Why not just call it what it is? "John O'Quinn Can't Sue The Prime Brokers Anymore Rule" would be a far more appropriate title for the proposed rule than the innocuously titled S7-08-08.
Because that is basically what it accomplishes. And my hunch is that isn't an accident.
The industry, specifically the prime brokers, who for years have been making tens of billions of dollars by acting as a criminal cartel, and fostering a counterfeiting scheme of the most massive scale in human history, don't want any more lawsuits where they are on the hook for their role in the scam. They correctly believe that they are going to get cored a new one once the OSTK and NFI suits move to discovery, which will take place within the next few months, and they want to ensure that never happens again. I don't blame them. Even if they settle, they need to close the door on more suits, as like big tobacco, they can't afford the fallout from dozens or hundreds of more suits.
So what is the best way to get a hall pass on a decade of criminal profiteering? Why, have the SEC, who now almost a year after putting the market maker exemption out for comment, and conceding that it violates federal securities laws by allowing naked shorting in equities for more profitable trading in options (but still hasn't put a stop to it), cook up a rule that essentially boils down to, "It's all the hedge funds' fault, we had no idea that hundreds of millions more stock than the company issued, and that we get paid billions to trade and "loan", was actually non-existent." That shifts the legal recourse to hunting down the far more nimble hedge funds, and proving malfeasance there. In other words, it directs lawsuits at entities in the BVI or Nevis or Liechtenstein, versus the prime brokers. Even though they directly financially benefit in a gargantuan way by the scheme. Can't have the guys who run the treasury and the industry being shown to be out and out criminals, now can we? And even worse, be financially liable for their roles? Nope. Anything but that.
So now we see that the SEC is nothing more than a PR agency for Wall Street, whose actions are tailored to give a veneer of enforcement legitimacy to a criminal group gang-raping the nation out of it's retirement savings. Any rule designed to slow or stop the gang-raping goes into the round file, any rule designed to limit or eliminate the chance of the plaintiff's bar obtaining redress gets fast tracked.
That's the plain truth. No other conclusion can be drawn. My hunch is that the bad guys will have to settle the suits, and have already written that cost off (what's a few billion when you can go steal another hundred?), however they are keenly aware that they need to close the door to anyone else coming in and doing the same cause of action. That could get out of hand. They might wind up having to pay out more than a fraction of what their cartel stole. Can't have that.
Hence the rule.
On another note, isn't it fascinating how the press is completely silent about the magnificent piece by Mark Mitchell, which can and should be read at www.DeepCapture.com - almost as though there is a standing order to just ignore the entire thing, as to deny or mock or condemn it will draw more eyes to it? Is that just me? Of interest is that there was a van with a scrolling screen parked directly in front of the SABEW conference, calling attention to the Deepcapture site, and inquiring of the conference attendees (the entire financial media) whether they too were captured journalists....and yet not a peep out of anyone. Guess there's your answer, huh?
I get their position. On the one hand, the piece is a devastating expose of the worst media corruption by criminals in hundreds of years. On the other hand, those same criminals pay the financial press, and basically own the media outlets. So they can't denigrate the piece and blast it into nonexistence, because then someone might actually read it out of curiosity, and then they have to address the fatal allegations contained therein. So they have to pretend it doesn't exist - but the van, stuck in their face at SABEW, strips them of the pretense that they didn't know about it, so it is an uneasy silence. Meanwhile, Herb slinks off to start his own hack shop, the criminals continue to operate with impunity, the cartel of corrupt reporters continue to pretend that they are anything but criminals themselves, and flies and spiders continue to get along together as normal.
How much evidence do we have to see of a system completely in ruins, before we acknowledge the obvious? That is the question.
I have taken a lot of flack for my statement that only a moron would have a dime in the market at this point. And yet there is a mountain of evidence showing that the market is nothing more than a massive counterfeiting and confidence scheme, operated by the worst crooks in human history.
Go read the piece, consider its data, consider this new rule, and then draw your own conclusions. I'm not optimistic that this goes anywhere good.