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Grandfather Clause Dead - And.....Now What?

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 8/7/2007 11:03 AM

UPDATE: Commissioner Raul Campos abruptly resigned this morning, following the unexpected "retirement" of Stachnick on Friday. So that is two top players at the SEC gone in a few days. Anyone want to start a dead pool, or maybe create a Perez Hilton style blog, to track the crooked, compromised celebrity cheats at the SEC? Not that either of these fine, upstanding public servants fall into that category - but you know, any OTHER folks who might be? Too frigging funny, and yet there have been no arrests or prosecutions, in spite of the unmistakable accusations and ample evidence of criminal obstruction of justice, dereliction of duty, etc etc categorized in the Senate report. I guess the law is for the little folks, not the impervious mighty in Washington.

UPDATE TO THE UPDATE: Commissioner Nazareth, AKA "let them eat cake" wife of one of the NY Fed governors (or ex, I forget whether he still actively is part of the private cartel of banks that own the monetary system) is also now said to be leaving by year end. She is one of the largest enemies of investors everywhere, having never seen a rule that would rein in Wall Street that she didn't hate. Bye bye, Naz, rats squeaking as they jump ship. Maybe a special prosecutor will be interested in who decided the grandfather clause was a good idea, as well as other "get out of jail free" Wall Street goodies? I understand Rocker's criminal defense attorney may be available. Just a tip. Not that I ever expect anyone to actually do anything about the looting of the US financial system, as the NY banking syndicate that controls it would never allow anyone with "juice" to ever get close to having to atone for their actions...just consider the Mack attack, or lack...sorry for the gratuitous alliteration....

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

This will be short and sweet. The SEC finally threw out the Grandfather exemption, allowing a further 35 day (trading days?) stall before one has to cover. You can read the entire thing here.

The problem with all this is pretty simple, and can be summarized in two words:

Or What?

As in, if you decide not to follow the SEC's new rule, what is the penalty, and where are the teeth? Oh. Wait. There aren't any. The rule could just as easily say, "If you naked short sell, and then don't deliver within some arbitrary period of time, you really, really shouldn't do that anymore, and if you are holding a bunch of grandfathered fails, then, er, you should try to cover them, if convenient, and profitable."

What is absent are any meaningful penalties. Not even something like, "You will be swatted with a Nerf (tm) bat and looked at disapprovingly for every billion you have naked shorted..."

Also absent is any action on the options market maker exemption. That will be, uh, well, re-considered. Because the idea that equity investors shouldn't subsidize the for-profit business activity of options market speculators is so passe and old-fashioned. We just don't have enough info on that. Need to collect more commentary, and deep thinking. As in, stalled as long as possible. Just like this. And then finally, if and when anything happens, we can expect more of what we just saw exposed in the report on Pequot - any large or influential participant found violating the rules, will be, uh, well, spoken to in a stern tone of voice, and put on notice that their behavior is, uh, sort of bad, maybe. Or not. Perhaps they will just be allowed to go public just before blowing up, or allowed to head one of the largest banks in the country, or maybe nominated to the highest offices of the land.

So there's your, "Or What?"

Anyone with a dime in the markets at this point is an idiot.

Now get your GPS chip-equipped passport (for your protection, of course), wait for the elimination of the remainder of the Constitution and Bill of Rights (also for your protection, of course), and keep putting your savings on the line, while the croupier hands out loaded die and rakes what's left of your rapidly devaluing cash over to the Wall Street side of the table.

Any questions? 
Copyright ©2007 Bob O'Brien
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Comments (37)
Re: Grandfather Clause Dead - And.....Now What? By browntrout on 8/7/2007 8:40 PM
I think the SEC will enforce the rules like they did with Pequot breaking all kinds of laws and ignored. Proprietary trading programs and full-time crooks being protected again?

How about the thousands of companies that still trade that are not allowed on the SHO list? The SEC will not force any buy-ins on those will they? In the mean time the industry is just making up the REPORTED short positions on those stocks and no regulator cares. The only thing the SEC does is to halt trading in those securities to protect the crooks and their ILLEGAL tax-free gains.
Re: Grandfather Clause Dead - And.....Now What? By rtway on 8/7/2007 8:42 PM
After doing my due dilligence as to evaluating our options as to who might be our next leader or figurehead they call "President" your words ring out quite clear and make perfect sense. Our constitution for all practical purposes is as worthless as the thousands of amendments that have watered it down to a boy scout manual. Our enemies will be able to attack us at will with an apology from us if we take some action against them. Our populace has become brain dead in the world of financial reality and our assetts will soon be owned by the Chinese and Arabs. Soon the world will be buying debt instruments of other countries due to devalued dollar and our deficit shows no promise of shrinking. Knowing all this we can't find any qualified people to get us out of this mess. In fact we can't even find anyone with a solution to anything except to cast dispersions at what ever opponent they might have. This country is in deep poop and those who put us there don't realize that they go down with the ship like it or not.
Re: Grandfather Clause Dead - And.....Now What? By bobo on 8/9/2007 8:15 PM
It's not so much that I am depressed or soured by all this. It is that it is all so avoidable, and yet all so predictable. The problem with the market as currently operated is twofold - first, one is led to believe that fundamentals, and analysis, enable one to pick a winning strategy, when in point of fact manipulation renders all such ideas moot. If the bad guys decide your winner will lose 90% of its value, it will. That simple. Have yet to see it not happen, and it is increasingly blatant, just as insider trading ahead of anything of significance is pervasive now. Second, one is encouraged to become indebted - via margin, or in non-financial markets, via debt instruments like mortgages and credit facilities. This ensures indentured servitude for the duration, as most work for the bank and the car loan company, not for themselves. The market is a mechanism to remove any wealth remaining after all interest on debt is paid, and most profit is removed via taxes at every level, and the invisible tax of inflation has done its work. In order to suck the last of a lifetime's savings out of the nation, it is absolutely necessary that more rubes put their money into the market, regardless of which flawed paradigm they are following - that heavily shorted stocks won't simply continue to have the counterfeit share printing press run until they are dead, that the SEC will stop obvious criminal activity and that these victims will have their day in the sun, that there is any linkage between performance and price, etc. etc. Again, the system requires one to volunteer to be fleeced - it holds a gun to your head with taxes, however it needs you to want to spin the wheel to lose whatever you managed to cobble together as savings.

That's why you'll always hear stories about the winners. Just as casinos put up billboards of their lucky winning patrons, so too does Wall Street hawk the vision of the retiree basking in the warm glow of market prosperity, or the savvy trader making bank. The machine requires you to have greed, as only through greed can it take your sh-t away from you. Greed for things you haven't saved for gets you debt. Greed for money for nothing gets you into the market. Greed for feeling superior to others through possessions drives the pressure cooker consumer society, where you never have enough to be satisfied, regardless of what you have. It is necessary if the machine is to sell you things, preferably through debt.

So simple. The nation sold out by Congress due to greed. Greed for unlimited spending capacity, greed for ever more power, greed to control.

Greed is good. Spoken by the sociopath character in Wall Street. Too true.

It's hard to convince couples who live in a country where you can buy food 24/7 and have virtually anything consumer oriented you can think of, to work 10 hours a day, for most of their adult life, in order to keep Mercedes and Citi and Rolex in business. You have to keep them feeling inadequate, and unhappy with their state, always requiring more of whatever you are selling to feel good for an instant. Without debt, the bankers have no hold. They need you to want to live beyond your means. So do most manufacturers. Most salesmen. Most everyone needs you to want more than you have earned, and to discard delayed gratification in favor of everything right now. There is simply no other way to make the system work as it does. And by creating an artificial reality where there is no apparent linkage between fiscal recklessness and disaster, the nation is steered over the cliff, even as it debates which crook will be the least toxic for the next 4 years. Folks, they are all the same. Every one. Some cloak their lie in God, some in liberty, some in moral righteousness, some in liberal rhetoric - any and all good, just so long as you don't focus on the real issue, which is the systematic degredation of the quality of life for most Americans - longer hours, two earners required to support the same lifestyle as a single earner could 30 years ago, rampant crime, runaway illiteracy, a Constitution and Bill of Rights in tatters, straw man boogieman enemies conveniently appearing on cue, hardly any more believable than Niceraguan "freedom fighters...."

Once you get it, it is all so clear and so simple, that one wonders how the rest don't get it. The answer is, you got to keep them occupied, or scared, or fighting amongst themselves, or fat and happy, or consumed with material possessions, or ideological dogma. Anything but how the power structure is taking away freedom, and money, at a clip not seen for a long, long time.

No wonder the Chinese aren't worried. Probably laughing their asses off. Hope they do a better job with all this than we did. Unlikely, as they are human too.

Sigh.
Re: Grandfather Clause Dead - And.....Now What? By anthony kalantzis on 8/10/2007 7:28 AM
bobo .. why would the SEC suddenly change the uptick rule

The Uptick rule is a former financial regulations rule, relating to the trading of securities in the United States. The rule was eliminated by the SEC, effective July 6, 2007.

it was implemented in 1934

Could this be a way of controlliing some short squeezes from getting out of hand ??
uptick rule By clearthinker on 8/11/2007 11:34 PM
co-incidence that the uptick rule was changed in the midst of a credit crunch?

Call me cynical...
Re: Grandfather Clause Dead - And.....Now What? By bobo on 8/10/2007 7:44 AM
Anthony: Well, let's see. We have Congress basically saying that the SEC is a running dog lackey of the Wall Street oligarchy. Whose interests do you think are served by that agency's removal of a critical rule that came out of the last market crash, and depression, which was the largest social engineering and wealth redistribution scheme the nation has ever seen? Who benefits by enabling massive bear raids with no mechanism to halt them?

Again, anyone in the market is an idiot. Truly. They have just about engaged in skywriting to telegraph their intentions.
Re: Grandfather Clause Dead - And.....Now What? By clearthinker on 8/11/2007 11:35 PM
A must read from Patrick Byrne

http://forums.auctions.overstock.com/viewtopic.php?t=17841

Dear Reader,

Two years ago I became convinced we were standing at the edge of an economic crisis akin to the 1929 market collapse, due primarily to the SEC having become a "captured regulator" which turned a blind eye to the fraud it was created to suppress (but only if that fraud were committed by the powerful financial interests that had bought it off). The proximate cause of systemic failure, I argued, was that our financial system has been building up a latent derivative risk among a vast network of hedge funds and the prime brokers who serve them (specifically, in the form of unsettled trades in our settlement system). But the conditions for collapse were created, I argued, by an indolent SEC.

In an attempt to force action before there was a systemic crisis, I tried to open the eyes of the financial media to what was about to occur, and drew nothing but vilification that was, in the words of one professional media observer, "like nothing we've seen in America since the 19th century" (they uniformly refused to report on the substance of my claims, instead stretching, often quite ridiculously, to portray it all as just a CEO ticked about his own stock price). I organized a fairly extensive effort to bring relevant information to those Senators who provide political oversight to the SEC, but was stymied in these efforts by Senator Richard Shelby of Alabama, an utterly despicable politician known in DC for his penchant for milking maximal dollars from all sides of every issue, then voting for whatever serves the interests of Wall Street (even at the obvious and profound expense of the citizenry). In a somewhat desperate measure, I encouraged legislation at the state level: reformist legislation passed the Utah legislature almost unanimously, but was then blocked by Wall Street through a series of threats, legal action, and (I am informed) cash dispensed to some state legislators who obediently flip-flopped.

Through these efforts the SEC was not only 0 help, they actually helped those who I hoped to expose before a systemic meltdown became impossible to prevent. I pushed hard on the SEC but drew no response other than becoming the target of a federal investigation. SEC Commission Annette Nazareth, who has a vested interest (through marriage) in continuing the cover-up, was quoted as being dismissive of my claims (though they were already supported by hard, uncontestable data, much of it in published economic research). SEC Commission Campos also personally opposed me, telling an associate of mine in a public forum, “Imperfect regulation does not justify vigilantism by Patrick Byrne or Overstock.com.” Actually, as we will see, it does, when the form of imperfection is corruption and the stakes are as high as they are proving to be.

One man came forward to support my claims: former SEC investigator Gary Aguirre. Recognizing that the Senate’s oversight of the SEC was fundamentally broken, he went to the Senate Judiciary Committee, sending letters that supported my view of rampant fraud within Wall Street protected by a co-opted regulator (and, it turns out, delivering boxes of evidence in support of these contentions). Naturally, the same journalists who had obediently clogged, cluttered, distorted and dismissed my claims, also went to work on Aguirre. The New York Times in particular published an article that was so derogatory, inaccurate, and insulting about Mr. Aguirre, that when the smoke clears it will stand for ages as an example of yellow journalism at its worst, and the potential costs it imposes on society.

However, in the Senate Judiciary Committee the irresistible forces of fraud and money met the immovable objects of Senators Grassley and Specter. They held hearings and dug into Aguirre’s claims. In an unbelievable display of hubris, the SEC had the gall to subpoena the Senate Judiciary Committee, which told them to get stuffed: Senator Grassley’s letters (since made public) lecturing the SEC on the meaning of the US Constitution's provision for congressional oversight of activities within the executive branch, are remarkable both in content and in the simple fact of their necessity. Senators Grassley (from Iowa) and Specter (a former prosecutor) refused to be bullied, and instigated an investigation by the Government Accounting Office.

Seven months ago the wig began to slip. The GAO issued a preliminary report that confirmed “the whiff of a cover-up,” as Senator Specter summarized it in January. Last Friday, the Senate Judiciary Committee and General Accounting Office released a report thoroughly vindicating Gary Aguirre (and in the process, my own long-standing criticisms of the SEC). It makes it clear that those on Wall Street with “juice” (as one higher-up called it while killing an investigtion) are considered untouchable by our regulators, who turn out to have been negotiating for $1 million jobs with the same people for whom they are derailing investigations. The report excoriates the SEC’s Office of the Inspector General (OIG) as having taken part in the corruption and cover-up.

This week, SEC Inspector General Walter Stachnik (who has held that position since the SEC OIG was created in 1989), announced his retirement. Commissioner Roel Campos followed suit and, according to today’s newspapers, Commission Annette Nazareth is leaving soon as well.

When the Securities and Exchange Commission was created in 1934, it was given the daunting mandate of restoring investor confidence in what was left of America’s battered capital markets. When a corrupt Sheriff turns a blind eye to thuggery from his patrons, self defense is justified but not obligatory: However, when one sees bullies mugging strangers before the eyes of a unconcerned and indolent Sheriff, a civilized person takes it as his duty to find the bullies and get up in their grills. The corrupt sheriff will naturally denounce as “vigilantism” this decision by others to do that job for which he is paid, but at which he is so abjectly failing.

Our global financial system is teetering on precisely the kind of systemic event of which I have been warning, brought about by precisely the kind of deep, latent derivative risk we were told could not exist, but which came to exist under the see-no-evil mentality of Wall Street’s cronies at the SEC and within the financial media. Sadly, I predict that in the weeks and months to come we’ll learn that Aguirre was just the footnote to what has been covered up. And, regrettably, our nation will suffer deeply for it.

Most respectfully,

Patrick M. Byrne

PS Regarding the federal investigtion: I have no beef with it, actually. Everything I have done has always been legal and ethical, but I do recognize that it has been irregular and, coloring outside the lines as far as I have, I do not begrudge the federal attention I ahve received. In addition, I have no desire to express disrespect for, or hurt the feelings of, those hundreds of honest, hard-working government employees who come to work each day wanting to do a good job regulating the capital market. It is simply the case that I think a fair share of their bosses, the brass at the SEC, have been corrupted in one way or another. The departure of the OIG, and especially Annette Nazareth, is a first step in fixing this most vital of regulatory bodies.
Re: Grandfather Clause Dead - And.....Now What? By kevin on 8/11/2007 11:33 PM
Top honchos at ... Bear Stearns.

Between them, the four quietly cashed out more than $57 million worth of company stock before the crisis hit.

http://www.thestreet.com/s/bear-stearns-fat-cats-cashed-out-at-the-top/funds/followmoney/10372963.html
Re: Grandfather Clause Dead - And.....Now What? By kevin on 8/13/2007 8:51 AM
Brokerages hiding sub prime losses?

http://biz.yahoo.com/rb/070810/sec_banks_inquiry.html?.v=6

The way it works is you cook the books, hide naked shorts, fails to deliver, etc. - whatever you have to do to make your own stock options worth something - then cash out and leave the investors holding the bag.

The guys running the prime brokerages don't care because they're not personally liable.
Re: Grandfather Clause Dead - And.....Now What? By kevin on 8/13/2007 8:53 AM
The Dow Jones is now "centrally planned" by Wallstreet and the plunge protection team.

http://www.marketoracle.co.uk/Article1771.html

What happened to the unbiased auction market and the hidden hand of market forces? Now it is central control for Wallstreet and their friends.

Central banks are printing hundreds of billions to bail out the purchasers of CDO's, but they had no problem letting retail investors in NFI, etc. go down the tubes.
Re: Grandfather Clause Dead - And.....Now What? By bill on 8/13/2007 8:54 AM
the only presidential candidate with courage to speak the truth:

http://www.youtube.com/watch?v=x_vPUqPTims
Re: Grandfather Clause Dead - And.....Now What? By InTheKnow on 8/13/2007 8:55 AM
I'm still waiting for Grandfather to be be buried. No burial, no rejoicing!

So far a few of the rats have abandoned ship... it's time we chased them all out before the whole ship sinks thanks to them!
*** WTFF? *** By InTheKnow on 8/13/2007 8:56 AM
What has this world come to?

You have the Hedge Funds running the SEC and Cramer running the Federal Reserve and all the miscreants are running the markets without an uptick rule in site.

Grandfather's corpse is rotting in bed with the stench permeatting the markets. When the hell are they going to bury him?

Like Bobo says... it all stinks!
Re: Grandfather Clause Dead - And.....Now What? By wiki on 8/14/2007 3:41 PM
Wikipedia watch tool:

http://blog.wired.com/27bstroke6/wikiwatch/

Maybe it can help identify lil gw, DTCC, etc. editors.
Re: Grandfather Clause Dead - And.....Now What? By ginger on 8/14/2007 3:57 PM
now what ???
Re: Grandfather Clause Dead - And.....Now What? By davidn on 8/7/2007 8:46 PM
One of my pet peeves is that tomorrow (if they cover it), the financial press will say "only 1% of trades fail", using this bs statistic from the new rule:

"5 According to the National Securities Clearing Corporation (“NSCC”), 99% (by dollar value) of all trades settle on time. Thus, on an average day, approximately 1% (by dollar value) of all trades, including equity, debt, and municipal securities fail to settle. The vast majority of these fails are closed out within five days after T+3."

What possible purpose could they have to include debt (which hardly ever fails) with equity which is much smaller in dollar value? What possible reason could they have for expressing it as a percentage of debt and equity dollar value instead of as a percentage of equity trades?

The only reasonable answer is that the trillions of dollars in government debt dwarfs the equity market in dollar volume and including them obscures the immense size of the problem even after all the netting. It creates a bullshit stat the papers can run with.

"Of the record $174.9 trillion in equity securities
transactions processed in 2006, we eliminated or netted down
$171.1 trillion (98%), so only $3.8 trillion required an exchange
of securities and funds."

The total securities processed (from page 7) is $174.9 trillion
Debt is $864+76 trillion = $940 trillion

Isn't it strange to dump $940 trillion in unrelated assets into a pool of $174.9 trillion under interest before creating the stat, then only expressing it post netting?

"The value of these transactions also declined slightly to $864 trillion in 2006,
from $874 trillion previously. Netting reduced the number of
government securities transactions requiring settlement by 76%,
to $206.9 trillion from $864 trillion.
Mortgage-backed securities volume grew 3%, to 1.7 million
transactions in 2006, but the value of these trades remained
relatively flat at $76 trillion."

http://www.dtcc.com/downloads/annuals/2006/2006_report.pdf
Re: Grandfather Clause Dead - And.....Now What? By davidn on 8/7/2007 8:47 PM
Note 28, page 9 shows they KNOW that debt doesn't fail, yet they include it in the 1% statistic.

"Such activities of these entities include creating and redeeming Exchange Traded Funds, trading in municipal securities, and using NSCC’s Envelope Settlement Service or Inter-city Envelope Settlement Service. These activities rarely lead to fails to deliver and, if fails to deliver do occur, they are small in number and are usually closed out within a day. Thus, such fails to deliver would not trigger the close-out provisions of Regulation SHO."
Minimum 12.5% fail each day By davidn on 8/8/2007 6:50 AM
Dec. 31, which we assume was a typical day had $59.9 billion in post netting trades

The fail to receive was: $2,643,433,000
The fail to deliver was: $3,749,160,000
Daisy chained stock borrows was: $1,105,727,000
Total minimum post net fails was: $7.5 billion

If we take the post net fails of $7.5 billion and divide by the post net daily volume of $59.9 billion, then at least 12.5% of the dollar value of a daily trade fails on a rolling basis. Given that the fails are marked to market at likely artificial prices and this doesn't include outside the system fails (foreign depositories, x-clearing deals between brokerages, etc.), this problem is WAY bigger than they try to paint it.

I wonder if they use netted numbers at the clearing brokerages to determine if it meets .5% of the outstanding. That little loophole could explain why so few companies are listed as REG SHO.

According to page 66

http://www.dtcc.com/downloads/annuals/2006/2006_report.pdf

NSCC’s CNS system interposes NSCC between participants in
securities clearance and settlement. CNS transactions are generally
guaranteed as of the later of midnight of T+1 or midnight of the day
they are reported to the membership as compared/recorded. Since all
trades submitted to NSCC are matched, the failure of participants to
deliver securities to NSCC on settlement date, and the corresponding
failure of NSCC to redeliver the securities, results in open positions.
Open positions are marked-to-market daily. Such marks are debited or
credited to the responsible participants through the settlement process.
At the close of business on December 31, 2006, open positions due to
NSCC aggregated $3,749,160,000 ($3,423,028,000 at December 31,
2005). When a participant does not deliver securities due to NSCC
on the settlement date, NSCC, in accordance with its SEC-approved
rules, utilizes the Stock Borrow Program (SBP) to complete its delivery
obligations to the extent that participants have made available for loan
to the system shares of that issue. As of December 31, 2006, NSCC
completed delivery of $1,105,727,000 in securities through the SBP
($977,702,000 at December 31, 2005), leaving $2,643,433,000 in
open delivery obligations due to participants ($2,445,326,000 at
December 31, 2005). NSCC's borrowing from the SBP does not
relieve a participant's obligation to deliver the securities to NSCC.
In addition, the settlement of trades is generally scheduled to occur
3 days after the trade date. As of December 31, 2006, trades totaling
$59.9 billion were scheduled to settle over the next three settlement
days.
Re: Grandfather Clause Dead - And.....Now What? By bobo on 8/7/2007 9:42 PM
Davidn: The reason that they are misleading in their use of statistics is because they are liars, and their job is to convince you, via trickery and sleight of hand, that up is actually down, that a huge problem is actually a small problem, and that they aren't ripping you off. The reason is that they need you to keep putting your money into the market, or they can't steal your money anymore. As we see in the Pequot investigation, the SEC deliberately aids and abets these criminals in ripping off less fortunate investors and participants, by running interference for them and ensuring that they never face the music. No iffs, ands or buts about it - it is all there in black and white. And yet even so, Congress can't bring itself to admit that it's time to shut the robbery factory down and get new, more honest cops in. Nobody at the SEC is in cuffs, having to explain how they conspired in a cover-up of criminal activity - stock manipulation on a systematic basis, likely with classic racketeering overtones. Instead, they make it sound like they are VERRRRRY disappointed in blah blah blah, but nothing changes. No bad guys are arrested. No money is returned to ripped off investors. Nothing is different or improved.

The SEC is the enemy, not a friendly. Just as a crooked cop isn't a friendly. Pretending that crooked cops are actually straight serves nobody well, but the crooks.

And that's just the way it is.
Re: Grandfather Clause Dead - And.....Now What? By clearthinker on 8/8/2007 6:37 AM
Little reason to think this system will change....too few people like Liz Moyers to cover the stories...too few Patrick Byrnes, and we need a few who run profitable companies...and too many regulators in the pockets of Wall Street...Those of us who are fighting this battle are right...and history will no doubt show that the refusal of the media and regulators to deal with this was irresponsible, immoral and in many cases criminal...but the system protects its own, and while there may be some isolated victories, the system will never permit the widespread problem to be resolved to the benefit of shareholders....

Grandfather clause took 3 years to get revoked and we haven't even begun to deal with the ex-clearing fails....Cramer's on TV screaming at Bernake to lower rates to protect who? His buddies at the prime brokers....not you and me....

Well done, America....
Re: Grandfather Clause Dead - And.....Now What? By old duffer on 8/8/2007 7:17 AM
What we have is evil institutionalized and no help in sight on earth.eom
Re: Grandfather Clause Dead - And.....Now What? By bobo on 8/8/2007 6:56 AM
Former SEC Commissioner Arthur Levitt was just on Bloomberg, arguing that the SEC report was unfair, and that the SEC is honest and good and true, and vigorously prosecutes injustice regardless of from whence it emanates....

Of course, he didn't mention exhibit after exhibit of documented stock manipulation by Pequot. Or tell us what major prime broker has EVER taken a meaningful hit for misbehavior, or explain why the SEC waited until after the statute of limitations had run out, or limited the scope of the investigation to only two of the 18 examples of reported crookery, etc. etc.

The machine is busy mounting a campaign to convince anyone still playing that this is all political garbage from Specter and Grassley, and simply ignores all data showing that to be a lie.

The way you know the system is lying is that its lips are moving.
Re: Grandfather Clause Dead - And.....Now What? By Jeremiah 9:24 on 8/8/2007 10:46 AM

It seems that one of the loopholes created here to protect the whores is in R203 where the Rule says that grandfathered fails in "threshold securities" are to be covered in 35 days; thus for any security that is not a threshold security, no cover is necessary even for old grandfathered fails from prior to Jan. 3, 2005. Thus the SEC seems to be still giving a pass on all those manipulative trades done prior to the implementation of Reg. SHO. Many OTC and Pink Sheets (and perhaps others, who knows?) don't get listed even though they have huge old naked shorts; those companies continue to get screwed.

Am I missing something?
Re: Grandfather Clause Dead - And.....Now What? By bobo on 8/8/2007 10:47 AM
Jeremiah:

No, I think you pretty much get it.
Re: Grandfather Clause Dead - And.....Now What? By davidn on 8/8/2007 1:17 PM
The DTCC brags that they net 98% of trades and only have to do a transfer of cash or shares 2% of the time. Their customers are not brokerages. The DTCC's customers are clearing brokerages.

Well over 90% of US brokerages push their back office functions to a clearing brokerage.

With all the netting, the real threshold isn't .5%. It is whatever multiple needs to be applied to .5% to take account of the netting.

Also, the largest clearing brokerages have dozens of accounts at the DTCC. I believe the rule reads that they need to exceed .5% at one of their accounts, not in aggregate.

I believe a company has to have a substantial portion of their stock fail (maybe 20%?) before they reach .5% at any one clearing brokerage.

It's all smoke and mirrors. Why can't every brokerage have their ownership registered directly at the DTC or preferably at the company transfer agent?

The answer is the obfuscation serves the interests of the criminals.
Re: Grandfather Clause Dead - And.....Now What? By bill on 8/8/2007 9:06 PM
We would have such a wonderful, prosperous country if not for the evil perpetrated on the American people by the Federal Reserve, Wall Street and Political liars. So sad....Maybe the citizens of We the People will get off their lazy asses and wake the F up....maybe...someday.
Re: Grandfather Clause Dead - And.....Now What? By makeuwonder on 8/8/2007 9:08 PM
Couldn't we force a cover if people insisted on getting their certificates in paper? I know they are naked shorting the mutual fund stocks too so I'm not sure how we could figure out how to eliminate them from using those shares. Maybe someone has an idea for this. I know most places charge you $40 to get the certificates. They will also tell you it's not going to matter. If you still insist on getting them they will start to pour lots of reasons for you to not get them and most of the time can talk you out of doing it. Especially when they start talking about how hard they will be to trade back and the money you will spend. If you hold a substantial position in the stock it will take them weeks to get your shares to you. I've been through this a few times. Try it. See if what I say isn't true especially about your broker talking you out of it. That's the last thing they want to cough up are physical shares. But in the long run if they ever do come out and force them to cover I suspect it will be impossible. While they say it's only a small percent what's been going on is they are using the same shares back and forth so they don't show up on the SHO list but only the tally sheet that lists how many shares of each security bought is made available to us we'll never know. It's all in the back room at the EXCLEARINGHOUSE DEPARTMENT. And they won't disclose the numbers. I wrote the IRS after reading they got a new Director and he welcomes people to turn people in who are committing tax fraud. I used their form and turned in all the Brokerages and reported these brokerages not paying taxes on all the revenues they make after they shorted for most likely some corporate giant these little innovative company's. That may have had the new drug to kill off cancer. Which we'll never see.

Think about it really. How else are they going to break our dollar. They have to get rid of these little businesses. They are spending us into whirl with war expenses, they are creating a class of lazy people giving them free housing not to work. They've let our country fill up with people who do the jobs they got those people who are collecting your tax dollars sitting home to keep their eligibilty going doing them. Then they work for cash and don't pay any taxes and to top it off are eligible for the same housing those who aren't working for and staying home to stay eligible for are getting. Because they report 6 kids they get a nice big house. On your money. What did all this do for the housing market?? It's all like domino's. Can you see it all run together?

So my thoughts were if they were to ever get people in our Congress and other agencies to come forward and clean it up, they may not be able to cover. Maybe the ones holding paper certificates will be the only ones with real shares. Maybe they will have to refund your money paid for stocks. Or if it's bad enough pay a percent after what's left from their claiming bankruptcy. All this ties together somehow and I really don't get the big picture. I keep trying to but it's beyond my capacity. I suspect this is much of what is going on and while it sounds nuts, it's not a joke.

God bless us all and pray we get his help because we sure need it now. Way to many poor people and good people will be hurt by a few if someone doesn't start showing integrity. It all start with your self.
Re: Grandfather Clause Dead - And.....Now What? By rtway on 8/8/2007 9:09 PM
Both of these political parties are looking for a slam dunk to knock out the other guy before o8 rolls around. Look at how much time the Dems spent on the Scooter Libby circus when they could have put Bush and company away with the Pequot thing or many, many others. Ask Donaldson he got out when the getting was good.The point I am making is that there are so many connected names in this scheme that no one party can captilalize on this scandall without committing professional and financial suicide, therefore Joe six pack again has no one looking out for his best interest. Our only hope is that a unknown or a third party Zorro shows up before 08 complete with a media army to back him or her out. I don't see either things happening but 08 is a long way off. A good eye opening book before this election could really help. (I hope you hear me) so that the populace could get a 101 primer on the market and how it effects them, them meaning everybody that pays taxes. I have digressed. My point is that any current politician or reporter can not use this info without incriminating themselves or friends. Pretty shitty situation.
Re: Grandfather Clause Dead - And.....Now What? By searrows on 8/9/2007 9:15 AM
Makesuwonder you should do what i did in order to get my paper certificates. Greed makes the world go round.... Contact a full service broker and tell him you want to dump your current broker be it a discount or full service doop, there is one caveat though, and that is you want to get you certificates. When he asks why tell him you don't trust so and so no mo because of whatever reason. If he says he will get the shares for you make him prove it by calling the transfer agent while you are there for the ones most heavily shorted. They said it would take a month but I did get them. I had called my old broker months before and they told me about the expense and the difficulty to get them out of the system, and back in again and how the trend was away from paper etc...by they Gosh you know who called me three times asking me why I was leaving them...and offering me free trades and money to borrow my shares etc....the last time they called they had two people on the line with me, probably the guy's boss. I eventualy got them and I took my shares home and trade less with what I left in the new account and it did cost 50 or 60, but at least I have my shares even though they have been watered down to the power of two. The markets are terribly compromised why play eh? Meanwhile they are encouraging everyone to stay put while the banks and hedge funds work furiously to sell what they can and figure away to stick everyone who works for a living with the bag and right now I would have to put my money on them to do it and then blame us for being dummies....Maybe I lucked out because neither of these two companies was stillon the SHO list at the time.
Re: Grandfather Clause Dead - And.....Now What? By old duffer on 8/9/2007 9:17 AM
Dem's can't use this aganist Repub's and Repub's can't use this against Dem's cause they are all in bed with the same Devil Whores. A demonic threesome!
Re: Grandfather Clause Dead - And.....Now What? By SEC leaving in droves on 8/9/2007 9:18 AM
interesting to see the departures following the scathing report on the SEC's handling of the Aguirre case....would be better to see such a report on the SEC's handling of naked shorting and downward volatility..., but I suspect that once Patrick's cases move full steam ahead, there will be another big surge of "controversy" over how regulators have been compromised.....
Re: Grandfather Clause Dead - And.....Now What? By kevin on 8/9/2007 7:39 PM
"Both of these political parties are looking for a slam dunk to knock out the other guy"

If Hillory gets in, then the Clintons and the Bush's will have controlled the whitehouse for 28 years.

Both John Kerry and George Bush were members of Skull and Bones, which only adds a dozen members per year. How can such a small club, with ties to the international banks, run candidates for both democrats and republicans?

The two parties are two sides of the same banking cartel, kind of like a good cop / bad cop team.

Look at Shelby, he was both democrat and republican - both parties accept political contributions to serve their masters.

Wallstreet controls the media and both political parties. Change will only come when people wake the f' up by understanding what they read on the internet and deciding they don't want to let a small club of parasitic criminals rip them off.
Re: Grandfather Clause Dead - And.....Now What? By hugh betcha on 8/9/2007 7:40 PM
mortgage crisis? well, maybe. but the way i see it and my (manipulated) stocks too, is that this is phase one of the cleanup of naked shorting. bobo, you have been great in all this, but also too close to it, thus your doom and gloom attitude. i hope you and (heck) everyone is long highly shorted / manipulated stocks during this process. they're going to shake this market a whole lot more but i bet cronic SHO stocks are all up up up also green stocks... opportunity knocks me thinks... good luck and keep up the super stuff you are doing, i for one wouldn't be here for this opp without your info.

i'll bet we hear zip from the media on the real reason for this market shakeup until well after it's over. proof that i'm onto something will come in the form of much higher prices for targeted stocks over the next ??? (few years??? i don't know how to think about how long it may take to get enough cleaned up to start making it right.

hugh
Re: Grandfather Clause Dead - And.....Now What? By kevin on 8/9/2007 7:42 PM
http://www.cfoss.com/wall.html

It’s harvest time again and the fleecing of the stock market sheep has once again been astonishingly successful. What a harvest, some say the biggest ever, with Billions bilked from the bleating herd of naive investors and transferred to the coffers of market insiders. This bilking, also known as a market correction takes place whenever the movers and shakers decide to prick the proverbial market bubble. As of late, ( March 19 - 2001 ) stock markets have been plummeting, losing a huge percentage of their value. To many novices this gigantic loss appears to have just evaporated into thin air. But this belief I’m afraid is far from the truth. The truth is, no money ever just disappears from the markets. What transpires instead is money simply changes hands.

*** Quoting Peter Canelo, the US investment strategist at Morgan Stanley Dean- Witter in New York. "One must realize that the market may create wealth but it doesn’t create new money. The money is always there, only the pockets change." he says "For every buyer there’s a seller, for every borrower there’s a lender. What Wall Street giveth, Wall Street taketh away."

Some of the most influential on Wall Street under the inspired guidance of the US Federal Reserve are the beneficiaries of these manipulated markets, forearmed with insider knowledge this Cabal has literally made a killing. Through worldwide manipulation of gold prices, currency and derivative trading, a large portion of the wealth of the western world has now ended up in the pockets of this Wall Street Gang. Suffice to say, with the levers of power under their control and with a myriad of schemes and well organized strategies, they have succeeded even beyond their wildest dreams.
Re: Grandfather Clause Dead - And.....Now What? By kevin on 8/9/2007 7:43 PM
It may sound trite, but “inflation is theft”. Unfortunately, inflation is also part of the ruling class’ strategy to rob the poor, fuel the stock market with cheap credit, and move jobs overseas. It is the autocrat’s method of “social engineering”---shifting wealth from one class to another by simply printing more money and pumping it through the system via low interest rates. Remember, bankers know that people will ALWAYS borrow money if lending standards are relaxed and the money is cheap enough. At 1%, the Fed was basically losing money on every transaction, but persisted with their plan anyway.

Anyone who cares to go back and trace interest rates moves for the last 7 years will see that the Fed is really a political organization that decides monetary policy entirely on the basis an elite agenda that supports endless war, outsourcing of American jobs, and domestic repression.

http://www.cfoss.com/Trouble%20in%20Hedgistan.html
http://www.cfoss.com/

Does that mean that the entire hedge fund empire—which is built on a foundation of dodgy loans and quicksand---may be headed for the crapper?

No one really knows. But a pall has settled-in over downtown Manhattan where gloomy-looking men in pinstriped suits are waiting for the other shoe to drop.

Y’see, the hedge fund industry is based on the bizarre notion that one does not have to produce anything of value to make boatloads of money. You don’t even need assets any more---just a risky loan that can be transformed into an investment grade security through the magic of “securitization” a sprinkling of Wall Street snake oil.

Abrah Kadabra---presto-chango!


Re: Grandfather Clause Dead - And.....Now What? By captdale on 8/9/2007 7:44 PM
Hey Bobo - Shades of 1929 with the miscreants pumping money into the system in an effort to keep it from imploding. It is going to be VERY interesting to see the final outcome. Not long to wait. You can for sure say "I told you so". Maybe now, maybe (I doubt it) someone in a position to actually do something and will, might listen. It's a big time CYA in action. And all because of that darned crooked sub-prime housing market. LOL.

Hey bill - you said: So sad....Maybe the citizens of We the People will get off their lazy asses and wake the F up....maybe...someday.
Reply: I seriously doubt it. Too fat, too dumb, too lazy. And, too much in debt !!!
Re: Grandfather Clause Dead - And.....Now What? By oldfeller on 8/9/2007 7:45 PM
Cheer up, bobo. Saying "anyone with money in the market is an idiot" covers a lot of ground. The FED and their funny money almost demands some exposure in the market for most folks. The one thing you can always count on, the one thing that never changes, is that a dollar next year will be worth less than a dollar this year. This will never change as long as the biggest crooks of all control our economy.

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