Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (93942)	3/16/2006 12:03:20 PM
From: StockDung	Respond to of 122087

Vincent Lo Castro CMKX naked shorting victim. Ever hear of him? ===================================================== Pinnacle Business Management, Inc., Vincent A. Lo Castro, and ... Pinnacle Business Management, Inc., Vincent A. Lo Castro, and Jeffrey G. TURINO, ... The Commission's complaint charges that Pinnacle, Lo Castro and TURINO ... www.sec.gov/litigation/litreleases/lr17507.htm - 7k - Cached - Similar pages ========================================== fron CMKX shareholder list: bonesgfx.com 9595 1085 Vincent Lo CastroPA 5,065 12/18/02 01/07/03 3,000,000 (3,000,000) 9596 9597 9598 1086 Vincent Lo CastroPA 5,068 12/18/02 01/07/03 4,000,000 (4,000,000) 9599 Page 246 of 788 1 As of 12/31/2004 Sorted by Shareholder Account 2 3 Shareholder Cert. Date Date Issued Surrendered 4 Account Name Number Issued Surrendered Shares Shares 5 9600 9601 1087 Lo Castro & Assoiciates PA 5,067 12/18/02 02/11/03 3,000,000 (3,000,000) 9602 1087 Lo Castro & Assoiciates PA 5,084 12/31/02 02/12/03 10,000,000 (10,000,000) 9603 1087 Lo Castro & Assoiciates PA 5,097 01/06/03 01/30/03 17,000,000 (17,000,000) 9604 1087 Lo Castro & Assoiciates PA 5,647 01/28/03 02/06/03 17,000,000 (17,000,000) 9605 1087 Lo Castro & Assoiciates PA 5,648 01/28/03 02/11/03 16,000,000 (16,000,000) 9606 1087 Lo Castro & Assoiciates PA 5,941 02/11/03 02/24/03 17,000,000 (17,000,000) 9607 1087 Lo Castro & Assoiciates PA 5,942 02/11/03 02/24/03 17,000,000 (17,000,000) 9608 1087 Lo Castro & Assoiciates PA 5,943 02/11/03 02/27/03 17,000,000 (17,000,000) 9609 1087 Lo Castro & Assoiciates PA 5,944 02/11/03 03/05/03 17,000,000 (17,000,000) 9610 1087 Lo Castro & Assoiciates PA 6,075 03/01/03 03/14/03 20,000,000 (20,000,000) 9611 1087 Lo Castro & Assoiciates PA 6,076 03/01/03 03/11/03 20,000,000 (20,000,000) 9612 1087 Lo Castro & Assoiciates PA 6,077 03/01/03 03/19/03 20,000,000 (20,000,000) 9613 1087 Lo Castro & Assoiciates PA 6,078 03/01/03 03/24/03 20,000,000 (20,000,000) 9614 1087 Lo Castro & Assoiciates PA 6,654 08/29/03 09/19/03 50,000,000 (50,000,000) 9615 1087 Lo Castro & Assoiciates PA 6,980 09/15/03 09/26/03 50,000,000 (50,000,000) 9616 1087 Lo Castro & Assoiciates PA 6,981 09/15/03 09/26/03 50,000,000 (50,000,000) 9617 1087 Lo Castro & Assoiciates PA 6,982 09/15/03 09/26/03 50,000,000 (50,000,000) 9618 1087 Lo Castro & Assoiciates PA 6,983 09/15/03 10/08/03 50,000,000 (50,000,000) 9619 1087 Lo Castro & Assoiciates PA 6,984 09/15/03 10/08/03 50,000,000 (50,000,000) 9620 1087 Lo Castro & Assoiciates PA 6,985 09/15/03 10/08/03 50,000,000 (50,000,000) 9621 1087 Lo Castro & Assoiciates PA 8,140 09/29/03 10/14/03 50,000,000 (50,000,000) 9622 1087 Lo Castro & Assoiciates PA 8,643 10/10/03 10/22/03 100,000,000 (100,000,000) 9623 1087 Lo Castro & Assoiciates PA 8,644 10/10/03 10/22/03 100,000,000 (100,000,000) 9624 1087 Lo Castro & Assoiciates PA 8,645 10/10/03 10/22/03 100,000,000 (100,000,000) 9625 1087 Lo Castro & Assoiciates PA 8,646 10/10/03 10/22/03 103,938,000 (103,938,000) 9626 1087 Lo Castro & Assoiciates PA 8,647 10/10/03 10/22/03 46,062,000 (46,062,000) 9627 1087 Lo Castro & Assoiciates PA 9,188 12/19/03 01/05/04 300,000,000 (300,000,000

To: peter michaelson who wrote (93942)	3/16/2006 12:15:14 PM
From: StockDung	Respond to of 122087

Oh, by the way.... re Ms. Trimbath... has anyone pointed out that she flew from her home in Calif all the way to Trenton New Jersey to testify? Or that she was an expert witness in one of the O'Quinn suits that was tossed? ============================================== DTCC Clarifies Work Experience of Former DTC Employee NEW YORK--(BUSINESS WIRE)--March 14, 2006--The Depository Trust & Clearing Corporation (DTCC) issued a statement to correct inaccurate information that has appeared in the press and has been represented on Web sites and in public forums regarding the purported work experience of a former employee at one of DTCC's subsidiaries. Susanne Trimbath has never been an official of DTCC or any DTCC subsidiary or predecessor company. She has never been an officer of the company or any of its subsidiaries. Our records indicate that Susanne Trimbath was hired by The Depository Trust Company (DTC) in 1987 as a manager of transfer agent services, a corporate middle-management position below officer level. Ms. Trimbath resigned from her DTC employment in 1993 holding the same position. There have been claims that Ms. Trimbath is an expert on clearance and settlement and the Stock Borrow Program. The Stock Borrow Program is now, and was at the time of Ms. Trimbath's employment at DTC, operated by the National Securities Clearing Corporation (NSCC), a separate company from DTC. In fact, Trimbath's employment at DTC pre-dates any corporate affiliation between DTC and NSCC, and predates the formation of DTCC. At DTC, Ms. Trimbath was responsible for representing DTC's interests with transfer agents for DTC-eligible securities regarding DTC's business interactions with these agents. She never held a position in any operations area that dealt directly with electronic clearance and settlement or the Stock Borrow Program. Contacts The Depository Trust & Clearing Corporation Stuart Z. Goldstein, 212-855-5470 sgoldstein@dtcc.comAt A Glance Depository Trust & Clearing Corp. Source: via Business Wire Updated 02/15/2006 by company Headquarters: New York, New York Website: dtcc.com CEO: Jill Considine Employees: 2,500 Organization: Private Revenues: $1.279 billion (2005) Net Income: $16.9 million (2005)

To: peter michaelson who wrote (93942)	3/16/2006 1:59:25 PM
From: eWhartHog	Respond to of 122087

Three New York Hedge Funds Settle Charges Tied to Trading By KARA SCANNELL March 15, 2006 WASHINGTON -- Securities regulators filed and settled charges against three New York hedge funds and their portfolio manager for allegedly engaging in a deceptive trading strategy involving insider trading, unregistered stock transactions and "naked" short sales. Langley Partners LP, North Olmsted Partners LP and Quantico Partners LP, along with their portfolio manager, Jeffrey Thorp, agreed to pay $15.8 million in disgorgement and penalties to settle, without admitting or denying wrongdoing, insider-trading charges and allegations of trading unregistered securities of 23 companies. Andrew Gordon, a lawyer representing Mr. Thorp and the hedge funds, didn't return a phone call seeking comment. The allegations come amid heightened attention to hedge funds and their trading practices by regulators and are part of a broader Securities and Exchange Commission probe into improper trading in the private-issuer market, where companies raise money through a type of unregistered security known as a Private Investment in Public Equity, or PIPE. "This case is an example of our ongoing effort to stamp out fraud and other trading abuses by investors in the PIPEs market," said Scott Friestad, an associate director in the SEC's division of enforcement. "We have devoted substantial resources to these investigations and will continue to do so." Hedge funds, lightly regulated investment pools that invest money for wealthy investors and institutions, are among the most active investors in the PIPEs market. In a PIPE transaction, a company sells unregistered shares that are usually locked up for two to four months until the shares are registered and free to be traded on the open market. PIPE deals are sold at a discount because of their illiquidity. Many investors hedge the PIPE by shorting the public stock, but to do so legally an investor needs to borrow enough publicly traded shares to cover the short. It is against U.S. securities laws to use unregistered stock to cover a short sale. According to the SEC complaint, from 2000 until 2002 "to avoid detection and regulatory scrutiny, Thorp employed a variety of deceptive trading techniques, including wash sales and matched orders, to make it appear that he was covering his short sales with legal, open-market stock purchase." Mr. Thorp also used the "naked" shorts, which were legal at the time in Canada, where he used a broker dealer, according to the complaint. A naked short is when the person doesn't own or intend to borrow shares to cover the trade. Mr. Thorp traded in shares of Amtech Systems Inc., BriteSmile Inc., Rail America Inc. and PurchasePro.com Inc., among others. The SEC also alleged that Mr. Thorp and the hedge funds violated insider-trading laws by shorting stock of seven companies before it was publicly known that the companies sought to raise money in the PIPE market. online.wsj.com ******************************************** A Troubling Finance Tool for Companies in Trouble By FLOYD NORRIS Published: March 15, 2006 When a company goes the route of PIPE's, you can bet that it is in trouble, unable to raise funds through conventional routes. But such companies can often raise millions of dollars, thereby postponing disaster. PIPE stands for private investment in public equity, and providing such financing can be very profitable, even if the companies later go bankrupt. Yesterday, in penalizing a New York hedge fund and its lead trader a total of $15.8 million, the Securities and Exchange Commission laid out one — illegal — way that investors get rich on such deals. Jeffrey Friestad, an S.E.C. lawyer, said the penalty was the largest ever imposed in a PIPE case. "It represents our ongoing commitment to stamp out fraud and ongoing abuses in the PIPE market," he said. While details vary, PIPE deals usually allow the buyer to buy shares — or securities convertible into shares — at a price below the market price of the stock. The catch is that the shares are not registered with the S.E.C. Buyers are required to sign statements promising not to sell the securities until the registration statement is effective. The market price usually sags after a PIPE deal is announced, and any investor who buys such an investment and waits for the shares to be registered, usually within a matter of days, risks discovering that the market price of the stock will have fallen below the purchase price. To avoid that, it is good to short the shares as soon as possible. But to do that in the United States, a trader is supposed to first borrow the shares. And, the S.E.C. says, it is illegal to use the shares obtained from the PIPE to repay the shares borrowed, since that would amount to having sold the PIPE shares too early. The investor is supposed to buy other shares to cover the short position, and then sell the PIPE shares separately. If the shares are illiquid, there is a risk that prices will move, leaving the trader with a loss. In addition, the S.E.C. says, it is illegal insider trading to sell the shares short if the seller knows a PIPE deal is coming, but that fact has not been announced to the public. The complaint against Jeffrey Thorp and three hedge funds he ran — Langley Partners, North Olmstead Partners and Quantico Partners — says that in 22 deals, PIPE shares were improperly used to cover short positions, often with elaborate ruses aimed at making the tactic hard to discover. In six of those cases, and one other, Mr. Thorp was accused of illegal insider trading by shorting the stocks before the PIPE deal was disclosed to the public. Mr. Thorp, 42, of New York and the funds settled the case without admitting or denying the S.E.C. allegations. Mr. Thorp also agreed to talk to the S.E.C. when asked. No phone number could be found for Mr. Thorp or his funds. His lawyer, Andrew G. Gordon of Paul, Weiss, Rifkind, Wharton & Garrison did not return a telephone call. The S.E.C. allegations indicated that unnamed brokers in the United States and Canada worked with Mr. Thorp to cover up what he was doing. Asked if the brokers would face charges, Mr. Friestad of the S.E.C. said the commission would "look to see whether brokers had any responsibility for this and bring charges if appropriate." The S.E.C. said that in the PIPE trades from 2000 to 2002, the defendants realized profits of $7 million. Their tactics included selling shares short without borrowing them, a practice known as naked shorting. But that shorting was done in Canada, where the practice is legal, and no charges were brought over that. Instead, the charges dealt with fake or prearranged trades intended to make it look as if the funds had bought other shares to cover their short positions. The S.E.C., in its complaint, described the PIPE market gently, saying companies issue such securities "when more traditional means of financing, such as a registered repeat offering, are for various reasons impractical." One thing that limits the size of the offerings is that buyers are reluctant to place large orders, out of fear that they will not be able to legally short the shares in time. But the S.E.C. said the tactics Mr. Thorp used led him to seek very large allocations. Few buyers of PIPE securities invest because they believe in the long-term prospects of the company, so the burden ends up falling on those who buy common stock. They rarely do well. Of the 23 PIPE deals covered in the S.E.C. complaint, it appears that in 21 cases the common stock is now trading, if it is trading at all, at a price below that paid by the PIPE buyers. Since that price was below the public price at the time, the common shareholders did even worse. There was one major exception, a company known as HealthExtra. It prospects grew worse, and its sale price fell, in the months after the PIPE deal was sold in 2001. But its business later improved and the share price has risen sharply. But the rarity of such good outcomes explains why it is usually a good strategy to sell any investment in a company that issues a PIPE as soon as the deal is announced. nytimes.com