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Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 7/28/2006 6:39 AM

Forbes has a very good article on the lawsuits against allegedly miscreant hedge funds and their colluding prime broker accomplices today.

You can read it here.

It is fair, balanced, complete, and does a nice job of summarizing the current state of the litigation landscape.

I wonder if the Forbes building will be demolished in a freak accident soon? How dare they break from the status quo of Wall Street wisdom?

How dare they.
Copyright ©2006 Bob O'Brien
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Comments (18)
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By den of thieves on 7/28/2006 10:00 AM
http://www.the-catbird-seat.net/TheSEC.htm

"The shock of the stock market crash and the Depression had set off a reform movement in Congress culminating in Senate hearings conducted by special counsel Ferdinand Pecora beginning in 1932. Though Pecora's withering cross-examination of some of Wall Street's leading investment bankers, the American public learned about insider trading, stock-price manipulation, and profiteering through so-called investment trusts.

Most of the abuses uncovered involved information bestowed on a favored few and withheld from the investing public. It was not only information that directly affected stock prices, such as the price of merger or takeover offers, but information that could more subtly be turned to a professional's advantage: the true spread between prices bid and prices asked, for example, or the identities of buyers of large blocks of stock and the motives behind their purchases.

In the wake of widespread public revulsion and populist fury, Congress passed historic legislation, the Securities Act of 1933 and the Securities Exchange Act of 1934. A new federal agency, the Securities and Exchange Commission, was created to enforce their provisions. Congress deemed the enforcement of its new securities laws to be so important that it enacted corresponding criminal statutes.

By separating banking from securities underwriting, the raising of capital, and distribution of stocks, bonds, and other securities, the securities act set the stage for modern investment banking. . . "
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By den of thieves on 7/28/2006 10:01 AM
Read that line again:

"Congress deemed the enforcement of its new securities laws to be so important that it enacted corresponding criminal statutes."
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By bbhindyou on 7/28/2006 10:12 AM
If specific acts have been designated as criminal and we have enacted statutes to go after the criminals who commit these acts I think the judicial branch DOES have a DUTY to the country to continue to investigate and PROSECUTE regardless of what the other washington nit wits say is their juristiction.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By Little Bo peep on 7/28/2006 10:59 AM

Richard Scrushy, founder and former CEO of HealthSouth Corp., has been convicted of paying $500,000 in bribes to receive a spot on a state board that approves hospital construction projects. The guilty verdicts on six charges included bribery, conspiracy, and mail fraud. The maximum sentence is 20 years in prison, but sentencing won’t happen until at least fall.

The failed defense strategy included comparing Scrushy to civil rights leaders such as Rosa Parks, who suffered injustice.

This conviction follows an acquittal for Scrushy in the trial on allegations of accounting fraud. Scrushy still faces a HealthSouth lawsuit against him related to the accounting fraud, a lawsuit filed by Scrushy against HealthSouth for wrongful termination, and civil charges filed against Scrushy by the SEC.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By Little Bo peep on 7/28/2006 11:20 AM
opps. Forgot this link.

http://biz.yahoo.com/ap/060629/alabama_corruption.html?.v=8
SIA SUES UTAH OVER NAKED SHORT LAW By browntrout on 7/28/2006 12:32 PM
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B15AC344D%2DF6A5%2D46DA%2DB83F%2D936A1246A79F%7D&dist=newsfin HAHAHAHA They claim it would be too much bookkeeping!
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By browntrout on 7/28/2006 12:46 PM
Chairman of SIA's stated goals listed on website: Chairman's Goals
To raise awareness of the importance and urgency of retirement savings.
To encourage and support transparency and effective, efficient regulation.
HAHAHAHAHAHA Who do these turds think they are fooling? They sound just like Cox and the DTCC. Lie, lie, lie. Fleece, fleece, fleece!
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By rtway1 on 7/28/2006 12:51 PM
Thanks to Forbes and this reporter for printing this article. A year ago this would have been impossible to report, obviously progress is being made when Forbes picks up on this.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By Spectator on 7/28/2006 2:58 PM
Looks like Liz Moyer has a track record of balanced informative pieces, many of them devoted directly and indirectly to the NSS issue lately. With Gasparino it's now two, well a year ago no one in NYC knew about it so may awareness is spreading around...

http://www.byliner.com/writer/?id=14260&p=5
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By majordanger on 7/28/2006 3:16 PM
Well Reuters still can't say illegal and naked in the same sentence, This hit about an hour ago....

" The Securities Industry Association (SIA), which represents Wall Street interests, said on Friday it filed a lawsuit in federal court seeking to block a Utah law aimed at curbing naked short selling, a controversial investment strategy."

Here is the YAHOO link
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060728:MTFH79722_2006-07-28_22-23-48_N28234639&type=comktNews&rpc=44
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By InTheKnow on 7/28/2006 3:37 PM
SIA=SCREW INVESTORS ALL
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By Wicked World on 7/28/2006 3:41 PM
Is that the same SIA who pledged their support for the law in exchange for the postponement of its implementation from July 1st until Oct. 1st?

That SIA?

Those jacklegs!
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By Yoda on 7/29/2006 4:17 AM

Utah will not back down. Discovery will be a joy. SIA just wants a delay at any costs.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By LitigationIsTheSportOfKings on 7/29/2006 8:12 AM
Wall Street group sues Utah over short-sales rule
Fri Jul 28, 2006 6:23 PM ET

By Kevin Drawbaugh

WASHINGTON, July 28 (Reuters) - The Securities Industry Association (SIA), which represents Wall Street interests, said on Friday it filed a lawsuit in federal court seeking to block a Utah law aimed at curbing naked short selling, a controversial investment strategy.

The association said the Utah legislation illegally usurps the jurisdiction of the Securities and Exchange Commission and is expressly preempted by federal securities law.

"On this issue, federal law could not be more explicit: the states are expressly prohibited from establishing ... requirements that are different from the requirements of the Securities Exchange Act," said SIA President Marc Lackritz.

At issue is a law adopted by Utah in May targeting an investment practice that has been attacked repeatedly over the years by Patrick Byrne, chief executive of Overstock.com Inc. , an online retailer based in Salt Lake City.

Short sellers borrow shares they view as overvalued from a brokerage, then sell them and wait for the market price to decline. If it does, then the short seller buys the shares back, returns them to the brokerage and pockets a profit on the difference between the sale and the repurchase prices.

Short selling is legal and common, especially among hedge funds, the lightly regulated and fast-growing capital pools that are playing an increasingly powerful role on Wall Street.

Naked short sellers take short positions in a stock without ever arranging to borrow the shares to cover their initial sales.

Earlier this month, the SEC voted 5-0 to propose a crackdown on naked shorting that would reduce the number of short positions that can be open without borrowed shares being delivered and narrow a related exception for market makers.

Utah acted alone on this issue two months ago when it adopted a law requiring brokerages to inform state regulators when sold shares are not delivered to the purchaser. Such "failures to deliver" sometimes signal naked shorting.

Brokerages that do not comply with the reporting law must pay $10,000 a day to Utah-domiciled companies whose shares are involved. The law is scheduled to take effect on Oct. 1.

The SIA filed its lawsuit in U.S. District Court for the District of Utah, Central Division. The group contends that the Utah law is too broad and covers transactions unrelated to shorting. Wall Street firms have said before that failures to deliver after a sale sometimes have nothing to do with shorts.

The SIA said, "In some cases the systems required to locate and report the information are simply unavailable."

Asked whether the SEC might file a brief with the court, commission spokesman John Nester said, "Staff is reviewing whether to recommend filing a friend of the court brief, but no decisions have been made."

A spokeswoman for the Utah Division of Securities declined to comment.



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Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By x. trapnell on 7/29/2006 9:52 AM
The SIA must be sorely afraid that other states will pass similar laws based on the Utah model. Imagine the problems for them if each state begins requiring brokers to obey the law! At the very least this suit will likely blunt momentum toward enacting laws that encourage compliance with federal securities statutes.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By Niel Storts on 7/29/2006 12:31 PM
"Controversial investment stategy". Doesn't everyone notice the disconnect displayed in those words? Interesting way to discribe fraudulant sales of product without delivering. "investment stategy" That's the way those clowns actually view this. No mental admission that they are breaking the law. Marks the true lack of any sort of a moral compass in those folks. They can't even admit in the confines of their own minds that they are a pack of scum sucking crooks. Mental defense at work in the morally defenseless.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By CMElec on 7/31/2006 6:11 AM
EB, you've got to love the sound of a snowball building size as it runs downhill in the middle of summer. An anomaly attributed directly to you.
Re: Liz Moyer Writes Balanced Forbes Article on NSS and Lawsuits By who'syouruncle on 8/1/2006 12:09 PM
bobo:

As I understood one of your recent postings, Forbes granted you the opportunity to address a group of their executives on the whole NSS and FTD problem.

It certainly seems that this article is a direct result of your briefing, and is 100% turnaround from 1-2 years ago.

Can we anticipate further evidence of this epiphany?

Bob L.

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