For those of you truly interested in market fairness, what follows is a gem. If you read it very closely, you'll see clues on how Patrick Bryne investigates, and how he has become a settlement expert. I have assumed all along that people w/i the industry have cooperated to some degree. Many in DC and in regulation are very afraid of bodily harm, and for that reason will not come forward. But there are pockets of people who do. The following is a reply to hack Floyd Norris piece on the end of naked shorting. The piece by itself is just subterfuge to throw suspicion away from the brokerage industry. But pay attention to how Dr. Bryne (the "Mr" Floyd uses is a power insult. He fullwell knows Bryne has a doctorate. We have been talking to Floyd for years.) describes the process, how he arrives at it, and the "total number". That number will come into play in the next couple days, and I will put it here. The way this ends is, the investigation into the destruction of Bear and Lehman, both which cost the taxpayer hundreds of billions. If you've listened to O'bama lately, and how could you not, you know the Populists will not let this stand. They don't care about BSC and LEH, or the employees, but they can use the cost to the taxpayers as a wedge to get moresupport from the flyovers. The process has already begun. The blog banter begins in the next post.
April 30, 2009, 10:39 PM Is Naked Shorting Gone? In my Friday column, I report on data that seems to indicate the S.E.C. has solved the naked shorting problem. That data indicates that the number of failed stock trades â in which shares are not delivered on time â is way down. That column reports that Patrick Byrne, the chairman of Overstock.com, suggested a number of ways that failures could be hidden by Wall Street. But I did not offer detail on those views. For anyone interested, here is the relevant e-mail exchange: Mr. Byrne: I notice that Overstock.com has not been on the Reg SHO list for some time, and that few stocks are on it now. Does that mean the rules have worked, or what other comments would you make? Floyd Norris Dear Mr. Norris, Thank you for asking. As you may know, I have never primarily considered this fight to be about Overstock: it has been a fight to curtail illegal-but-winked at stock manipulation in our marketplace before more companies were destroyed and our marketplace destabilized. I always felt the insistence by some that my fight was about Overstock was part of a cover-up, and so I commend you for asking regarding the greater picture. If I learned that the percentage of HIV-infection in the public blood supply had dropped, it would give me cheer, but I would not say, âThis level of HIV infected blood has reached an acceptable level.â Similarly, seeing this drop in the number of firms on the Reg SHO list and the number of failed shares brings me cheer, but does not make me think the game is won. In particular, until we have data on failures in the other nooks and crannies of the system (broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures) I cannot celebrate victory. However, yes I do think that the rule changes put in place during the latter part of last year made stock manipulation harder, and people have to be more sophisticated to do it. Ultimately, what has to happen is that we go to requirements for pre-borrow and hard-delivery. That is what it will take to really end things. Incidentally, that is where the discourse was some months ago when it log-jammed within the SEC: on one side, the good guys arguing for pre-borrow and hard-delivery; on the other side, SIFMA and the Managed Funds Association arguing against them (on the grounds that if they were forced to stop doing that thing they have all along sworn they were not doing, it would dramatically affect liquidity). I believe (and have a source from within the SEC who tells me) that the current debate over the uptick rule was largely manufactured to shift the discourse. It is a red herring. Respectfully, Patrick Byrne Thank you for your prompt reply. Is there evidence available on the scale of the âfailures in the other nooks and crannies of the system (broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures)â that you refer to? Netting sounds as if it removes the possibility of manipulation. Is there a reason to think otherwise? Floyd Norris Dear Floyd, First, just to make sure you know what I am talking about, I am sending you this section from an essay I wrote last August 3rd: Let us look at where these unsettled trades can reside within the piping of the âfactoryâ that is our nationâs stock settlement system, The Depository Trust & Clearing Company (âDTCCâ). I will use Goldman and Morgan as hypothetical examples only. âDesked tradesâ â Imagine Goldman takes your order for 1,000 shares of stock, but stashes your order in a desk and sends you statements saying that you have those 1,000 shares in your account (and use your money towards the $10 billion they pay themselves at the end of the year for being so clever). They have written a CDF to you without your knowledge: there is a 1,000 share failure-to-deliver to you at Goldman (which no one else knows about, incidentally). âPre-nettingâ - Goldman has one client sell 5,000 shares and another buys 3,000. The seller never delivers. Goldman âpre-netsâ the trades before submitting them to the DTCC. Hence, the DTCC sees only 2,000 shares of the failure. âCNS nettingâ - Goldman submits to the DTCCâs Continuous Net Settlement system that it sold 2,000 shares that it does not deliver. Imagine Morgan Stanley was on the other side of that particular trade. But maybe Morgan has a client who sold 1,000 to a Goldman client, and which that Morgan client failed-to-deliver. The DTCC nets the two trades, and therefore sees just 1,000 shares of failure (Goldman to Morgan). âStock Borrow Programâ (âSBPâ) - The DTCC looks at that 1,000 share failure, and says, âWe have 400 shares we can loan Goldman from our Stock Borrow Programâ, i.e., from the accounts of other BDâs within the DTCC. That reduces the failures it sees to 600. âEx-clearingâ - Suppose Goldman and Morgan apply to the DTCC to move 500 of those fails ex-clearing, and the DTCC approves. Those 500 FTDâs are turned into a derivative contract between Goldman and Morgan. As a private contract, it is not regulated by the SEC, and the DTCC does not even know when that contract gets cleaned up, if ever. âOffshore Failuresâ â Suppose someone sells 1,000 shares into this market from a foreign offshore exchange? There is a different terminology to describe such failures, and therefore the data is hard to get to. What is clear, however, is that there is little pressure to clean up failures among exchanges. In this example, there are 100 failures at the CNS level. Yet there were 7,000 failures throughout the system. Therefore, we should remember that, however many unsettled equity trades there are at the CNS level, it is likely to be a fraction, and maybe a quite tiny fraction, of the total unsettled trades in the system. What is the ratio of total fails in the system to those trapped in the CNS system? No one seems to know (and in fact, while the individual pieces of data are known individually, I strongly suspect that no one party has the birdâs eye view of how many of these there are at all levels). The estimates I am told range from 3 to 15. For ease I will refer to this as, âThe Iceberg Principleâ and the ratio of total failures to CNS failures as âIâ. So how big a problem is this? ∙The last reported size of the failures-to-deliver at the CNS level are $8.7 billion. ∙By Iceberg Principle, total failures = I X $8.7 billion ≈ $30 to $120 billion. ∙By Feynman Principle, total cost to cover = F X I X $8.7b = F X ($30 to $120 billion).
So respectfully, Wall Street, I believe you are Oak Ridge, Tennessee, blithely going about your jobs at the factory, taking for granted âthe pipingâ that is our settlement system. I believe you have manufactured, and are sitting squarely on top of, a financial atomic bomb. Thatâs not good for you, of course, and if it goes critical, America is downwind. Second: So now your questions are: Doesnât netting remove the possibility of manipulation? And, What evidence is there regarding the size of failures in those crevices? a) Netting does not remove the possibility of manipulation, but masks it instead. Assume Goldman has a client selling 1,000 shares of stock ABC, and Morgan has a client who buys those 1,000 shares, but the shares never deliver. However, Morgan has another client who sells 1,000 shares, and Goldman has one who buys those 1,000, but they also never deliver. In total, there have been 2,000 shares sold but not delivered. However, by pre-netting the brokersâ fails, those failures disappear. Collectively the two sellers have weighed down the market with 2,000 shares of phantom stock, but the netting makes 0 fails show at the DTCC. b) What is the evidence supporting my claims regarding the size of the failures in those other crevices? I am 100% confident of my claims because I possess incontrovertible proof that, for one particular stock whose name for legal reasons I cannot disclose (but you may be able to guess), the failures maintained by justone broker injust the ex-clearing crevice have been, at times, greater than the sum total of the failures showing up in the CNS system: Thus to me, this is a settled question. For one not in a position to review such evidence, however, you will have to do what I have done, which is, interview people in the settlement industry, find out where trade failures can persist, and for how long, and why. I think any fair-minded researcher will quickly be told of how much slop there is in these stock settlement niches, how easy it is to take things ex-clearing, how deep the offshore failures run, and so forth. Then the fair-minded researcher will try to get some data from the SEC, or DTCC, and will discover that he is stonewalled on even the most basic information, a fact which would, I think, raise the suspicions of that fair-minded researcher. Indeed, this is where some members of your esteemed profession have rubbed me raw, because instead of saying, âWhy canât the Establishment release the data, if there is really nothing there?â (as until a few years ago I would have expected any journalist to reason), instead almost all of them have said, âWell, I agree there is evidence of settlement failures, but the Establishment says thereâs no problem, and they wonât release the data to show me one way or another, so Iâll just stop digging.â After all, remember that we are not debating the properties of some newly-discovered subatomic particles: this data is knowable, and is in fact, known. Good luck trying to get anyone to release it to you (without filing the kind of massive, one-in-a-lifetime lawsuit against an entire industry, as I have done). I hope this helps. Patrick
Edward Manfredonia: "Why The SEC Needs Investigation" http://blackstarnews.com/?c=135&a=5642 Why The SEC Needs Investigation By Edward Manfredonia May 2nd, 2009 [Policing Wall Street] The Securities and Exchange Commission (SEC) has been investigating illegal short sales in stock and the manipulation of the media by short sellers. Yet, the SEC itself needs careful investigation to expose how the SEC's own several transgressions led us into the mess on Wall Street. If the Barack Obama Administration launched a website to invite whistleblowers to submit information, including documentation about the SECââ¬â¢s coverups, so much information would flow that the site would crash within a few hours. Some background: A short seller is someone who sells stock of a publicly traded corporation without actually owning the shares of the publicly traded company. Short selling of a stock has become a topic of importance since the collapse of Bear Stearns in March 2008; the harbinger of the current financial debacle. Currently, the SEC has asked for comments regarding the short sale of stock and has a deadline of June 29, 2009 for comments. Yet, had the SEC always been diligent in its work, much of the problems we face today on Wall Street might have been prevented. My background includes being a trader on Wall Street many years ago as most readers of my column know. In 1999, I collaborated with a reporter named Gary Weiss, as a major source, for an article "Scandal on Wall Street," that appeared in the April issue of Business Week. Afterwards Weiss seemed blinded by the light. We later had a falling out over some not-factual reporting that he did; this is a topic for a different column. While we were working on the 1999 article, in September 1998, we had frequent meetings in his office at Business Week. I was present on numerous occasions when Weiss received increasingly desperate sounding telephone call from a man named Manuel Asensio, a notorious short seller. On several occasions when I was in Weissââ¬â¢ office, he refused to answer the calls and I could hear Asensio screaming, "I need you to print that HEB article now." He wanted Business Week to publish his stock prognostication concerning Hemispherx Biopharma (AMEX symbol: HEB). Asensio had taken an extremely large short position in HEB. Weiss and I had discussed Asensioââ¬â¢s short position. I told Weiss that it could appear that he was assisting Asensio in driving down the price of HEB if the article about Asensioââ¬â¢s negative prognostications ran. Asensio wanted to profit enormously from a decline in the stock price of HEB. Weiss stated that he intended to quote Asensio as stating that HEB had a target value of $0. At this time I had given Weiss information that Joseph Giamanco Sr., whose firm GHM was the specialist in HEB, was illegally trading the stock of HEB in the accounts of his friends, which he controlled. I also told Weiss that the specialist was manipulating the price of HEB. This was a serious violation of the Securities Exchange Act of 1934. The article, "Why Hemispherx Could Take Sick," appeared in the September 28, 1998 issue of Business Week. This article quoted Asensio as stating that Hemispherx had a value of $0. The problem was that Asensio did not sell HEB stock when Business Week published Weissââ¬â¢ article. Asensio had already sold stock short; that is, stock that he did not own. Asensio bought back his short stock. Simply put Asensio had used Weissââ¬â¢ article to cause the price of HEB to fall, so that he could purchase in excess of 100,000 shares that he had sold; and thus earn a profit on his short sales. Beginning in 2006 there were many voices crying out that short sales involved fraud. Evidence began to be presented that media personalities had assisted short sellers by publishing their verbatim words. Thus, media found themselves assisting short sellers; instead of being neutral in disputes. On January 18, 2006 I wrote to Christopher Cox, Chairman of the Securities and Exchange Commission, and the SEC Commissioners including Cynthia Glassman concerning Weissââ¬â¢ Business Week article and how it assisted Asensio. Julie Riewe, an SEC staff attorney, for investigation wrote to me that Glassman had referred my letter for investigation. On February 8, 2006 I provided more detail to Riewe in an eight page letter. Riewe then called me and informed me that Chairman Cox and the Commissioners had voted not to investigate the charges contained in my letter. She said Cox had ordered that my letter be placed in my file. Additionally, Riewe told me that the numerous letters I had sent about Wall Street malfeasance had simply been placed in my file. I could totally relate to the recent disclosure about how Harry Markopolosââ¬â¢s several attempts to have Bernard Madoffââ¬â¢s scam exposed years ago were frustrated the SECââ¬â¢s inaction. So how can anyone be surprised that the United States is in this catastrophic financial debacle, for which Wall Street shares huge responsibility. Please post your comments online or submit them to milton@blackstarnews.com especially if the postings are long.
But in the middle of that March, there was a strange occurrence: short selling in Dendreon began to increase at an unprecedented rate. Illegal naked short selling increased as well. http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-2-of-15/
I am new to this forum so can anyone give your suggestion about the insurance..... ........... http://www.texashealthinsurancenow.com