Haven’t blogged lately, largely due to my lack of any time to do so, but also due to my complete lack of surprise (and resultant apathy) over the meltdown of the US financial system’s icons, as well as the reprehensible behavior of so many of our nation’s protectors.
Before we get started, everyone that hasn't done so needs to go to www.Deepcapture.com and read Mark Mitchell's brilliant chronicle of the NY media's capture by Wall Street, as well as your's truly's role in the whole ugly mess.
But on to blogging.
First, we still have the hanging question in the Millberg Weiss case, which has never been asked by any of the prosecution team – deliberately never asked, as it is such an obvious question: “How did MW know which companies to prepare suits against because they were going to go down? HOW DID THEY KNOW THEY WERE GOING TO GO DOWN?” The obvious answer is that they were told, and were participating in an orchestrated scheme to destroy those companies. That would be criminal racketeering, BTW. But for some reason, nobody on the prosecution wants to ask the question. Doesn’t that strike you as odd? A wee bit, shall we say, er, out of keeping with wanting to root out illegality and criminal behavior?
Then we have the SEC, basically stonewalling any reform of the Market Maker exemption, now closing in on a year since it was acknowledged as a major factor in naked short selling. The SEC just can’t get around to eliminating it. Hundreds of comment letters, consensus from dozens of authorities, and yet they can’t just eliminate an exemption for which no good reason exists, other than to provide unfair advantage to the options market makers, at the direct expense of investors. Nope, been just too busy to get around to eliminating the single largest problem in the markets. You know, got things to do. Places to go.
Ditto for lacking the ability to refute any of the contentions in the NIPC petition, which I helped draft, thus am passingly familiar with. Basically, the SEC’s treatment of securities entitlements violates virtually every Federal Securities law I can think of – which is proved rather conclusively in the petition. And the SEC isn’t allowed to behave the way it is behaving. It can’t just shrug it’s shoulders and pretend that a rule exists allowing securities entitlements to trade as shares after T+3 has come and gone, and no share has been delivered. But that is exactly what it does. So much for the rule of law, or the notion that anyone is going to rein in Wall Street or it’s captive cops. Not a chance. The laws are a moot point – they say whatever we SAY they say, not what they actually say. That’s the SEC’s position. And the public is too busy worrying about iphones to understand how it’s prosperity was stolen. Yikes.
Next, we have discovery proceeding in the OSTK versus the prime brokers case. Presumably proceeding, as I have no special insights beyond what is in the filings.
I wonder, if OSTK’s charges are correct, how a guy like Henry Paulsen can remain the head of the Treasury, if he can also be shown to have been the head of GS while they were acting as a leading member in a criminal racketeering cartel? I mean, wouldn’t that be bad, to be running one of the banks that was counterfeiting OSTK like there was no tomorrow (and presumably many others)? Or does that just not matter, either? As in, the same guys who won’t dare ask how MW knew who was going to go down, won’t dare go after the heavyweights who looted the financial system? I’m afraid I already know the answer. But then again, sometimes the wrongdoing is so obvious that it demands some sort of retribution. I guess we will all find out as this makes it’s way to court, and theory collapses under the weight of fact, and trading records. Can’t wait for that day.
And we have hedge fund scumbags galore. We have Sam Israel, whose now acknowledged faked death was greeted by me with a har har har when I first read it. I mean, sure, feeling remorse for his misdeeds (puhleeeese), he decides to take his own life, versus slipping away to somewhere tropical to bang strippers and drink rum for the rest of his days? What I found particularly low rent about his bridge jumping antic is that it was so patently easy to disprove. Hint: If you are going to fake your death, at least don’t do it where security cams can tag your getaway car. Do something creative, like have your boat blow into a million pieces 30 miles from shore. Have a little fun with it. Make it count – you only expire once, after all.
And we have the Einhorn-fest, wherein every NY financial media outlet touts his completely forgettable screed, as well as his views on Lehman, for a solid month. Gee. How completely spontaneous. And unexpected. One of the short sellers long believed to be in bed with the NY financial media cobbles together a book, and suddenly his every breathless thought about his latest short target is greeted as though he is the new Messiah. I mean, that just doesn’t fit with the theory that there is a group of shorts who routinely use that same media as their personal attack dog force against their short targets. It is all so completely fresh, and new, and exciting.
If only there was a pattern.
And finally, we have the David Rocker/OSTK/Gradient suit. I finally got a chance to read the Rocker side of the story in some depth from the filing, and it is the most incoherent Chewbacca defense I have ever seen. Literally. I mean, if you are going to jibber and jabber like a chimp, at least try to keep your lies straight. Best as I can tell, his defense against charges that he violated California’s laws by conspiring to control the content of research reports, and presumably illegally front run them, is……..that Patrick is a bad man, and that I, the Easter Bunny, completely unconnected to OSTK, the suit, or really anything else germane to the charges, made his partner Marc feel threatened when I posted his publicly available street address on the message boards.
You are not misreading this. Readers of my blog no doubt remember when I went onto the Yahoo message boards, and tired of the organized bashing crews publishing vicious attacks on Mary's nephew, diseased sister, etc. did an internet search, and got Marc's street address, and then posted it to show that I too could find out personal info and use it to effect on the boards. I later posted a public apology for my antics, regretting the lapse in judgment. At the time, much was made of it, although nobody cared to field the question as to why it was a state secret if I could find the address in about 5 minutes using google. Also, none of the bad guys cared to discuss how anyone knew that a two digit number and a word (absent the city, state, or anything in any way identifying it as attributable or connected to Marc) was Marc's street location (of the house that he had photos published of in Architectural Digest, and had photos of on the web along with the address). No, they preferred to position it as a dire threat (although Rocker's address was subsequently posted by someone else and not a peep was made). That was the agenda - predator as victim, terrorized by the Easter Bunny's inquiries as to the weather and how the wife and kids were doing.
Yes, I know, you are probably wondering what that has to do with Rocker scheming to make millions by authoring the reports and trading ahead of them (if the allegations are correct). Probably scratching your head, thinking, hey, does the Easter Bunny work for OSTK, is he an officer or director, is he suing Rocker, is he in any way connected with this other than being a message board writer and blogger? Does his message board posting alter whether Cohodes and Rocker were engaged in a criminal scheme to frontrun reports they authored and had Gradient distribute? Does it actually have anything to do with anything? What does it have to do with the charges brought in the suit?
Well, actually, that would be nothing. Nada. Zip. It is a classic, “look at the monkey! Look at the monkey!” defense, wherein one so muddies the water with BS that one hopes the dimwits on the jury can’t get back to the core issue. Barring environmental contamination of the courtroom’s water supply with crack cocaine, my hunch is that Rocker’s side is going to have a hard time finding a judge and jury that dim. Then again, hope springs eternal. And as the saying goes in the TV business, nobody ever went broke underestimating the intelligence of the American public…
So that’s the wrapup. I’ve never been more disgusted with what I see happening, nor do I have any doubts whatsoever at how corrupted the system is. But scumbags continue to be scumbags, thus there is at least some continuity to the universe…