3 Deep Capture reader contributions are submitted below, with the link to review the context which they were offered.
As Dr De Costa suggests, these summary opinions are very additive to overall student understanding.
deepcapture.com
Dr. Jim DeCosta says:
January 20, 2010 at 9:08 am
Here’s a snip-it from Book #9 and a letter to Congress in re:the proximate cause for the Bear Stearns and Lehman Brothers share price evaporation. This doesn’t address the ancillary roles of CDS’s, pulling of credit lines, put options,…Certain events placed them at the edge of the cliff but the autopsy clearly shows that they were pushed.
“I would refer you in Congress to the results of a very exhaustive “post-mortem examination” performed on these two admittedly damaged corporations by Dr. Rob Shapiro the Clinton administration’s former Under Secretary of Commerce and Dr. Nam Pham released in April of 2009. You can study their findings at sec.gov.
As you will notice in the Bear Stearn’s attack from the first quarter of 2007 to March of 2008 although “declared short sales” (“short interest”) increased an incredible 4-fold their failures to deliver (FTDs) increased an astronomical 145-fold. Similarly, in the case of Lehman Brothers from the third quarter of 2007 to September of 2008 their “declared short sales” also increased 4-fold but their FTDs increased a mind-boggling 151-fold. Despite these remarkably aberrant statistics to this very day the SEC, the DTCC, the Wall Street lobbyists and FINRA still feel compelled to stick to their story. WHY? What might the repercussions be if the truth be told as to the integral role of abusive short selling crimes in the demise of these corporations and the near demise of our entire financial system? Note that these massive increases in “strategic” (Dr. Leslie Boni 2003) delivery failures in these two corporations illustrate the concepts of “targeting” a corporation deemed to be at least temporarily an “easy prey” as well as the concept of perpetrating criminal activity while “working in concert” i.e. “racketeering”.
Unlike an increase in a corporation’s declared “short interest” even a mild increase in FTD levels might imply the intent to defraud. The benchmark to evaluate in regards to “intent to defraud” issues is the increase in FTD levels above the historical norms for that particular corporation. Perhaps even more impressive than Bear Stearn’s 145-fold increase in FTDs is the fact that this represented a 57-fold increase in FTDs above the previous all-time “high water” mark. Only corrupt Wall Street bankers, “deeply captured” regulators and conflicted SROs in the midst of a gigantic cover-up process could possibly refer to statistics like these as mere “background noise” that should be filtered out.”
Reply
Dr. Jim DeCosta says:
January 20, 2010 at 9:30 am
But wait the statistics get much, much more aberrant when you factor in how the NSCC’s CNS operates:
“In regards to the Bear Stearns and Lehman Brothers attacks one might intuit that abusive short sellers willing to induce the triggering of the potential systemic risk repercussions and the inevitable microscopic scrutiny of their actions associated with attempting to take down two systemically important institutions would not direct the clearing of these nefarious trades through the NSCC’s CNS system for all to see. It’s a bit hard to appreciate but the 145-fold and 151-fold increases in FTDs are actually grossly low. The question begging to be asked is whatever happened to the inevitable microscopic scrutiny of the trading data. If it did occur then why were the results covered up?
One must also keep in mind that the 145- and 151-fold increases in FTDs only address those FTDs that survived “pre-netting” at the CNS. One would also have to factor in the FTDs held at trading desks via “desking” or “broker/dealer internalization”, those held in “ex-clearing arrangements” between abusive clearing firms, those held in Canadas’s “Central Depository for Securities” or “CDS”, those held in other clearance and settlement systems offshore, etc.”
Reply
Dr. Jim DeCosta says:
January 20, 2010 at 10:52 am
I’m sorry for stealing bandwidth but I think there is an opportunity for the DeepCapture folks to advance an important notch on their own NSS learning curves. The question arises WHY would the SEC, the DTCC and FINRA make the insane utterance that a 151-fold increase in FTDs had nothing to do with Lehman’s demise? The answer is that they have to at this late hour.
What might happen if U.S. investors learned that the Bear Stearns and Lehman Brother’s statistics were not that atypical when a U.S. corporation falls into the “easy prey” category as they did? What might happen if U.S. investors suddenly realized that development stage U.S. corporations all go through a stage of development in which they present as an “easy prey” to abusive Wall Street insiders and their hedge fund “guests”?
What might the repercussions be if U.S. investors learned that many of their past investments in development stage corporations never did have a chance for success while the congressionally mandated providers of investor protection i.e. the DTCC, the SEC and FINRA sat passively by and monitored the blood-letting? These crimes have to be covered up when the investing public becomes suspicious even if it’s a little embarassing for “securities cops” to proffer that a 151-fold increase in FTDs was “background noise”.
Here’s the rub; by definition these congressionally mandated providers of investor protection cannot simultaneously be in “cover-up” mode at the same time they are supposedly providing robust investor protection.
The sad history of our markets in relation to abusive short selling frauds have our current “securities cops” handcuffed and the perpetrators of these frauds know it. That’s why the gross fraudulent conduct with BS and Lehman occurred without anybody worrying about any adverse consequences. There needs to be a day of reckoning wherein all current FTDs over a certain age are bought in and those shares are finally delivered to their purchasers. This will unhandcuff our securities cops and allow them to shift from cover up mode to investor protector mode.
Reply |
