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Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bobo, it looks like news travels fast. Karma's a beotch. Maybe we should all contact our representatives.
http://newsbusters.org/blogs/jeff-poor/2009/03/12/former-congressman-calls-investigation-cnbcs-jim-cramer

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bob,

You're great, and I only wish more people saw the things that John didn't say, as you said them. Sadly, the last thing Americans need at this snap shot in time, is comic relief.

The joke has been on us for far too long now. It's going to take a revolution!

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

I would have loved to have seen the negotiation that Cramer's lawyer was doing before this show to try to keep the telling video out of the mix. It was as obvious as hell that he was shitting bullets when the tape came on and even muttered something under his breath about getting in trouble with the SEC. But in typical Cramer fashion he talks so fast and low that you need a specialist to make him out. I am sure his wife is working overtime trying to get his shorts clean. Bob, it is time to hoist a pint today, I think we (you) scored a victory that was long in coming and only getting better. Karma is a bitch.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Ya think the folks at Apple and Rimm might want to talk to "Jimbo"?

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bobo,

The mechanisms for simply milking the public have long been established. If anything, one would want to keep as low a profile as possible to keep that system humming quietly in the background, if scamming the public were the sole objective. Cramer's daily nonsense isn't necessary and would never be allowed. No one in a position of power/wealth would construct or allow to be constructed such a house of cards and ruin the existing system they have benefited from unless larger ends were in play. A steady state system can change only slowly if at all, but a chaotic system provides manifold opportunities for directing a fixed agenda.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

How is this going to get fixed? WWIII?

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

The clowns on TV shows are going to continue to make money trivializing and satirizing criminal events until the American public develop some friggin' backbone and don't tolerate it any longer. It is really that simple, and although it may take another 25% down and 20% unemployment before people take this more seriously... bring it on. Something better wake us from our stupor before we laugh ourselves into the poverty of a third world nation while we slumber. As whacky as Carlin was... some things he had dead on. The American Dream... you have to be asleep to believe it. http://www.badgertowers.com/1617382713.flv

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

"Bob" Comical that the sock puppets posted in the "comment" sections of the linked blogs. Strict adherence to the game plan outline. Seems that our friends have a total inablity to ever deviate from the rules that bindstheir lives. LOL

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bob, this is awesome. CNBC has been a huge problem for years, sickening actually. I have watched several of the interviews with Patrick a few years ago. In these interviews they treated the guy like a lying piece of dirt. My hat is off to Byrne and any others that have stayed the course against the Fraud of the markets while CNBC and others padded their pockets with lies and deceit! My opinion is CNBC and these so called "reporters" should be investigated just to see how fat their bank accounts really are!

Keep up the good work Bill and lets get more petitions going to help clean up this mess of a market! After all if only a portion of the "ill gotten" gains were recovered the US could wipe out the National Debt! Now wouldn't that be a hoot!

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

The end of CNBC as we know it!!



Recs: 10 Overstock CEO Calls Jim Cramer a “Criminal.”
This morning, my wife got an e-mail from Overstock.com, enticing her to buy cheap stuff. She’s an Overstock fan (I rarely buy anything there), so she actually pays attention to the deals. Nothing out of the ordinary here. Right?

Well, tacked onto the bottom of the e-mail is a message from Overstock CEO Patrick M. Byrne. It reads as follows:

Dear Honored Client,

We take seriously our duty to save you money. We know the current financial crisis is of concern to many of you. If so, you may find this interesting. Otherwise, please just enjoy your shopping.

In recent weeks, “The Daily Show”’s Jon Stewart has exposed TV personality Jim Cramer as a liar (see these recent clips, 1 2 3). But I think he’s worse: I think he’s a criminal.

If that sounds hard to believe, please see this video (which Jim did not expect to reach the public) of Jim Cramer bragging about using the press to manipulate the stock market illegally. For a full analysis of the career of Jim Cramer, please read my essay: “Jim Cramer is a Complicated Man.”

Warren Buffet says that, “If you ever sit down at a poker table and in 15 minutes haven’t figured out who the pigeon is, you’re the pigeon.” Similarly, if you are getting any advice from Jim Cramer or CNBC, you are the pigeon. CNBC is a 24/7 hedge fund infomecial designed to trick you into making bad investments for the benefit of hedge funds. Again, watch the tape of Jim. Then read the critique. Then turn off CNBC.

Or else, just ignore this message and enjoy your shopping.

Most respectfully,

Patrick M. Byrne, PhD
CEO, Overstock.com
patrick@overstock.com

Whoa. As Brooke says, we’re in a whole new era.

http://www.thecontrarianmedia.com/2009/03/overstock-ceo-calls-jim-cramer-a-criminal/

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bob,

When might Jon release the tape of Cramer at the podium during a Manhattan Investor's conference when he told the crowd how he INSIDER TRADED Enron and bullied CEO's into releasing their earnings data to him in advance, so that he could FRONT RUN the results?

For coalition members, these video tapes seem like ancient relics, do they not? :-)

Keep the heat on this SOB, and the rest of his cabal who he RIDES with!

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Petitions and writing to legislators etc. about "ain't it awful" will not do one single thing to fix this. You and I both know exactly what the solution is. Unlikely but possible. When the states finally figure out that they do not need the federal government to dictate how they should be run, I would venture to say that the second civil war would not be won by wall street.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Patrick is nominated to appear on the Daily Show - I suggest we all vote for him to appear.

http://guests.dailyshownews.com/akira/dtd/16867-2313

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

This is special for Jim Cramer as I know he is a reader of this and Deep Cature and I am sure with the firestorm going on over his outing on the Jon Stewart Show he, or a aide is feverishly reading all these sites to total up the damage. So here it is Jimmy bum.

God is not mocked, you will reap what you sow.

Jimmy boy, you may not believe it, or in Gods justice, but I will bet on God in this one since it is in God I trust....Not you, your a criminal Cramer!

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Dear Tim,

If I understand the theft of this century correctly, there will not be enough recourse left to pay for much of anything, let alone our national debt. Not UNLIKE Bernie Madoff, the monies have all been SPENT on lavish, "The Rich and Famous" lifestyles with mansions and yachts across the globe.

Even if we Joe Public could get our hands on a fraction of those "assets," their mark to market values today, with significantly fewer players capable of affording them on the demand side of the equation, would realize dimes on original dollars which were counterfeited and recycled.

The money is gone! It's been spent! It has been transported out of our markets, into their hands. If you were reading Dr. Byrne over time, you would realize that, "They Drank Our Milkshake!" :-(

The best recourse we can hope for, is that the perpetrators are tried like the "economic war criminals" they are, especially for TREASON against our people and ways of life.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

I clicked on "the other side's" links to see what they were saying and noticed that there were Overstock advertising links on their pages. Thought it was funny, wondering if it was intentional, buying advertising on the bad guys pages is a great idea.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Let's not forget the list of complicit along the way. There was Mozilla of CFC who was out there stating how good housing was and Jim supporting CFC. Got to be lots of videos out there re such. The Gaspario's, the Fabers who are great at talking about a FAILURE after the fact but have some difficulty being upfront when a Patrick was on their shows to INFORM. Instead they mocked him Has to be lots of video clips out there re such. How about videos of Cramer telling his audience to WALK AWAY from their homes. YUP that certainly helped with home sales. VIDEOS anyone. What was NOT being said was BSC/LEH/ and others are SUCKING wind and we need to get that fed to put out easy money so they can get out of their chit. This is SO MUCH BIGGER than Cramer as we all know. It is about the LOSS of ETHICS and lack of INTEGRITY of those who have a job to do and simply didn't do it. PUT the pressure on the new pres elec as we continue to inform. Then we will see how independant the SEC ISN'T or what happens to a SHELBY/FRANKS/PELOSI REID SHAPRIO with an INFORMED ANGRY POPULACE. ESPECIALLY the BILLIONAIRES who were just brought to their knees. THINK they are PISSED. BET ON IT. LET them do the work for us. FEED them the VIDEOS and DOCUMENTS, WHISPER IN THEIR EARS THE NAMES and WHO DID WHAT and WHO DIDN'T. Even bad guys KNOW WHEN TO SHIFT SIDES. And those who don't. LEARN the HARD WAY. Any with the skills could put together a graph to show how this has devloped and then input the HOW re a comment section.

Re: Patrick on the Jon Stewart show

Patrick belongs on the Daily Show-- on Bill Maher, Thom Hartmann, Rachel Maddow, Keith Olberman and every other "populist" justice oriented show.

So do Bobo, Dave, Dr. DeC, Tommy T, Mark Mitchell, Robt. Shapiro and all other market reform advocates (masks optional) who know how the game has been rigged by the insiders-- and can let the public know-- in no uncertain terms-- how and by whom they and their retirement funds are being plundered.

The extraordinary window of opportunity opened by the Daily Show should now be exploited for all its worth. Here's hoping Patrick's pr people will be instructed to carpe diem pronto-- and exert every effort to provide Patrick and others to those few but highly visible media outlets that will welcome them and the illuminating, empowering message they bring.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

I second that - get Patrick on TDS! That's as far as I made it, but by all means...get him on with all those others, too...
How?

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

bravo Wash Post. now keep on investigating. if we don't have any investigative journalists left, then we just have pap! follow this "securities lending" debt of AIG.
this exchange between AIG & "others" securities loaned for cash. just whose securities were they. did they belong (bought & paid for) to AIG. a cash payment was contracted for. explain what was theirs to give.

as larry summers just said..."We are a country of laws. There are contracts," Summers said yesterday. "The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system."

and think about his declaration when you think about amount of short sale fails beyond the number of shares available in the float of so many stock offerings.
think about the contract of short sales where a reasonable follow up for the buyin to satisfy the transaction is the only acceptable set of terms

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Is it possible this whole 'mess' was orchestrated in part to keep the 80 million baby-boomers working so they don't cost 50 trillion over the next 75 years in social security and medicaid? Collection would be upside down in 2017 and 200 to 300 billion a year starting in the mid 2020's. Looting their retirement accounts could keep them working longer and paying for themselves.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bob,

Thought you'd appreciate an email that I sent CNBC almost 2 years ago regarding the rules of their "Portfolio Challenge".

PS: Please pass this onto Patrick and Jon Stewart if possible.


From: xxxxxxxxxxxxxxx
Sent: Wednesday, March 21, 2007 9:07 PM
To: CNBC
Subject: RE: Advice on the "Rules" for entering your Portfolio Challenge


Dear CNBC,

Before I enter your “$1 Million Dollar Portfolio Challenge” I would like to ask you a few questions regarding the rules of trading for your challenge.

If I decide to short a stock that I pick for my portfolio will CNBC condone my strategy to “…create a level of activity beforehand that would drive the futures….” of the stock that I wish to short?

The reason I’m asking this is because if Jim Cramer feels that it’s safe to enact this type strategy that “the Securities and Exchange Commission never understands this” then I guess CNBC would condone it.  This would mean that there’s a good chance that this strategy would work for me in your portfolio challenge.

Is this type of strategy a good and legal strategy for your challenge?

Also, in regards to the stock that I plan on shorting, I was thinking of calling a few hedge funds and asking them to “not do anything remotely truthful…” regarding my stock pick, “because the truth is so against your view that it’s important to create a new truth to develop a fiction…”.

So if a little negative fiction gets planted in the marketplace by a few of the hedge funds that I call, is this also a good and legal strategy for your challenge that might give me an advantage over your other contestants?

I figure, “Look, over maybe 2 weeks from now the buyers will come to their senses and realize that everything that they heard was a lie, but then again Fannie Mae lied about their earnings for 6 billion dollars, its just fiction and fiction and fiction.  And I think its important for people to recognize, is that the way that the market really works, is to have that nexus hit the brokerage houses with a series of orders that can push down, then leak it to the press and then get it on CNBC, that’s also very important; and then you have a vicious cycle down…”

“It’s a pretty good game.” …and I think it might be a very good strategy for me trying to win your “$1 Million Dollar Portfolio Challenge”.

What do you think?

Before I try to enter using this strategy, I just wanted to clear it with you to see if CNBC will condone my strategy for winning your “$1 Million Dollar Portfolio Challenge”.

I await your reply, before I enter your contest.

Sincerely,

xxxxxxxxxx
xxxxxxx, xx

-----Original Message-----
From: CNBC [mailto:cnbconline@cnbc.com]
Sent: Tuesday, March 20, 2007 12:30 PM
To:
Subject: Don't miss your chance to get an edge...

Note: Of course I didn't get a reply!

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bobo,

This post may be slightly off-topic, but after reading your last two posts, I'm confused as to whether you believe that insiders will engineer deflation or hyper-inflation. You mentioned hyper-inflation in your last article but also reference the Great Depression in which deflation ruled.

My take is as follows:

- Deflation benefits those who still hold money during a depression as they can pick up real assets on the cheap and make a killing when the economy rebounds. The spoils are distributed fairly widely because a significant section of the middle and upper classes are net holders of cash at the start of the deflationary period. Not only can they survive but they may even prosper. Income distribution becomes more concentrated but not dramatically so.

- Hyper-inflation also benefits the insiders as they are able to prepare themselves before it hits. They ensure their wealth isn't dependent on fiat currencies by holding gold, arable land, the means of production, etc. and controlling private security networks. In contrast to a deflationary period, the middle class and even members of the non-insider upper-class cannot survive as their cash savings become increasingly worthless. They are therefore forced to sell or barter away all of their assets and join the ranks of the poor and disempowered. The insiders claim all the spoils. Wealth concentration returns to medieval levels.

With this in mind, if I were to embark upon a once-in-a-millennium global looting spree then I would:

-- Engineer the world's greatest credit-fueled boom, leaving great chunks of the world's population and governments with debt they can't repay.
-- Sell over-valued assets and stocks at the top of the market.
-- Short or naked-short the world's stock markets right after I've sold (also collect on credit derivatives that I've entered into during the boom) leading to even steeper stock falls.
-- Consolidate cash won on speculative bets by engineering bear market rallies.
-- Withdraw credit lines globally to further engineer a period of debt-deflation leaving a chunk of the population bankrupt and desperate.
-- Use my boom-time cash to buy real assets at depression-era prices.
[note that the above formula appears to have been used in the Great Depression and modern-day Japan]
-- Instruct captured governments to go to war against debt-deflation. Hype it up so the population fears a multi-decade Japan-style period of debt deflation or "A Greater Depression". Print money on a massive scale.
-- Ensure that enough money is printed to over-compensate for debt deflation, particularly reductions in the velocity of money (the lynchpin of the deflationists' argument against the possibility of a shift from deflation to inflation)
-- Mop up the wealth of those who survived the period of debt-deflation as they sell assets to buy food, pay for medical treatment, etc. Owners of gold, power industries and agricultural production are well positioned to pull this off.

What do you think?

Once again, thanks for all your great work.

Re: prosecute the bastards and lock em up!

March 18th, 2009 at 3:16 pm
Tuesday, March 17. 2009
Posted by Karl Denninger in Editorial at 18:10 “What SCHEME Is AIG”, specifically.

from:
http://market-ticker.org/archives/877-Had-Enough-FRAUD-America.html

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bobo, the recent OIG report from the SEC mentions www.thesanitycheck.com and www.investigatethesec.com.

Spin already coming out from the enforcement division. You might want to take a look. Give them hell.

http://www.sec-oig.gov/Reports/AuditsInspections/2009/450.pdf

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Naked Shorts does not exist..except here..

Naked Short Sales Hint Fraud in Bringing Down Lehman (Update1)
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By Gary Matsumoto

March 19 (Bloomberg) -- The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts.

As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30.

The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days.

“We had another word for this in Brooklyn,” said Harvey Pitt, a former SEC chairman. “The word was ‘fraud.’”

While the commission’s Enforcement Complaint Center received about 5,000 complaints about naked short-selling from January 2007 to June 2008, none led to enforcement actions, according to a report filed yesterday by David Kotz, the agency’s inspector general.

The way the SEC processes complaints hinders its ability to respond, the report said.

Twice last year, hundreds of thousands of failed trades coincided with widespread rumors about Lehman Brothers. Speculation that the company was being acquired at a discount and later that it was losing two trading partners both proved untrue.

After the 158-year-old investment bank collapsed in bankruptcy on Sept. 15, listing $613 billion in debt, former Chief Executive Officer Richard Fuld told a congressional panel on Oct. 6 that naked short sellers had midwifed his firm’s demise.

Gasoline on Fire

Members of the House Committee on Government Oversight and Reform weren’t buying that explanation.

“If you haven’t discovered your role, you’re the villain today,” U.S. Representative John Mica, a Florida Republican, told Fuld.

Yet the trading pattern that emerges from 2008 SEC data shows naked shorts contributed to the fall of both Lehman Brothers and Bear Stearns Cos., which was acquired by JPMorgan Chase & Co. in May.

“Abusive short selling amounts to gasoline on the fire for distressed stocks and distressed markets,” said U.S. Senator Ted Kaufman, a Delaware Democrat and one of the sponsors of a bill that would make the SEC restore the uptick rule. The regulation required traders to wait for a price increase in the stock they wanted to bet against; it prevented so-called bear raids, in which successive short sales forced prices down.

Driving Down Prices

Reinstating the rule would end the pattern of fails-to- deliver revealed in the SEC data, Kaufman said.

“These stories are deeply disturbing and make a compelling case that the SEC must act now to end abusive short selling -- which is exactly what our bill, if enacted, would do,” the senator said in an e-mailed statement.

Short sellers arrange to borrow shares, then dispose of them in anticipation that they will fall. They later buy shares to replace those they borrowed, profiting if the price has dropped. Naked short sellers don’t borrow before trading -- a practice that becomes evident once the stock isn’t delivered. Such trades can generate unlimited sell orders, overwhelming buyers and driving down prices, said Susanne Trimbath, a trade- settlement expert and president of STP Advisory Services, an Omaha, Nebraska-based consulting firm.

The SEC last year started a probe into what it called “possible market manipulation” and banned short sales in financial stocks as the number of fails-to-deliver climbed.

‘Unsubstantiated Rumors’

The daily average value of fails-to-deliver surged to $7.4 billion in 2007 from $838.5 million in 1995, according to a study by Trimbath, who examined data from the annual reports of the National Securities Clearing Corp., a subsidiary of the Depository Trust & Clearing Corp.

Trade failures rose for Bear Stearns as well last year. They peaked at 1.2 million shares on March 17, the day after JPMorgan announced it would buy the investment bank for $2 a share. That was more than triple the prior-year peak of 364,171 on Sept. 25.

Fuld said naked short selling -- coupled with “unsubstantiated rumors” -- played a role in the demise of both his bank and Bear Stearns.

“The naked shorts and rumor mongers succeeded in bringing down Bear Stearns,” Fuld said in prepared testimony to Congress in October. “And I believe that unsubstantiated rumors in the marketplace caused significant harm to Lehman Brothers.”

Devaluing Stock

Failed trades correlate with drops in share value -- enough to account for 30 to 70 percent of the declines in Bear Stearns, Lehman and other stocks last year, Trimbath said.

While the correlation doesn’t prove that naked shorting caused the lower prices, it’s “a good first indicator of a statistical relationship between two variables,” she said.

Failing to deliver is like “issuing new stock in a company without its permission,” Trimbath said. “You increase the number of shares circulating in the market, and that devalues a stock. The same thing happens to a currency when a government prints more of it.”

Trimbath attributes the almost ninefold growth in the value of failed trades from 1995 to 2007 to a rise in naked short sales.

“You can’t have millions of shares fail to deliver and say, ‘Oops, my dog ate my certificates,’” she said.

Explanation Required

On its Web site, the Federal Reserve Bank of New York lists several reasons for fails-to-deliver in securities trading besides naked shorting. They include misunderstandings between traders over details of transactions; computer glitches; and chain reactions, in which one failure to settle prevents delivery in a second trade.

Failed trades in stocks that were easy to borrow, such as Lehman Brothers, constitute a “red flag,” said Richard H. Baker, the president and CEO of the Washington-based Managed Funds Association, the hedge fund industry’s biggest lobbying group.

“Suffice it to say that in a readily available stock that is traded frequently, there has to be an explanation to the appropriate regulator as to the circumstances surrounding the fail-to-deliver,” said Baker, who served in the U.S. House of Representatives as a Republican from Louisiana from 1986 to February 2008.

“If it’s a pattern and a practice, there are laws and regulations to deal with it,” he said.

Fines and Penalties

Lehman Brothers had 687.5 million shares in its float, the amount available for public trading. In float size, the investment bank ranked 131 out of 6,873 public companies -- or in the top 1.9 percent, according to data compiled by Bloomberg.

While naked short sales resulting from errors aren’t illegal, using them to boost profits or manipulate share prices breaks exchange and SEC rules and violators are subject to penalties. If investigators determine that traders engaged in the practice to try to influence markets, the Department of Justice can file criminal charges.

Market makers, who serve as go-betweens for buyers and sellers, are allowed to short stock without borrowing it first to maintain a constant flow of trading.

Since July 2006, the regulatory arm of the New York Stock Exchange has fined at least four exchange members for naked shorting and violating other securities regulations. J.P. Morgan Securities Inc. paid the highest penalty, $400,000, as part of an agreement in which the firm neither admitted nor denied guilt, according to NYSE Regulation Inc.

Enforcement ‘Reluctant’

In July 2007, the former American Stock Exchange, now NYSE Alternext, fined members Scott and Brian Arenstein and their companies $3.6 million and $1.2 million, respectively, for naked short selling. Amex ordered them to disgorge a combined $3.2 million in trading profits and suspended both from the exchange for five years. The brothers agreed to the fines and the suspension without admitting or denying liability, according a release from the exchange.

Of about 5,000 e-mailed tips related to naked short-selling received by the SEC from January 2007 to June 2008, 123 were forwarded for further investigation, according to the report released yesterday by Kotz, the agency’s internal watchdog. None led to enforcement actions, the report said.

Kotz, the commission’s inspector general, said the enforcement division “is reluctant to expend additional resources to investigate” complaints. He recommended in his report yesterday that the division step up analysis of tips, designating an office or person to provide oversight of complaints.

Schapiro’s Plans

“Our audit disclosed that despite the tremendous amount of attention the practice of naked short selling has generated in recent years, Enforcement has brought very few enforcement actions based on conduct involving abusive or manipulative naked short selling,” the report said.

The enforcement division, in a response included in the report, said “a large number of the complaints provide no support for the allegations” and concurred with only one of the inspector general’s 11 recommendations.

SEC Chairman Mary Schapiro, who took office in January, has vowed to reinvigorate the enforcement unit after it drew fire from lawmakers and investors for failing to follow up on tips that New York money manager Bernard Madoff’s business was a Ponzi scheme. She has “initiated a process that will help us more effectively identify valuable leads for potential enforcement action,” John Nester, a commission spokesman, said in response to the Kotz report.

Last September, the agency instituted the temporary ban on short sales of financial stock. It also has announced an investigation into “possible market manipulation in the securities of certain financial institutions.”

No Effective Action

Christopher Cox, who was SEC chairman last year; Erik Sirri, the commission’s director for market regulation; and James Brigagliano, its deputy director for trading and markets, didn’t respond to requests for interviews. John Heine, a spokesman, said the commission declined to comment for this story.

“It has always puzzled me that the SEC didn’t take effective action to eliminate naked shorting and the fails-to- deliver associated with it,” Pitt, who chaired the commission from August 2001 to February 2003, said in an e-mail. The agency began collecting data on failed trades that exceed 10,000 shares a day in 2004.

“All the SEC need do is state that at the time of the short sale, the short seller must have (and must maintain through settlement) a legally enforceable right to deliver the stock at settlement,” Pitt wrote. He is now the CEO of Kalorama Partners LLC, a Washington-based consulting firm. In August, he and some partners started RegSHO.com, a Web-based service that locates stock to help sellers comply with short-selling rules.

Postponed ‘Indefinitely’

Pitt began his legal career as an SEC staff attorney in 1968, and eventually became the commission’s general counsel. In 1978, he joined Fried Frank Harris Shriver & Jacobson LLP, where as a senior corporate partner he represented such clients as Bear Stearns and the New York Stock Exchange. President George W. Bush appointed him SEC chairman in 2001.

The flip side of an uncompleted transaction resulting from undelivered stock is called a “fail-to-receive.” SEC regulations state that brokers who haven’t received stock 13 days after purchase can execute a so-called buy-in. The broker on the selling side of the transaction must buy an equivalent number of shares and deliver them on behalf of the customer who didn’t.

A 1986 study done by Irving Pollack, the SEC’s first director of enforcement in the 1970s, found the buy-in rules ineffective with regard to Nasdaq securities. The rules permit brokers to postpone deliveries “indefinitely,” the study found.

The effect on the market can be extreme, according to Cox, who left office on Jan. 20. He warned about it in a July article posted on the commission’s Web site.

Turbocharged Distortion

When coupled with the propagation of rumors about the targeted company, selling shares without borrowing “can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions,” he said in the article.

“‘Naked’ short selling can turbocharge these ‘distort-and- short’ schemes,” Cox wrote.

“When traders spread false rumors and then take advantage of those rumors by short selling, there’s no question that it’s fraud,” Pollack said in an interview. “It doesn’t matter whether the short sales are legal.”

On at least two occasions in 2008, fails-to-deliver for Lehman Brothers shares spiked just before speculation about the bank began circulating among traders, according to SEC data that Bloomberg analyzed.

On June 30, someone started a rumor that Barclays Plc was ready to buy Lehman for 25 percent less than the day’s share price. The purchase didn’t materialize.

‘Green Cheese’

On the previous trading day, June 27, the number of shares sold without delivery jumped to 705,103 from 30,690 on June 26, a 23-fold increase. The day of the rumor, the amount reached 814,870 -- more than four times the daily average for 2008 to that point. The stock slumped 11 percent and, by the close of trading, was down 70 percent for the calendar year.

“This rumor ranks up there with the moon is made of green cheese in terms of its validity,” Richard Bove, who was then a Ladenburg Thalmann & Co. analyst, said in a July 1 report.

Bove, now vice president and equity research analyst with Rochdale Securities in Lutz, Florida, said in an interview this month that the speculation reflected “an unrealistic view of Lehman’s portfolio value.” The company’s assets had value, he said.

‘Obscene’ Leverage

During the first six days following the Barclays hearsay, the level of failed trades averaged 1.4 million. Then, on July 10, came rumors that SAC Capital Advisors LLC, a Stamford, Connecticut-based hedge fund, and Pacific Investment Management Co. of Newport Beach, California, had stopped trading with Lehman Brothers.

Pimco and SAC denied the speculation. The bank’s share price dropped 27 percent over July 10-11.

Banks and insurers wrote down $969.3 billion last year -- and that gave legitimate traders plenty of reason to short their stocks, said William Fleckenstein, founder and president of Seattle-based Fleckenstein Capital, a short-only hedge fund. He closed the fund in December, saying he would open a new one that would buy equities too.

“Financial stocks imploded because of the drunkenness with which executives buying questionable securities levered-up in obscene fashion,” said Fleckenstein, who said his firm has always borrowed stock before selling it short. “Short sellers didn’t do this. The banks were reckless and they held bad assets. That’s the story.”

‘Market Distress’

On May 21, David Einhorn, a hedge fund manager and chairman of New York-based Greenlight Capital Inc., announced he was shorting stock in Lehman Brothers and said he had “good reason to question the bank’s fair value calculations” for its mortgage securities and other rarely traded assets.

Einhorn declined to comment for this story. Monica Everett, a spokeswoman who works for the Abernathy Macgregor Group, said Greenlight properly borrows shares before shorting them.

Even when they’re legitimate, short sales can depress share values in times of market crisis -- in effect turning the traders’ negative bets into self-fulfilling prophecies, says Pollack, the former SEC enforcement chief who is now a securities litigator with Fulbright & Jaworski in Washington.

The SEC has been concerned about the issue since at least 1963, when Pollack and others at the commission wrote a study for Congress that recommended the “temporary banning of short selling, in all stocks or in a particular stock” during “times of general market distress.”

Airport Runway

On Sept. 17, two days after Lehman Brothers filed for Chapter 11 bankruptcy, the number of failed trades climbed to 49.7 million, 23 percent of overall volume in the stock.

The next day, the SEC announced its ban on shorting financial companies in 2008. The number of protected stocks ultimately grew to about 1,000. On Sept. 19, the commission announced “a sweeping expansion” of its investigation into possible market manipulation.

The ban, which lasted through Oct. 17, didn’t eliminate shorting, according to data from the SEC, the NYSE Arca exchange and Bloomberg. Throughout the period, short sales averaged 24.7 percent of the overall trading in Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. on NYSE Arca. In 2008, short sales averaged 37.5 percent of the overall trading on the exchange in the three companies.

To date, the commission hasn’t announced any findings of its investigation.

Pollack, the former SEC regulator, wonders why.

“This isn’t a trail of breadcrumbs; this audit trail is lit up like an airport runway,” he said. “You can see it a mile off. Subpoena e-mails. Find out who spread false rumors and also shorted the stock and you’ve got your manipulators.”

To contact the reporter on this story: Gary Matsumoto in New York at gmatsumoto@bloomberg.net.

Last Updated: March 19, 2009 03:30 EDT

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

I just went through some old Cramer videos - Where he said to buy the market at 14000, and even said " I know it's irresponsible" and "things are over valued" - but "that's how you make money"...Then he tells Santelli how he thinks the market is dangerous.

Cramer is a guy who at best, reads the paper in the morning, goes outside to check the weather and if it's raining, he'll tell you he predicted it, even if he predicted sunshine an hour ago. He has no problem making it up as he goes and even going so far as to actually insult viewers who listen to him and lose money....

His vendetta against hedge funds and shorts is as fake as it goes. He wasn't talking about this 7000 points ago. He brings it up after the damage is done. CNBC has a chair for jim Chanos whenever he wants to come on, and they treat him like royalty.

CNBC is a 24 hour informercial for their buddies. That's it. All the rest is to try to lull the public into believing they are "your friends"...

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

http://www.bloomberg.com/apps/news?pid=20601109&sid=aB1jlqmFOTCA&refer=home

terrific article on the demise of LEH and BSC via illegal naked shot sales this news will finally cause the sec and congress to crack down on illegal short sales

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Could somebody send Jon Stewart the story of how many thousands of put options were bought on Novastar about 3 days before a big hit piece came out in WSJ back in March/April 2004. Maybe he can share some of that blatant criminal manipulation with the public.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

Bobo,
NY retirement funds ... pay to play... just like the mob...Pequot and Carlyle were paying... http://www.nytimes.com/2009/03/20/nyregion/20morris.html?_r=3&emc=eta1

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

WOW! George Soros certainly has articulated the problem and the solution. I certainly hope that Geithner takes this advice. The proposed solution sounds so simple to implement.

http://online.wsj.com/article/SB123785310594719693.html

The Soros solution:

"Many argue now that CDS ought to be traded on regulated exchanges. I believe that they are toxic and should only be allowed to be used by those who own the bonds, not by others who want to speculate against countries or companies. Under this rule -- which would require international agreement and federal legislation -- the buying pressure on CDS would greatly diminish, and all outstanding CDS would drop in price. As a collateral benefit, the U.S. Treasury would save a great deal of money on its exposure to AIG."

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

http://www.pbs.org/moyers/journal/04032009/watch.html

Read the entire transcript linked above.

Bill Black being interviewed by Moyer on PBS.

WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they’re refusing to obey the law.

BILL MOYERS: In other words, they could have closed these banks without nationalizing them?

WILLIAM K. BLACK: Well, you do a receivership. No one — Ronald Reagan did receiverships. Nobody called it nationalization.

BILL MOYERS: And that’s a law?

WILLIAM K. BLACK: That’s the law.

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated–

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law.

BILL MOYERS: This law, you’re talking about.

WILLIAM K. BLACK: Yes.

BILL MOYERS: What the reason they give for not doing it?

WILLIAM K. BLACK: They ignore it. And nobody calls them on it.

BILL MOYERS: Well, where’s Congress? Where’s the press? Where–

WILLIAM K. BLACK: Well, where’s the Pecora investigation?

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

You know what. I am really really pissed. I worked hard and played by the rules. Lived within my means and kept my CC paid up. Saved 15% of my gross pay all my life. Retired and promptly found myself broke. Taken by the greed and corrupt people that did not play by the rules and the bought and paid for congress. I'm just fed up with the whole damned mess. Now I am expected, and really have no choice in the matter, to bail out those who did not play by the rules. Actually those that screwed me to start with. It is my sad opinion that nothing short of a armed revolution will fix this mess and that ain't gonna happen so here we are. Ain't is just too bad. Hey, what goes around comes around. If I were the crooks I would not be sleeping soundly these days. At least I have enough sense to not resort to armed violence as a form of payback but rest assured there are masses of people out there that do not have the self control that I do.

Re: Jim Cramer Called Onto The Carpet By Jon Stewart

I personally believe, that the true reason for the forcing down of the market, and the collapse of the financial institutions of our country, is to force the U.S. to adopt a world currency to replace the U.S. dollar as the standard. There has been no changes in the lending policy requirements from the banks. Since the mark to market has required the banks to write down thier capital assests to current values, the rquired reserves they must posess, in order to lend, have not changed. The banks can take the bailout money and get interest from the Federal Reserve by depositing it with them. Even if they were able to lend the bailout money to the people, why would they take the risk when they can get interest from the Feds. There was never any requirement, that the banks lend the money they received from the bailouts to the people. This will cause more pressure on the government to provide more money from the taxpayers which in turn will cause no turnaround. The government will be blackmailed by the IMF to get with the global program or face a revolution by the people. We will be sold on the idea, by promises of great financial returns to all of our retirement accounts. We will sell our souls to the devil for promises of security.