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Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC!

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 9/29/2006 9:30 AM

Global Links filed suit against the DTCC for making what it alleges are false, misleading and defamatory statements about the company. Interesting, as the DTCC clearly expects companies the size of Global Links to roll over and play dead when they see the legal might of that awe-inspiring organization. The threat of phalanxes of legal weenies from Proskauer Rose marching in lockstep to the courthouse is supposed to have the same psychological impact as a gladiator facing 20 hungry lions.

Guess not all gladiators are that worried about the "lion problem."

This will be another fun one to watch unfold.

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

You can check out a great article on the rhetorical dishonesty employed by Wall Street in the online edition of Newsweek.

Read it here.

It would seem that the Street's penchant for stretching the truth is gaining greater understanding in the mainstream. The article could well have been called, "When lying liars lie."

Bravo to Newsweek for this diamond in the rough.

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

I was speaking with a buddy of mine who is fairly high in one of the larger brokerages, and he indicated that there is a schism within the industry. The divide is between the guys that run the office in NY, lending stock, naked short selling, cheating, and whatnot, and the brokers in the field.

I didn't know this, but brokers have no seat at the table in discussing important issues. There is no association for the brokers/sales people in the trenches. They don't have a voice. In many cases, their compliance people forbid them from making any statements, be it letters, emails, etc.

They can't donate $25 to PETA or the NRA without permission from their company. They aren't allowed to access or comment on any websites, including this one.

Their well fed bosses have their lobbying organization - the SIA - which oftentimes takes a position that hurts the broker in the office's interests - but there is no way for the broker to make that known.

Lawyers have professional organizations. Doctors have professional organizations. But not the actual individual brokers. They are required to be silent, and suck up whatever their corporate bosses dictate. They can't phone in tips, or blow whistles, or voice any dissenting opinion, as they are forbidden to do so by their employers.

What's up with that?

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

The bashing against Crocs was launched in a soft manner today by Bethany at Fortune. I predict that will be the first in a long series of negative articles about the company. How do I know this? Well, the short interest went through the roof over the last few months, TheStreet has started, "Are these guys a one hit wonder?" articles, and the company recently appeared on the SHO list.

So they have been targeted by the cabal that is responsible for most of the shorting on the SHO list. This little gaggle of super powerful hedge funds seems to be able to short and distort with impunity, and the SEC never investigates any of the obvious issues surrounding their tactics - it's like someone very very powerful in the administration has issued a hands off aviso.

If I'm right, here's what you can expect: Several quislings at NY pubs will come out with articles questioning their accounting, or business practices, or ability to continue to perform. They will see "downgrades" from companies that never covered them before, making the notion of a downgrade specious. They could easily see an SEC or other agency investigation into some aspect of their business, which will be entirely contrived in order to tank the price. We will see their message board clogged with newly arrived bashers. There will be tons of ugly rumors, some supplied by the inevitable insider mole at the company. We might even see Gradient or some other for hire mouthpiece issue a hugely negative "research report" on the company. If Milberg was still viable, a class action would be in the works, but lately they have been rather preoccupied by the multiple felony charges leveled against the firm.

In short, we will see the OSTK/NFI/TASR/NFLX/KKD/ACAS/FFH treatment from all the usual suspects, and the SEC will pretend that no similarities in the boilerplate attack plan exists. This selective blindness, which seems to be blanket in the case of this group, will mystify everyone except the readers of this blog, and thinking human beings capable of formulating a coherent thought. The NY press and CNBC will be all over the attacking, and seem to be unable to comprehend how this is the identical tactic used by a small group of very bad guys, who short and distort to make their outsized profits.

Anyone want to take that bet?
Copyright ©2006 Bob O'Brien
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Comments (22)
Story Floyd Norris: CMKM Diamonds By Newspaper on 9/29/2006 11:42 AM
Selling Shares by the Billions to Racing Fans
The story of a tiny company that spent the little money it had on sponsoring a race car sheds light on the market for small stocks that can fly below the radar for years.

http://www.siliconinvestor.com/readmsg.aspx?msgid=22861358
Re: Newsweek has great article on Wall Street rhetorical dishonesty By mhelburn on 9/29/2006 12:00 PM
Although the brokers aren't allowed to write or say anything, it has been my experience that they know and are interested in hearing what the customers are saying. I was particularly impressed recently when a broker was encouraged with the possibility of changing Reg SHO and was knowledgable about the situation.

Most of these guys are going to toe the mark because they don't want to deal with customer complaints, but they have no power to change the climate within the company. The rules that the brokers use where they promote in-house funds and such have profit incentive for the brokerages. I have never asked for help or recommendations but one of my friends keeps doing it and then kicks herself for listening to them.

Look at the euphanisms iin the industry letters on Reg SHO recommendations.
Good article in newsweek. Naked shorting is fraud... counterfeiting.. The special vocabulary that is created is well described in the article as perfuming a pig. This is something that our government has made acceptable as our politicians are experts at this. A person who speaks in plain English, and you can understand, is probably telling the truth. If you can't understand... be skeptical.

Re: Newsweek has great article on Wall Street rhetorical dishonesty By InTheKnow on 9/29/2006 12:22 PM
Great Newsweek article.

FTD's or Fails to Deliver = COUNTERFEIT STOCK = We got your money sucker now go fuck yourself!

FTD'S = FUCK THE DUMMIES!
Re: Newsweek has great article on Wall Street rhetorical dishonesty By sealman29 on 9/29/2006 1:19 PM
Mary, my Schwab office manager/broker does not know anything about the NSS problem, FTD or Reg SHO. Frankly, I believe he has no interest either.
I have tried to enlighten him by supplying links to thesanitycheck and others but he continues to look at me oddly when I have requested my certs. His only comment so far has been "Why do you want your certificates?"
FWIW, I was a licensed Registered Representative 35 years ago and worked for a year at one of the biggest brokers at that time (Dupont, Walston & Co.-owned at that time by H. Ross Perot) Management put all retail brokers on a very short leash and there was an official party line on virtually every subject or security. hell. Interestingly, during my stint, the official company stance on NSS was that it was illegal, would not be tolerated and would be prosecuted to the fullest exent possible. There were even some questions on the NASD and NYSE exams covering the illegalities of NSS and FTD issues.
Re: Newsweek has great article on Wall Street rhetorical dishonesty By mhelburn on 9/29/2006 2:21 PM
it had to be clean for a while, but it has evolved as the tradiing rules have been liberalized to provide less risk and more profits for the participants.

Some people are in denial... even with the threshold list. Anyone who doesn't know doesn't deserve your business. If he doesn't believe you, he probably thinks you are crazy.. Show him how crazy you are by moving your account elsewhere.
Re: Newsweek has great article on Wall Street rhetorical dishonesty By an_observer on 9/29/2006 2:28 PM
Maybe it would be an idea to contact Investor Relations at CROX and warn them of what's about to strike. They have no e-mail (aside the normal customer e-mail where the message might go astray) where to reach them, just a telephone number.

When the events later confirm what will be told to them , they could become allis in fighting the cause. The setup seems completed since apart from the first red flags enumerated by Bobo the stock is now listed on two German exchanges as per link hereafter:

http://finance.yahoo.com/lookup?s=CROCS&t=S&m=ALL

Being located in Europe and my poor command of English would not make me a credible messenger so someone volunteer to deal with this? Again amazed at how blatantly they act despite this being a hot issue.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By an_observer on 9/29/2006 2:33 PM
Oops I made a wrong manipulation.

Crox's investor realtion details hereafter:
http://www.crocs.com/company/Investor_Relations/Investor_Contact.jsp

I have just posted a link directing to the sanitycheck on Crox's Yahoo board.
Re: Newsweek has great article on Wall Street rhetorical dishonesty By CMElec on 9/29/2006 5:35 PM
I'll take the bet... that it happens along the way you just laid it out.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By LinnBenton on 9/29/2006 7:56 PM
I am not impressed by the Newsweek article. When they do an extensive report on FTDs, then I will cheer for them.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By Granny on 9/30/2006 4:12 AM
Gramps and I LOVE our CROCS!!!!
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By davidn on 9/30/2006 8:40 AM
Bobo, how did you imagine the serial numbers working?

At the DTC, claims on shares owner by Cede & Co are moved from one participant to another on a net basis from instructions from the NSCC.

The problem is that most of these participants are themselves clearing for other parties. It is uncommon for a brokerage to have an account directly with the DTC. More typically, their clearing organization has the acocunt.

The NSCC has complained that these clearing organizations PRE-NET. In other words, rather than process trades through the day, they just put in a net order that may or may not match the actual activity of the day.

Since it is claims that are trading, not shares, how would you put a serial number on a claim?

I think the solution is to completely get rid of the DTC, Cede & Co. and clearing organizations. The NSCC could send instructions to the company transfer agent (who could rent space on the NSCC computers) to electronically move the IOU's on the company shareholder list.

Rather than a long chain of beneficial ownership, your brokerage would own the shares and you would have a beneficial relationship with your brokerage ONLY.

The parasitic clearing organizations are obsolete with the arrival of the internet.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By davidn on 9/30/2006 8:53 AM
Explanation of how pre-netting can facilitate criminal activity.

1. A group of criminals take control of a clearing organization that clears for a large number of brokerages.

2. They enter into a relationship with a dirty brokerage and don't require the dirty brokerage to properly collateralize their positions. This is a business risk that they are allowed to take on.

3. They place orders through the dirty brokerage to sell XYZ all day long.

4. Because the stock seems on sale, orders pour in to buy XYZ. Each of these buys can be netted with a naked short. Buying is overwhelmed and the stock inevitably declines.

___

Just as you have no idea whether you own a real share or not, the honest brokerage that clears through dirty clearing has no idea either. They get a statement that tells them that they own a share. If dirty clearing is an incredibly large, well respected Wall Street name, they will assume the shares are real.

Instead, the clearing organization can match EVERY buy with a fail to deliver. It costs them nothing, because from the point of view of the NSCC, their pre-netted position has not changed (if buys and naked shorts are exactly equal).

The effect is that the counterfeiters can take all the buyers' money without putting any more collateral up with the DTCC group. As long as the brokerages who clear through dirty clearing keep feeding the buy orders, it is a license to print money.

There is little risk for the bad guys as clearing organizations are not liable for knowingly facilitating securities fraud. The customer at the brokerage doing the counterfeiting is usually an anonymous foreign company.

If / when the crap hits the fan, then the system is left holding the bag. Look at Refco, MJK Clearing, Adler Coleman - it doesn't make the press, hardly anyone gets arrested and the system (first the insurance fund, then the taxpayers) cover it. Or more likely, they push the problem under the rug by moving the liability into a new company.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By 0pcowboy03 on 9/30/2006 9:02 AM
davidn,

How can you get rid of Cede & Co.? They own the whole rotten mess!!!!

op
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By bobo on 9/30/2006 9:29 AM
I understand that it is claims on shares that net, however the claim on the shares (security entitlement) would have to have a serial number that corresponds to the genuine share. Put another way, before a security entitlement can be traded as a share, it would have to have delivery made to legitimize it as a genuine security entitlement, which has to have a bona fide security to back it up, per UCC 8. The number would be the proof.

So you buy shares, and your broker credits your account with a pending security entitlement. At T+3 it becomes bona fide, due to the underlying security being delivered - NFI share YLMN870273408703704. Now that security entitlement has that number to back it up.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By Leisure Suits on 9/30/2006 1:27 PM
http://townhall.com/columnists/column.aspx?UrlTitle=partisan_ex-president&ns=RobertDNovak&dt=09/30/2006&page=2

Sen. Arlen Specter, chairman of the Senate Judiciary Committee, last Monday delivered an unusually candid assessment of the Senate's notoriously light work schedule.

Former US President Bill Clinton speaks as a guest speaker at the Labour Party conference in Manchester, England, Wednesday Sept. 27, 2006. (AP Photo/Kirsty Wigglesworth)
Related Audio:
Chris Wallace Interview

In a National Press Club luncheon speech, Specter noted it was "very hard to convene a Monday morning hearing" because of extended weekends. He continued: "We've fallen into a routine . . . of starting our workweek Tuesday at 2:15 after we finish our caucus luncheons, and people start to get edgy and heading for the airports early on Thursday. So we might increase the workweek by 50 percent, say, to three days."
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By MarionPolk on 9/30/2006 3:34 PM
Interesting that the math error made by the DTCC and cited in the Global Links suit was first pointed out HERE by me the day the DTCC published their feeble attempt at "lower" math.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By gregcable2002 on 9/30/2006 4:41 PM
MarionPolk,alot of eyes read this blog.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By davidn on 9/30/2006 4:44 PM
opcowboy3:

Cede & Co. own your shares because you let them. You can request your shares be registered in a certificate in your own name.

Alternatively, to facilitate that they be traded electronically, they could be registered in the name of your brokerage rather than the name of your brokerage's clearing house.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By ranger on 9/30/2006 5:04 PM
Now you got it BOBO. The last bit of information is exactly the pattern I have been aluding too. It is there plain as day. I will admit that most of the companies do have problems but if we were all perfect there would be no need for a market. They use the information and twist it to fit thier short position. It is much easier to get stocks to go down then it is to get them to go up. If you find a company that is being targeted and you own stock in the company you will be better off selling out and taking a short position because nothing can be done to prevent the massive amount of selling pressure the hedge funds can create. They have no interest in the companies period. The only goal is to make money. The real winners will be the private equity money that gets to buy companies cheap afer the hedge funds have destroyed the market cap. It would not surprise me at all to learn that they even plan it out years in advance. Destroy the share price, force the company into financial instability and then buy it out. Once it is in private hands they refinance all the debt and then pay themselves a big fat dividend and then take the company public again. I know I am rambling but the truth is BIG MONEY ALWAYS WINS and they will lie, cheat, steal, write thier own rules, pay off politicians, and do whatever else is needed to ensure they remain in charge.
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By clearthinker on 9/30/2006 5:46 PM
ranger- remember ATHM? The first cable internet company that was VERY promising? You need look no further than here to understand how they were buried in toxic finance deals by a board controlled by ATT....only to be bought in bankruptcy court by none other than................ATT........and then sold to Comcast.....now follow along......

2002.....Comcast-ATT deal moves forward

PHILADELPHIA— Shareholders of Comcast and AT&T overwhelmingly approved Comcast's planned $51 billion purchase of AT&T's cable television business Wednesday in a deal that would create a cable TV powerhouse with nearly twice as many subscribers as its closest rival.

The deal between Comcast, the nation's third-largest cable TV company, and AT&T Broadband, the largest, would form a new AT&T Comcast with about 22 million subscribers. That would far outdistance AOL Time Warner, which has about 11 million.

2005........AT&T to settle At Home bankruptcy suits for $340M
05.03.2005, 06:31 PM

SAN FRANCISCO (AFX) -- AT&T said after Tuesday's closing bell that it has reached an agreement to settle claims arising out of the bankruptcy of At Home Corp. for $340 million. AT&T said it will pay $340 million to the Bondholders' Liquidating Trust, the party pursuing claims on behalf of the At Home estate. Comcast Corp. will pay AT&T 50% of the settlement amount, as part of the deals AT&T reached with Comcast when Comcast purchased AT&T Broadband in 2002, the company said. AT&T and Comcast have also agreed to relinquish claims to about $60 million that had been held in reserve by the At Home Estate to satisfy pending claims. AT&T said the settlement agreement will not have a material impact on its operations results. The settlement agreement requires the approval of the U.S. Bankruptcy Court for the Northern District of California, AT&T said. AT&T became the controlling shareholder of the At Home Corp. in 2000.

___________

Chump Change

GET IT FOLKS?
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By bobo on 9/30/2006 10:00 PM
Gasp. You mean that market shenanigans are part of corporate america's SOP? Why, the next thing you know we will be told that large, mainstream companies hire PIs to lie about their identities and steal personal info, as a routine part of their business.

Get out of here. Nobody would buy it. Please. Do we look that dumb?
Re: Newsweek has great article on Wall Street rhetorical dishonesty - UPDATE: Global Links Sues DTCC! By virakiller on 10/3/2006 6:50 AM
get the bats and meet me on Wall Street
Brokers get a "free pass" we want to bosses and we want to "hurt them" the
way they hurt us

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