Where does one go to file a
complaint against government agencies for the crimes of racketeering,
conspiracy to commit fraud, and aiding and abetting in the
counterfeiting U.S. currency and the crimes are of such an extent as to
constitute the high crime of treason against the country they exist to
serve and the American people for whom they were supposed to work to
protect? The agencies I'm complaining about are the
Securities and Exchange Commission, the Federal Reserve and the U.S.
What compels me to pose this question and express the complaint is
that I've been participating in a very interesting blog on a new theory
on the demolition of Building 7 on September 11, 2001. Building 7
is the building that housed government offices that were destroyed in an
obvious controlled demolition sometime after 5:00 pm on the 11th.
If it has ever received mainstream media coverage, I don't know about
it. What I do know is that the average American citizen who gets
most of their information from the mainstream media is not even aware
that a third building "collapsed" on 9-11.
The name of the blog is
"American Everyman" and the article, "9/11 Shock Opera..." by Scott
Creighton was posted by blogger WillyLoman.
Since Building 7 housed the SEC and with consideration for the
massive amounts of Wall Street fraud that occurred in the 1990's and
that continues to this day, the subject in the comments inevitably
turned to the idea that Building 7 may have been destroyed because of
the investigation and evidence of fraud committed by Enron which went
down just before 9/11. This would seem to be a viable theory if
one believed that the SEC was actually "on the job" of being the
watchdog of Wall Street. At this point we know for a fact, that
they are not as was proven by their failure to investigate and stop the
Bernie Madoff scam even when handed their case by
Henry Markopolous. Strike One against the SEC.
Hedge Funds and Put Options
Towards the bottom of the blog, WillyLoman posted a link to
three excellent, short videos that explain in simple terms that even
a financials industry illiterate such as myself could understand, how
the hedge funds are stealing equity value from the market.
Basically they are Kiting securities. For those who are too
young to remember a time before financial transactions moved at the
speed of light, Kiting is one of the very oldest of scams against
a bank. It used to be you could write a check and if you paid attention,
you would know that it took several days to clear. So you could write a
check with a zero balance in your bank account - in essence betting that
you could make a deposit before the check cleared thereby getting a free
loan from the bank. Of course if you didn't make it with the
deposit, it turns into a crime of theft - insufficient funds.
Then WillyLoman posted the link to the Deep Capture website where a
long expose written by Mark Mitchell is posted. The expose is a
story about naked short selling, mob involvement in Wall Street and the
theft of billions of dollars from shareholders by hedge fund operators
using a strategy media "News" coverage, fraudulent stock analysis, naked
short selling, SEC passive complicity and the destruction of hundreds if
not thousands of companies.
The Story of Deep Capture - exposing naked short-selling
The crimes are the work of Wall Street hedge
fund managers and brokers who engage in a common
trading strategy known as short-selling. A short
sale is a way of making money when the price of
a stock goes down. You borrow shares
from someone else and immediately sell them off.
If the price drops, you buy the shares back and
return them to the original owner, pocketing the
difference. If a company goes out of business,
short-sellers hit the jackpot.
perfectly legal and unobjectionable. But some
short-sellers do not play by the rules. A small
group of powerful hedge fund managers stop at
nothing to annihilate the companies they sell
short. Their tactics include: blackmail, smear
campaigns, espionage, fraud, harassment,
extortion, bribery, rumor-mongering, sabotage,
off-shore money laundering, political cronyism,
frivolous lawsuits, witness tampering, biased
financial research, false identities, bogus
credit ratings, bribery, libelous blogs, bad
science, forgery, wiretapping, counterfeiting,
collusion, lying, cheating, threats and theft.
Their most egregious trick is to sell
“phantom stock.” By exploiting a glitch in Wall
Street’s computerized trading system, and a
loophole in federal regulations, some hedge
funds sell virtually unlimited amounts of stock
that they have not yet borrowed or purchased.
This is often referred to as “naked short
selling.” Hedge funds use this tactic to flood
the market with supply and drive down prices -
which is blatantly illegal.
....the Securities and Exchange Commission has
more than 300 companies whose stock has been
sold but never delivered in excessive
quantities. In other words, a significant
fraction of the stock sold in more than 300
companies is phantom stock. If you think you own
shares in one of these companies, the chances
are that a broker has sold you air to satisfy a
crooked hedge fund client. The computer might
say that you own stock, but in reality, you do
not. [Strike Two against the SEC]
...But we also know it because Leslie Boni, a
resident economist at the SEC has published a
seminal report, “Strategic
Failures to Deliver,” which identifies
phantom stock as a major problem. We know it
because former Undersecretary of Commerce Robert
Shapiro has done his own
study, concluding that naked short sellers
have vaporized as many as 1,000 companies.
we know it because in January 2005, the SEC
begins publishing a list of more than 300
companies whose stock has been sold, but never
delivered, in excessive quantities. There is
some initial muttering about the phantom stock
being the result of “clerical errors,” - maybe
the real stock is sitting under a mattress
somewhere, or the dog ate it - but this is so
much gobbledygook, as evidenced by the huge
amount of undelivered stock and the SEC’s later
admissions that phantom stock is a “serious
...Peter Chepucavage, the SEC attorney who
drafted the so-called Reg SHO rule requiring the
SEC to begin listing victimized companies, has
told us that its enactment was preceded by an
unprecedented lobbying effort spearheaded by
Wall Street. The result, he says, is watered
down enforcement. While the SEC listed the
victim companies, for example, it stipulated no
way of helping them - which is like publishing
the names of rape victims while refusing to
prosecute rapists. (Indeed, the stock prices of
many of the companies on the list dropped
significantly in the days after the list first
appeared.) [Strike Three and the SEC
But, anyway, there it is: a list, supplied by
the SEC — unequivocal evidence that hundreds of
companies are victimized by a stark financial
...It is also important to recognize the role of
The Depository Trust and Clearing Corporation (DTCC),
an organization headquartered in New York City.
DTCC is where stock trades are processed — more
than $1.5 quadrillion worth of them every year.
That’s 30 times larger than the entire gross
product of the entire planet...
DTCC is one of the world’s most important
financial institutions. But what the Wikipedia
entry does not mention is that the DTCC is also
among the least transparent organizations on
earth. No joke: America’s founding fathers would
take up arms if they knew that anything like the
DTCC could exist in this country. There are
funds exceeding 30 times global output flowing
through a sealed black box that is not
understood even by the SEC officials who are
supposed to regulate it.
One former SEC official describes his
colleagues visiting the DTCC and asking, “So,
what is it you guys do here, again?” A former
DTCC employee confirms that the SEC would
occasionally send junior people, and summarizes
their oversight as follows: “The SEC staffers
would say, ‘What do you do?’ and ‘How do you do
it?’ After we would explain to the SEC folks
what the DTCC did, the SEC people would say,
‘OK, are you doing it?’” These meetings would
occur about once per year, and take no more than
two or three hours. That was the oversight
provided by regulators to the sealed black box
corporation through which 30 times the economic
output of the entire world flows.
Because the DTCC processes every short
sale, it knows which brokers have hedge fund
clients that are selling stock and not
delivering it. The organization also knows
precisely how much phantom stock is circulating
in at least one part of the system. Yet, perhaps
because it is “user owned” - that is, it is
owned and operated by the very Wall Street
brokerages that sell the phantom stock - the
DTCC refuses to release any information.
History of the
Depository Trust and Clearing Corporation from the DTCC website:
The depository, DTC, and the oldest of our clearing
subsidiaries, NSCC, were both created in response to the
paperwork crisis that developed in the securities
industry in the late 1960s and early 1970s. At that
time, brokers still exchanged paper certificates and
checks for each trade, sending hundreds of messengers
scurrying throughout Wall Street clutching bags of
checks and securities.
Wall Street's "Paperwork
With the New York Stock Exchange (NYSE) handling 10
to 12 million shares daily, brokers were literally
buried in paperwork, and concern about risk was growing
in Congress, the Securities and Exchange Commission, and
The crisis became so severe that, in order to help
reduce the backlog, the exchanges closed every
Wednesday, shortened trading hours on the other days,
and extended settlement to T+5 from T+4. Eventually the
industry developed two separate and distinct approaches
to solve the paperwork problem.
One Solution: Immobilization
The first solution was to immobilize physical stock
certificates by maintaining them in a central location
or depository, and to record changes of ownership using
"book-entry" accounting methods where no certificates
actually change hands. Initially, this was done by the
NYSE and its Central Certificate Service. That led to
the creation of DTCC's depository subsidiary in 1973.
Another Solution: Netting
The second approach to solving the paperwork crisis
involved a concept called multilateral netting. If one
broker does 100 trades in IBM, both buying and selling
at different prices with a variety of different brokers,
there are few opportunities for netting. By interposing
a central organization as the counterparty to all
trades, all that broker's trades in IBM can settle to
one net position, and all money for trades in all
securities can settle to a single dollar figure owed to
or from the central counterparty.
Today, with net money settlement, only a single money
transfer is required, reducing the dollar amount of
financial obligations by as much as 98%.
overview of DTCC:
DTCC, through its subsidiaries, provides clearing,
settlement and information services for equities,
corporate and municipal bonds, government and
mortgage-backed securities, money market instruments and
over-the-counter derivatives. In addition, DTCC is a
leading processor of mutual funds and insurance
transactions, linking funds and carriers with their
DTCC's depository provides custody and asset
servicing for 3.5 million securities issues from the
United States and 110 other countries and territories,
valued at $28 trillion. In 2008, DTCC settled more than
$1.88 quadrillion in securities transactions.
DTCC operates through six subsidiaries - each of
which serves a specific segment and risk profile within
the securities industry:
- National Securities Clearing Corporation (NSCC)
- The Depository Trust Company (DTC)
- Fixed Income Clearing Corporation (FICC)
- DTCC Deriv/SERV LLC
- DTCC Solutions LLC
- EuroCCP Ltd.
DTCC's joint venture company, Omgeo, has over 6,000
customers in 45 countries and plays a critical role in
institutional post-trade processing, acting as a central
information management and processing hub for brokers,
investment managers and custodian banks.
If there wasn't a centralized information system and stock
certificate depository, there might be some dubious but plausible
explanation for the scheme of Kiting securities to occur without anybody
being aware - although that still wouldn't explain the SEC's failure.
Flashback to 1987 Black Monday, Stock Market Crash --
“Following the 1987 stock market crash, President Reagan called
[Nicholas] Brady to serve as chairman of the Presidential
Task Force on Market Mechanisms. The Brady Commission recommended
reforms that were subsequently adopted.
The commission recommended the Federal Reserve Board become a ''supercop"
overseeing financial market regulation and coordinating ''circuit
breakers" such as trading halts on stock and price limits on
[Cato] After the Crash: Linkages Between Stocks and Futures
...So allow me to introduce you to the elephant. The Brady
commission report states that 60 percent of publicly outstanding
common shares are owned by householders. But roughly 80 percent of
daily big-board volume is accounted for by institutions such as
mutual funds, insurance companies, pension plans, and broker-dealer
proprietary accounts. On average, about half of the daily volume on
the New York Stock Exchange consists of block trades, that is,
transactions of at least 10,000 shares each. The retail investor, in
other words, may own the train, but its operation is firmly in other
people's hands. That message was underscored during the October
What all this means is that the securities markets have become
highly institutionalized and control of financial assets has become
concentrated in a very few hands. A small group of money managers is
capable of dictating both the direction and the velocity of equity
prices. An important brake on market volatility in past decades,
namely, the need for a broad public consensus to develop before a
significant change in market trend could occur, has disappeared.
....PROF. MILLER: The call for a unified clearing system is
reminiscent of the grand-sounding but impractical proposals offered
15 years ago for a national market system. It strikes me as an
overreaction to the rumors of clearing defaults that were
floating, particularly in New York, during this chaotic period.
The first we heard about them was when we read about them in the
Brady report. They were not a major factor on the floor of the
Chicago Mercantile Exchange.
Since Christopher Cox was on the original Brady Commission, it means
that he had to have been aware of the problem of clearing defaults -
which are what I called Kiting Securities.
Brief History of the 1987 Stock Market Crash with a Discussion of the
Federal Reserve Response
The 1987 stock market crash was a major systemic shock. Not
only did the prices of many financial assets tumble, but market
functioning was severely impaired. This paper reviews the events
surrounding the crash and discusses the response of the
Federal Reserve, which responded in a number of ways to support
the operation of financial markets, including the provision of
liquidity, in a highly visible fashion.
And it means that the Federal Reserve knew about it so when the
decision was made for the Federal Reserve to provide liquidity to the
market when they knew there were clearing defaults because what was
being traded were phantom securities, in effect, what the Federal
Reserve was doing was what I consider to be counterfeiting U.S. currency
in the form of digits in a computer using the mechanism of the
Depository Trust and Clearing Corporation and the hedge fund operators
to launder the digits. The effect of what they were doing was to
extract real wealth and equity from real companies. By inflating
the number of shares on the market, they devalued the shares to the
point of making the debts of the corporation greater than the assets of
the corporation - forcing into bankruptcy where the assets of the
corporation could be picked up for pennies on the dollar.
By expanding the money supply no doubt
to correspond to the amount of the phantom stock value which the DTCC
would have known the precise amount, Alan Greenspan, as the Chairman of
the Federal Reserve was complicit and in fact, was integral to the
The reason I say that what they did was
counterfeiting was because the money in the form of digits in the
computer were not created as a function of economic activity in the
United States; and it was not created by government spending, it was
purely a digital creation of the Federal Reserve participating in a
digital laundering scheme for the purpose of theft at a magnitude that
qualifies as Grand Theft Country.
The U.S. Treasury which is responsible
for the U.S. monetary system - and they are charged with tracking down
and they are charged with tracking down and stopping counterfeiters also
failed in their obligation to the American people. And it can't be
said that they didn't know about it either. In 2004,
Treasury Secretary John Snow told the audience at the National Press
Club that $7 trillion had been taken out of the U.S. economy.
Who was stood up and shot for treason for the theft? Nobody.
Who even went to jail? Nobody.
One more thing - if you walk up
to a bank teller and you have a counterfeit bill - regardless of the
denomination, the teller confiscates it and you get nothing.
The same thing should happen to those people who have counterfeit digits
on the books of the banks no matter where those counterfeit digits are
May 29, 2009