Hi rrufff,
I thought the following series of comments to Bob O'Brien's
Sanity Check piece of 12/16 (SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years) is worth posting here as well. It's my understanding that the initial comment by "tommytoyz" is by Patrick Bryne and of course, "bobo" is Bob O'Brien.
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By tommytoyz on 12/18/2008 8:11 AM
Finally people are starting to see what the SEC really is. I think even many staff at the SEC don't even know they've been played either. The broker-dealers have lied and played anyone who could be conned. Obama was conned into hiring the chief of FINRA as the next head of the SEC.
But folks, the problem will get worse. The next big crack will be at the DTCC - only we may not hear about it as such. For as brokers fail, leaving behind all their FTDs, who is responsible as counterparty for the FTRs? At the very least, the DTCC is liable to return the shares it borrowed from the stock borrow program to cover the fails of brokers and reduce FTRs. But now many brokers are gone leaving the DTCC to return the borrowed shares and eliminate the FTRs itself.
While the DTCC has held on to the purchase funds from the failing broker, it has released the money to the failing broker on a mark to market basis. If on a net basis the value of the borrowed shares used to stop gap FTRs, the remaining fundsheld by the DTCC will not be sufficient to cover the difference. So now we have the clearing agency being a player itself, rather than just worrying about clearing. Forget settling, they don't do that reliably. Now they have an interest in the market and are participants.
Who will bail them out?
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By bobo on 12/18/2008 8:27 AM
Tommy. I believe we are seeing more the implosion of funds like Copper River and Bernie's, due to stress in the system. Specifically, stress caused by their losing the ability to illegally use the options market maker exemption to chronically NSS stocks they are short. My pet theory is that Madoff isn't an issue of a classic Ponzi scheme at all - rather, it is the case of a quasi-ponzi scheme where NSS was also involved on the broker side to generate cash with which to pay off clients. If that is the case, then this blowup is due to changed regulations.
My personal feeling is that some of the contra-parties may have demanded shares be delivered, stressing Bernie's cash position as he bought in to deliver. Additionally, the timing as it relates to major NSS money launderers like Red Sea being busted is just a wee bit too coincidental for my liking. At the end of the day, we will never hear the truth, just as we will never hear the truth in Refco.
Notice how nobody mentions Refco as yet another mystifying example of the SEC being co-opted? They were negotiating a workout with Refco over naked short selling in the Bermuda Shorts case even as they gave them the go-ahead to go public.
Basically, since I've really been following this, we've had Refco, we've had Bear Stearns, we've had Madoff, we've had the Aguirre debacle, we've had the runs on the banks and the reintroduction of bear raids as the norm due to the SEC's eliminating the uptick rule. We've also seen, in the same decade they were ignoring the warnings about Madoff, the Mutual fund frontrunning scandal, and countless settlements indicating routine violation of the rules by the big brokers. And of course, we also saw them grandfather all fails under SHO, effectively legalizing counterfeiting, if post-hoc.
How is it that this agency hasn't been shut down? I mean, how obvious does it have to be? And Shapiro was part of the gang when much of this was going on - how does it make sense to have her run it, when she was part of the problem?
This is broken, and yet Washington and the press act as though it isn't. If this were in the private sector, it would be behind bars.
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By Paul on 12/18/2008 1:06 PM
Bobo
I'm confused about the status of naked shorts these days. What has been taken from them? Grandfathering? How close are we to t+3? Versus where we were a year ago?
Where did the money go? I read the Deep Capture Blogger who promised to tell us the names of 20 billionaires and their leader that were continuing to profit from this uncontrolled rigged casino (Judd Bagley).
What is the landscape?
Paul
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By Jeremiah 9:24 on 12/18/2008 1:06 PM
BobO,
You are quite correct regarding Shapiro, she is just another industry shill and will stay in bed with the manipulator/counterfeiter scum. When the NASD and SEC were pretending to care about the Berlin listing scam, and guys like David Patch were explaining to them and the investing public how the criminals were abusing the "bona fide arbitrage" exemption to the locate requirements (permitting naked short selling for NASD member firms so long as it was in conjunction with a bona fide arbitrage transaction -- NASD Rule 11830 I believe), I emailed Shapiro and specifically explained what was going on, how, who big players were, and what rules were being violated. She acknowledged receipt and thanked me for the information. Then the SEC and NASD sent a few of their people on a junket to Berlin, and came back saying "we see no naked shorting over there."
They were and are either blindly stupid or grossly corrupt. Of course, from my perspective, corrupt is stupid, in the long run. As folks like Bernie and Bethany and Herbie may just find out.
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By bobo on 12/18/2008 1:14 PM
Paul, we are basically doing a bit better now that the options MM exception has gone by the wayside - groups like Rocker found it impossible to make a profit if they couldn't violate the law by misusing the Options MM exception, and quickly imploded.
As far as NSS goes, it is still a significant issue, as deepcapture.com reports. Ex-clearing dwarfs CNS FTDs, and they just move the most egregious FTDs into ex-clearing, as I believe discovery in the upcoming lawsuits will show. That hasn't changed or gone away, nor has abuse via international clearing houses. So the game is still completely rigged, but they closed a few of the most ugly and obvious loopholes.
Where did the money go? I posited, in my work of fiction, that hedge funds were being used by clandestine arms of the government, as well as by drug cartels and mafias the world over, to launder money and generate profits for their activities. Looks like that fiction wasn't such a fiction. That, and something like half the Forbes 400 are Wall Street guys who never did anything more than move money around and pull it out of the system. They didn't invent a new drug, or better operating system, or even make shoelaces - they just ran money, and became wildly wealthy doing it - just as the Kennedy fortune was really made running stock pools (and of course, some bootlegging). Now, as in the late 20's and early 30's, the parasites took out most of the juice via the markets, leaving the real economy crippled for a decade.
Even as we swear things are different, they replay with eery similarity.
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By captdale on 12/18/2008 4:55 PM
Good job Bobo - you said: The cops are bent. The thieves run the game. You are the food, the raw material that goes into one end of the sausage grinder and is turned into their next meal.
-------------------
My friend, that is the tame version. I wish for some simple "frontier justice" to rear its ugly head and not be stopped until a very large chunk had been ripped out of their livers. And thats my tame version.
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By Paul on 12/19/2008 10:55 AM
Turns out an Financial professional in direct competition with Madoff has been providing proof of a Ponzi scam directly to the SEC since 1999. Did the SEC listen??
What do you think?
news.yahoo.com
Paul
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By bobo on 12/19/2008 10:56 AM
Paul:
Huh. And ain't it a coincidence that Madoff closed down his CLEARING FIRM, which was absorbed by the NSCC, in 1999?
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By Paul on 12/19/2008 2:51 PM
I almost never agree with Paul Krugman because his writing is so one-sided - Regarding this article I have nothing to disagree with.
nytimes.com
It is time for Wall Street to serve Main Street. Period
Paul
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By mhelburn on 12/19/2008 8:29 PM
I would like to ask the former SEC attorney Richard Sauer if he is a crook. Why would a respectable person need a code name of "Lavaman". Maybe the guy dresses in disguises.. and Bethany wouldn't recognize him...
Bernard Madoff’s niece, Shana Madoff, served on FINRA’s Compliance Advisory Group as Ms. Schapiro was heading FINRA. Shana Madoff resigned that position this week. WTF...
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By mhelburn on 12/20/2008 6:41 AM
"I'm betting old Bernie was into money laundering on a large scale." See Spose's comments...
From Bloomberg
Federal investigators found evidence he ran an unregistered money-management business alongside his firm’s brokerage and investment-advisory subsidiaries, two people with knowledge of the inquiry said.
Clients of the undisclosed unit may have included hedge funds, Investigators are examining why Madoff’s wife’s name appeared on documents linked to transactions under scrutiny.
Ruth's name appeared in the London office... Run the money through one place and back and it is clean.... Drop the money into a slush fund with Bernie and then do a transfer between entities.... make the trail a little longer...
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By rtway on 12/21/2008 8:24 AM
When the hell are we going to call this what it is. We have an internal enemy just as sinister as Bin Laden. Taking down a widow or a child in need by depriving them of financial life blood or letting them sucumb to sicknesses or diseases that can be cured but won't because someone stopped the funding is this any different them putting them to torture. We have a enemy within that has better camoflague than our troops. It is called the media and they are work hand in hand with the well organized theives who also wear the uniform of a politician or regulator. What is the line in the sand? When they want a civilian army and for us to give up our weapons. I'm no gun advocate but I sure feel the need to own one now. If our government doesn't start taking criminal action soon against the SEC our democracy is toast and they will have shown their hand. I see Obamas new appointment as the true test, and I think I know the outcome. Thanks for good reporting Bobo.
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By kevin on 12/21/2008 8:25 AM
History of private banks.
hermes-press.com
Re: SEC Allows Deci-Billion Dollar Ponzi Scheme to Run For Years By pjstevenson on 12/23/2008 7:13 AM
Well folks, we are one step closer to losing control of our assets.
Who can stop this?
Pete
thesanitycheck.com |
