Oklahoma Passes Landmark Stock Market Reform Law
by Mark Faulk
The state of Oklahoma today passed landmark legislation dealing with fails to deliver in the stock market, by an overwhelming margin. The final vote in the State House of Representatives was 81-12 in favor of State Bill 979, with eight legislators not present. The legislation will now go to Oklahoma governor Brad Henry to be signed. SB 979 is considered by stock market advocates to be an important step in dealing with an issue that many feel has been ignored at the federal level by both the SEC and Congress.
Although there has been some support at the federal congressional level to tighten or even rewrite laws dealing with stock market reform, the inaction on the part of the SEC has caused millions of small investors, with support from the North American Securities Administrators Association and the U.S, Chamber of Commerce, to refocus their efforts on reform at the state level, making the Oklahoma victory even more significant. Oklahoma representative Guy Liebmann called the overwhelming victory “a clear mandate.”
Last month, in a commentary supporting SB 979 that was published in the Oklahoma City-based magazine NONzine, and reprinted online at The Faulking Truth, I said that:
Every day, six billion dollars worth of shares are purchased in companies in the US stock market, and not delivered. Someone signs on to their brokerage account, or more accurately, millions of someones sign on, and pay for shares in companies that their broker doesn’t deliver. In some cases, those shares are never delivered, creating what is essentially a flood of counterfeit shares in publicly traded companies, harming both investors and the companies themselves.
In the next few weeks, the Oklahoma Legislature will vote on a landmark bill that could serve as the model for stock market reform efforts nationwide. It has been written to withstand the legal assault that Wall Street has unleashed on other legislation introduced in other states. The measure, SB979, has already passed the Senate and will come up for a vote in the House sometime in the next few weeks.
This issue is NOT as much about Wall Street screwing investors as it is about the loss of potential jobs, local and state tax revenue lost, citizens’ investment funds stolen, and retirement funds decimated. It’s about hedge fund managers building hockey rinks in their backyards while the rest of the country struggles just to make ends meet. It’s about CEOs of the major brokerage firms getting bonuses amounting to tens of millions of dollars a year while small startup companies are forced into bankruptcy before they even have a chance to see if they can flourish on their own merit.
The Oklahoma legislation requires that, among other things: “Upon any filing of a periodic Short Interest or Short Interest report with the Securities and Exchange Commission or a self-regulatory organization, or the filing of any record that contains such information, every broker-dealer shall contemporaneously file a copy of such report, or record containing such information, with the Administrator”.
It also states that: “Every broker-dealer shall file with the Administrator, on a quarterly basis, all ledgers or other records reflecting securities failed to receive and failed to deliver…which are already created and maintained in accordance with Exchange Act Rule 17 CFR 240.17a-3(a)(4)(v).”
The bill also lists the rights of purchasers of stock who don’t receive delivery to pursue legal action against broker-dealers to recover money lost because of failures to deliver, as well as interest, attorney’s fees, and damages. It is expected that this bill will now be used as a model by other states that are interested in protecting their own citizens’ rights to buy and sale stock with the assurance that what they are paying for is actually delivered, and in assuring that companies that decide to raise money in the stock market won’t become victims to stock manipulation and fraud.
While the NASAA doesn’t comment on individual state efforts concerning stock market reform, General Counsel Rex Staples did say that the “NASAA’s position is the same that we’ve held all along as an organization. We will continue to push for resolutions to the problems that we see with naked short selling. At the same time, I’m taking SEC Chairman Cox at his word that he’s going to do something about the issue on a federal level.”
While it’s almost a certainty that attorneys for the securities industry will challenge the new law, as they did in Utah, advocates feel certain that the Oklahoma legislation is written to comply with federal guidelines.
We have posted the final version of Oklahoma State Bill 979 in its entirety at:
faulkingtruth.com
--------------------------------------------------------------------------------
Mark Faulk is the Editor of The Faulking Truth, and the author of the upcoming book entitled "The Naked Truth: Counterfeiting the American Dream," due out (after several delays due to new developments in the story) in mid-2007. For more information on the book and on the stock market scandal, go to faulkingtruth.com , and to pre-order your copy, go to theownersgroupinc.com He is also the host of "The Faulking Truth" radio show, which airs every Friday from 10-11:30 AM EST at www.cfrn.net , and is available for download after the show at www.streetiq.com/dir/CFRN.shtml
-------------------------------------------------------------------------------- |
