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Senator Grassley: We Are Not Amused

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 12/13/2006 8:42 AM
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Sign the Market Reform Petition Now!: View it here.

To view the SIA NYSE member firm spreadsheet showing $63 billion in delivery and receipt failures as of Q2, 2006, click here.

Visit the new "SEC/Gary Aguirre Cover-Up" section of this site for a compilation of Mr. Aguirre's efforts to expose the SEC's alleged obstruction of justice and whitewashing of insider trading by some of the biggest names on Wall Street.

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

Normally I would write 2-4000 words of Sanity Check for your edification and titillation. However today, I don't need to.

Senator Grassley wrote a short but sweet letter to the WSJ, wherein he took the gloves off, and slammed the SEC for basically everything this blog has been harping on for years.

Well, not everything, but if running a cover-up for powerful Wall Street interests is the tip of the iceberg, it certainly sounded the alarm. In Beltway-speak, an investigation "fraught with problems" means a cover-up. It means the SEC didn't do its job. It is "fraught with problems" in the same way that police investigation that plants evidence and obstructs justice is fraught with problems. It's the polite way of saying the SEC has two sets of rules - one it pretends applies, and one that does apply - to Wall Street. That would be the one where insider trading and fraud are winked at by aspiring counsel for that power center, temporarily running interference for it at the Commission. It would also be the one where any honest, decent investigator will be terminated should they dare to believe that the law applies evenly to all participants and investors.

Here's the letter:

"Your Dec. 8 editorial "The Pequot 'Scandal" leaves the impression that Gary Aguirre and I are the only two people concerned about the way the SEC handled the Pequot investigation. In fact, Mr. Aguirre's concerns have been echoed by both former and current SEC officials, who provided candid testimony to our committees.

The focus of the Senate investigation I'm conducting with Sen. Arlen Specter (R., Pa.) isn't John Mack and Pequot; rather, it is whether the SEC retaliated against one of its lawyers and whether it wields an even hand in looking out for investors big and small. Our review is evidence-based, and so far the evidence suggests the Pequot investigation was fraught with problems, Mr. Aguirre's termination is suspect, and the inspector general failed in his duty to conduct a thorough and independent inquiry.

Sen. Chuck Grassley (R., Iowa)
Chairman
Committee on Finance
Washington"

The question is now, can the SEC be trusted to regulate anything, given Grassley's conclusions? Or more specifically, what will it take to get a special prosecutor appointed so that the miscreants can be brought to justice? There are clearly folks in the upper levels of the SEC who are bought and paid for by Wall Street, and who have been passing rules in direct conflict with the 1934 Act, scoffing at the idea that anyone could ever make them comply with it.

They do so with a sense of invulnerability that is troubling, and telling.

Send Senator Grassley an email or letter expressing your concern and support. The squeaky wheel is getting the oil.
Copyright ©2006 Bob O'Brien
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Comments (32)
Re: Senator Grassley: We Are Not Amused By InTheKnow on 12/13/2006 9:05 AM
The Democrats when they take the helm had best be ready to follow Senator Specters and Grassleys lead or we will hold their feet to the fire and they will be lumped together with the scumbags from the SEC.

The SEC is for sure is filled with the worst criminals our government has fostered and their perfomance at the Judiciary hearing was shocking at the least and totally repugnant. These are scum of the worst kind and worst than organized crime for their potrayal as defenders of the individual investor. Shame on them, shame!
Re: Senator Grassley: We Are Not Amused By bbhindyou on 12/13/2006 9:20 AM
Can this be posted under important articles?
Re: Senator Grassley: We Are Not Amused By republicrats on 12/15/2006 12:42 PM
The republicrats have two branches: the democrats and the republicans, but they are part of the same system that cowtows to Wallstreet.

"And that’s pretty much how I feel about the Republicrats now. I want what they can’t or won’t give me—the world’s best antiseptic. Sunshine. Warmth. And truth."

http://civillibertarian.blogspot.com/2006/12/republicrats-to-voters-people-have.html

Their stranglehold will melt because they can't stop the warm rays of truth from enlightening one investor mind after another.
Re: Senator Grassley: We Are Not Amused By blogger on 12/15/2006 3:16 PM
I guess blogger's are getting too powerful the powers that be?

"Senator John McCain has introduced legislation that would fine blogs up to $300,000 for offensive statements, photos and videos posted by visitors on comment boards, effectively nixing the open exchange of ideas on the Internet, providing a lethal injection for unrestrained opinion, and acting as the latest attack tool to chill freedom of speech on the world wide web."
Check out Mack and his nice bonus check... GEEZUM... By More_Fraud_on_wallstreet on 12/15/2006 5:29 PM
Check out the 40 million dollar bonus John Mack just got.... With money like, I wonder if you can pay off a few people here and there???

http://news.yahoo.com/s/ap/20061216/ap_on_bi_ge/mack_bonus_4
Re: Senator Grassley: We Are Not Amused By Mosses on 12/17/2006 1:03 PM
J.P. Turner & Company, L.L.C. (CRD #43177, Atlanta, Georgia)
and S. Cheryl Bauman (CRD #2207311, Registered Principal,
Atlanta, Georgia) submitted a Letter of Acceptance, Waiver and
Consent in which the firm was fined $211,372, $86,372 of which
represents disgorgement of commissions and fees received and
$40,000 of which was jointly and severally with Bauman. The
firm is prohibited from offering hedge fund interests or opening new
hedge fund accounts for six months, and is thereafter suspended from
offering hedge fund interests and opening new hedge fund accounts
until the firm submits revised written supervisory procedures with
NASD that satisfactorily address the supervision of hedge fund
offerings as well as the trading in hedge fund accounts. The firm is
also subject to a six-month pre-use filing requirement with NASD for
all customer advertisements and sales literature relating to hedge
funds, beginning with the first use of such sales
communications following the suspension from offering
hedge fund interests and opening new hedge fund
accounts. Bauman was also suspended from association
with any NASD member in any principal capacity for
three months.
Without admitting or denying the findings, the firm and
Bauman consented to the described sanctions and to
the entry of findings that the firm, acting through
Bauman, failed to establish and maintain a supervisory
system reasonably designed to ensure compliance with
applicable laws, rules and regulations relating to the
trading activity in a hedge fund account, and failed to
reasonably supervise the offering of the fund’s interest
and the trading activity in the fund account to prevent
violations. The findings stated that, in connection with
the hedge fund offering, the firm made improper use of
a public customer’s funds by permitting the deposit of
customer subscription funds into the hedge fund
account and permitting the funds to be used to meet
margin calls without prior approval of the subscription
by the firm’s compliance department and by failing to
return the deposit to the customer in a timely manner
after the firm rejected his subscription. The findings also
stated that the firm, acting through Bauman, approved
and permitted the use of a brochure for the fund that
contained statements and claims for which it failed to
provide a sound basis and failed to disclose the inherent
risks associated with the absence of an operating history
for both the partnership and the general partner;
exaggerated the experience and services the registered
representatives operating the fund offered and made
false statements regarding the fund’s investment
strategy. The findings also stated that the firm failed to
establish a proper escrow account for a private offering
and the firm, acting through Bauman, failed to establish
and maintain a supervisory system reasonably designed
to ensure compliance with applicable laws, rules and
regulations in connection with a private offering. NASD
also found that the firm paid securities commissions
that totaled $2,226,130.90 to non-member entities or
persons.
The suspension in a principal capacity is in effect from
November 6, 2006, through February 5, 2007. (NASD
Case #E072003011201)

http://www.nasd.com/web/groups/enforcement/documents/monthly_disciplinary_actions/nasdw_018087.pdf
Re: Senator Grassley: We Are Not Amused By bbhindyou on 12/19/2006 6:59 AM
It looks christmas came early for nyse they just got the exchange they always wanted.
A world wide market run just like this one is bound to be great for the small new companys out there chances of sucess and mom and pop investor as well.
Now the hide the fails game goes global and who will end up with the hot potato?
I think the war we are engaged in that is the most important conflict of all not many know about and it appears to be going global.
I for one don't feel like I'm on the winning side so far either!
Re: Senator Grassley: We Are Not Amused By SteveM on 12/20/2006 7:55 AM
bbhindyou,

We are losing big time. What more can be done?
Re: Senator Grassley: We Are Not Amused By Lenofus on 12/13/2006 9:45 AM
Let's see, jammie, toof brush, comb........ What else will I need for 3 to 5 in the Pen? How rotten do you have to be to have a position of responsiblity like an SEC Branch Chief, and soil it with your greed and stupidity? No mercy. Their one step above child molesters.
Re: Senator Grassley: We Are Not Amused By CMElec on 12/13/2006 1:10 PM
From the Video starting at about 2 Hrs and 7 minutes Kreitman is responding to Specter's questioning as to why the sudden change in his opinion of Aguirre and where Kreitman cites his reasons for his firing:

...."""his inability to work within a closely supervised, structured, and collegial environment."""

Translation: He wouldn't play ball with the rest of us corrupt, double dipping, US taxpayer screwing thieves.

This specifically outrages me and drives anyone with any sense at all to get to the bottom of this. Thankfully two Senators amoung us do too.

The snowball is growing exponetially in size now. Keep pushing it downhill, it's not going to stop on my watch. CMElec
Re: Senator Grassley: We Are Not Amused By CMElec on 12/13/2006 2:32 PM
Find out where to view the entire hearing of the Senate judiciary here:
http://www1.investorvillage.com/smbd.asp?mb=4148&mn=24085&pt=msg&mid=987815

You can even get your own copy to archive there also.

This is history in the making.
Re: Senator Grassley: We Are Not Amused By tommytoyz on 12/13/2006 3:30 PM
Any constituents of Grassley and Specter can send them this :

RE : Uncontrolled issuance of “Securities Entitlements” by broker-dealers puts U.S. Financial markets at High Risk



Dear xxxx

I feel it is important to bring to your attention the serious risk to the US financial system that SEC is allowing Wall Street broker-dealers to expose it to - permitting the virtual unlimited issuance of Securities Entitlements. A new strategy is now circulating to exploit this exposure that could severely harm not only investors, but the entire financial system. The strategy circulating is called the Dividend Capture Strategy and is described in exhibit A.

The reason for this severe risk exposure is directly due to the fact that broker-dealers are permitted by the SEC to issue securities derivatives called “securities entitlements” and credit these to investors in far greater numbers that the numbers of real securities. So many investors think they bought and hold real securities in their accounts, when in fact they only hold “securities entitlements” issued by broker-dealers. Further, the SEC permits this switch to be kept from investors or the market as if it were a tightly held secret.

A recent letter put to the SEC to address the regulatory ramifications and interpretation of the Dividend Capture Strategy went unaddressed. Brian A. Bussy, Assistant Chief Counsel at the SEC, said that the Commission would not address these concerns in any way, even though he did admit that it did raise concerns within the Division of Market Enforcement.

Specifically, the culprit is the issuance of “securities entitlements” in far greater numbers than the numbers of outstanding issuer-issued securities, with no controls to correlate between the two. This can now be exploited via the Dividend Capture Strategy to bring the U.S. markets to their knees and harm all classes of investors and possibly U.S. tax payers, not to mention the economic consequences.

The complete lack of controls in the issuance of “securities entitlements” by broker dealers to the market and investors in relation to the number of issuer-issued securities means there is no risk control to the U.S financial system from this discrepancy. This risk must be removed before the U.S. markets are harmed, as it most certainly will otherwise be harmed if not removed. Worse, the exploitation of this risk exposure doesn’t even require any trades or a price movement while being executed, making it almost impossible to detect.

The only way to remove this threat to the U.S. markets is for the SEC to amend REG SHO, which it is currently considering, in such a way, that puts a limit on the number of “securities entitlements” that broker-dealers can issue to investors. There must be a direct correlation between the number of securities issued by companies and “securities entitlements” to these securities credited to investor accounts.

Currently, the SEC permits many exemptions to the Securities Exchange Act of 1934 and allows other regulatory exemptions with the effect that broker-dealers can issue “securities entitlements” which in no way correlate to the number of issuer-issued securities. The result of this is that there are far more “securities entitlements” in the market and held by investors than there are actual issuer-issued securities.

Incidentally, the Securities Exchange Act of 1934 and the Securities Act of 1933 do not permit the issuance of these “securities entitlements” by brokers to investors. The Acts specifically prohibit such activity, as such issuances were implicated in the crash of 1929 during the Pecora Senate hearings in 1933, which led to the Acts and the formation of the SEC.

So I urge you to please understand the risk that the U.S. markets are currently in by the virtually uncontrolled issuance of “securities entitlements” by broker-dealers and do all possible to remove this threat. Not only do a high number of these derivatives harm investors directly when a large number of them are used in specific cases, but Wall Street firms can now be held hostage via the new Dividend Capture Strategy and exploit the risk exposure positions they are taking. It is in the interest of Wall Street firms and securities investors and the economic vitality of the U.S. that the 1934 and 1933 Securities Acts be more closely adhered to. The U.S. financial markets are already losing their competitiveness to more fair and robust markets overseas.



Sincerely,








Exhibit A

Description of the Dividend Capture Strategy



Basic Strategy

Broker-dealers credit more securities in investor accounts than issuers have issued, thus creating more rights to dividends than the issuer has to an obligation to pay, in exchange for assuming risk exposure. The strategy seeks to capture as many PIL payment obligations as possible from broker-dealers that results from their risk exposure, in addition to regular dividend payments.

The strategy is not reliant on the purchase, sale or borrowing of any securities or acquiring any voting rights, taking control of the issuer or a change in the price of any securities. The strategy itself merely profits by collecting dividends and PIL. No trading need take place.


The Number of Issued Securities Vs. The Number Held by Investors

When investors purchase securities, their broker-dealers confirm these purchase transactions as defined under rule 10b-10 by, among other things, crediting securities to their accounts. However, broker-dealers sometimes fail to obtain the purchased securities at the time the purchase transactions are confirmed to investors (even after T+3) or to maintain them after they have been obtained and trades confirmed. In these cases, broker-dealers credit “securities entitlements” to investor accounts in lieu of real issuer-issued securities. The Commission has explained in its Nanopierce Amicus Curiae Brief that broker-dealers can rely on the authority of U.C.C. Article 8 to credit “securities entitlements” to investor accounts in lieu of issuer-issued securities that investors have purchased through them and that the crediting of “securities entitlements” by broker-dealers to investor accounts can complete and confirm the purchase transaction for the investors. However, crediting “securities entitlements” to investor accounts increases the number of securities in investor accounts over and above the number of securities the issuer has issued.

Securities Lending further increases the number of “securities entitlements” credited by broker-dealers in investor accounts and the total number of securities in investor accounts, because when real securities held on behalf of investors are lent out by broker-dealers, the lent securities are not debited from investor accounts. The shortfall in the number of issuer-issued securities broker-dealers have vs. the number of securities the broker-dealers have credited to investor accounts is then accomplished by crediting “securities entitlements” to investor accounts in place of the lent issuer-issued securities. Retail investors are not even aware when this happens.

In certain cases, some broker dealers have actually had little or no issuer-issued securities on hand in any depository while crediting their investor clients almost exclusively with securities via “securities entitlements”. A recent example are City Securities, Daiwa Securities and Lazard Ltd., that credited a total of 1,280,772 “securities entitlements” of OSTK with a market value of $34,888,229 to investor accounts while only holding a total of 50 OSTK issued securities as of January 12, 2006.

For all of the sampled broker-dealers in the case of OSTK on this date, the broker-dealers were found to have issued 6,703,630 more securities in the form of “securities entitlements” to investor accounts and thus short an equal number of OSTK issued securities, with a value of over $180 Million Dollars.

Several other companies have been able to determine that the number of their securities held by investors exceeds the number of securities they have authorized and issued and the list of companies exploring and discovering this is growing quickly.

In a recent Securities Industry Association consolidated report, just for NYSE issues alone in Q2 of 2006, the market to market value of delivery failures by reporting firms is $28 billion. This is far higher than the $3 Billion reported by the DTCC for all exchanges, not just the NYSE, probably because the DTCC doesn’t see all FTDs and because they only see post CNS netting figures. FTRs, or failure(s) to receive, add another $27 Billion or so. Again, just for the NYSE.

The evidence is clear that the combined aggregate number and value of “securities entitlements” credited in investor accounts by broker-dealers far exceeds the number and value of issuer-issued securities by tens of billions of Dollars. Even on a simple “mark-to-market” basis.

Nothing directly limits the number of securities credited to investor accounts according to the total number of securities the issuer has issued. There is no direct control. However, when broker-dealers freely credit securities entitlements, they also freely and willingly take on the risk exposure of doing so and have thus in aggregate exposed the entire financial market in the U.S to this risk. However, no control means no risk control either.



Dividend Payment Obligations by Broker-Dealers

Despite the fact that broker-dealers issue “securities entitlements” in lieu of issuer-issued securities to investor accounts, broker-dealers are still required to treat persons for whom the accounts are maintained as entitled to exercise the same rights that compromise the issuer-issued securities. The Commission cites this obligation on the part of broker-dealers under UCC Sections 8-104 and 8-501 in the aforementioned Nanopierce Amicus Curiae Brief. Further, as per the 1978 Securities Exchange Act Release No. 15194 and NASD rules, broker-dealers are required to make prompt dividend, paid in-lieu and interest payments to investor accounts. It is clear then that even if broker-dealers credit investor accounts exclusively with “securities entitlements” that the broker-dealers in question are still obligated to promptly pay dividends in the form of PIL, if the underlying issuer of the security declares and pays a dividend.


Example

In a simplified example, if Strategy Investors agree to capitalize a company with 100 million Dollars on the condition that 90% of it be distributed to share holders within 60 days, as a return of capital via dividends, whereby the issuer has 20 million securities outstanding, but for which Strategy Investors can find and arrange to borrow 30 Million dividend rights – Strategy Investors would receive $135,000,000 in the form of dividends and PIL – $35 million more than was invested to capitalize the issuer, while the issuer retains $10,000,000.

Thus, brokers who credited “securities entitlements” to investors in excess of issuer-issued securities will be liable for paying $35 Million to investors as PIL. If brokers refuse, investors would certainly seek a civil suit to enforce their rights to receive dividends or PIL from their brokers.

If this is repeated often enough, at some point cash liquidity will be insufficient to cover the PIL payments that brokers are be liable for. This would certainly tumble the financial market into a crisis.

What’s worse is that broker-dealers have no way to close out the positions and remove their liability and risk exposure once it is established. The investors who have paid for the “securities entitlements” issued by the broker-dealers have the sole discretion to sell or hold on to these indefinitely. There is nothing broker-dealers can do to remove these “securities entitlements” from the market once they have been issued, except to by buying an equal number of issuer-issued securities themselves – if they can find any willing sellers.

The main reason “securities entitlements” are credited by brokers to investors is due to delivery failures.

Since almost all broker-dealers and derivative market makers engage in the practice of delivery failures or issuing “securities entitlements” to the market, it would only require a small number of securities involved in a Dividend Capture Strategy to impact and endanger just about every single equity and derivative broker-dealer and market maker and thus the financial market of the U.S.

This type of risk-free scheme is tailor-made for money launderers and foreign entities wishing to harm the U.S. financial markets. It is very easy, as shown in documented cases, where broker-dealers have sold more “securities entitlements” than the number outstanding issuer-issued securities – to just one single account. It boggles the mind to think how many “securities entitlements” an entity could acquire through hundreds of accounts. It is not difficult for one entity to control a larger number of “securities entitlements” and dividend rights in excess of what issuers are obligated to pay in divide
Re: Senator Grassley: We Are Not Amused By rtway1 on 12/13/2006 3:32 PM
Grassley and Specter share the same committment and courage as people of courage like Dr. Martin Luther King, Audie Murphy, Ronald Reagen and Patrick Byrne. One has to swell with pride when we see real American heroes again. It's been a long time. I hope Skilling will find his new home comfy, at least he will have a lot of time to to judge if it was worth it. I love karma.
Re: Senator Grassley: We Are Not Amused By CMElec on 12/13/2006 8:43 PM
Everytime I read this blog or review the Dec. 5th hearing of the SEC I laugh. It's a laugh of relief as I consider the effect that a few good men (that includes women) can have on righting a cauldron of wrongs. My God it's about time, Thank You.
Re: Senator Grassley: We Are Not Amused By InTheKnow on 12/13/2006 8:50 PM
Where is the outrage from the press. This scandal is bigger than Watergate and Clintongate.

A whole division of the Federal government is running a feifdom and every investor is a serf. What the hell is going on?
Re: Senator Grassley: We Are Not Amused By Sean on 12/13/2006 9:01 PM
Bob, and others. Do you think it was a coincidence that the 36billion in bonuses for Wall street execs were announced a month earlier than normal and 30% more than last year? Do you think that with all the known scandals going on, the SEC on trial ect. that they were be more cautious on how they throw this up in our faces. To me something seems strangely unsual here. I just want to know if my massive paranoia is setting in finally or what? Thanks in advance for your response.
Re: Senator Grassley: We Are Not Amused By rtway1 on 12/13/2006 9:20 PM
Tommy Toyz your example was great. I can't wait to get this ball rolling. You and Bobo deserve the badge of honor for all investors. Thank you.
Re: Senator Grassley: We Are Not Amused By They Took My Money on 12/14/2006 12:23 AM
Sean,

They are proud of the money they stole. I wouldn't be surprised if next year they start announcing their bonuses in the Summer. They can get a full 6 months press coverage before January giving them time to laugh louder and longer.
Re: Senator Grassley: We Are Not Amused By ZeroSumGame on 12/14/2006 1:36 AM
Money moves around from buyers to sellers with a bt of friction.

That friction is trading commissions - money takien right out of the system.

Mostly, what goes into the system from losers should go to winners, but the parasites that designed the system invented fail to deliver.

They constantly skim value from anyone stupid enough to play in their casino.

They made so much money, they hired people to run the SEC, Senate and Congress.
Re: Senator Grassley: We Are Not Amused By Missing Reports on 12/14/2006 2:17 AM
OVERVIEW
Missing Reports, 2005

The following is a list of reports not yet included in the database. Some have not been filed, while others have been filed but await data entry, standardizing and coding.

House:

Eni FH Faleomavaega

Luis V. Gutierrez (D-Ill)

Sheila Jackson Lee (D-Texas)

Debbie Wasserman Schultz (D-Fla)

John M. Spratt Jr. (D-SC)

Executive Branch*:

Nicholas Calio, Assistant to the President

Michael Chertoff, Secretary of Homeland Security

Christopher Cox, Chairman, Securities and Exchange Comm

Carlos Gutierrez, Secretary of Commerce

* Only select members of the executive branch are collected.

http://www.opensecrets.org/pfds/overview.asp?type=M
Re: Senator Grassley: We Are Not Amused By Iona Hogbin on 12/14/2006 9:23 AM
Where did all my money go? Oh, my...

Goldman Sachs’ Gain, Poor New Yorkers’ Loss
December 14th, 2006

Here is an editorial in the Daily News, entitled, “How To End Poverty”:

“The merry moneymakers at Goldman Sachs will end the year with $9.5 billion in profits, and they’ll divide $16 billion in bonuses - about $622,000 for each employee. We do not begrudge these conquerors of capitalism, but we note two points.

“First: Gov. Pataki and Mayor Bloomberg lavished Goldman with subsidies so it would build a headquarters near Ground Zero. The giveaway grows more obscene as Goldman rakes in ever more money.

“Second: Goldman’s numbers offer a vivid example of the growing gap between the rich and everyone else in America. In the city, 1.5 million people live below the poverty line of $16,000 a year for a single parent with two kids. Goldman’s bonus pool could raise each of their incomes by more than $10,000. Something is wrong when one firm’s bonus pool is big enough to end poverty in America’s largest city.”
Re: Senator Grassley: We Are Not Amused By Sledge Hammer on 12/14/2006 9:56 AM
Iona,

$622,000 apiece is not exactly correct. The money is not distributed evenly. Some on the top may get 20 million, some on the bottom may get a few thousand. You don't really think they will give that money away to the underlings.

This is part of an article in forbes. They came out with bs reasons so they don't have to give the little people money anymore.

Why? While workers may like receiving a little extra fat in their December paychecks, employers have increasingly found that bonuses don't accomplish much, especially when everybody gets the same thing. "You might think it would create some loyalty, but in fact it really didn't," says Jeffrey Bacher, a senior vice president with consulting firm Aon (nyse: AOC - news - people ).

Not only that, but bonus plans can cause workplace disharmony if they aren't administered well. If they give everyone the same amount, they will anger the high performers. If they give some people more than others, they'll upset the low performers. Some dissatisfied employees will always complain about favoritism--and they may be right. "Whenever you give out bonuses you are going to tick certain people off," says David Hofrichter, a managing director at Buck Consultants.

Occasionally, that can have disastrous results. One of Hofrichter's clients, a midsized manufacturing firm, promised its workers would receive bonuses based on the firm's financial results as well as individual performance. The company did well, but at the end of the year executives realized the bonus pool hadn't swelled as much as they expected. If they gave out performance-based awards, some people would have gotten nothing or close to it.

So they decided to give everyone the same thing. But the product developers had worked long hours, and felt they contributed the most to the company's success. "They felt that their contributions were totally ignored," Hofrichter says. "That makes you susceptible to the recruiter's call." In fact, many of those product developers left the firm--which then sought Hofrichter's help.

As a result, most companies are switching to performance-based compensation plans with measurable goals. These bonuses aren't always tied to the calendar year--workers might receive them on their employment anniversaries, or whenever the company's fiscal year ends. When companies manage these programs well, they communicate their expectations throughout the year, so no one is surprised by the result. "People know what to expect," says Crandall. "You can pretty much figure it out on the back of an envelope, usually."

Alas, incentive payouts don't make sense for everyone. For salespeople and, well, investment bankers, it's easy to measure a worker's performance based on how much revenue he has generated. The more cash they bring in, the more they take home. That's why Goldman Sachs employees will be splitting $16.5 billion in pay this year, a 40% increase over 2005.

And for everyone else? Enjoy your $24 ham. If you get one, that is.

http://www.forbes.com/home/compensation/2006/12/13/leadership-salary-bonus-lead-comp-cx_hc_1214bonus.html
Re: Senator Grassley: We Are Not Amused By midget on 12/14/2006 11:24 AM
http://www.mondaq.com/i_article.asp_Q_articleid_E_44952
Re: Senator Grassley: We Are Not Amused By crime pays well on 12/14/2006 10:01 PM
John Mack the biggest bonus for the head of a Wall Street firm, awarding him $40 million as the company headed for the best profit in its 71-year history.


http://www.bloomberg.com/apps/news?pid=20601087&sid=aWq6lxdhinjU&refer=home
Re: Senator Grassley: We Are Not Amused By InTheKnow on 12/15/2006 4:05 AM
Where are the investors yachts?
Re: Senator Grassley: We Are Not Amused By bbhindyou on 12/15/2006 6:54 AM
Why would the sec create the dtcc ?
Why did the dtcc allow the creation of such a large failue to deliver problem that they had to 'implement' S.H.O. ?
Who makes the most money off of these failures?
Who loses?
Money is power.
Someone needed to take power from the losers and give it to the winners.
What will they do with it?
Did they really need it or did they just want to take it because it was there?
The loss of power/money makes it easier to manipulate populations and creates need in the losers off power to do anything they can to regain it.
Is this the reason?
Re: Senator Grassley: We Are Not Amused By davidn on 12/15/2006 8:00 AM
The SEC didn't literally create the DTCC and technically, they don't have a monopoly.

The best I can tell, some fails live at the DTCC as the trades were handled through the continuous net settlement system. These disclosed figures are post netting.

Another $60+ billion lives at a dozen major custodians.

Then you have repurchase agreements which dwarf fails. Functionally, they act like a collateralized loan, but technically, they aren't subject to stock lending rules.

By the time a company shows up on SHO, they have a really big problem.
Re: Senator Grassley: We Are Not Amused By gregcable2002 on 12/15/2006 8:42 AM
our local news did a segment last night on the huge wall street bonuses and the spokesperson for one of the wall street firms spun it into how great our economy is doing.I guess if you get rich off selling bogus shares and collect commissions also on selling those shares your economy is great.I can barely afford gas for my car.eom
Re: Senator Grassley: We Are Not Amused By bbhindyou on 12/15/2006 8:46 AM
The stock borrow program originated with the dtcc correct?
The sec was a government custodian of share holder rights when it was a part of the formation process of the dtcc in the 80's correct?
The ability to naked short stocks in the amount it appears is a part of our current marketplace would not have been possible without the stock lending the dtcc program has facilitated.
I don't know how repurchase agreements have become the amount they have but I can say the dtcc and sec have some blame in the naked short selling problem.
The primary objective of the sec is not to facilitate trade .
The share holders stock values and rights no longer seem to be the prime objective at the sec.
I wonder what is?
Re: Senator Grassley: We Are Not Amused By gregcable2002 on 12/15/2006 9:45 AM
one more thought on my local news report,thats the BS getting fed to the public through local news stations,everything is great,wall street is making record amounts of money so the economy is doing good.DON"T WORRY,BE HAPPY,when I retire I hope the government parks the fema food trailer close to the tent city so I won't have to walk to far.
Re: Senator Grassley: We Are Not Amused By Sean on 12/15/2006 9:47 AM
Martha Stewart made 40K on her Imclone trading transaction, lied to the Feds and rec'd 6months in Jail. John Mack made 11.4 million on an insider trading deal was and is being Scrutinized by the Senate Judiciary Commitee for same an gets a 40 million dollar bonus for his efforts. Is it me or does something stink to high heaven here?
P.S. he also lied under oath through the SEC investigation.
Re: Senator Grassley: We Are Not Amused By InTheKnow on 12/15/2006 12:24 PM
I want to remind everyone that the holidays are fast approaching and we should support those that have championed our cause for all these years.

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