Author Topic: Over Eighty (80) Years of COUNTERFEITING, COUNTERFEITING, COUNTERFEITING, ......  (Read 2269 times)

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Offline boomerkel

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Over Eighty (80) Years of COUNTERFEITING, COUNTERFEITING, COUNTERFEITING, Ad Infinitum, Ad Nausea
      
Posted by:   bburrell    2/28/2008 3:42 PM
http://www.thesanitycheck.com/Blogs/BudBurrellsBlog/tabid/84/EntryID/688/Default.aspx

The modern history of counterfeiting of commercial securities began over 80 years ago. It started with the wholesale traditional

counterfeiting of stock certificates to support the short selling activities of more than 500 pools comprised of the assets of the

wealthiest individuals in this country at the time, over a 3 year period leading to the October, 1929 Raid-related Crash.

The refinement of the earliest photo lithography made it possible to produce reasonably high quality counterfeit stock certificates

duplicating the real ones. These certificates could then be loaned to short sellers to create a required "borrow" to secure the

margined short, especially useful when stocks were tightly held.   The manual back offices of the brokerage firms never knew the

difference, and they never saw what hit their companies until it was too late.

These unregistered counterfeit securities sold above were never registered by the true underlying company. They were never entered

into the stock record book of the corporation, nor were any proceeds ever given to the underlying Company, nor were they ever

accounted for in any audit process or financial reports of the Company.  The frauds/criminals here knew they would force de-

registration or bankruptcy of the targets, and subsequent loss of the books and records of the companies they broke.  There was no

Federal Record Keeping requirement back then.

In most cases, if not all, the people doing the counterfeiting were directly linked to the very same Pools (we call their modern analog

Hedge Funds) referred to above, most of whom coordinated their efforts to act in concert at the direction of what might today be

called in Chinese organized crime a "Snakehead".  The largest short of the Crash was to become the first head of the SEC, Joe

Kennedy Sr.  He would accumulate a personal cash net worth of over $500 Million in 1933.

This counterfeiting practice was so widespread, it was one of the earliest to acquire a name for its practitioners, PAPER HANGERS.

  The counterfeit securities also were named:  They were called “WATERED STOCK.”

President Roosevelt chose Joe Sr. as the head of the SEC, only to face a firestorm of criticism. This was a tough period for FDR, as

it was well known and believed that Kennedy and his key associates (Bernard Baruch was rumored to be the other key) had actually

manipulated the 1929 Crash and subsequent bank failure in 1933 to their own profit.

FDR responded to the criticisms of his selection of Joe Sr. with the statement "I needed one of their own kind, who understood their

criminal methods, to have any hope of controlling them."  Controlling them was a pipe dream.  They ran the same identical scam

again in 1937, another Raid, with similar results.

Joe Sr. created an SEC that was little more than an enforcement and extortion racket he used to protect his friends, to attack his

enemies and economic targets, and to further fill his pockets.  The legendary investment banker and trader Charlie Allen would later

say that Joe Sr. started the SEC to make sure no one else could ever have real money again.

Basic organizational theory dictates that the original culture of an institution can never be completely stamped out, and it further

predicts that that culture will always re-surface, even if it is decades later.  Remember this.

Laws were created to control the sale of unregistered securities, to prohibit the counterfeiting of commercial securities, and to

federally criminalize as conspiracy any act done in concert to manipulate financial assets of the United States.  I refer you all to

Sections 5 and 6 of the Securities Act of 1933, to USC Title 18, Sections 513 and 514, and finally, to CJS Sections 22, 22A and 46,

the latter being the supporting law behind the Sherman Anti-Trust Act, the Holding Company Act, the Investment Company Act of

1940, and more recently, the RICO statutes.

Sections 5 and 6 made such causes the basis for civil and limited criminal complaints for enforcement penalties, while Title 18 was

used to attack the counterfeiting of commercial securities by making it a Class B Federal Felony, and finally, the CJS sections

caused such conspiracy conduct between two or more parties to be judged as Insurrection and Sedition, a form of Treason.

During the 16 years I was on the street, I never worked in a firm that would begin to allow any form of unregistered security to be sold. 

Only two firms allowed the creation of synthetic securities from registered securities assemblages, specifically for Down and Outs, a

form of synthetic put made up of a short of the stock, and the short of the call, a variant of the old Reverse Conversion arbitrage from

options.

One firm would do it for client hedge funds, while the other firm told its clients it didn't do them, so their clients would not compete with

their house trading accounts’ activities in this space.  In 1979, I was offered job working on this very account at the second firm, an A

list bulge bracket underwriter. I passed.

There were many professional short sellers throughout my time on the street, who tried to manipulate their target companies just as

today.  They operated at first without many of the tools and opportunities created by the ERISA Act of 1974, and the letter ruling of

1993 which dropped the word "Borrow" from the short seller's lexicon, and substituted word "Locate".  This same letter ruling created

exemptions from even this rule for three kinds of traders:  Market Makers, Arbitrageurs, and Hedged Accounts (read funds).

During the Oil and Gas boom of the late 1970's and 1980's, one short seller in Texas in particular cut such a swath through the Oil

Patch it was rumored someone finally put a high caliber bullet through the window of his Rolls Royce.  This same dirt sandwich would

call up a friend of mine who was a NASD Senior Supervisor and scream at him, saying "You got to stop this insider buying!!!"  This

bozo was INSANE, a stone sociopath. This is but one small example of the mentality of this type.

As the market makers realized what they had been given, they levied an economic assault matching the coordinated attacks the

equal of any in the history of modern warfare.  They determined how to drag the clearing business in by giving them a piece of the

action on their shorting, and invented numerous ways to use offshore brokers and jurisdictions to leverage their power. 

This was done so dramatically, that for a 7 to10 year period, it would be said that 80% of NASD member firm profits came from

shorting, particularly the development stage small public companies of the OTC Bulletin Board, nearly annihilated in six years.  By the

end of that period, they were attacking any company with an alpha, or "excess return". This included stocks on the NASDAQ NMS,

the AMEX (leading to its ultimate acquisition), and even the NYSE.  Acting in concert in large syndicates (remember the word

"Conspiracy" above?!), NO company could stand up to them in any attempt to maintain orderly markets.

In 2002, one of the largest of these syndicates' (650 members including many large hedge funds) operator, one Amir “Anthony”

Elgindy, was arrested in connection with investigation into his activities surrounding terrorism, subornation of FBI agents, and money

laundering issues. He was later convicted of securities fraud and more, and was sentenced to 11 Years in Federal Prison, from

where he continues to run his web site.

It is believed his syndicate killed well over 2000 target companies. His conduct was the direct link of shorting as a tactical approach

to the strategic objective of money laundering for organized crime and other nasty global entities.

Experts at first talked much about naked short selling, not focusing on its real character, which was from the imputed contra account

effect.  Every time a share was naked shorted, a counterfeit long was created never registered by, known to, or accounted for by the

underlying company.  This should start to sound familiar.  Some interesting twists in FASB also entered into their tactical equation.

If the short sellers could bankrupt a target company, they could avoid a revenue recognition event under GAAP.  No revenue

recognition event, no taxable event.  Ergo, they pursued their targets with "unbridled aggression", always hoping for either an

involuntary deregistration of the Company, or its actual bankruptcy.

In another twist of the SEC rules, if a company did either, the shorts never had to cover, not ever.  Again, they had laundered money

without tax consequence.  I have explained this to every one I have worked with and talked to, and universally, it leaves them stunned.

The SEC came under so much pressure to clean up this disgrace, that finally, they issued a piece of window dressing rule making

called Regulation SHO.  After doing it, they realized the market could not clean up its past without wiping the operators out, so they

initiated a "Grandfathering" proviso, saying that shorts existing prior to SHO would be exempted from immediate settlement, the latter

which was highly cushioned.

Then came another wave of indignation from investors, and the SEC  had to switch its position from there being no such thing, to it

not having any effect on markets, to now, that it is really negative for the market, and adversely affects capital formation.  They have

said so many things about so many positions, that they have now said everything and taken every position so well that they can refer

back to being right, and having acted prudently, no matter what happens.

In the late 1990's and early 2000’s, market makers at broker-dealers had a 10 day fail rule, which mandated a charge to their net

capital for any fail over 10 days.  They would roll their positions within the system by kiting trades known by several names, including

whip calls, and rolls.  Reg SHO changed that effectively to 13 days.  Re-enter rolls/whip calls, but now, not put through the clearing

system, but rather done directly broker to broker in what is called Ex-Clearing. 

Shorts and their related counterfeit longs would sit in Ex-clearing, invisible and unreported anywhere.  Taking things a step further, the

short players would take to intentionally miss-marking tickets to reflect short sales as actually "Long Sales" when they weren't, and no

one was the wiser.  Well, not exactly no one.

Everyone needs to realize that calling naked shorting anything other than counterfeiting, albeit by virtual electronic journal entries

rather than a printing process, is simply WRONG.  It is the intent of the perpetrators to delude the longs into thinking that they have

bought real shares from a real seller, when in fact, the longs only know this when they themselves are dirty, such as when a

manipulator wants the counterfeit proxies attached to the counterfeit longs to manipulate actions at a target company.

One well known company would call for a Proxy vote at their annual board meeting.  They had a legally outstanding number of shares

according to their stock record book of 60 Million shares.  How many proxies showed up?  80 MILLION. I am shocked, SHOCKED,

that such a thing could happen in America.  Counterfeit proxies are the most serious corporate governance issue coming out of this

scandal, a concern to every major corporate counsel in this country and overseas.

This is the longest piece I have ever posted.  It re-covers many points in my previous writings.  The SEC recently declared that the

naked shorting selling of securities was NOT the sale of an unregistered security, in a completely illogical and self serving regulatory

statement designed to feed key vested interests with their hands in the guts of the SEC.

Illegal naked short selling is MOST CERTAINLY not only the sale of an unregistered security, it is by intent and practical impact the

COUNTERFEITING OF COMMERCIAL SECURITIES BY SYNDICATES.  What the SEC says as a bureaucracy is meaningless to

true honesty.  It is very interesting that in making this declaration, the SEC specifically did NOT exempt such players from insider

trading rules, particularly where they had previous knowledge of a pending PIPE deal.

After a scathing set of Euromoney articles in April and June, 2005, the UK and EU went to a mandatory three (3) day settlement on all

their exchanges, effectively stopping their shorting scandals mirroring those here.  They gave no grace period.  It was hard, but their

markets are now much cleaner than here.  It is no accident that London has now trumped New York.

Copyright (C) 2008 Bud Burrell
"I believe that banking institutions are more dangerous to our liberties than standing armies." ... Thomas Jefferson

Offline cueball7

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  We need a three day rule for settlement on all our exchanges in this country. Wall street would shit a brick if the SEC tried to implement this rule, but its needed as the first of many steps towards the U.S. having sound money! Good catch Boomer!

Offline mockingbird

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  • He who laughs last, laughs best.
This is beyond ridiculous.

Here we are fighting over tablescraps, when these crooks the sons of crooks have robbed every man, woman, and child of the very shirt on their backs.

It's time for a revolution, now!!!

Their next step is vasectomizing every newborn male.

They'll convince the sheeple that it reduces testicular cancer, and it is completely reversible  ::)
Quote from: industria on April 10, 2008 at 01:51:06 AM
Quote
If you don't like the way things are run don't let the door hit you in the ass as you leave.  :-*

"Attack of the tyrannical moderator!!!"

Offline rick reuben

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That lead post was amazing. Explains much, thanks.

Offline boomerkel

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That lead post was amazing. Explains much, thanks.

Thanks for the comp :-*

More than happy to enlighten you and incite you! ;D

"I believe that banking institutions are more dangerous to our liberties than standing armies." ... Thomas Jefferson

Offline rick reuben

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Looks like the vultures were digging into their own carrion as the end approached ( sorry if this has been posted previously- I missed it ):
Quote from: washington post 3-22-08
An unusual spike in trading of Bear Stearns shares preceded the collapse of the 85-year-old Wall Street institution last week, and the Securities and Exchange Commission is looking into this activity, said a person familiar with the matter.

In particular, the SEC is examining a surge in short selling that occurred days before the trouble at Bear Stearns was revealed publicly. In a short sale, a trader borrows shares and then sells them in the hope the price will fall and he can buy them back at the lower rate before returning them to the owner. The more the stock falls, the more the trader makes.

SEC spokesman John Nester declined to comment on whether the agency was looking into the trading of Bear Stearns stock.

Offline boomerkel

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April 10, 2008: 12:48 AM EST

NEW YORK (Dow Jones) -- Former Federal Reserve Chairman Paul Volcker on Wednesday challenged recent moves by the central bank, including its $29 billion bailout of Bear Stearns Cos. and interest rate cuts, saying both could create more problems than solutions.

Last month's rescue of Bear Stearns (BSC) and the subprime mortgage mess that led up to it illustrate sharp differences between investment and commercial banks, with the latter better capitalized and regulated, and therefore better able "to protect against these crises," said Volcker, speaking at the Harvard Club of New York City.

The Fed intervention also calls into question what role the central bank might be expected to play if and when other such scenarios arise, said Volcker, who chaired the Fed from 1979 to 1987.

"Taking this kind of action in an emergency does create a precedent in people's minds... the more you support the market, the more political concerns arise. The Federal Reserve is supposed to be above all that," said Volcker.

"Financial crises don't come along unless there are underlying problems," said Volker, who pointed to years of the U.S. consuming more than it produces, with U.S. debt financed by money from abroad and Americans buying cheap goods from overseas.

"The only trouble is you can't go on forever spending more than you're producing," he said.

Volcker, whose Fed is credited for halting the stagflation crisis of the 1970s, also maintained the central bank's interest rate cuts won't be an easy fix to current financial problems. "The history of markets is littered with the idea you can solve problems by raising inflation," he said.

Addressing the same audience, former Treasury Secretary Lawrence Summers said the U.S. economy is "currently in recession," but the next administration would likely inherit an economy on the cusp of recovery.

"In a technical sense the recession will have ended when the next president takes office," although the climate may not feel much improved, said Summers, a Harvard University professor who led the U.S. Treasury during the Clinton Administration.

David Walker, up until recent weeks the country's comptroller general, lashed out at the "imprudent and immoral practices of the Federal government," saying the current policy of low taxes and high government spending means "tomorrow's taxpayers will pay the bill, (including) those too young to vote and some of them not born yet."

For a financial system to work, it needs to have incentives "for people to behave the right way," adequate transparency, and individual and institutional accountability when things go wrong, said Walker, who for a decade headed the Government Accountability Office.

UPDATE: Former Fed Chief Volcker Questions Wisdom Of Bear Bailout, Cuts

  (END) Dow Jones Newswires
  04-10-08 0048ET
  Copyright (c) 2008 Dow Jones & Company, Inc.


"I believe that banking institutions are more dangerous to our liberties than standing armies." ... Thomas Jefferson

Offline boomerkel

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  We need a three day rule for settlement on all our exchanges in this country. Wall street would shit a brick if the SEC tried to implement this rule, but its needed as the first of many steps towards the U.S. having sound money! Good catch Boomer!

We need Alex Jones to cover this story of which there are many, but for some reason there is dead silence!

"I believe that banking institutions are more dangerous to our liberties than standing armies." ... Thomas Jefferson

Offline limitgov

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Their next step is vasectomizing every newborn male.

They'll convince the sheeple that it reduces testicular cancer, and it is completely reversible  ::)

It might cut down on the redistribution of income.....
Poor people are very expensive.....

I'm just sayin!

if you see baby after baby.....born in a hospital....and you look on the insurance and it says medicaid.....

factor in some other costs to the taxpayer.....
poor people are very expensive.