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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: basserdan who wrote (4188)	3/15/2009 2:46:01 PM
From: rrufff	1 Recommendation Read Replies (1) \| Respond to of 5034

Madoff wants everyone to believe that his MM operations were honest. In reality, at best, he used lax rules to perhaps legally front run and operate another type of scheme, making a market but failing to settle the transactions. He even threw in commissions even though there were no transactions. Despite all this, there are still out there who claim that MM's don't scam us. <<I want to emphasize today that while my investment advisory business -- the vehicle of my wrongdoing -- was part of my firm Bernard L. Madoff Securities, the other businesses my firm engaged in, proprietary trading and market making, were legitimate, profitable and successful in all respects. Those businesses were managed by my brother and two sons.>> . . . In fact, I never made the investments I promised clients, who believed they were invested with me in the split strike conversion strategy. . . . In connection with the purported trades, I caused the fraudulent investment advisory side of my business to charge the investment advisory clients $0.04 per share as a commission. At times in the last few years, these commissions were transferred from Chase Manhattan bank account of the fraudulent investment advisory side of my firm to the account at the Bank of New York, which was the operating account for the legitimate side of Bernard L. Madoff Investment Securities — the proprietary trading and market making side of my firm. I did this to ensure that the expenses associated with the operation of my fraudulent investment advisory business would not be paid from the operations of the legitimate proprietary trading and market making businesses. It is my belief that the salaries and bonuses of the personnel involved in the operation of the legitimate side of Bernard L. Madoff Investment Securities were funded by the operations of the firm's successful proprietary trading and market making businesses.>> cnbc.com

To: basserdan who wrote (4188)	6/3/2009 7:03:37 AM
From: rrufff	Read Replies (2) \| Respond to of 5034

Whistle-Blower Claims New Retaliation By SEC Liz Moyer, 06.02.09, 02:50 PM EDT forbes.com Former SEC lawyer Gary Aguirre says the agency withdrew a settlement offer after he criticized them in a Forbes story. Gary Aguirre, a whistle-blower fired from his job as a lawyer at the Securities and Exchange Commission in 2005, is again crying foul, alleging the agency pulled the plug on settling his long-running dispute with them after he criticized the SEC in a Forbes story last month. Aguirre claims the breakdown in the proposed $2.1 million settlement was a form of retaliation, possibly for his remarks in a May 15 article about an inquiry by the agency's inspector into whether lawyers at the SEC's enforcement arm were trading stocks while on the job. (See "Watchdog Alleges Insider Trading At SEC.") In the article, Aguirre told Forbes the charges were "not surprising. It would be the next logical step in the SEC's mission reversal: from protecting investors to protecting Wall Street." The settlement was nearing completion that week, with both sides appearing to reach agreement on the amount and details of the payment to Aguirre, according to a series of e-mails between Aguirre and Mark Cahn, the SEC's deputy general counsel. Then it all broke down. "After careful consideration, we cannot agree to your proposed terms," Cahn wrote in an e-mail dated two hours after the news article was published. "Unfortunately, we are unable to reach a settlement on mutually acceptable terms." The SEC wouldn't comment on the timing or reason for its withdrawal. In a statement Monday evening, John Heine, an SEC spokesman said, "We were engaged in negotiations for a period of time in an effort to put this four-year-old matter behind us and focus our resources on our mission of protecting investors. We have been unable to reach agreement on terms that we find acceptable. We continue to believe that the claims are without merit." Aguirre, who was a California trial lawyer before joining the SEC in 2004, went public three years ago with his explosive allegations about an SEC cover-up of his investigation into possible insider trading at Pequot Capital, a powerful Wall Street hedge fund. He contends he was fired for daring to interview John Mack, now the chief executive of Morgan Stanley ( MS - news - people ), during his investigation. The SEC initially dropped the investigation of Pequot after Aguirre left the agency. But his allegations prompted a Senate investigation, which resulted in a 2007 report that painted a damning portrait of an agency mired in political favoritism and captured by the brokerage industry it is supposed to regulate. The report backed Aguirre's version of events. Perhaps not endearing himself to his former colleagues, Aguirre gave Sen. Charles Grassley, ranking member of the Senate Finance Committee, information that led to that Senate investigation along with other probes. The SEC has faced a barrage of criticism in the last few months. It is accused of mishandling an investigation that could have uncovered Bernard Madoff's $65 billion Ponzi scheme years before it unraveled in December. It is fighting continued embarrassing revelations, including a recent report by its own inspector general detailing allegations of insider trading by two SEC staff attorneys. That probe, begun by the inspector general at Grassley's request, resulted in the matter being referred to the Department of Justice for further investigation. The SEC, now under new leadership, has tried to look like it is taking a more active investigative role. Last month, Pequot Capital founder Arthur Samberg announced he was shutting down his $3 billion fund and returning money to investors, citing intensifying scrutiny by regulators of his trading for the firm in 2001, the period that was the focus of Aguirre's original insider trading probe. Aguirre and the SEC have been locked in a bitter fight over the last four years over his termination. He says throughout that time he was never subject to a gag order about the SEC. Settlement discussions began in earnest six months ago and appeared to be headed to a resolution according to the e-mails, which Aguirre supplied to Forbes. Cahn, who joined the agency in March from the prestigious law firm WilmerHale, sent a seemingly conciliatory e-mail to Aguirre on March 24 saying the negotiations had been productive, with "substantial movement from both parties" over the last few months. By mid-April, Aguirre was complaining about the SEC dragging its feet again. But a flurry of e-mails between the parties in early May appeared to close the remaining gaps. The remaining issues related to the tax treatment of the settlement and whether and how much of it would be designated to cover medical expenses incurred by Aguirre, who says the saga has been intensely stressful and even has caused him to require spinal surgery. An e-mail from Cahn to Aguirre on May 7 referenced an agreed-to lump sum payment of $2 million plus attorney fees. Subsequent e-mails over the next week quibbled over $300,000 to be designated to the medical expenses, with the SEC demanding doctor verification. On May 12, Cahn noted in an e-mail to Aguirre that he hoped to "bridge this last gap" in the negotiations. Aguirre sent Cahn his final proposal containing the negotiated wording for signature on May 13. E-mails between the two sides the next day focused on the SEC's inability to meet Aguirre's demand for a response by the end of the day on May 14, with Cahn saying he was not going to be in the office but that he intended to give the details of the final proposal "the attention they deserve." Aguirre extended his deadline to 5 p.m. on May 15. The SEC inspector general's report that raised questions about possible insider trading by SEC staff lawyers was made public by Sen. Grassley's office on May 14. The Forbes article was published at 1 p.m. on May 15. Cahn's e-mail breaking off the talks came at 2:59 p.m. that day. Aguirre says the case now goes to trial, and he has moved to Washington, D.C., from San Diego to prepare for it. "If the SEC is ready to pay $2.1 million to settle a 'groundless' lawsuit, how much would they pay to settle one that has merit?" he says. forbes.com