Part 5 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up REDUX

Part 6 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up
http://www.nowpublic.com/world/part-6-naked-shorts-75-000-cracking-wall-street-cover-redux
Part 1 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up
by RoryKearney | July 11, 2008 at 07:13 am | 3795 views | 32
http://www.nowpublic.com/world/naked-shorts-75-000-cracking-wall-street-cover

Part 4 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up REDUX
by RoryKearney | July 23, 2008 at 10:05 am | 220 views | add comment 
http://www.nowpublic.com/world/part-4-naked-shorts-75-000-cracking-wall-street-cover-redux

Now Playing

Hearings on Systemic Risk

I believe these hearing were held by the House of Representative, on systemic risk. I believe he just said that it is their second hearing on systemic risk. Barney Frank presided. He is in charge of the finance committee.

Systemic Risk and the Financial Markets

Thursday, July 24, 2008, 10:00 a.m., 2128 Rayburn House Office Building
Full Committee


Click here to watch live webcast of this hearing.

Washington, DC—House Financial Services Committee Chairman Barney Frank (D-MA) today announced the second in a series of hearings on the policy implications of the transformation of domestic and international financial markets, with a primary focus on the rise of potential systemic risk associated with the dramatic growth in the share of assets held outside the commercial banking system, the complex arrangements that link firms that are regulated differently (or not at all) and the increasing amount of leverage. Witnesses for this hearing will be New York Federal Reserve President Timothy Geithner, S.E.C. Chairman Christopher Cox.

The committee will explore the adequacy of current oversight and regulatory tools, and the extent to which existing structures are adequate to respond to future problems. Specifically, the hearings will examine:

* Current state of the financial regulatory system, both in the United States and abroad, and ways to measure and limit risk without stifling innovations and improve market liquidity and breadth.
* The implications of providing investment banks and others access to the discount window.
* In light of the collapse of Bear Stearns, proposals to improve the regulatory structure to better assess and mitigate systemic risk to avoid a similar or more serious crisis in the future.
* The need for enhanced capital and reserve requirements for financial firms.
* The adequacy of current powers of the Federal Reserve and other regulatory agencies to protect the financial system and the taxpayers.

Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke will appeared at the first of this series of hearings on July 10th. For more information on that hearing, please visit: http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr071008.shtml


Witness List & Prepared Testimony:

To be announced

Available Member Statements:Printed Hearing:
The printed version of this hearing will be posted as soon as it is available.


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Make sure to send the transcript when it comes out, to your elected Senators and Congressmen in your state. I will post it here time permitting, or you may put the link in the comments section. Or both.

You can find them here.

Contact your Representatives and Senators and ask them to call for an investigation into the FDA’s handling of this travesty.

HOW TO FIND YOUR REPRESENTATIVE

Contact Your Elected Officials

by email http://www.conservativeusa.org/mega-cong.htm

by zipcode http://www.visi.com/juan/congress/index.html

If you go to the Congresspedia site http://www.Congresspedia.com and put your Representative’s name in the search box and scroll down and you will find all current contact information. Contact their Washington office as they have the most clout.

Call your Representative and ask for their Congressional staffer handling this issue and speak to them.

Follow up with emails and faxes.

If you can visit their office.

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http://www.opensecrets.org

http://www.opensecrets.org/industries/contrib.php?cycle=2008&ind=F2700

http://www.opensecrets.org/industries/contrib.php?ind=F&goButt2.x=9&goButt2.y=10&goButt2=Submit

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http://www.tradingmarkets.com/.site/news/Stock%20News/1778667/

Texas Joins States Considering Sanctions Against UBS Over Auction Rate Securities
Thursday, July 24, 2008; Posted: 12:06 AM  

Jul 24, 2008 (financialwire.net via COMTEX) -- UBS | Quote | Chart | News | PowerRating -- July 24, 2008 (FinancialWire) Texas is considering a partial suspension of UBS AG (NYSE: UBS | Quote | Chart | News | PowerRating) from working as a securities dealer in the state until investors who purchased auction rate securities are reimbursed.

New York state Attorney General Andrew Cuomo is preparing to file a civil suit against the company and has also subpoenaed Citigroup Inc. (NYSE: C), Merrill Lynch (NYSE: MER), J.P. Morgan Chase (NYSE: JPM | Quote | Chart | News | PowerRating) and Goldman Sachs (NYSE: GS). Massachusetts has already filed charges against UBS.

The $330-billion market for auction rate securities was used by municipalities and non-profits, among others, to borrow long-term while paying lower short-term rates by having rates reset every week or month through auctions. In February, the market froze when investors remained on the sidelines and several Wall Street firms chose not to support the market by putting in bids.

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The conference contained a lot of good questions posed by the finance committee, one even referring to this debacle as "financial weapons of mass destruction". Bush said a few days ago, that Wall Street got drunk. Unfortunately we have to clean up the party. I heard a lot of doublespeak out of Chairman of the Securities and Exchange Committee (SEC) Christopher Cox's mouth,  and like the Wizard of Oz, he reasurred us that he has had the power  all along, to enforce the laws and that no new laws need to be implemented, and besides, it is such a bother, but there was no real need for him to worry. Maxine Waters slammed that gavel down and adjourned the 2 1/2 hour meeting on "Systemic Risk and the Financial Markets ",  and we were assured a few committeemen back, that nothing could possibly be done with this issue until next year. I believe the Congress is off tomorrow, hey, it's Friday, and they probably started their extended weekend right after the meeting, so I could see their desire to get the next party started. In the words of Scarlett O'hara of Gone With The Wind, " I can't think about that right now. If I do, I'll go crazy. I'll think about that tomorrow."


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Overstock.com Reappears on the Regulation SHO Threshold List
'We're Still Batting .950!' Celebrates CEO Byrne

Last update: 5:44 p.m. EDT July 24, 2008
SALT LAKE CITY, July 24, 2008 /PRNewswire-FirstCall via COMTEX/ -- Overstock.com, Inc. (OSTK: 
 announced that today, after a 14 trading day reprieve, it has reappeared on Nasdaq's Regulation SHO threshold list. (Source: http://www.nasdaqtrader.com/aspx/regsho.aspx).
 
Regulation SHO requires the stock exchanges to publish daily a list of companies whose stock has failures-to-deliver above a certain threshold. It also requires mandatory close-outs for open fail-to-deliver positions in threshold securities persisting for over 13 days, with the aim that no security would appear on the threshold for any extended period. Despite that aim, Overstock.com has now appeared on the Regulation SHO threshold list for 839 trading days -- about 95% of the nearly 900 days the list has been in existence.
 
"We're back on the list," said Overstock.com chairman and CEO Patrick Byrne, "but I'm not surprised. Data provided by a financial news organization suggests that of our approximate 6,000 owners, the top 50 own 106% of our stock. And yet last Friday, it appears that 20% of our issued and outstanding stock traded, as the price of it fell 40% when we announced earnings that largely beat the Wall Street consensus expectations."
 
Last Friday, nearly 4.5 million Overstock.com shares traded -- nearly ten times the average volume. In addition, there was an abnormally large volume of trades in the options market on Friday -- even for an options expiration day.
 
Ironically, this happened while the SEC put in place an emergency apartheid order that provides special protections against naked short selling for a select 19 companies, those being Fannie Mae, Freddie Mac, and 17 Wall Street firms, only seven of which have ever been on the Reg SHO list to date, and nine of whom have been enabling naked short selling against Overstock.com (according to a lawsuit filed by Overstock). Byrne said, "This apartheid protection of the elite of Wall Street is Orwellian: why should a select group of brokerage firms receive special protection from illegal trading practices, when many of these firms have enabled others to engage in these very same practices, targeting public companies that now receive no protection under the SEC's emergency order?"
 
The American Bankers Association has asked that the apartheid system be expanded to include more banks. However, Overstock.com, the Financial Services Roundtable, and former SEC Chairman Harvey Pitt, have called on the SEC to expand and extend the rule of law to the entire market.
 
Byrne continued: "When someone sells something that they neither own, nor borrow, nor deliver, a reasonable person may ask, 'What is being sold?' The answer is, 'Nothing.' The SEC has realized that liquidity born of 'nothing' may be unhealthy for the market."
 
Overstock.com believes that in order for naked shorting to stop the SEC must:
    1. Eliminate the option market maker exception of Regulation SHO.
2. Extend the pre-borrow requirement of the emergency order to the entire
market, not just the 19 select companies.
3. Cause to be disclosed the volume of failures to deliver on a timely
basis -- at least as often as the exchanges disclose legitimate short
interests (twice a month).
4. Expand the purview of Regulation SHO to include transactions that occur
outside the Depository Trust and Clearing Corporation.
"The SEC must do more to stop chronic failures-to-deliver," said Overstock.com senior vice president of corporate affairs and legal, Jonathan Johnson. "If it continues to take mere half measures, abusive manipulators will continue to have their way in the markets."
 
As of today, 568 companies are on the Regulation SHO threshold list: 245 for over 13 consecutive trading days, 52 for over 100 consecutive trading days, and one, Medis Technologies Ltd., for 746 consecutive trading days. (Source: http://buyins.net/tools/short_list.php?ssd=20080724).
 
 
http://www.marketwatch.com/news/story/overstockcom-reappears-regulation-sho-threshold/story.aspx?guid=%7BD1846042-792E-4A9F-9C5A-0856AC703F06%7D&dist=hppr

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July 25, 2008  5:20 AM updated

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New from DeepCapture  First part below.... the dynamite continuation at  http://www.deepcapture.com/     Short-Sellers Spin Themselves Silly, SEC Sounds Strong July 24th, 2008 by Mark Mitchell

After years of intermittently ignoring and whitewashing one of history’s biggest financial swindles, the Wall Street Journal today, for the first time, published some basic truths about the crime: “Illegitimate naked short selling is different from [legal short-selling]…this kind of manipulative activity can have drastic consequences…Eliminating the prospect of naked short selling will help assure investors that… when the market declines it is not because of unseen manipulators and `distort and short’ artists.”

Unfortunately, these words were not written by some enterprising journalist seeking to nail the criminal hedge funds who have manufactured billions of phantom shares (shares sold “naked” because they don’t exist) while using other dubious tactics – such as publishing false “independent” financial research, working with a crooked law firm (the recently indicted Milberg, Weiss) to saddle companies with bogus class action lawsuits, hiring thugs and private investigators to harass corporate executives, orchestrating dead-end government investigations, employing armies of basement-dwelling creeps to bash companies and smear reputations on Internet message boards, and feeding distorted and maliciously false information to compliant or naïve journalists – all part of a massive, collusive effort to destroy public companies for profit.

No, sadly for anyone who cares about the state of our financial markets and media, those crimes go mostly unreported. And as for the few basic truths that appeared in today’s Wall Street Journal, they were not products of any journalistic effort. They were, rather, the words of SEC Chairman Christopher Cox, who managed (no doubt, with some difficulty) to convince the Journal to publish an op-ed wherein he explains why he had to issue an “emergency order” to prevent abusive short-selling from crashing the American financial system.

Why is this not front page news? Why is the Journal not clamoring for the criminals to be put away?

We’ve noted that The Wall Street Journal’s “Money & Investing” section, which covers the hedge fund beat, was once under the control of editor David Kansas, who was known for unleashing reporters on companies targeted by his long-time short-selling friends, while ignoring, with seemingly purposeful intent, all evidence suggesting that his friends were up to no good. Kansas, I believe, was the principal reason why the Journal long held back from investigating the naked short selling scandal.   See rest at link....

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The views expressed below are those of the author and are not necessarily those of AsiaMedia or the UCLA Asia Institute.

Excerpts

By Tom Plate
Pacific Perspectives Columnist

Wednesday, July 23, 2008

Beverly Hills --- Knowing that something is not working, at least not for the general good, is not the same thing as being able to remove the particular evil in the interest of the general good.

Here is Exhibit A: short-selling around the world by mammoth hedge funds.

In our hearts and in our minds, we Americans have come to realize -- all too slowly -- that so-called hedge funds are to economic stability what a new computer virus is to the health of your hard-drive, or a hurricane to a poorly-diked city.

To explain: A hedge fund is an investment colossus that can move many millions and sometimes even a billion or two into an economy -- or into a financial sector -- and make money by betting that things will get worse -- that prices will fall, that a currency's value will weaken, and that investors will panic.

Its distinctive trading tool is the massive short bet: the wager that a set of stocks or a given currency will lose value over the very short run.

Like a plague of locusts, short-selling hedge funds can even prey on healthy expanses of companies and countries and add to their woes virtually overnight because of their massive evil size, because (thanks to Internet Technology) of their ability to strike instantaneously, and of their capacity for parachuting in and out of negative investments with lightening speed.

http://www.asiamedia.ucla.edu/columns.asp?parentid=95124

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Disclaimer: Everything I write in these blogs is my opinion only. If there are any errors, please send me the corrections and I will make them.

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For those of you not up to snuff on "naked shorting" and overstock.com, keep in mind that usually the "captured" press, release hatchet jobs on companies that short sellers feed them, often using fabricated information. They don't bother checking on it due to either being "captured" and some are just plain lazy. There are a few, very few, like Liz Moyer, and Mark Mitchell, that are both not "captured" and will do the research. Mostly, they get clowns like Cramer, who will come out guns ablazing and start shooting the company without ever having done the research on their own. Many of the companies, I opine, he knows very little about, except that the fax said shoot his mouth off, and I will give him this, that is the one thing he is very good at. Now he says he was against “naked shorting” all along. I bet he wrote that fabrication himself.

Overstock is suing the people who set out to destroy their company, including Gradient Analytics, who issued many of the derogatory reports against them, and does the ratings system for certain stocks for marketwatch etc. I heard they just dropped 90 stocks off the list they will be covering. Dendreon was dropped off. I do not have the full list of drop offs. I have to ask myself, why are they suddenly not covering these 90 companies anymore? Are their “quants” bad for business?” I would like some investigative reporter to fill me in.

Anyway, Gradient Analytics, (formerly Camelback, who also answered one of the phones Pinnacle (which I believe was a hedge fund they were also running out of the same operation)) these enterprises change names when they change their socks, allowed Rocker Partners Hedge Fund (now Copper River), to write parts of the reports prior to Gradient releasing them (releasing them means faxing them to everybody in their who's who short and distort list), and everybody takes their short position, the reports are released, and the carpet bombing of the stock continues. It's all in the overstock lawsuit. I will put up the URL for it when I get round to it.

How do we know all this. Apparently, the great Gradient Analytics, hires kids out of college, and they did the right thing, and told someone. At least they filled out affadavits saying that that is what happened. Also, on their time sheets, they had a column with the names Milberg Weiss, the law firm that two of the well to do top lawyers were indicted and sentenced (with a hand slap of a fine and a few years of time and no restitution for the people they stole millions of dollars from or the companies they harmed materially) for having a system whereby they already had lead plaintiffs in place who were stockholders in the companies that were targeted for the take down, and who they subsequently brought class action lawsuits on their behalf against these "bad" companies being targeted by Gradient Analytics. I hear it is a very lucrative game. I assume the college grads got a small bonus if they could put a check next to any company whose name could be sent to Milberg Weiss.

Gradient Analytics, comprised of Don Vickery and the other name eludes me, made yachtloads of money working their stock analysis company, although the heat is on big time right now, but don't worry for them, they have probably stashed enough cash away for both this life and the afterlife. It's all in the "quants".

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The Milberg Weiss Indictment
Editorial of The New York Sun | May 19, 2006

http://www.nysun.com/editorials/milberg-weiss-indictment/3303

Excerpt

Yesterday's indictment of class action plaintiffs' law firm Milberg Weiss in connection with a fraud case promises to shine a bright spotlight on the need for tort reform. The firm, along with two of its partners, Steven Schulman and David Bershad, stand accused of orchestrating a long-running scheme to pay off the named lead plaintiffs in the shareholder lawsuits the firm has built its reputation in pursuing. The indictment doesn't speculate on whether the motive was fun or profit, but the smart money's on profit. Mr. Bershad earned some $161 million as his share of the firm's profits between 1983 and 2005; Mr. Schulman made $67.1 million between 1991 and 2005. The firm allegedly raked in about $200 million in fees over 20 years just from the 150 suspect cases described in the indictment.

The case hinges on an alleged conspiracy by which the firm would kick back a portion of its fees to the lead plaintiffs in its trademark shareholder suits. Such an arrangement is illegal because it leaves the named plaintiff with different interests than the other class-action plaintiffs he's supposed to represent. One such named plaintiff who was indicted last year, Seymour Lazar, stands accused of taking a total of $2.4 million in exchange for his participation in a plethora of such cases over the years. Mr. Lazar allegedly received $325,000 over two years for suits against W.R. Grace, $100,000 for a suit against British Petroleum, more than $400,000 for two different suits against Genentech, and the list goes on.

Finding creative ways to make lots of money might sound like the American way, but the allegations made in this case paint a picture of a perversion of the entrepreneurial spirit. These alleged crimes weren't victimless. Those millions upon millions of dollars came from the pockets of the unsuspecting shareholders in the defendant companies. The plaintiffs' attorneys' fees that apparently lined the pockets of Messrs. Schulman, Bershad, and Lazar and others implicated in the case came from those shareholders in the form of profit-reducing payouts that cut dividends, while the lawsuits threatened to depress stock prices.

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http://www.iht.com/articles/2008/06/03/business/legal.phpShareholders' lawyer sentenced for kickbacks made to clients By Jonathan D. Glater Published: June 3, 2008
Excerpts

Melvyn Weiss, the prominent class-action lawyer, has been sentenced to 30 months in prison by a U.S. District Court judge in Los Angeles for his role in concealing illegal kickbacks to plaintiffs.

He received his sentence on Monday and was also ordered to pay $9.8 million in forfeitures and $250,000 in fines.

The sentencing nearly concludes an investigation of tactics used by Weiss's former firm, Milberg Weiss, now called Milberg.

Weiss's former partner, William Lerach, is serving a two-year sentence as a result of the same investigation, and other lawyers have pleaded guilty for roles in what prosecutors described as a criminal conspiracy that lasted for decades. Lerach was also ordered to forfeit $7.75 million.

Weiss, Lerach and the law firm that they built together dominated the lucrative field of securities class-action litigation, filing many lawsuits against publicly traded companies on behalf of investors who had lost money when share prices fell.

Milberg itself still faces an indictment and is set to go to trial in August, but a settlement is widely expected.

A deal with Milberg would be the latest in a series of blows to the image of plaintiff-side trial lawyers. In addition to guilty pleas by Lerach last year and Weiss this year, another well-known lawyer, Richard Scruggs, pleaded guilty in March to trying to bribe a state judge in Mississippi.

The spate of guilty pleas has led some Republicans in Congress to call for limits on the conduct of plaintiffs' lawyers in shareholder suits. Senator John Cornyn has introduced a bill seeking to modify the rules governing such litigation.

Other Republican lawmakers have called for investigations of lawyers involved in shareholder litigation.

"The Milberg Weiss trial lawyer scandal has exposed a potentially serious threat to our nation's economy, but to date, the Democrat-controlled Congress has done nothing about it," said Representative John Boehner, the Republican minority leader.

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http://www.cftc.gov/newsroom/enforcementpressreleases/2008/pr5521-08.html


Release: 5521-08
For Release: July 24, 2008

CFTC Charges Optiver Holding BV, Two Subsidiaries, and High-Ranking Employees with Manipulation of NYMEX Crude Oil, Heating Oil, and Gasoline Futures Contracts

Defendant Caught on Tape and in Email Saying He Would “Bully” the Market

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today its case against Optiver Holding BV, two of its subsidiaries, and three employees, charging them with manipulation and attempted manipulation of New York Mercantile Exchange (NYMEX) Light Sweet Crude Oil, New York Harbor Heating Oil, and New York Harbor Gasoline futures contracts during March 2007.

The CFTC filed the civil enforcement action in the United States District Court for the Southern District of New York against Optiver Holding BV, a global proprietary trading fund headquartered in the Netherlands, and two subsidiaries – Optiver US, LLC (Optiver), a Chicago-based corporation, and Optiver VOF, a Dutch company. The complaint also names defendants Christopher Dowson (head trader of Optiver), Randal Meijer (head of trading and supervisor of Optiver and Optiver VOF) and Bastiaan van Kempen (Chief Executive Officer of Optiver).

The complaint charges all defendants with 19 separate instances of attempted manipulation involving the aforementioned energy futures contracts on 11 days in March 2007. The complaint further alleges that in at least five of those 19 attempts, defendants successfully manipulated certain of these energy futures contracts, causing artificial prices. In three of those instances, defendants forced futures prices lower, and in two instances, defendants forced futures prices higher. The complaint alleges that defendants profited by approximately $1 million from their manipulative scheme.

According to the complaint, the defendants employed a manipulative scheme commonly known as “banging” or “marking”’ the close. “Banging the close” refers to the practice of acquiring a substantial position leading up to the closing period, followed by offsetting the position before the end of the close of trading for the purpose of attempting to manipulate prices.

The complaint further charges Optiver and van Kempen with concealing the manipulative scheme and making false statements in response to an inquiry from NYMEX.

“These charges go to the heart of the CFTC’s core mission of detecting and rooting out illegal manipulation of the markets,” said CFTC Acting Chairman Walt Lukken. “The CFTC’s Enforcement Division aggressively pursues and punishes manipulative activity to bring offenders to justice and deter others from attempting to harm the markets. Although this alleged energy trading scheme lasted only several days in March 2007, even short-term distortions of prices will not be tolerated by the Commission.”

“The men and women of the Division of Enforcement are working tirelessly to pursue every investigative lead involving potential wrongdoing in the commodities markets, including our nation’s vital energy markets,” said Acting Enforcement Director Stephen Jay Obie. “We use every resource available to uncover wrongdoing and to make sure that violators of the Commodity Exchange Act are tracked down and brought to justice.”

The Energy Futures Contracts Manipulated by Defendants

The defendants’ manipulative trading scheme involved three futures contracts listed for trading on the NYMEX: the Light Sweet Crude Oil futures contract (Crude Oil, also referred to as West Texas Intermediate (WTI)), the New York Harbor Heating Oil futures contract (Heating Oil), and the New York Harbor Reformulated Gasoline Blendstock futures contract (New York Harbor Gasoline). The settlement price for the Crude Oil, New York Gasoline, and Heating Oil futures contracts is derived by calculating the volume weighted average prices of futures trades conducted during the closing period for the contracts (from 2:28 to 2:30 p.m.). The volume weighted average price is referred to commonly as the VWAP.

The defendants’ manipulative scheme involved the Trading at Settlement (or TAS) contracts in Crude Oil, Heating Oil, and New York Harbor Gasoline contracts. TAS contracts are futures contracts, except that the parties determine at the initiation of the contract that the price of the TAS contract will be the day’s settlement price plus or minus an agreed differential. A TAS contract which has been bought or sold can be offset by trading a futures contract in the opposite direction.

The Manipulative Scheme

The manipulative scheme, in defendant Dowson’s words, to “bully the market,” involved trading a significant volume of futures contracts in Crude Oil, Heating Oil, and New York Harbor Gasoline in the opposite direction of the associated TAS position, before and during the close of the contracts. The defendants’ goal in trading the large volume of futures was to improperly influence and affect the price of futures contracts in Crude Oil, Heating Oil, and New York Harbor Gasoline. The defendants’ manipulative scheme was, in the words of defendant Meijer, “built on the idea that we can control the VWAP.”

As alleged in the complaint, the scheme ultimately permitted defendants to profit regardless of the direction of the market move, provided that Optiver’s futures trading in the close and before the close was in the opposite direction of the TAS position it had accumulated during the trading day.

For further detail on the allegations, please see the complaint and background documents found in Related Links.

The Commission wishes to thank the U.K. Financial Services Authority and the New York Mercantile Exchange for their assistance with this investigation.

The following CFTC Division of Enforcement staff members are responsible for this matter: Manal Sultan, David Acevedo, David MacGregor, Michael Berlowitz, David Oakland, R. Stephen Painter Jr., Eliud Ramirez, Derek Shakabpa, Judith Slowly, Lara Turcik, Lenel Hickson Jr. and Vincent McGonagle. Michael Penick and Andrei Kirilenko from the CFTC’s Office of Chief Economist are also responsible for this matter, as well Dr. Young Hwan Byeon, an Economist from the Korean Financial Supervisory Service.
Last Updated: July 24, 2008

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Check the comments on Alexis Glick's Blog

http://glickreport.blogs.foxbusiness.com/2008/07/23/the-sec-battle-round-2/#comments

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Patrick Byrne, (aka Hannibal) OSTK CEO throws us a bone.

I do know Chanos record and will be blogging about (and posting) it as soon as I have some time to finish that one  up. I left a teaser for it at the end of one story in Deep Capture: The Analysis.
http://www.investorvillage.com/smbd.asp?mb=3532&mn=21907&pt=msg&mid=5269330

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David Patch of InvestigateTheSEC.com writes

Jim Chanos and MFA Admit to Naked Short Selling
http://www.investigatethesec.com/drupal-5.5/node/341

Letter CPIC and MFA Letter to SEC on Short Sale Order 7.18.08.pdf   
http://www.investigatethesec.com/drupal-5.5/files/CPIC%20and%20MFA%20Letter%20to%20SEC%20on%20Short%20Sale%20Order%207.18.08.pdf


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To Refresh Your Memory on Chanos (see my prior "naked short" blogs)

Well, to make a long story short, Miss Ashley Dupree as it turns out, was living in the beach house James Chanos, President of Kynikos hedge fund, owns. 
He is interviewed in the Bloomberg video, and you can hear a little more about him the Bud Burrell radio interview.

Bloomberg Phantom Shares Video Featuring Patrick Byrne
http://video.google.com/videoplay?docid=4490541725797746038

http://www.financialsense.com/Experts/2008/Burrell.html
Bud Burrell weighs in on Naked Short Selling — Audio File

James Chanos is also being sued by Fairfax Financial Holding for trying to destroy his company.

Excerpt

Hedge Fund Hit Man Hired by Cohen, Loeb, Sender, Says Insurer
By Anthony Effinger

Aug. 24 (Bloomberg) -- One morning in 2005, an unusual letter arrived for Rev. Barry Parker at St. Paul's Anglican church in Toronto. The news: A member of his flock was out to swindle the parish.

``Dear Father,'' the note begins. ``The attached documents are being sent to you out of my concern for the Church's finances.''

The letter goes on to say that the allegedly wayward parishioner, an insurance executive named Prem Watsa, was bilking shareholders of Toronto-based Fairfax Financial Holdings Ltd.

``I am perplexed by the mystifying, spectacular rise of this insurance medusa,'' the typed letter reads. ``Be aware, Father, be skeptical and ask Mr. Watsa to make a full confession.'' The note was signed P. Fate. The return address was that of St. Patrick's Cathedral in New York.

Stranger still is what Fairfax says is the source of the letter: A cabal of hedge fund managers -- among them James Chanos, Steven Cohen, Daniel Loeb, David Rocker and Adam Sender -- hoping to profit from a slump in Fairfax stock. Fairfax, which has a history of accounting lapses, sued eight hedge fund firms for racketeering in July 2006, demanding $6 billion in damages.

The insurer says the letter to Parker, excerpts of which were included in its complaint, was just one of many dirty tricks the fund managers used to smear the company, which has 8,000 employees and $26.8 billion of assets. The hedge funds deny wrongdoing.

MI4
At the heart of this story is a freelance research analyst named Spyro Contogouris, whose previous -- and often contentious -- dealings have ranged from Houston real estate to Nigerian natural gas. Until recently, Contogouris, 46, ran a firm that sounded more cloak-and-dagger than stocks-and-bonds: MI4 Reconnaissance LLC, based in New Orleans.

Fairfax says the hedge fund firms paid Contogouris and MI4 employee Max Bernstein to send out slanderous reports about the insurer and to harass its executives.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aaza4TiCAtxE&refer=home

Bad Things Happen To Bad Peoplehttp://imustimes.wordpress.com/2008/03/12/bad-things-happen-to-bad-people/
March 12, 2008 by channelXRFR

Jacobs: Spitzer just picked targets of opportunity. He was very selective about it. It’s not the he sprayed the whole area with a shotgun with #7 bird-shot. Spitzer just picked his targets carefully to make sure he made a point.

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CNBC, owned by GE, is the business channel that covers the stock market every weekday from probably 4 in the morning to 8 or 9 at night. They did not cover the SEC meeting yesterday with Chrisopher Cox and Congress in real time although they did mention it now and again, to feign covering it. It was a quickie, as I mentioned above, 2 1/2 hours to deal with the melt down of the financial system, and cox looked very uncomfortable during the grilling, although he weaved and bobbed with the best of em, and Congress has plenty to think about when they have time, and I figure they probably have way more going on behind the scenes then they are showing, as the American citizens and the good people of the world struggle for transparency during this Government and Wall Street Cover-Up.

Hearings on Systemic Risk
I wonder if the transcript is out yet.

Duh. A camera panned the seats and they were mostly empty. No reporters. Nuttin. I suppose the captured ones find it more entertaining to be sipping an appletini in the Hamptons. For the lazy ones, Fire Island will have to do.

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Our appeal before the Court of Appeals for the Sixth Judicial District of the United States for Provenge comes up next Tuesday July 29.
http://caretolive.com/

1 in 6 men get prostate cancer. Why did the FDA delay Provenge, for late stage prostate cancer, a safe and non toxic immunotherapy that was shown to prolong survival and greatly improve quality of life, for men who are out of options?

Kerry Donahue, Attorney CareToLive

CareToLive v. yon Eschenbach, No. 07-4465
(6th Cir. oral argument set for July 29, 2008)

Oral arguments
July 29th at 1:30 pm
Potter Stewart United States Court House
100 East Fifth St., Cincinnati, Ohio

The Sixth Circuit Court in Cincinnati, Ohio
Appeal No. 07-4465
Southern District of Ohio Court decision (case # 07-729)

Today the FDA sent a Federal Rule of Appellate procedure 28 letter to the Sixth District Court which you can review here.
http://caretolive.com/wp-content/uploads/2008/07/caretolive-defs-rule-28j-letter-20080716.pdf

Our Counsel then filed a response seen here
http://caretolive.com/wp-content/uploads/2008/07/ctlfdarule28-responsea.pdf

and his own Rule 28 letter with attachments, seen here
http://caretolive.com/wp-content/uploads/2008/07/ctlfdarule28jlettera.pdf

excerpt

The District Court in this matter made its decision on both the requested  injunctive relief and the averments of the complaint without considering the  whole APA record in this matter. The need for greater transparency of FDA  actions with regards to matters of such great public importance is imperative to  the confidence of the Citizens in its government agencies. Transparency was  denied in this case due to the treatment of the case by the lower Court when it  failed to order production or consider the APA record, as discussed in the new  Court decision attached. The District Court essentially dismissed the matter  without even reviewing the CR letter sent to the applicant, which is a part of  the APA record and which was offered to be made available to the Court by  Appellee.
Sincerely,
Kerry Donahue

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Ed at Pharmalot Bags It!

http://www.pharmalot.com/2008/07/civil-servant-disobedience-a-critical-fda-site/

Civil Servant Disobedience: A Critical FDA Site
11 Comments
By Ed Silverman // July 18th, 2008 // 12:55 pm
A new web site called Thoreau-FDA.com has emerged that is highly critical of the agency and, in particular, FDA commish Andy von Eschenbach, who is accused of oppressing FDA employees and preventing them from doing their jobs. The site, which is anonmyously crafted, is allegedly the brainchild of an unknown number of current and former agency employees.
Their goal: “to intensify public scrutiny of FDA upper management’s efforts at ensuring public health protection in an increasingly complex global marketplace…and engage (Andy), his successors and FDA upper managers in a public question and answer dialog … to end the entrenched process flaws in FDA’s pre-approval drug review and post-approval regulatory enforcement systems.

http://www.thoreau-fda.com/letter.php

Link above. Customize this letter and tell Commissioner "Andy" (as he likes to be called) Von Eschenbach what you really think about the delay for over a year of the immunotherapy Provenge for the 30,000 American men who die of prostate cancer every year without any options(not to mention the rest of the men in the world).

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Is this the kind of quantitative analysis they are referring to?

http://thaihauk.wordpress.com/2008/07/23/dendreon-and-provenge-–-the-fda-expostulative-colloquium-binding/

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http://www.boston.com/news/globe/magazine/articles/2005/10/02/to_be_frank/

Meet Barney Frank. He presided over the meeting on Systemic Risk.



To Be Frank

By Charles P. Pierce  |  October 2, 2005

Even by the standards of Washington, D.C., this is an impressive gathering of expensive suits. The crowd jamming the committee room is dark and woollen. It makes the waitstaff at Waterman Funeral Home look like the Village People. An American city has drowned this week, and the Committee on Financial Services of the House of Representatives has gathered for a "briefing" - not a "hearing," there wasn't time for a hearing - and that has brought all the pinstripes and muted handkerchiefs into this room.

. . . . .
Twenty-five years after he went to Washington, and 15 years after he survived a sex scandal that it's hard to imagine any politician surviving today, this once-rumpled, still-gay congressman from Bayonne, New Jersey, is one of the most formidable and influential members of the House. Barney Frank's powerhouse role on Capitol Hill is a triumph both public and private.

 Excerpts

Back in 1985, Frank had engaged the services of a male escort named Stephen Gobie, who had advertised his "hot bottom" in a personal ad. Over the next two years, while Frank was trying to decide whether to come out, he and Gobie carried on a clandestine affair, during which time Frank hired Gobie as a driver despite knowing Gobie was on probation for drug possession and for possession of child pornography. Frank used his House privileges to fix Gobie's parking tickets. He wrote a memo trying to clear Gobie from probation that was disingenuous at best and an outright deception at worst. Gobie repaid Frank by running a prostitution service out of Frank's Capitol Hill apartment. When Frank discovered this, he fired Gobie and ended their relationship. Then, in 1989, just two years after Frank's announcement that he was gay, Gobie told his story to the conservative Washington Times.

There was an immediate public outcry. Frank confirmed the basic details of his relationship with Gobie and the financial and other favors he'd done, but he angrily denied he'd been aware that Gobie had gone into business for himself in Frank's apartment. Even so, it was an astonishing act of indiscreet self-indulgence, especially for the stiff-necked ethics scold who'd shown no pity for the various Abscam defendants. Even Frank's closest Massachusetts friends were shaken. And The Boston Globe called for Frank to resign, so as to spare the voters the pain of having to confront his sex life in the voting booth.

Instead, Frank admitted what he'd done, denied what he hadn't, and took his case to the House ethics committee, which recommended a reprimand by the full House, a lesser penalty than the censure that had been requested in a motion by a notorious back-bench bomb thrower named Newt Gingrich. The punishment was handed down in 1990.

Frank set out to rehabilitate himself. He declined the Globe's invitation and ran ferociously for reelection in 1990, winning with 66 percent of the vote. He worked doggedly at legislation. Moreover, he found a kind of power in his unique position. When Republican aides began circulating rumors that then Speaker Thomas Foley was gay, Frank called in the press and said that, if the whispers didn't stop, he would publicly out any Republican member whom he knew to be gay. The whispers stopped.

"I honestly don't know if I'd have done it," he says, citing a moment in Gore Vidal's political drama, The Best Man, in which two politicians talk about blackmailing someone who's gay. Frank recalls one of them saying: " `I wasn't telling you to do it, you stupid bastard. I was telling you to threaten to do it.'"

Frank also watched as Gingrich rose in power until, in 1994, the Georgian orchestrated a Republican takeover in the House that gave the GOP control of both chambers of Congress for the first time in 40 years. In a way, Gingrich, who became speaker, and his revolution completed Frank's political rehabilitation. His essential gifts suited a politician in opposition.

Almost from the start, Frank perceived a schism in the personality of the new speaker, who fancied himself not only a gifted political partisan but also a towering cultural and sociological visionary. The two sides were not compatible, and Frank, who was uniquely attuned to the problems of living any kind of a double life, sensed an advantage and tormented Gingrich almost from the moment that the latter picked up the speaker's gavel. This eventually prompted some decidedly unvisionary whining from Gingrich, who, Frank decided, was what is called in the fight game "a bleeder."

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It's a lucrative game." James Cramer Wallstreet Confidential (see deep capture)

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The hedge fund industry howls with outrage over the new SEC temporary rule..."It's not a big problem"...is now...it could ruin the markets if curtailed...hmmm
Location: Blogs   Bob O'Brien's Sanity Check Blog         
Posted by:   bobo    7/21/2008 4:29 AM


http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/701/Default.aspx

The Easter Bunny Blog
44 Comments

Excerpts

The hedge fund industry howls with outrage over the new SEC temporary rule..."It's not a big problem"...is now...it could ruin the markets if curtailed...hmmm

Location: Blogs   Bob O'Brien's Sanity Check Blog         
Posted by:   bobo    7/21/2008 4:29 AM

UPDATE 7/22. Over the last few days, the hedge fund apologist media choagies have been in full roar. Nobody is discussing the massive fails that the FTD data shows to be fact, nor are they discussing the SEC's new data showing that the market maker exemption is largely responsible for many of the fails, i.e. it is being abused to manipulate, not hedge or make markets.

No, instead we have been treated to endless proclamations about how good shorts are for the market, how vital they are, and basically unlimited air and print time trying to confound legal short selling (where the seller borrows the stock ahead of selling it), and illegal market manipulation using delivery failures, where the sell order is placed with no borrow, and no intention of delivering.

This should surprise nobody who's been a regular reader of this blog.

I've gotten a lot of emails from people who are unclear on why I'm so disgusted with the market maker exemption from the SEC's emergency measure. Let me explain. The large prime brokers on Wall Street have facilitated and profited hugely from naked short selling. It couldn't take place without them acting as a cartel and cooperating with each others' fictional stock sales. They are a huge part of the problem. But now, they not only are protected by this emergency order from the very crime they perfected, they have gotten an exemption so they, and they alone, can continue to naked short. That's what the exemption means. Nobody can do it to us, but we need to do it to everyone else.

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I just went to Barney's website. I urge everyone to get to know Barney.

Here is the link to Barney Frank's Congressional website. It's amazing he has time to accomplish much in between all those "important" trips he takes.

http://www.congress.org/congressorg/webreturn/?url=http://www.house.gov/frank 

May 15, 2007            

Statement of Congressman Barney Frank
On Travel Paid for by Non-governmental Sources

“Given the interest that is periodically expressed in travel by Members of Congress which is paid for by non-governmental groups, I thought it best to release the complete list of the trips I have taken since 2001, including both the destination and the sponsoring organization, as reported in my required annual Financial Disclosure Statements.  As the list makes clear, the overwhelming majority of these trips were taken for purposes of political advocacy.  I believe it is an important part of my job to push in the political sphere for the public policies for which I work officially.  There are several major subgroups within the advocacy category to which I give particular attention, and from which I receive a number of invitations.

“First, I believe it is very important for elected officials to do all that we can to encourage young people to be politically active. For this reason, I try very hard to accommodate any request I get to speak to colleges and universities. Second, as one of only a few openly gay or lesbian elected officials in America, I am frequently asked to speak to gay political groups. I was one of the organizers of the National Stonewall Democratic Federation, a gay Democratic organization, and I promised at the time of the founding to accommodate requests from that organization to speak whenever I could do that without impinging on my duties. Third, because I very much wanted to see the Democrats regain control of Congress, I put a high priority on accepting speaking invitations from various state and local Democratic party organizations throughout the country, especially in areas where the Democrats faced a difficult fight.  Now that the Democrats are back in the majority as a result of the most recent elections, I continue to receive requests to make appearances before such groups for the purpose of developing strategies for advancing Democratic values and expanding the Democratic majority.  And, fourth, I have been invited to speak to a number of liberal citizen advocacy organizations, and I am eager to accept these invitations whenever I can to encourage political activity for progressive causes by various citizens.  As indicated in the table that appears below, 78 percent of my non-governmentally sponsored travel since 2001 has fallen under these four categories.

“I have also been active through my work on the Financial Services Committee (where for four years I was the senior Democrat, and since the beginning of this year have been the Chairman) in international economic matters. I believe that one of the most important issues facing us is to see that globalization is carried out in a socially progressive manner. Thus I have taken several trips to international economic conferences, including those in Davos, Switzerland where I have been four times, though my participation in three of the Davos trips was funded by the U.S. Government, rather than a non-governmental entity.

“Finally, because of my role on the committee, I have spent a considerable amount of time working to familiarize myself with the details of the committee’s agenda.  Some of that work is accomplished when I speak with various citizen groups, which include consumer advocates, people concerned with housing, predatory lending, etc.  In other cases I accept invitations to meet with various entities in the financial services field.  For example, I have been to the New York Stock Exchange, the NASDAQ, and the Mercantile Exchanges in Chicago because they are important institutions which the committee regulates to some extent, and I believe it is important to have a good understanding of how they function, a goal which is advanced in part by visiting them.  I would add that, as a result of the increased responsibilities and time constraints that come with the committee chairmanship, I will be taking fewer trips than I have in the past.

“Attached is the list of destinations, sponsoring organizations, and trip durations for all of these trips dating to the beginning of 2001.”

U.S. Congressman Barney Frank

Summary of Travel Funded by Non-Governmental Sources

(As reported in Rep. Frank’s annual Financial Disclosure Statements for 2001 – 2006, with supplementary information for 2007)

Category                                                                     Number of Trips

Gay, Lesbian, Bisexual,                                                               38
Transgender Organizations

Advocacy and Community Groups                                            19

Colleges and Universities                                                          16

Democratic Political Organizations                                           12

Financial Services Groups                                                          9

Media Appearances                                                                     6

Non-Federal Democratic Candidates                &