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To: StockDung who wrote (91095)	3/31/2005 7:22:49 PM
From: Kevin Podsiadlik	Respond to of 122087

Tel: 212.855.3240 Fax:212.363.5284 March 31, 2005 lthompson @dtcc.com Mr. Peter Lee Editor Euromoney Nestor House, Playhouse Yard London EC4V 5EX U.K. Dear Mr. Lee: We were very disappointed to read Euromoney’s April issue cover article on naked short selling, which largely parrots irresponsible allegations asserted by lawyers in various litigations filed around the U.S. against DTCC and numerous broker dealers. The article fails to reflect a true understanding of the complicated securities clearing and settlement programs it discusses, fails to report that most of the litigations have, to date, been dismissed, withdrawn or are subject to dismissal motions, and, perhaps most egregiously, accepts as true characterizations of DTCC’s stock borrow program (“SBP”) that seriously misrepresent it and are wildly erroneous. While DTCC provided your reporters with written material on many of the issues raised, this information was ignored. In addition, there was little effort to fact-check information about DTCC, nor was there an opportunity to directly rebut allegations contained in the article. In repeating the essential theme of the lawsuits filed against DTCC that the SBP is at the root of naked short selling (because SBP borrowed shares allegedly are delivered to buyers in place of the shares the naked short sellers fail to deliver), the article fails to acknowledge that, in reality, only a small percentage of all deliveries (about 1.6%) are filled by shares borrowed through the SBP, although this information was provided to your reporter. This fact puts the lie to the claim, oft repeated by those seeking to misrepresent the program and, unfortunately, prominently reported by Euromoney, that short sellers feel “Who cared if you didn’t own what you sold – the DTCC would make good on your delivery.” Had the reporters done their homework, they surely would have realized that brokers who fail to deliver (and are never relieved of their legal obligation to fulfill these contracts) aren’t relying on the SBP to fill open delivery obligations. It’s hard to believe that DTCC would have been such a prominent part of Euromoney’s story if the reporters had understood this basic fact regarding the SBP and what it doesn’t do. It’s similarly shocking that Euromoney would refer to the lawsuits filed against DTCC without mentioning the outcome of most of these cases: that they have been dismissed or withdrawn. Indeed, Euromoney refers to the Sporn litigation in California, without mentioning that only last month the federal judge involved dismissed the amended complaint in its entirety. Plaintiff is now on his third version of the complaint, in a futile effort to keep the case alive. (The main case is not pending before the Ninth Circuit Court of Appeals, as Euromoney erroneously reported.) New motions to dismiss are scheduled to be heard on May 2. Apparently Sporn’s lawyer failed to mention the case history to Euromoney, and Euromoney apparently did no checking of its own. Again, the information on these cases was given to your reporters by DTCC, but appears to have been ignored by them. 2. Some Specific Mistakes in the Story In addition to these general errors, there are very specific mistakes in Euromoney’s reporting: Ø Euromoney repeatedly refers to the SBP as relying on a “lending pool” maintained by DTCC. Nothing of the sort exists. Securities remain credited to the independent DTC accounts of lending members until and unless the member informs NSCC on a daily basis that a position is available for the SBP and NSCC needs the shares to fulfill a delivery obligation that day. All of this is accomplished electronically, and there is no “pool” of shares. The notion that there could be more shares in the (non-existent) “pool” than were actually issued demonstrates a fundamental failure to understand how the system works. Ø While making much of the fact that brokers don’t force buy- ins, Euromoney never reports that NSCC has no power to compel its members to buy-in open positions. It is up to the broker to determine whether it wishes to buy-in. NSCC is not a regulator nor does it exercise enforcement powers. Those powers reside with the federal and market-based regulatory agencies. Ø After going through a confused example regarding the sale of hypothetical XYZ shares, Euromoney stumbles badly when it reports that “Buyer A and Investor B” could sell the same [XYZ] shares as a result of the SBP. In fact, if Investor B’s broker, Broker B, had lent the shares to NSCC, and Investor B later advises Broker B that he wishes to sell, Broker B must recall the loan, go into the marketplace, or force a buy-in order to settle Investor B’s sale. Nothing about the SBP enables Broker B to sell shares that it otherwise could not have sold. It is simply untrue that Buyer A and Investor B “could sell the same shares,” and Euromoney should know better than to suggest that they could. Ø Another red herring is the issue of what information NSCC shares with the public. NSCC does not disclose information regarding open positions – this is confidential information and, if disclosed, could be used to manipulate the market. Indeed, Regulation SHO does not require NSCC to disclose any confidential customer information to the marketplace; Regulation SHO only requires NSCC to report certain information to the SEC, the national exchanges and the NASDAQ, which NSCC certainly does. Ø Much is also made regarding the delivery of physical share certificates. Another red-herring. DTC routinely honors requests by its participants (acting on behalf of their customers) to withdraw a paper share certificate. What has not been permitted by the SEC are attempts by issuers (i) to remove securities that they don’t even own from DTC; and (ii) to prevent their publicly held shares from being deposited at DTC. The Euromoney article ends by noting that the naked short selling issue is “a confusing tale,” and that it is. But nothing in the Euromoney article contributes to making the issue less confusing. Indeed, by parroting allegations of plaintiffs’ lawyers, failing to conduct an independent investigation and reporting erroneous facts, the Euromoney article, unfortunately, only contributes to the uncertainty and confusion surrounding the naked short selling controversy. As a publication covering capital markets globally, we would have expected you to give greater care to this type of story. This article is far from the customary high standards of journalism normally associated with your publication. The insinuations and misinformation contained in this article are extremely troubling to us, and should be to you. We will not accept silently this type of sloppy, one-sided journalism. DTCC has been an integral part of the capital market system in the U.S for over 30 years, providing automated post-trade processing of $1 quadrillion in securities transactions in 2004. We’re one of the most highly regulated companies in the world (by the SEC, the Federal Reserve and the New York State Banking Department). Throughout DTCC’s history, we have repeatedly demonstrated our resolve to protect the integrity of our financial markets, including during the horrific attacks of September 11, 2001. DTCC personnel stayed at their desks to ensure that $280 billion of transactions were settled that day, and kept operating throughout that week to settle a total of $1.8 trillion in securities transactions. We’re asking that our rebuttal be published in your next issue as a letter to the editor and that Euromoney acknowledge that inaccurate and misleading statements occurred. Sincerely, Larry Thompson First Deputy General Counsel DTCC dtcc.com

To: StockDung who wrote (91095)	3/31/2005 9:01:11 PM
From: rrufff	Read Replies (1) \| Respond to of 122087

FINALLY! Dateline to Air Stockgate Segment April 10th by Mark Faulk After over a year of promises, postponements, and delays, Dateline finally confirmed today that they will air their report on the stock market scandal on Sunday, April 10th, at 7 pm ET. The segment, dealing with the scandal dubbed "Stockgate", has long been anticipated by advocates pushing for reform in the stock market, and was first confirmed by The Faulking Truth last June. This is an excerpt from that article: "It's been called the biggest financial scandal in the history of the world, with incurred losses estimated by some experts at well over $1 trillion dollars. It's a scandal that involves over 1,200 offshore hedge funds, over 150 US brokers, and has already bankrupted over 7,000 US companies in the past six years. According to many of the lawsuits filed to date, the crooks include terrorist groups and organized crime syndicates. Sources say that this scandal, which involves an intricate system of selling electronic counterfeit shares of stock in an effort to destroy the market value of small publically traded companies by utilizing a method known as "naked short selling", will eventually implicate almost every major broker in America, all of the governing bodies that oversee trading, and will extend into Canada and Europe." Sources at the time told us that the Dateline story contained information that would "blow the roof off of this scandal", and that Dateline had already filmed over 100 hours of explosive footage, with interviews from class action attorneys John O'Quinn (of the Houston law firm of O’Quinn, Laminack and Pirtle), and Wes Christian (of Christian, Smith, Wukoson and Jewell), who along with the law firm of Heard, Robins, Cloud, Lubel & Greenwood, who are representing clients in dozens of lawsuits filed against the SEC, the DTCC, and several of the country's largest brokerage firms. "What's Up With The SEC?" Since that time, we have learned that officials from both the SEC and DTCC have been interviewed by Dateline, and numerous other recent developments have (at long last) triggered a frenzy of media coverage over the past few weeks. In addition to that, ads have been taken out in several major newspapers, and the roles of hedge funds, who specialize in shorting stocks, have been brought into question in other fraudulent schemes as well. In fact, in an ad in today's op-ed section of the New York Times (March 28, 2005), in an editorial entitled "What's Up With The SEC?" the conservative Washington Legal Foundation ( wlf.org ), blasts the SEC for "sitting on several complaints of misconduct filed by the Washington Legal Foundation, and supported by the U.S. Chamber of Commerce, detailing examples of questionable stock manipulation by short sellers and class action attorneys". According to WLF Chairman Daniel J. Popeo, in one case, information about a class action lawsuit was leaked to short sellers who, in turn, made a huge profit by shorting the stock before the information was made public. Popeo also claims that "in other cases, short sellers and trial lawyers dish dirt about a targeted company to financial reporters, analysts, and regulators, and the damaging news sends the stock price plummeting, thereby forcing the company to settle. Short sellers then reap the profit when the stock drops." You can read that editorial in it's entirety at www.faulkingtruth.com/Articles/LettersToEditor/1010.html "If I Only Had a Hedge Fund" In a related development today, the New York Times online edition ran an article about the incredible proliferation of hedge funds today entitled "If I Only Had a Hedge Fund", in which they said that the number of hedge funds created since 1999 has increased by 209%, with 1,406 new hedge funds introduced in 2004 alone. A recent study released by Credit Suisse Boston said that hedge funds now account for half of all stock market activity, and that they now manage a staggering $1 trillion in funds. Why are managers tripping over each other to start new hedge funds? Because instead of the small fixed percentage that they get by managing traditional funds (sometimes as low as 1%), they instead 1% plus 20% of any profit the hedge fund generates, which has made many of the hedge fund managers instant multi-millionaires. In fact, according to a survey in Institutional Investor magazine, the 25 highest paid hedge fund managers earned an average of $250 million in 2003. To read the New York Times article, go to: nytimes.com With those kinds of profits to be made, it is any wonder that the SEC, the DTCC, brokers, and hedge fund managers have begun to circle the wagons? Every time a share trades hands, every one of them gets a piece of the action. Even legitimate hedge funds, those who don't engage in naked short selling, profit when their corrupt counterparts drive down the price of stocks through illegal naked short selling. And the SEC, NASD, and DTCC take their cut for every share that is bought and sold, whether that share is real or counterfeit. If the SEC needs a smoking gun, they need only to take a close look at Global Links Corp (OTCBB: GLKCE), where one investor recently bought 100% of the issued stock AND another investor bought 15% of the same stock, only to watch hundreds of millions of phantom shares continue to be bought and sold. While the SEC has ignored this curious case, Congress hasn't. Senator Robert Bennett cited the Global Links story (as first reported by Financial Wire) on March 9th when he grilled SEC Chairman William Donaldson about the naked short selling scandal, "this article just last Friday in a national publication indicates that people are still selling short shares that they don't have and clearly are never gonna acquire." This stock is merely a microcosm of the larger problem that pervades the stock market system, and serves to illustrate how pervasive the fraud really is. It is vitally important that the Dateline story gets the attention it deserves. We can only hope that their report tells the real story of this scandal, and that Congress and the major media will join us in our mission to, at long last, restore trust and credibility to our stock markets, so that honest investors can once again invest their hard-earned money and have a chance to achieve the American Dream. -------------------------------------------------------------------------------- To contact members of the US Senate Committee on Banking, Housing, and Urban Affairs, go here and click on the members' names: banking.senate.gov To contact members of the Senate Finance Committee, go here and click on the members' names: finance.senate.gov Sign the petition at www.investigatethesec.com -------------------------------------------------------------------------------- Add your name to our "Stockgate activist list" at info@faulkingtruth.com. We will email you only when we have new articles or information dealing with this issue. Please link the articles everywhere you can, post them on stock message boards, and send them to the appropriate public entities. To enact positive change requires positive action. "Few will have the greatness to bend history itself; but each of us can work to change a small portion of events, and in the total; of all those acts will be written the history of this generation." - Robert F. Kennedy For related articles on this story, read: "Is Dateline Losing Credibility Over StockGate Story Delays?" www.faulkingtruth.com/Articles/Investing101/1005.html "Is Time Running Short in Stockgate Scandal?" www.faulkingtruth.com/Articles/Investing101/1011.html "The Waiting is the Hardest Part" www.faulkingtruth.com/Articles/Investing101/1012.html "Stockgate Goes to Congress" www.faulkingtruth.com/Articles/Investing101/1019.html And for an overview into the stock market scandal, read: "Financial Terrorism in America" www.faulkingtruth.com/Articles/Investing101/1001.html