span is that wide?

We need simple. Easy to understand. Fast.

maybe something like......

Dear Charlie Gasarino,
We fully understand who your employer is and that pays the bills.
Why do you have this opinion?

A widespread conspiracy the likes of Milken/Boesky/Levine is just too far fetched to be believed.

Is there something about the information Mr Gary Aguirre provided that you think is dishonest or without merit? If so, please inform us.

Let us know if you have any questions? We would be happy to answer.

Thank you.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By cutty on 6/28/2006 11:16 AM
I wonder if there is a way the crooks and their helpers can put the toothpaste back in the tube now. It's on record for future generations, nobody can claim it does not exist or "Do not no anything about any of that". Eager to see what happens now.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By friendofthedevil on 6/28/2006 11:48 AM
bobo -

I dream of your second or third book. It is historical and the first chapter opens with Mr. Gary Aguirre applying for a job with the SEC. He is rebuffed, but undeterred... Throughout the book you flesh out a dozen characters, perhaps a mysterious Mack, perhaps Hatch or Specter, perhaps the special prosecuter. With any luck, it ends with a summary of prison sentences and a description of the new SEC. For Mr Aguirre's sake, I hope there isn't too much action for the hero-protagonist. We don't need another Clancy novel.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By piddly_sum on 6/28/2006 11:55 AM
Frank also called for hearings in the Financial Services Committee to examine the hedge fund industry and any need for additional oversight and regulation.

http://www.house.gov/banking_democrats/pr06282006.html

Now what will Oxley and Baker do...?
Re: Senate Judiciary Hearings Yield Remarkable Testimony By mhatmccane on 6/28/2006 12:46 PM
I believe I heard Specter indicate that DOJ could prosecute cases based on provisions of SarBox - as a response to the turf war with Banking. Did anyone else hear something like that??
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Fed up on 6/28/2006 1:09 PM
While I think this was a good day, I wouldn't have the current SEC involved in trying to regulate my bowels much less the hedge funds. That whole gang needs to go.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By piddly_sum on 6/28/2006 2:01 PM
If SarBox is 1348 then yes, it will all be treated criminally now.

One other interesting thing that occured to me. Shelby's staffer Andrew told me this week that he would not attend the hearing since he is not on the Judiciary committee. Yet I recall Specter saying Grassley would have or wanted to attend the hearing but was otherwise occupied (probably with the Paulsen confirmation since he is Finance Chairman). Grassley is not on the Judiciary Committee either, but like Shelby does have an interest in the matter.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 2:28 PM
mhatmccane,

<>

You heard correctly. The problem is the SEC is not referring cases to DOJ so they can prosecute under 1348. Here is the text :

Section 807 of the Sarbanes-Oxley Act enhances the criminal penalties for securities fraud under newly created 18 U.S.C. §1348 properly entitled “Securities Fraud.” 18 U.S.C. §1348 provides that:

Whoever knowingly executes, or attempts to execute, a scheme or artifice—
to defraud any person in connection with any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781) or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 780(d)); or
to obtain, by means of false or fraudulent pretences, representations, or promises, any money or property in connection with the purchase or sale of any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781) or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 780(d)); shall be fined under this title, or imprisoned not more than 25 years, or both.

Although the Securities Exchange Act has made securities fraud punishable for several decades, the new provision appears to make a prosecution easier. For example, the mens rea requirement under the new statute is knowledge, as compared with the willfulness requirement of the Exchange Act. §1348 also removed the requirement that the fraud be in connection with the purchase or sale of securities.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 2:35 PM
The Banking Comiittee held a Hearing on hedge funds 5/16/2006. I watched it. What a joke. The biggest concern raised was the number of IPOs being done outside the US.

There is a link to that Hearing on the Home Page of this site.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 2:39 PM
Financial Services Ranking Member: If the SEC doesn't have the authority, let’s give it to them

Washington, DC– Congressman Barney Frank, the Ranking Democratic Member on the House Financial Services Committee announced today he will be introducing legislation to authorize the registration and monitoring of hedge funds, effectively reversing a recent Court of Appeals decision. Last week, the D.C. Circuit Court of Appeals overturned the Securities and Exchange Commission (SEC) rule, finding the SEC reinterpretation of exemptions previously relied on by hedge fund advisors to be “arbitrary.” Frank’s legislation, which is still being drafted and will be formally introduced tomorrow, will give the SEC clear authority to require registration and monitoring. Frank also called for hearings in the Financial Services Committee to examine the hedge fund industry and any need for additional oversight and regulation.

“Given the increasing size of hedge funds and the growing role they are playing in the economy, it would be a grave error to allow the court decision denying any authority by the SEC to stand,” said Congressman Frank. “At the very least Congress should give the SEC the power it has sought to require registration, and we should also be looking into whether any further SEC or regulatory authority regarding hedge funds is needed.”

Specifically, Frank’s bill would provide the SEC with the clear authority to require registration of hedge fund advisors under the Investment Advisors Act, which reverses the decision of the court. The bill would authorize the SEC to interpret the term “client” to require registration of advisors to funds that have more than 15 investors.



Does anyone have a copy of the audio? By JR on 6/28/2006 2:59 PM
Missed the hearing, but would like to hear it.

Please advise.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By mhatmccane on 6/28/2006 3:00 PM
Hem,

< You heard correctly. The problem is the SEC is not referring cases to DOJ so they can prosecute under 1348. Here is the text :>

Did I also hear Senator Specter suggest that individuals could request DOJ help in these cases - ie, not require a referral from the SEC to get the DOJ involved ?
Re: Senate Judiciary Hearings Yield Remarkable Testimony By tellit on 6/28/2006 3:22 PM
We are more than fortunate to have Senator Specter and Senator Hatch leading this effort. This problem requires the right individuals at the right levels to stand up against immense pressure and influence from the opposing side. It was apparent today that Specter and Hatch have what it takes. They are senior, hard nosed, won't be pushed around by other members of congress, and realize people need to be put in jail - not fined. I found it interesting that Hatch said he would have to leave early and stayed to the end. We should all email these two fine Senators and express our support and encourage them to continue this effort with immediate action.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By NMS on 6/28/2006 4:15 PM
CNBC's Power Lunch today clearly showed they are a Hedge Fund production.
And our champion crusader, Charles Gasparino, went out of his way to discredit Gary Aguirre's testamony saying there was no supporting evidence on why he needed testimony from Morgan Stanley CEO John J. Mack.

Gasparino completely ignored Aguirre's sworn testamony which stated:

"If you wish to know more details how the SEC stopped the investigations, including supporting evidence, the identity of the suspected tipper and tippee, and the tipper’s political connections, you may find this information in the 42-page sworn statement and 46 supporting exhibits I provided Kathy Casey, Esq., Staff Director and Counsel for the Senate Banking Committee, in mid-March 2006"

How odd that after Aguirre gives his evidence to Kathy Casey...he is fired, and Kathy Casey gets appointed to the SEC.

And now SEC is also threatening legal penalities on Aguirre,reported in the Financial Times, but 'no' Wall Street media.

God help us!
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 4:37 PM
mhatmccane,

"Did I also hear Senator Specter suggest that individuals could request DOJ help in these cases - ie, not require a referral from the SEC to get the DOJ involved ?"

Yes. The suggestion was made to both Kim Blickenstaff, CEO of Biosite, and Marc Kasowitz, Senior Partner with Kasowitz, Benson, Torres & Friedman LLP, and Alliance for Investment Transparency.

Kasowitz's firm is the one that filed the Biovail lawsuit.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By hemingway811 on 6/28/2006 8:41 AM
For a Hearing that was not about NSS, as stated in the opening remarks, Hatch made sure he brought it up at every opportunity.

BRAVO !!!

"Specter additionally said that he found that civil fines, with no admission of guilt, were suspect, and usually designed to end matters before they got really uncomfortable for the perp. He seemed pretty intent upon taking this issue to the criminal level."

I took particular note of that. Perhaps the Judiciary will find a way to side-step the Banking Committee and remedy this.

Re: Senate Judiciary Hearings Yield Remarkable Testimony By bobo on 6/28/2006 6:50 PM
Folks, we should all move along to the latest blog above this one for further commentary. This is moving along pretty fast now.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By FindDiamonds on 6/29/2006 6:07 AM
We are mad as Hell and are not going to take it anymore!
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Smithied on 7/2/2006 10:01 AM
We all must come together and march on Wall Street or Washington DC. We must let the public know about this issue. SEC, DTCC, The Senate, The White House know, we the AMERICAN INVESTOR know this issue exist and we're not taking it anymore. If the Hispanics in this country can form together for there causes then we must do the same. The cause is LEGIT and its a LEGAL issue. I CALL FOR US TO GET TOGETHER AND RAM THE RIGHT IN THEIR FACES PUBLICLY.
A renowned former broker comments on Naked Short Selling By apieceofmymind2 on 7/17/2006 3:42 PM
A renowned former broker (28 years), having his own firm for 18 years and considered one of the biggest precious metals brokers during that time makes comment about Naked Short Selling. See Forum "My Pilot Light Has Been Out!"
Re: Senate Judiciary Hearings Yield Remarkable Testimony By YGMichaels (FDIC Whistleblower) on 11/25/2006 11:36 PM
WMR has discovered there is much more to the government's harassment of Kenneth W. Ford. Yolanda Gibson-Michaels, Ford's second cousin, to whom he is close, filed major fraud and conflict of interests charges against Donald E. Powell, the chairman of the Federal Deposit Insurance Corporation (FDIC) and a close political ally and friend of George W. Bush who served as President of First National Bank of Amarillo, Texas and Chairman of the Board of Regents of Texas A&M University.

Gibson-Michaels, a whistleblower who worked for the FDIC Legal Division, uncovered fraud involving senior FDIC officials and scandals involving Bank Hapoalim of Israel, Bank Leumi of Israel, Russian-Israeli mob figures Vladimir Guzinsky and Arkady Gaydamak (a financial partner of Cheney while he was at Halliburton), Bank Leumi's Chairman Eitan Raff, SunTrust Bank of Florida (the bank from where the FBI's confidential informant Tonya Tucker (who stung Ford) received checks while she was in the Washington area, the Washington Field Office of the FBI, illegal Congo diamond trading involving DRC Resources Corporation, massive overcharging of the FDIC by outside counsel law firms, Saudi lobbyists in Washington, the Wells Fargo-Tejas merger, Tyco International, Enron off shore entities, and Halliburton. WMR will bring more details about this massive fraud involving the FDIC, described as a $3 trillion slush fund for Bush, Cheney and their business friends and associates around the world.

Considering Ford's cousin's high profile FDIC investigation (also involving Securities and Exchange Commission probes) of politicians and businessmen connected to Bush, Cheney, and Israeli interests, perhaps David I. Salem, the U.S. Assistant Attorney who was so quick to see Kenneth Ford sent to prison, should also have any of his possible connections to the Bush White House, the GOP, and Israel thoroughly investigated for potential conflicts of interest and criminal conspiracy.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By eastendwes on 6/29/2006 12:58 PM
you may call it what you like, "failed to deliver" or NSS, in plain english it is called FRAUD!. The very institution trusted to police this activity,condoned it. Now that this is not a little ugly secret but a senate judiciary hearing, I would not want to be a MM,DTCC or a hedge fund manager....all you dirty little broker beware...the law is comming and they are bringing hell with them.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By George on 6/28/2006 8:42 AM
Companies like EATC and NPCT paid stockreporter.de to write bogus buy reports.

Whats with that Bob?
Re: Senate Judiciary Hearings Yield Remarkable Testimony By rtway1 on 6/28/2006 8:43 AM
I thought it was something we only could dream about a year ago. I liked the veracity of Hatch and Spector and the fact that they encouraged more people to come forward and they probably will to CYA. I wish more time was spent on the secrecy of the DTCC and why wasn,t anybody there from the SEC. Answer: They are hiding under Chris Cox skirt.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By mhelburn on 6/28/2006 8:43 AM
I was pleased with the evidence. It was exactly what I expected from all parties. Anifantis and Aguirre and Biosite CEO pulled all together. The DOJ basically confirmed that there is no meaningful prosecution.

Aguirre's testimony about SROs bringing in complaints and little or no attention being paid to them by the SEC over the last many years.... we knew that.

If there are going to be some sacrificial lambs offered up, the easiest ones are already in the slaughterhouse. The path of least resistance.. ease, high profile entities.

Did you notice how often the Chairman asked about the name change and identified the current name of one of the subjects. I see orange.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By baldone on 6/28/2006 8:45 AM
Actions speak louder than words. They can hold the hearings, however if no one takes any action based on the hearings; what have they really accomplished?
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Just hoping it doesn't "die in committee" on 6/28/2006 8:46 AM
The hearing was great, absolutely everything that could be hoped for. But the true measure will be in what results. If this is the last we've heard from the Hill on the subject, then we have yet a long row to hoe. Public outcry needs to be further developed, to keep this issue on the radar and of importance to the entire Congress, not just two Senators.
Re: Senate Judiciary Hearings Yield Remarkable Testimony By Steubenville Ohio Granny on 6/28/2006 8:48 AM
My impression was exactly as yours. I have been lurking here from the beginning. This site is the absolute best. I had problems getting the "hearing "to open. I went to your site and soon discovered others were having the same problem. I complained to my son and he sent me a link and viola it opened it! If you want to know something, just go to BoBo. I have plastered windshields with your web address (1000 +) and still going even though I get caught at times by security. This issue is so important to me I continue and its now done more carefully. I also send the letters to congressman and local editor. Their is more but I won't bore you with that. I am 76 and if I can do something, everyone can. No excuses!
Re: Senate Judiciary Hearings Yield Remarkable Testimony By piddly_sum on 6/28/2006 8:51 AM
It sounded to me like they invited SAC Capital, Gradient and others to participate but they declined. Where it appears this one is headed they will not be able to decline actual committee and grand jury supoenas.

As for the SEC (and perhaps the FBI for that matter), it will be interesting how high the obstruction of justice indictments will land. I wonder how many people over there are now reaching for the telephone to be the first one to squeal and try to get themselves off the hook.