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IBD Does Second Part of NSS Article

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Posted by:   bobo 11/7/2006 10:40 PM

The second installment of the IBD articles on NSS have made it live, and the second part is better than the first, IMO.

We still have to grit our teeth through Cramer's jabbering, which sort of is nothing more than an uninformed and unsupported opinion based upon....well...nothing.

That's not unexpected.

The rest of the article is pretty good.

Check it out.
Copyright ©2006 Bob O'Brien
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Comments (19)
Re: CBS Marketwatch Does Surprisingly Good Article on NSS By InTheKnow on 11/7/2006 11:14 PM
I hope that all these government scumbags realize that one of the main concerns of the voters is in this current election is CORRUPTION IN GOVERNMENT.

Hey scumbags pack your bags and run your asses off for the American people are not going to take your bullshit anymore!
Re: CBS Marketwatch Does Surprisingly Good Article on NSS By PhantomCertificates on 11/8/2006 12:25 AM
You can find the second article from IBD here:

http://www.investors.com/editorial/IBDArticles.asp?artsec=17&artnum=1&issue=20061107

One thing that I think got glossed over in the first article was an incorrect comment by Robert Shapiro (I'm not sure if it's a misquote, or just a miscalculation on his part). He stated that "with 2 billion shares, you would need 100 million fails". This is incorrect. With 2 billion shares outstanding, a failure of more than 10 million shares through the dtcc would trigger an SHO entry (a failure count that has shown up on a few small caps). It's not that the large corporations can't show up on the SHO list, it's just far easier to manipulate a stock that's only trading a few hundred thousand shares, than one that can trade 20 or 30 million shares in a day. It's the effect of those trades that the naked short selling traders appear to be interested in, and they can't get that effect from a large cap stock.

In regard to IBD and its readership, it is a California company I believe, and the manipulative action of small cap stocks directly effects their readership and the CANSLIM investing technique that the paper promotes. I've seen many cases where stocks are attacked immediately after they come out of trading patterns that this technique suggests as a buying point. It appears to me that many of the stocks that IBD readers prefer to invest in, are exactly what the shorts attack to trigger the stop losses suggested by IBD. I think this issue effects these readers as much, if not more so than any others. I would suggest giving constructive feedback to these two articles, and not to assume they are the NY financial press.
Re: CBS Marketwatch Does Surprisingly Good Article on NSS By honkytonker on 11/8/2006 5:36 AM
Article in NY Times this morning in which Greenberg and Einhorn are shown to be victims of pretexting, perhaps by evil Allied Capital. Check it out.
Re: CBS Marketwatch Does Surprisingly Good Article on NSS By gregcable2002 on 11/8/2006 6:54 AM
I love this part:Ms. Torre Bates, who joined Allied’s board in 2003, added that the board remained skeptical of Mr. Einhorn’s motives, given his “history of making broad accusations of misconduct against Allied management while simultaneously having an apparent financial motive to depress Allied’s stock price.” Maybe it's the FBI thats watching Mr Einhorn and company?
Re: IBD Does Second Part of NSS Article By kevin on 11/8/2006 7:25 AM
Too bad we couldn't have kicked out Shelby.
Re: IBD Does Second Part of NSS Article By bid on 11/8/2006 8:40 AM
Who do you complain to when the bid and the offer are the same, but the market makers won't allow the trade to occur because they are short?
Re: IBD Does Second Part of NSS Article By billwpitt on 11/8/2006 12:30 PM
If Dems have 51 Senate seats....new Senate Banking Commitee chair....from the Dem side. Shelby becomes minority party sub-chair.
Re: IBD Does Second Part of NSS Article By gregcable2002 on 11/8/2006 1:19 PM
Not a problem,Shelby will just become a Democrat again.
Re: IBD Does Second Part of NSS Article By kevin on 11/8/2006 1:20 PM
Bill, don't tease me like that. Are you saying Shelby is toast if the Virginia recount goes to the democrats?
Re: IBD Does Second Part of NSS Article By yoda on 11/8/2006 1:27 PM
You either get Schumer or Shelby what is the difference? Let's hope the GAO investigation of the SEC will continue.
Re: IBD Does Second Part of NSS Article By piddly_sum on 11/8/2006 2:55 PM
correct, no difference between Shelby and Schumer,

but it is not good to lose Specter and Grassley, doubtful the new chairs will have the same level of interest

who knows, maybe Frank in the house will light a fire over at financial services?
Re: IBD Does Second Part of NSS Article By a concerned investor on 11/8/2006 3:20 PM
I've been thinking about the disclosure that the previous Chairman Donaldson's firm, Donaldson, Lufkin & Jenrette Securities Corp (now known as Pershing) is responsible for so many phantom shares and it has made my blood boil.

The disclosures are provable and we have the power to force regulation.

Please consider sending variations of this letter to every state or federal regulator, politician or media outlet you can think of.

This is a provable, clear cut example of rules that aren't being enforced that are putting millions of investors at risk.

Dear Regulator:

As you know, it is fraudulent to use "smoke and mirrors" to sell someone something that doesn't exist.

The SEC has identified that some members of the brokerage community do exactly that. Because the clearing system makes it difficult to tell if a real share backs an electronic book entry, some participants have been able to sell "phantom shares" to the investing public.

In a speech from July 2006, Sec Chairman Christopher Cox said, "The Commission is particularly concerned about persistent failures to deliver in the market for some securities that may be due to loopholes in the Commission's Regulation SHO, adopted just two years ago."(1)

According to the DTCC, the central clearing organization, the total level of these phantom shares in the system total $6 billion.(2) This includes "fails to deliver" (shares owed from one participant to the National Securities Clearing Corporation) and "fails to receive" (shares owed from the National Securities Clearing Corporation to a participant).

Over 90% of brokerages are "introducing brokerages", that is they use a third party "clearing brokerage" to facilitate their back office functions. These third parties act as custodians and if they don't act with integrity, can put the assets of many innocent investors at risk.

It has come to my attention that the clearing subsidiary of the Bank of NY, Pershing LLC., which holds the assets of over 3.5 million retail customers(3) is responsible for $1.7 billion of these $6 billion phantom shares or 28% of the problem. They report(4) "Securities Fail to Deliver" of $730 million and "Securities Fail to Receive" of $968 million.

In their "Statement of Financial Condition"(4), they further disclose that they are exceeding the Net Capital Rule 15C3-1 by a billion dollars, putting over 3.5 million investors' assets at extreme peril. The SIPC only has reserves of $1 billion to protect the entire industry.

"At June 30, 2006, the Company’s regulatory net capital of $1,233 million was 16.24% of aggregate debit balances and in excess of the minimum requirement by $1,081 million."

When the terrorist attacks of September 11th caused the collapse of MJK Clearing, the Securities Industry Protection Program developed a report that identified the lack of enforcement of this miniimum asset requirement rule as one of the main causes of the failure.

"During an extended period of strong economic growth, regulators, market participants and politicians who supervise the Commission’s activities, may have overlooked the significance of a firm regulatory framework."(5)

I demand an immediate investigation into the activities of Pershing LLC and enforcement of the requirements that they:

A) Immediately honor all fail to deliver and fail to receive "IOU" obligations to deliver shares to the shareholders that paid for those shares

B) Either increase their assets according to rule 15C3-1 or begin an orderly wind down of their business activities

Sincerely



A Concerned Investor



(1) http://www.sec.gov/news/speech/2006/spch071206cc2.htm
(2) http://www.dtcc.com/Publications/dtcc/mar05/naked_short_selling.html
(3) http://ftp.sec.gov/rules/proposed/s71600/brueckn2.htm
(4) http://www.pershing.com/statementoffinancialcondition.pdf

(5) http://www.sipc.org/pdf/SIPC_fitch.pdf
Re: IBD Does Second Part of NSS Article By Mosses on 11/8/2006 3:21 PM
Hillary Clinton is the answer.

We need to put preasure on Hillary to save the world from naked shorting.

http://clinton.senate.gov/contact/

Contact Senator Clinton through her offices:

Albany/Hudson Valley
Senator Hillary Rodham Clinton
Leo W. O'Brien Federal Office Building
1 Clinton Square
Room 821
Albany, NY 12207
Phone: (518) 431-0120
Fax: (518) 431-0128

Rochester Region
Senator Hillary Rodham Clinton
Kenneth B. Keating Federal Office Building
100 State Street
Room 3280
Rochester, NY 14614
Phone: (585) 263-6250
Fax: (585) 263-6247

Buffalo/Western New York
Senator Hillary Rodham Clinton
Larkin at Exchange
726 Exchange Street
Suite 511
Buffalo, NY 14210
Phone: (716) 854-9725
Fax: (716) 854-9731

Rockland and Putnam Counties
Senator Hillary Rodham Clinton
P.O. Box 47
Nyack, NY 10960
Phone: (845) 613-0076
Fax: (845) 613-0110

Long Island
Senator Hillary Rodham Clinton
155 Pinelawn Road
Suite 250 North
Melville, NY 11747
Phone: (631) 249-2825
Fax: (631) 249-2847
Syracuse/Central New York
Senator Hillary Rodham Clinton
James M. Hanley Federal Building
100 South Clinton Street
P.O. Box 7378
Syracuse, NY 13261-7378
Phone: (315) 448-0470
Fax: (315) 448-0476

New York City
Senator Hillary Rodham Clinton
780 Third Ave
Suite 2601
New York, NY 10017
Phone: (212) 688-6262
Fax: (212) 688-7444
Westchester County
Senator Hillary Rodham Clinton
P.O. Box 617
Hartsdale, NY 10530
Phone: (914) 725-9294
Fax: (914) 472-5073

North Country
Senator Hillary Rodham Clinton
P.O. Box 273
Lowville, NY 13367
Phone: (315) 376-6118
Fax: (315) 376-6118
Washington, D.C.
Senator Hillary Rodham Clinton
United States Senate
476 Russell Senate Office Building
Washington, DC 20510
Phone: (202) 224-4451
General Fax: (202) 228-0282
Scheduling Req Fax: (202) 228-0121
TTY/TDD: (202) 224-6821





Re: IBD Does Second Part of NSS Article By Zimmer on 11/8/2006 3:23 PM
Sorry, this is off topic ... but does anyone know what happened to the NCANS and NFI sites? I'm getting a page saying it's "Out of Order" ... ????
Re: IBD Does Second Part of NSS Article By Paladin on 11/8/2006 3:38 PM
Zimmer,

Technical probs. at site.... should be back up within a couple days (as per site "elf" who posted that answer at iV NFI board.
Re: IBD Does Second Part of NSS Article By hilary on 11/8/2006 4:01 PM
http://www.stewwebb.com/Bush%20Crime%20Family%20Flow%20Chart.HTML
Re: IBD Does Second Part of NSS Article By RMR on 11/8/2006 4:53 PM
from the Daily Reckoning:

"Big Bonuses Seen Again for Wall Street," says the New York Times.

"Never in the history of Wall Street have so many earned so much in so
little time," adds a Bloomberg report.

"Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman
Brothers Holdings Inc. and Bear Stearns Cos. are about to reward their
173,000 employees with $36 billion of bonuses. That's a 30% increase from last year's record, and it doesn't include the billions more that will be
paid by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co.,
the three largest U.S. banks, as well as the hundreds of hedge funds and
private-equity firms that constitute the financial industry.

"Enriched by the unprecedented value of takeovers, equity trading and
credit derivatives, this year will be the best ever for the major brokerage firms," said Brad Hintz, an analyst at New York-based Sanford C.
Bernstein & Co.

"The average windfall for each individual at the five largest U.S.
securities firms will be enough to buy a $165,000 Bentley Continental GT,
the two-door coupe favored by Nikki Hilton and Cher. They'll have plenty
of change for a box of Romeo y Julieta cigars and a case of Pol Roger
champagne - the stuff enjoyed by Winston Churchill, Britain's prime
minister in the 1940s and 1950s."
++++++
Regrettably-- we know how the bastards got it!
Re: IBD Does Second Part of NSS Article By zero sum game on 11/8/2006 5:17 PM
The cash that goes out has to come from the cash that went in.

Cash goes in from buying and comes out from selling and friction (commissions and bonuses to the street).

The more friction, the less profit for you and me.
Re: IBD Does Second Part of NSS Article By InTheKnow on 11/8/2006 6:55 PM
They gots your money those scumbags!

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