Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 8/17/2006 9:45 PM
Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 8/17/2006 9:45 PM
Dave Patch didn't know that today was going to be different than all other days, when he woke up, started the coffee, and went out to get his mail.
No, it was just another summer day.
Except it wasn't.
Today was the day that his mailman brought him the information that would prove conclusively that our securities regulator, the SEC, actively allowed investors to be defrauded by Wall Street after some brokers there made the mistake of a lifetime.
Read his stunning expose here.
Check out the actual FOIA data here.
That doesn't happen every day - where FOIA data shows up for a company that was used as the poster boy for naked short selling by a Senator on the Senate Banking Committee, who directly tells the head of the SEC that he wants a full and complete accounting on what the hell happened with that company - and the data shows that Wall Street was trading up to 10 times the total authorized shares at the time of the controversy. That's quite a dilutive multiplier, huh?
Dilutive in failed trades, that is. Post netting - remember that the CNS system nets the vast majority of trades, removing them from ever having to settle - so that's 10 million shares after the netting effect.
Unkown multiples of the total outstanding shares of the company, being traded, with the SEC knowing about it, and doing nothing. Not a single thing. Note, in my comments, I walk everyone through the math - the company did issue an additional 3 million shares in March, while the FTDs reported in April in the FOIA data were accumulating - but those presumably went into the market during that period, and reduced the total FTDs to "only" 10 million, presumably down from 13 million.
During this period, the SEC has been assuring us how Reg SHO has "worked," and has solved much of the naked short selling problem - at the same time that it knew that in Global Links, Wall Street had printed whole cloth multiples of the authorized shares as naked shorts, and then proceeded to cover it up, further victimizing investors in that company.
Now, how bad does it have to get, and how obvious? I suppose that it is possible that the SEC ignored Bennett's instruction to Donaldson to look into Global Links and figure out what was going on. We could just pretend that it wasn't being discussed for many months after that Senate Banking Committee hearing, and that staffers within the SEC weren't assigned to figure out what the deal was. That is possible, in the way that it is possible that there are millions of you and me walking around in alternative universes. Anything is possible.
But it isn't remotely likely.
No, what is likely is that the SEC knew and understood what had been done, but rather than protecting investors and halting trading, it engaged in a cover-up.
There's that word again.
Cover-up.
Aguirre accused the SEC of doing it. Senator Specter hints at it in a recent article. And now FOIA data shows a concrete example where the ONLY plausible explanation is a cover-up by the nation's securities regulator. A cover-up that directly benefited only the participants who naked short sold all that stock, and directly harmed the company and the company's investors.
So it would certainly appear that our SEC is engaging in cover-ups to benefit powerful Wall Street interests at the direct cost of the investing public's savings.
So, what else has to happen now for a special prosecutor to be named?
How many MORE examples of blatant criminal negligence, obstruction of justice, collusion, breach of ethics, etc. etc. have to occur before we get rid of the cretinous bumbling of "don't fix it if it ain't broke" good old boys, and get a serious prosecutor to peel the onion on this?
Guess what? It's broke. When multiples of the authorized issuance can trade for many months, while investors are bilked out of their investment by Wall Street, as the SEC runs cover for them, it's about as broke as it can get.
Write Specter. Send him this stunning piece by Dave Patch. Demand a special prosecutor, now.
Enough is enough.
The evidence is clear on this one, and presidents have seen impeachment headlines over far less. If the SEC is violating its mandate to act in the public interest and protect investors to this degree, it deserves to be dismantled, and the Justice Department brought in to put the cuffs on those responsible. This is highway robbery, with no plausible excuse other than the obvious, aided and abetted by the SEC, even as they were claiming that Reg SHO was a success, and the only ones whining were malcontents pissy over their stocks going down.
Guess what? They were going down because Wall Street was printing their shares in multiples of the outstanding authorized issuances, while the SEC lied about there being a problem, and LET THEM GET AWAY WITH IT.
Just as they gave Wall Street a get-out-of-jail-free card with all the older fails for a year and a half, via the grandfathering clause. Including all ten million of these fails. How very convenient. Makes you wonder how many "trading errors" like these were made in NFI and OSTK when they dropped off the SHO list and then came back on, with all fails that brought them back on also grandfathered. Seems like a neat way to counterfeit a whole bunch of stock, take a lot of investor money for it, and never have to be accountable, huh?
But wait. That would never happen, right? I mean, the SEC would stop it, right? Wrong. They didn't, and they've been caught red-handed.
Figure it out, people. The obvious answer is the correct one here. The SEC has become an agency that protects lawbreakers if they have enough connections and money, and it views itself as invulnerable, so it does whatever it wants.
Who's going to stop it?
A special prosecutor.
It's time. Senator Specter, enough. Please. What more do you need to see? Really? What else?
I wonder if any of the media will report this? You know, a company that was literally buried in bogus shares even as a Senator in the Senate Banking Committee was demanding action and explanations, and the SEC was pretending everything was hunky dory?
Probably not. Why would a captured, co-opted media mostly owned by Wall Street want to report on the meltdown of the regulator chartered with policing the markets?
Every day, just as I think I can't get any more disgusted, I surprise myself.
Senator Specter? Appoint a prosecutor. Get the Justice Department on this. Now. Before the SEC allows tens of thousands of other investors to be fleeced while it covers it up - which is likely already happening every day, come to think of it.
Either we are a nation under the rule of law, or we aren't. This is the last straw.
Bring on the special prosecutor now. Please.
Copyright ©2006 Bob O'Brien
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Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By majordanger on 8/17/2006 7:10 PM
I feel ill.
I had a boss once that had a rule.. "no bad news on Friday"
Well feeding the boss only happy news led to the companies eventual demise few years after I left.
I suspect somebody in the SEC was told to report only happy news.
Good work Mr. Patch.. But I still feel ill.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/17/2006 7:24 PM
You feel ill because it really is as bad as we all feared.
We have the SEC engaging in a Watergate-level cover-up, a deception designed to protect the interests of Wall Street at the direct expense of defrauded investors, and now we have hard proof.
They were told to investigate this and have a full report done for Bennet. They can't claim they didn't know. It is literally impossible.
They knew. They knew and they did nothing, and belittled those with enough brains to understand that they were lying. What do you do when your top cops are so crooked they will run a cover-up to protect the crooks, and punish those with the temerity to expose their misdeeds?
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/18/2006 8:14 AM
Tonga. Do you know what a split is, versus a reverse split?
A split, 3 for one, would create 3 shares for each one in existence.
A reverse split does the opposite. a 3 for one reverse split would give you one share for every 3 currently in existence.
The poster in question claims that the company did a 3 for 1 reverse split in April.
"But if you look at the publcily available info there were 5.1m shares out in January and then in early April (before foia) there was a 3 for 1 reverse split which would put out # to 15 m. Not the 1m claimed by Patch"
How many shares would be left if 5 million shares had a reverse 3 for 1 split? Take your time with it. We have all day.
That assumes that the poster's first claim is correct, and that he didn't botch that as well.
I'll look forward to the additional clarity you can bring to this topic.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/18/2006 8:36 AM
From the company's feb. 2005 filing:
"ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
Effective February 1, 2005, the Registrant implemented a one for 350
reverse split of its authorized, issued and outstanding shares of common stock.
The number of authorized and outstanding shares of the Registrant's common stock
has been reduced in accordance with the one for 350 split ratio to 5,428, 571
and 1,158,064, respectively, following the February 1, 2005 reverse split."
Now, for those that can't comprehend what they read very well, that means that the company was AUTHORIZED as of Feb to issue UP TO 5 million or so shares. They actually had issued 1.1 million.
Following along so far?
So the poster from SI, typical of that forum's acumen, mistakes what is issued with what is possible. Fine.
Next, we turn to the company's april filing.
"The number of shares outstanding of each of the issuer's classes of such common
equity, as of March 31, 2005, was 4,028,362 shares of Common Stock and
15,000,000 shares of Series B Preferred Stock."
So, the company issued or sold 3 million more shares between Feb and end of March. Fine. Meanwhile, Wall Street sold 10 million FTDs. Not fine. The SI poster clearly doesn't know the difference between Class B preferred shares, and common stock, even though the company makes the distinction for him. Note: The company is authorized to issue shares. Wall Street is not. Depending on your math and when you choose to take the measurement, Wall Street either created 10X the total number of issued shares, or 3X, or 2X, or some sliding scale in between. The point is simple - Wall Street diluted the company's shares by multiples of the issued shares, and the SEC did nothing, and covered it up. Maybe allowing Wall Street to issue two times the total number of shares issued is OK, as delivery failures. Maybe 3 times. Maybe ten times. Or maybe that is inconsistent with investor protection?
Now, the issue is whether it is OK for Wall Street to issue 10 million shares of stock during a period where the company has issued 1.1 million, or 4 million. That is the question. And if that is inconsistent with your understanding of the words investor protection, the next question is, is it OK for the SEC to know about it, and do nothing about it, and allow Wall Street to dilute investors in a secret manner they aren't authorized to do, and allow them to keep the money, at investor expense.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Tonga on 8/18/2006 8:37 AM
Bob,
Looks like you forced the guy on SI to make a correction.
Message 22732280
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By browntrout on 8/18/2006 8:40 AM
Tonga- The disinformation that you refer to on SI posted on Yahoo is exactly that or an idiot talking out his ass. He appears not to understand a reverse split or is misrepresenting it intentionally. Either way- Not valid info from the perp.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Tonga on 8/18/2006 8:50 AM
Next, we turn to the company's april filing
"The number of shares outstanding of each of the issuer's classes of such common
equity, as of March 31, 2005, was 4,028,362 shares of Common Stock and
15,000,000 shares of Series B Preferred Stock."
Bob, your correcting Patch math but leaving out the 3 for one forward split on April 10
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/18/2006 9:25 AM
Tonga: I'm getting sort of tired of correcting your errors.
From the company's own statements:
"The number of shares of the registrant's issued and outstanding stock as of
April 30, 2005, was 4,428,362 shares of common, 15,000,000 shares of series B
preferred stock."
No forward split. Wrong.
Besides which, the point is that at the TIME THE FTDS WERE CREATED there was 1.1 million issued shares, followed by 3 more million, which presumably reduced the FTDs to 10 million, from some unknown but larger number.
What the company does going forward from there is immaterial to the fact that Wall Street created multiples of the issued share base, and illegally traded that, taking investor money in return for secretly massively diluted shares. I suspect that was a trading error by the MMs, but the point is that it should have been corrected, not allowed to continue in the hopes that the company would eventually issue enough shares for Wall Street to cover with.
For all we know, the 3 million were issued to a MM who realized his error and approached the company. That's sheer speculation, but anything's possible.
Also, remember there were days with 50 million shares trading hands. So how many FTDs were flushed out of the system by the 1 to 4 million genuine shares cycling over and over again? Who knows how large the actual FTD number was as of end of Feb? Nobody does. What we do know is that as of start of April 10 million FTDs had been created, and the company only had 4 million outstanding - many of which were owned by one guy.
So please, stop spreading the erroneous info in an attempt to obfuscate. If you are going to make claims, support them with hard evidence, like links, or cease and desist.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By majordanger on 8/18/2006 9:38 AM
Tonga,
Please read the letter to David Patch from the SEC that lists the "TOTAL FAILS IN" for Global Links.
It is a link near the top of this page marked "actual FOIA data here"
You will see that Mr. Patch paid $28 for SEC research time and had to force thier hand with the Freedom of Information Act.
As amazing as it sounds, I would tend to believe this document over a posting in a yahoo chat board.
There are more than 1 million fails listed.
The SEC seems to feel it's better to let several thousand investors each lose a few thousand dollars then let a dozen or so brokers lose millions because of their own mistake.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/18/2006 9:53 AM
Millions, Majordanger. As of the first day reporting FTDs, there were over 10 million shares FTD. There is no options MM for Global Links, so that excuse is off the table. This is just Wall Street selling what doesn't exist, in multiples of the issued shares. Business as usual.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Patchie on 8/18/2006 10:06 AM
Tonga...
That post came off a post made by Floyd Schneider on Silicon Investor. He is off by one year as he is looking at 2006 share structure. Go to the Global Links Edgar Filings for a full history of share structure.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Patchie on 8/18/2006 11:13 AM
Tonga,
The message on the OSTK board is based on an Elgindy henchmen (Floyd Schneider) that can't understand dirt. He is looking at 2006 filings in which he company did a 3:1 forward split in April or 2006. If you go back to the Edgar filings you will see the share structure leading into this event.
On February 1, 2005 teh company executed a 1:350 reverse split and wound up with 1.1 million shares. This created the "when issued" trading. A later filing in June now shows that on March 31, 2006 the shares had risen to 4 Million making this 10X problem more a 2.5X problem on April 15. And on December 30 there was 4.8 Million with a 6 Million fail.
Now, over and above that, early stories identified that 50 Million shares traded the day Simpson purchased his 1.2 Million shares which was 2 days after the reverse. teh following day another 25 Million was traded. Between February 1 and April 17 there was some really bad trading taking place and Global Links minimized the problem by issuing 3 Million more shares into circulation. Based on GL history these shares were issued and released for sale immediately as compensation for work performed.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bryedge on 8/18/2006 12:10 PM
BobO,
Dave Patch truly is a national treasure, as are you.
Yes, "knowing" is different from "having proof", but the corruption on Wall Street is simply too big, too widespread for those in power NOT to have "known", as well. There is no way I could believe that any of this is a surprise to ANYONE on the Senate Banking Committee and those Senators have known of this proof, and probably much, much more for much longer than we have.
If the Senate knew, so did the House. If Congress knew, so did the White House/Administration. Everyone makes jokes how nothing is secret in Washington, and to go further, IMO, NOTHING IS SECRET, JUST COVERED-UP.
This issue has NOTHING to do with "Dem's vs Pub's", as has been said many times, and proof of that is the obvious cooperation in the cover-up. Any member of Congress claiming not to be involved can only admit to either total incompetence or fearing his own improprieties will be divulged, neither likely to happen, thus. the status quo.
For me, I have lost all faith in the US markets, and my disdain for Congress is worse than it has ever been. Any justice for the Wall Street crimes will be long in coming, if then. Even if today, we were granted our wish of an independent prosecutor, it will be YEARS before the investigation is completed, and then more time will be consumed if trials materialize.
I do not say these things to discourage anyone's efforts to bring the guilty to justice, quite the contrary. I think the reality of the time it will take is needed to make a point.
If the group here, and those at the Faulking Truth, Investigatethesec, Burrell's Blog, etc, are considered the "enlighened ones", then I think the question, "Why are you investing in the markets?" demands an answer. We know the markets are rigged against the small investor. We know that the richest people in the world, those in control of the major banks, are also the biggest criminals in the world and are DIRECTLY RESPONSIBLE for the theft of trillions of dollars from small investors around the world. We also know that these Wall Street elites are in obvious control of those supposedly elected by the public to serve the public, but are nothing more than "Royal lackies".
So, why are any of us investing through the markets?
I think it is admirable to suggest that we "trade less" in an attempt to send a message of "hit them in the pocketbook, then they will listen", but this plan is severely lacking and can easily be seen as naive at best, hypocritical at worst.
You cannot be "partly pregnant" and you cannot be "partially involved". Why should anyone be taken seriously about proclaiming the corruption on Wall Street, all the while participating in the scandal. Given what we know, if you do invest in US markets, you are, IN FACT, financing the crimes.
Do you want to be heard? Do you want to get their attention?
STOP TRADING NOW!! (how humorous can it be to use Cramer the Crook's own words)
STOP TRADING NOW, and spread THAT word.
The best way to hurt any business, is to NOT use that business, and the worst testimonial is word of mouth.
I do understand the difficulties of abandoning a stock portfolio, but how smart is it to hold on to something that you do not really control and are likely to lose? We cannot count on the SEC to protect us, nor can we really expect Congress to move expeditiously. And, to think that the bankers will find religion and change without considerable arm-twisting is fantasy.
First we need to decide whether to be greedy or morally driven. I am of the opinion that morals run high here, so STOP ALL TRADING NOW, until the problem is fixed.
Then leave your "National Bank" for a local bank. The corruption is not only located on Wall Street. Like chapters of a violent gang, bank branches are simply an extention of the corruption and result in more control/use of your money for criminal activity.
Invest locally. Buy silver, gold, and real estate. BECOME DEBT FREE!!!
INVEST IN YOURSELF, NOT IN YOUR SLAVERY!
Then, pass the word and keep fighting the good fight.
Steady on, Bob O'Brien, Dave Patch, Mark Faulk!
God Bless us all.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Dave on 8/18/2006 1:12 PM
What about getting AARP involved. We need some horse power now!!!! When these people find out what is going down they will FIGHT. They may even put their military uniforms back on and head towards D.C.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bryedge = STOP ALL TRADING NOW on 8/18/2006 2:30 PM
BobO,
Senator Bennett is proclaimed by some as being one of the "good guys". Why?
From Patch's article, these two clips speak volumes.
Bennett quipped "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.” Bennett continued, stating "My main message here is that the evidence is Rule SHO is not working, so that's what we need to get into in detail."
This clearly shows Bennett is well aware of what NSS really is and he knows the true intention of the trade, which would seem to say that he also knows someone was harmed in the transaction.
Still, 17 months later Global Links remains on Regulation SHO and the investor who purchased the entire shares issued and outstanding remains short on delivery of his purchase.
This clearly shows that Bennett and the rest of his cohorts are STILL sitting on their collective asses and doing nothing to protect the investors. How much concern can this man have for the "commoners" when he knows for a fact that they have been a victim of a crime and after 17 MONTHS has done NOTHING? It is also clear that "moving at the speed of Congress" requires negative numbers.
STOP ALL TRADING NOW!!!
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By gregcable2002 on 8/18/2006 3:12 PM
Forbes had another article this evening about the FOIA info Patch received and Liz did a good job explaining what the problem is all about,thats great but now we need a cure for the problem,it's been diagnosed to death,lets find a cure and settle the trades as mandated by law,no settlement, no money,plain and simple.I buy shares and when they deliver I pay.Hows that for a cure?
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bryedge = STOP ALL TRADING NOW on 8/18/2006 3:27 PM
BobO,
Senator Bennett is proclaimed by some as being one of the "good guys". Why?
From Patch's article, these two clips speak volumes.
Bennett quipped "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.” Bennett continued, stating "My main message here is that the evidence is Rule SHO is not working, so that's what we need to get into in detail."
This clearly shows Bennett is well aware of what NSS really is and he knows the true intention of the trade, which would seem to say that he also knows someone was harmed in the transaction.
Still, 17 months later Global Links remains on Regulation SHO and the investor who purchased the entire shares issued and outstanding remains short on delivery of his purchase.
This clearly shows that Bennett and the rest of his cohorts are STILL sitting on their collective asses and doing nothing to protect the investors. How much concern can this man have for the "commoners" when he knows for a fact that they have been a victim of a crime and after 17 MONTHS has done NOTHING? It is also clear that "moving at the speed of Congress" requires negative numbers.
STOP ALL TRADING NOW!!!
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By commonsense on 8/18/2006 3:38 PM
Guys... I 100% agree that NSS is wrong. But WTF.. everyone in this forum is NOT accepting that OTC fraud, or P&D, is rife, but that i've the wrong end of the stick!!! My problem is that you have a legimate complaint, but unless you address the ugly side, you present yourselves as ostriches. IF the SEC rooted out the frauds at inception, then your arguement is strengthened 'cos only legit companies exist on the OTC market. I've received 20 P&D e-mails this week alone. Bob & Patch - why won't you comment on the wild west OTC market (AMEX ain't much better in my view)
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By noshorting on 8/18/2006 3:49 PM
forbes.com
Failed Trades
Liz Moyer, 08.18.06, 5:50 PM ET
A simple Freedom of Information Act request has reignited debate over the influence of naked short-selling in the stock markets.
Late Thursday and all day Friday, bloggers and posters in investment Web site chat rooms were furiously debating the merits of information dug up by David Patch, a now-familiar character in the blogosphere who stands firmly in the anti-naked-short-selling camp.
On Thursday, Patch got word back from the U.S. Securities and Exchange Commission on his request for information regarding failed trade data on Global Links, a Las Vegas real estate holding company that has been the target of frenzied trading activity over the last year and a half, and whose shares now trade at just fractions of a penny.
The data says on April 18, 2005, and the next day, fails in trades of Global Links stock totaled 10 million each. This compares with roughly 4 million shares in total outstanding common stock reported by the company at the end of March 2005.
So there was well over twice as many failed trades each day as there were actual common shares issued.
How can this be? Global Links is a very tiny company, but it is one example of an intensifying debate that is going on in the markets and at the SEC about possible market manipulation.
For the last year and a half, there has been a growing chorus of folks, like Patch, who argue that naked short-sellers pose a systemic risk to the markets by creating counterfeit shares that pressure stocks of targeted companies even lower and force some companies out of business (not to mention destroying the investment savings of shareholders.)
They even contend that this activity is orchestrated, involving the collusion of hedge funds, broker dealers and in some cases journalists, all under the not-so-watchful eye of market regulators.
Their detractors--blogger and former BusinessWeek editor Gary Weiss mockingly calls them the "Baloney Brigade"--say they are distorting or misinterpreting the data. Or, at worst, they are scam artists bent on the opposite form of stock fraud--the "pump and dump."
To back up for a minute, short-selling is when the trader borrows the shares and sells them, hoping they'll fall and he can buy them back at a lower price and pocket the difference when he goes to close out his loan.
But sometimes stock is hard to borrow. Trades still take place, however, though traders never managed to borrow the shares before selling them, resulting in the shares not being delivered to the buyer. These are known as fails-to-deliver. It's also called naked short-selling. Some of it's accidental, and some of it is an intentional form of manipulation.
The SEC, concerned about possible manipulative short-selling activity, instituted Regulation SHO in January 2005. It was supposed to curb abusive trading by imposing strict close-out rules in stocks that had high degrees of failed trades within certain parameters. But Reg SHO has proved to be less than effective, as the SEC itself noted last month in proposing amendments to tighten loopholes.
Since January 2005, several companies have been on the SHO list for well over 13 days, some for hundreds of days, including Overstock.com (nasdaq: OSTK - news - people ), Netflix (nasdaq: NFLX - news - people ), Krispy Kreme (nyse: KKD - news - people ), and Martha Stewart Living Omnimedia (nyse: MSO - news - people ). Even the SEC admits this isn't how it's supposed to work.
"Large and persistent fails to deliver," it says in its proposed amendment to SHO, "can be indicative of manipulative naked short-selling."
The SEC's own reporting on the issue doesn't even capture the whole problem. The agency uses data from the Continuous Net Settlement system at the Depository Trust & Clearing Corp., the New York clearinghouse that acts as the financial industry's go-to place for settling securities transactions.
The DTCC says fails-to-deliver equate to about $3 billion, if you divide in half the $6 billion figure it reported at the end of 2005 (it later explained it was double-counting delivered and received shares). The company, which reports fail data to the stock exchanges but won't release the data to the public, says it has no way of knowing how many transactions settle ex-clearing, meaning outside its walls, in special arrangements from broker to broker.
"We don't know the underlying reasons for why trades fail. All we do is process the data and provide the information" to the markets, says a DTCC spokesman.
Asked for the percentage of fails (among failures the DTCC tracks) in all stock trades settled, including ex-clearing, he says, "If you don't know the size of the whole market, how can you tell what percentage you have?"
Executives at Global Links think they have more like 20 million to 30 million failed trades in their stock, which might suggest ex-clearing trades in their stock are two to three times as great as at the DTCC. "It's something that we're still researching," says Patrick Donahoo, manager of marketing services.
The whole saga started in February 2005, when Global Links, then trading at 10 cents a share, initiated a 1-for-350 reverse share split, reducing its common stock outstanding from 350 million shares to about 1.1 million and narrowing substantially the number of shares available to be borrowed. After the reverse split, a Michigan businessman named Robert Simpson filed a notice with the SEC saying he had acquired 100% of Global Links' outstanding common stock.
Donahoo says there is no evidence that Simpson ever got his shares, even though he filed papers with the SEC documenting the purchase. Attempts to reach Simpson were unsuccessful.
According to the SEC data, the fails in Global Links stock dropped to just under 10 million a day after two days and gradually tapered off, but were still a lofty 5.97 million at the end of December 2005. A month after the reverse split, the company issued another 2.9 million shares previously authorized by the board, and those shares may have alleviated some of the fails.
Shares of Global Links, which trade over the counter, rose 2.22% Friday, but were still a half-penny each. Some 270,000 shares traded. "We're still operating, and our doors are open for business," Donahoo said. "But it's definitely taken our focus off what we're doing here."
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By newspaper on 8/19/2006 9:32 AM
commonsense what does OTC fraud or P&d have to do with NSS? Answer- absolutely nothing. The only fraud I see here is the one being committed by the SEC.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Patchie on 8/20/2006 3:35 PM
Common sense...The P&D scemes are in full force but are also the root to all regulatory efforts. Take a look at an SEC enforcement sheet and tell me how many P&D enforcement cass they take vs. illegal shorting. If it is 100:1 it is 1000:1. The problem is, the SEC set up the llegal shorting to offset the P&D and then ignored the abuses being perpetrated on real companies.
You want to talk about fraud? Look at the 100 different venues Wall Street takes to steal your money through a lack of transparency.
Nobody here condones the P&D any more than they condone a failed Wall Street IPO orchestrated to defraud investors and make the lead institution wealthy. Unfortunately there are only so many venues you can take action on and the P7D already has the SEC's attention. Almost too much attention if you consider they allow fraud to take place to offset it.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/20/2006 5:36 PM
Dave, I'll go one step further. After the SEC and the naked short selling problem is licked, I would be all ears for turning my attention to the P&D schemes. That's actually way easier to combat.
Of course, the same miscreants that are abusing the short side abuse the P&D side, so they will be just as unhappy to have light shined on that as the SEC and the miscreants are having the light focused on naked short selling.
The real problem is that there is a segment of Wall Street that is highly larcenous. That larceny isn't limited in any way to one scheme. True, there are favorite schemes, and the short side is particularly susceptible to it as it is so much easier to destroy something then to built it, making destruction an easy money game.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By commonsense on 8/21/2006 1:29 AM
Dave/ Bobo..... AGREED.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By MarionPolk on 8/23/2006 7:50 AM
The statement in the letter that there were no fails in the January to April period is clearly a lie, and the SEC knows it.
One investor purchased over 1 million shares in February that were never deliverd, and another investor purchased 180,000 shares in March that were never delivered.
The SEC knows of these failures, so how can they state there were no failures?
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Wonder Boy on 8/17/2006 7:34 PM
Thank you Mr. Patch! It is a disgusting situation and I have no description for the emptiness I feel at this point. Still, as good as this evidence may be---Will there be any press coverage? Will someone close down the SEC tomorrow morning? Geeezzzz, I don't have ANY answers!
Getting any justice from this 'system' takes a lifetime so perhaps we should just take the 'food' away from Wall Street and let them eat themselves?
OUCH! Just kicked the door to my office, my foot is swelling, and the door needs repair! What a day!
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/17/2006 8:26 PM
That the SEC allowed this to occur, and said nothing, no, worse, claimed that SHO was "working", is despicable. That they chose silence, covering-up a 10X naked shorting of a company, and allowing the investors to be defrauded, every day, by this massive wave of counterfeit shares, is astounding.
How can anything they say be trusted at this point? If they are willing to lie in such a brazen fashion, how can one word be counted on? This cover-up REEKS of everything that O'Quinn has been claiming for years - the SEC and the DTCC engaging in cover-ups to enable Wall Street to rip off investors, stonewalling efforts to expose the miscreants, passing rules that are further cover-ups for the bad guys...
I mean, it's all true. Every bit of it. There's not a chance in hell that the SEC didn't know about this, and it's clear they chose to do nothing and let us be fleeced, so that Wall Street could make money at our expense.
We need to contact every paper, every member of the Judiciary Committee, every reporter, and expose this. They've been refusing transparency for years, and now we know why.
I feel ill too. But I've known how ugly this is for some time. Now we have the proof, and it is likely the tip of a massive iceberg. How many other Global Links-level frauds is the SEC covering up? We can't trust them to tell us - they lie. Patrick could be correct, and companies like NFI and OSTK could have many millions of FTDs out there, all the while as the SEC lies and claims there's no issue of note.
We need a special prosecutor. The SEC needs to be held accountable for its actions. This is unspeakable. Governments have been overthrown for less. It is nothing short of the defrauding of America by special interests who have co-opted the top cop into running interference for them. It has to stop.
This is a post I made a while ago at Investorvillage.com, on the NFI board, and I wanted to share it with you folks too - it sums up my sentiment:
I've told you for a while that you couldn't imagine the actual scope of this. Now you are seeing the data points returning the equivalent of an iceberg the size of Africa directly ahead.
The SEC covered-up a 10X larger float of FTDs that could have been easily solved, by stopping trading once the problem was detected, and re-doing the trades to reflect the appropriate numbers.
Instead, the SEC allowed it all to continue, in the hopes that Wall Street would just solve the problem over time, obviously, at investor expense - ten times more diluted than anyone thought.
What else are they covering-up, hoping that it will go away, while Wall Street makes money at our expense?
They told us SHO was "working" and that this wasn't a "big" problem, that it was "insignificant", when they knew that this company, the poster boy for the issue, had ten times more stock trading than authorized. What else will they lie about, if they will lie about this? How can a single word they say be trusted now?
They had to know. They easily could have done the right thing, but instead they covered it up, hoping it would all go away, that Wall Street would work it out and investors would never know what happened to them.
And they got caught.
These are our top cops, people. If this stink doesn't overpower you, then you aren't breathing. Presidents have faced impeachment over less. This is big, and could well be the tip of the iceberg. No wonder everyone at the SEC and DTCC wants to avoid any transparency. I've said all along that opacity only helps the crooks. So far, that is holding true, as every bit of data we get seems to be more damaging.
We need a special prosecutor to look into this, and Aguirre's allegations, and the whole ex-clearing security entitlements quagmire, and bring some integrity back into the process.
Because now we know that when the SEC says there's no problem, what they mean is they think they've buried the evidence deep enough so they'll never get caught.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By clearthinker on 8/17/2006 8:48 PM
the funny part of this is, that if Wall Street is forced to claen up the fails, it will spark one of the largest rallies in the history of the stock market...imagine that..in an election year, no less...
BTW folks, if you think you are sick to your stomach now, wait until all the cretans who gave us the bum's rush for the last 5 years suddenly decide to start carrying the flag for investor's rights and justice....
If the SEC isn't brought down by this, it will never be.....
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By rtway1 on 8/17/2006 8:54 PM
I am certainly not as qualified as you and Dave but would it help if a large number of us were to take on a designated number of FOIA,s for hand picked stocks and flood the SEC with these requests not only to spur the issue but also to gather more evidence. After seeing this evidence I can only surmise that Rick Smith from Taser hasn't got the gonads to go after these bastards also as well as Martha, who wound up doing time for bullshit while they plundered her stock. I will be on the phone tommorrow and will do the e-mail trick also. If you have other specific contacts you want called make a list and e-mail me. Just imagine if you had a jar of vaseline and a screwdriver and talked like you were a loon you could get all the attention the press could spare. This country is really fu%^&ked up. Dave you are the best keep up the great work and thanks.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/17/2006 9:21 PM
Dave is a national treasure.
I think Senator Bennet should be advised of the latest in the SEC's honesty and full disclosure policy, so he can evaluate his feelings as to how honest they have been with Congress about what's going on behind the curtain. I think Specter suspects something is deeply awry, and this will send him over the edge. It is just so egregious. They could have so easily fixed this, and instead chose to allow Wall Street to continue with a fraud while they covered it up. It isn't about the amount of money involved, it's about the choices and the tactics and the dishonesty.
We have a regulator who clearly doesn't give a damn about market integrity, or investor protection, or the public's interest. They clearly are interested in downplaying the extent of these types of frauds, and saving face, and misleading the public and the Congress. Whether this is criminal negligence or deliberate subterfuge, is immaterial. They can't be trusted to tell anyone the truth. They didn't here. Where else are they misleading us? How many other companies have experienced this sort of SEC justice? CMKX shareholders still are getting stonewalled by their brokers, as are many others in many other companies. How many examples of this sort of decision making are there in the SEC's closet?
We can't trust the answer when they tell us. That's the crisis in confidence here. When the top cop is a pathological liar, we have a problem.
This needs to stop. Game over. Let's get someone competent to deal with this turning over the rocks and enforcing the 1934 Securities Exchange Act, including the requirement for prompt settlement with transfer of record ownership. Allowing a 10X creation of fake shares, and then allowing it to continue for years, is not what prompt means, nor is it consistent with ideas like investor protection, or safeguarding the public's interests.
This is as big as it gets. No wonder so many ranking SEC folks have jumped ship over the last two years. They know how big this is. They always did. That's the point, and the violation of our trust.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By hwh on 8/17/2006 9:29 PM
This whole dilemma strikes me of the movie 1600 Pennsylvania Ave except the crime is financial racketeering instead of murder...hwh
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By financial_circus on 8/17/2006 9:45 PM
Patchie and Bobo- You both seem shocked by this latest disclosure. Really, has there any doubt about this type of behavior between the SEC and Wall Street? A lot of us that have watched trading volumes in stocks have already been convinced of this fraud but it is nice to have the confirming facts released by the SEC. I hope sometime in the future the connection is made in the same manner for the obvious conspiracies that are linked between Wall Street and the Regulators. There has to be a consensus on what stocks of many companies the crooks are being allowed a free pass to destroy. This is not just one maverick firm nor just one person at the SEC. There has to be massive collusion between many of the firms and many employees at the SEC to keep pulling this fraud and destruction off.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/17/2006 9:52 PM
circus: There is an important distinction between knowing and proving. We just got proof. It cannot be ignored, or dismissed. It is what it is. The rot is pervasive, and the abuse is as bad as believed.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Millerd1 on 8/17/2006 9:58 PM
Patch for SEC Commissioner, Bob O'Brien for Public relation, Aguirre for Chief prosecutor.
Bob if Spector isn't all over this two days after he gets the information, it is time for another Washington Post Full page advertisement with Patch's information front and center, and calling for the independent investigator.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Millerd1 on 8/17/2006 9:59 PM
Gee, I wonder why Donaldson stepped down?
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By commonsense on 8/17/2006 11:41 PM
what do (did) global links do in business. I can't find much on the net about them.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By gilteddge on 8/18/2006 1:15 AM
A screaming full page ad is what is needed here....
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By gregcable2002 on 8/18/2006 4:34 AM
I think the problem is so big now that they have lost total control over our market system,thats why the few good people that get to peek into pandoras box cower away,think about it for a minute or two,we have the evil of counterfieted stocks flooding our market,if this gets exposed,fully exposed it more than likely will cause a crash that will get felt around the world,so the dilema is,do we pretend it doesn't exsist and let the system function as it does now or do we grab the bull by the horns and,come what may,fix the problem NOW.I say let the system crash if thats what it takes to clean it up,I'm tired on getting ripped off by those I pay my taxes to.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By gregcable2002 on 8/18/2006 4:40 AM
one more thing,it may be painful for a minute but we americans have the ability to bounce back,this country was built on the survival of the fittest.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By old duffer on 8/18/2006 4:43 AM
Write letters? Call them? Well we have tried and only nget the brush off or get informed that if we are not from thier District or State they can not help us. If by chance we are we just watch our inquires ignored or lost.
My feelings are that until we can get a gang numbering into the tens of thousands so mad that they are whilling to gather in Washington for protest that the crookes will just keep avoiding any fix.
One thing that gives me some hope is that in another area, the claimed conspiricy of government to do a terrorist cover up for political reasons, there seems to be a change. Read this and check out the background on Government cover up and resistance to doing what is right even with masive evidence.
This one has taken years to get anyone to listen.
worldnetdaily.com
Until we show up in force will they feel they can continue to stonewall us?
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By InTheKnow on 8/18/2006 4:54 AM
Every investor must be informed and informed of those in the government who are for the American investor and those who represent the hedge funds and foreign interests.
SETTLE THE TRADES!
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By old duffer on 8/18/2006 5:05 AM
Please excuse my spelling. As well as typing. When you get to my age and condition you may also suffer these problems.
Only hope to see , by those with a God given position,do what they are responable to do.
If not may God cut them off!
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Johnboy on 8/18/2006 6:15 AM
Digg this please to get the story out.
digg.com
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Niel Storts on 8/18/2006 6:53 AM
Wasn't the statement made that anyone who had any information and/or specific complaint ought to go directly to the department of justice? Well Dave, go for it.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By bobo on 8/18/2006 7:22 AM
The FOIA data is now up in the FOIA section. We all can go to the Department of Justice. And we should. CC Specter on it, and Bennett.
This has to stop.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By jojo on 8/18/2006 7:24 AM
"I'm tired on getting ripped off by those I pay my taxes to." ..excellent attention getter. include that in any ad.
how to get the word out is a tough one. story is complicated & time consuming . joe6pack has no time to wade thru all. that's how status quo keeps going.
maybe this new pension ruling which will automatically default workers earnings to 401k...maybe that could be start to demand the required transparency.
my company uses fidelity & metlife investmnts. they throw slew of legalese contracts at us to sign. no negotiating...all contracts written up by the corporation.
workers are just supposed to sign whatever they tell us to open investment account. even my IRA with ameritrade requires me to clik "i agree" to all their terms before they let me use my account.
now when our el presidente snorts that workers will have control of the earnings, let's make them explain all these brokerage terms & agreements or publically tell
el presidente & his treasury backups to shut the hell up.
no political speeches will be listened to until all our questions are answered.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Tonga on 8/18/2006 7:53 AM
Bob,
I just read a post on yahoo OSTK board. You better check it out since it appears that there where 15 million shares outstanding and not the 1 million David claims.
If its true this blogg is a blunder.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By Pinkice on 8/18/2006 8:00 AM
bobo/dave - i am sure you have already thought about it, but have you presented all of your findings to any of the think tank groups? they are probably already aware of the situation and may be bought off or corrupt also so to speak, but it is worth a thought. sometimes those in academia/intellect are more willing to go off on a limb. it only takes one or a couple to jump on board and publish articles on this type of activity in the market. guess i am thinking of brookings or cato or a couple who speak for democracy and economics. just a thought, but then again they have probably been silenced on this issue also.
the facts dave has presented us above put the FTD/NSS way over and above think tanks but the more we can get to jump on board the better.
Re: Dave Patch Exposes SEC Colluding With Wall Street To Defraud Investors By kerry on 8/18/2006 8:14 AM
Aaron Russo, unplugged, on the Federal Reserve.
video.google.com
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