LILA RAJIVA: The Mind-Body Politic
Individuals Not Ideologies
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Financiers Used 9-11 Diversion of FBI to Loot American Middle-Class
Great interview at Forbes, between Steve Forbes and Senator Ted Kaufman on the capital markets, naked short selling, the uptick rule, sponsored access, HFT (high frequency trading) and digitalization, dark pools, and fraud…
“Forbes: Finally, Fraud Enforcement Recovery Act.
Kaufman: Yeah, yeah.
Forbes: You’re proud of it.Kaufman: Yeah, I am.
Forbes: What it does, and what will it do?
Kaufman: OK, here’s what it did. After 9/11, we moved a lot of FBI agents over to cover terrorism, which we should have done. But we left only like 250 FBI agents in the country to cover financial fraud. We did more financial fraud cases in 2001 than we did in 2007, can you believe that? So, what we did with this financial and regulatory forum, with Pat Leahy, who is chairman of judiciary committee and Chuck Grassley, an Iowa Republican. It’s a bipartisan bill and we got a bill passed to give us more FBI agents, give us more prosecutors and to go after these folks. And so that’s basic what we passed, and we’re getting organized. Had a really good hearing of the judiciary committee. Rob Khuzami at the Securities Exchange Commission, Lanny Breuer’s head of the criminal division, Kevin [Perkins] from the FBI financial thing.
And we’re really, we’re going after this thing. And I know you agree with me. You know, if you, the folks that committed crimes while this thing was going on, we can all argue about what caused it or not, anybody who took advantage of this situation and lined their own pocket for it should go jail.”
Policing Wall Street…
From Black Star News:
“In the 1980s there was one great stock fraud, which captured the imagination of the American public. That stock fraud involved a chain of electronics stores, which went by the name of “Crazy Eddie.” These stores were founded by Eddie Antar (“Crazy Eddie”) of Brooklyn. “Crazy Eddie” used radio advertising to hype his stores. In the end the retail chain of “Crazy Eddie” went bankrupt; a $300 million fraud.
At the center of this fraud was Sam E. Antar, a cousin of “Crazy Eddie” Antar and the Chief Financial Officer of the “Crazy Eddie” retail chain. Currently Sam E. Antar has publicly stated that he has reformed and is now lecturing, without charge, on the “dangers” of crime. It is strange that Sam E. can afford this largesse because he filed for bankruptcy several years ago. He claims to be supported by the real estate interests of his wife’s family.
Recently he was the focus of an article, “Crazy like a fox,” by Aaron Elstein, which appeared in the October 4, 2009 issue of Crain’s New York Business. Once a felon, always a felon. Yet Elstein referred to Sam Antar as “a former felon.” That alone shows his bias and makes the reader believe that rather than an article the piece is meant to rehabilitate Antar. A felon is someone convicted of a felony. There is no such thing as a former felon.
Elstein also reported: “Mr. Antar admits working for a short-seller before. He did research for Barry Minkow, an investor who served prison time in the 1990s for running a fraudulent carpet cleaning service.” This is like saying “The titanic ran into an ice cube.” There are several understatements in the “article.”
Sam Antar not only worked for Barry Minkow but contributed $250,000 to Minkow’s Fraud Discovery Unit, which supposedly ferrets out false information in filings by publicly listed companies. Antar claims that this $250,000 was his wife’s money. Antar’s wife must be the most generous woman in the world- doling out $250,000 as a gift to her husband’s friend.
Here’s what happened: Minkow finds false information in SEC filings. Minkow then sells the stock short, in hopes that the stock price declines. Minkow then releases his findings. Minkow then buys back the stock after the price has declined. By that very fact alone, Minkow is not an “investor.” Minkow is a short seller.
As the reader can readily determine someone is making money from this arrangement. What’s not stated in the article is that Minkow did not just run “a fraudulent carpet cleaning service.” Minkow’s carpet cleaning business was called ZZZZ Best, a stock fraud that defrauded the American public of hundreds of millions of dollars. Minkow served seven years in federal prison for fraud among other charges.
The article is a “white wash,” a “fix.” Minkow owes the government approximately $16 million and his salary is garnished to pay the amount owed. That is why the payment could not be made out personally to Minkow but to the Fraud Discovery Unit- the money would have been seized.
During his incarceration Minkow converted to Christianity and studied for a Divinity Degree. Currently Minkow is a pastor of a Church. I find it rather amusing when convicted felons turn to God. It has been my experience that once a stock fraud artist- always a stock fraud artist. The money is too good and too easy. That is why the members of Aish Kodesh in Long Island participated in the stock frauds of Maier Lehmann.
Sam E. Antar is a fraudster; as is Barry Minkow.
Both have now found God. Perhaps they have monetarized God.”Manfredonia, a trader and whistleblower on Wall Street in the 1980s, is now on a campaign to expose corruption on the Street. Please e-mail him tips to Edward@blackstarnews.com
Ron Paul: No Military Occupation Of Haiti
Statement of Congressman Ron Paul, United States House of Representatives Statement in Opposition to H Res 1021, Condolences to Haiti, January 21, 2010
I rise in reluctant opposition to this resolution. Certainly I am moved by the horrific destruction in Haiti and would without hesitation express condolences to those who have suffered and continue to suffer. As a medical doctor, I have through my career worked to alleviate the pain and suffering of others. Unfortunately, however, this resolution does not simply express our condolences, but rather it commits the US government “to begin the reconstruction of Haiti” and affirms that “the recovery and long-term needs of Haiti will require a sustained commitment by the United States….”
Xmarks’ Top 20 Corruption Sites List Includes Deep Capture
I just happened to notice this ranking of the most popular corruption sites and thought I’d post it as more evidence that the campaign against naked short selling isn’t some marginal “freak” show, as some of the financial blogs have tried to claim it is. (more…)
Sad SAC: Reuters Spikes Hedge Story On Complaints From Steve Cohen
Via Finalternatives:
“Reuters opted against running a story about alleged insider-trading on the part of SAC Capital Advisors founder Steven Cohen after Cohen himself complained about the news agency’s coverage, a journalism blog reports.
Cohen repeatedly called Devin Wenig, CEO of Thompson Reuters Markets Division and the second-in-command at Reuters parent Thomson Reuters, according to Talking Biz News. The hedge fund boss reportedly complained that the story, which the University of North Carolina blog reports would have been an “incremental” advance in the story of alleged insider-trading more than 20 years ago, was part of a pattern of persecution on the part of Reuters.
Wenig forwarded Cohen’s complaints to Reuters editor-in-chief David Schlesinger, who in turn referred the story to editors. Those editors debated the story, written by Matthew Goldstein, before deciding to kill it after three days.
“We make decisions on whether or not to run stories purely on journalistic grounds,” a Reuters spokesman told Talking Biz News.
Goldstein was the first reporter to cite the unsealed court documents that include explosive allegations against SAC and former SAC portfolio manager Ping Jiang. Cohen’s ex-wife, Patricia, last week sued him for $300 million, accusing him of insider-trading, perjury and hiding assets from her and from the authorities.”
My Comment
Looks like more confirmation of the Deep Capture thesis - that major newspapers are bending over backwards…and forwards….for the big hedge funds.
I notice that Hedge World has picked this story up….as well it should, it’s a big one… and very kindly links this blog, as well as the ever-alert zerohedge - the only MSM-touted blog I truly dig, mainly because I dig the characters on it.
Earlier, I blogged that Steven Cohen was also having problems with a militant ex-missus, who has gone public with allegations that he perjured himself, hid money from the government (here we are on Stevie’s side), and did other sorts of naughty things, like insider trading, that reclusive billionaires really shouldn’t do, not if they want to stay either reclusive or billionaires.
We have much more sympathy for Mr. Cohen, of course, than we do for the self-important twits and petty tyrants who fly their bylines at major newspapers with little respect for the body politic. At least, we understand simple greed. But the weedy vanity of the pen-pushing mob needs to be exposed for what it is.
Now comes Mr. Goldstein, who clearly suffers from the delusion that his job is to break important stories, no matter how exalted the net worth of the subjects. That didn’t sit well with his boss, and now the dirty laundry is out in the open.
Meanwhile, as if irate Sith ladies and spiked stories weren’t enough, there’s also a forced oral sex- cross-dressing- cum- sexual-harassment suit coming back from the past to haunt Sad SAC.
Who knew you could have so much fun without getting naked (shorted)?
Wall Street: The Crematory Of Capitalism
“Independent traders know as a fact that Humungous Bank & Broker (HB&B) research analysts are biased and unaccountable. We also know they give short-term tips to their firm’s proprietary traders and sales people that are at odds with their longer-term published opinions. These unfair practices are permitted because the fundamental conflict of interest structure of the securities industry is permitted.
Today the Wall St Journal has reported that FINRA (the Financial Industry Regulatory Authority) has launched a broad inquiry into how up to a dozen Wall Street firms disseminate stock ratings and research. Important questions are being asked.
On August 24 this year, WSJ informed the public of how Goldman Sachs analysts were tipping their traders with info that differed from published reports. These regular meetings were called “trading huddles”. At the time, I called it insider trading, which is criminal.”
My Comment:
A reader commented earlier that “insider trading” is a big yawn as a story (for the latest insider trading arrest, see this case, of an ex-banker from Lazard, a relatively small case, admittedly)
Someone might come to that conclusion only if their knowledge of the practice were abstract and based on theoretical debate on the subject. But anyone who knows the history of the capital markets over the last 30 years or so knows that a big part of the story is that investment (merchant) banks turned into traders by the end of the century and that their proprietary trading became more important to them than their retail clients or customers. I’ve written about this in relation to Goldman Sachs, which was the most egregious (because it was the most powerful) of the lot.
Insider trading is essentially a failure of banking as a profession, with professional ethics. There is a fiduciary responsibility to shareholders (in the case of a company) and of clients (in the case of banks). Conflict-of-interest is a problem in every other work place. Why not here?
Besides conflict-of-interest, insider trading involves an explicit fraud on the client.
That’s in addition to the crime of fractional brokering, as someone cleverly puts it. (This is quite different from fractional banking. Due to the confusion of language that lets banks perform both safe holding and investing functions at once, fractional banking is legal). On the other hand, “fractional brokering,” which is what naked shorting and “fails-to-delivered” amount to, is illegal.
Unfortunately, the professional financial reporters seem too myopic to understand the gravity of the problem, our self-involved “gonzo” journalists (yes you, Matt Taibbi) are too politically-driven to explain it correctly, and right now I’m too disgusted by the intellectual dishonesty of the media to take the trouble to make the argument on the web and see it lifted by all and sundry with nary a link or footnote, let alone verbal acknowledgment.
As Cara points out correctly (and safely, since he’s in Canada), Wall Street and the American capital markets have become a joke, and a substantial part of the financial media still doesn’t seem to realize it’s the punchline.
That gives me no pleasure to say. For years, I defended American business to my foreign friends, claiming that Americans at least held to standards, regulations, and transparency requirements higher than theirs (meaning, Indian and non-Western).
Behind all the glitz “America” still operated somewhere, I argued.
The Marxists and communists who called the whole thing a charade and a lie didn’t quite get it, I was sure. The values of the American republic would prevail. Once most money-managers and businessmen were alerted to what was going on in the markets, I fully expected that their outrage would be enough to stem the rot. I saw CEOs stepping up to the plate and doing their duty, when the future of their own (rather than someone else’s) children was at stake.
That was four and a half years ago, when I first began researching the markets.In retrospect, I see I was incredibly naive.The rot goes deep.
Those are somber thoughts to have around Christmas time. But perhaps not inappropriate. If you recall, in the Christmas story, gold (or should I say, gld?) and frankincense were only two-thirds of the offering. The other third was myrrh. Myrrh is a resin whose oil, I read here, is used for embalming and whose incense is used by penitents at funerals and cremations.
That must be the bitter scent I smell rising from the capital markets.
SEC Chief Khuzami On Muckety
Former federal prosecutor and Deutsche Bank general counsel Robert Khuzami was appointed chief of the SEC on March 30, 2009. Here’s his bio.
Berlusconi Immunity Thrown Out by Constitutional Court
Italy’s top court, the Constitutional Court, has thrown out a law granting immunity from prosecution to the president, Silvio Berlusconi:
“The law overturned Wednesday was pushed through by Berlusconi’s conservative coalition in 2008 when he faced separate trials in Milan for corruption and tax fraud tied to his Mediaset broadcasting empire. It granted immunity from prosecution while in office to the country’s four top office holders — the premier, the president of the republic and the two parliament speakers.
The proceedings against Berlusconi were suspended as a result of the law, drawing accusations that it was tailor-made for the premier.
The corruption trial is particularly threatening because, in the meantime, the premier’s co-defendant has been convicted of accepting a bribe to lie in court to protect Berlusconi in another case.
Still, even if convicted, the premier would not be obliged to resign and could simply appeal, as sentences in Italy are usually not served until all avenues of appeal are exhausted.”
Letterman Targeted in Extortion Plot By CBS News Employee
Update: Favourite Letterman-blackmail quote so far is by Stephanie Gutman, at The Telegraph, UK:
“But this follows on the heels of the Travolta family extortion affair, so it points out one of the pitfalls of fame and wealth, that one is continually surrounded with a mosquito cloud of predators trying to draw blood. And even the creepiest, snarkiest, fake-sincere liberal talk show host gets my sympathy for having to live with that.”
“Three weeks ago, Letterman said, he got in his car early in the morning and found a package with a letter saying, “I know that you do some terrible, terrible things and that I can prove that you do some terrible things.” He acknowledged the letter contained proof.
He said it was terrifying “because there’s something insidious about (it). Is he standing down there? Is he hiding under the car? Am I going to get a tap on the shoulder?”
Letterman said he called his lawyer to set up a meeting with the man, who threatened to write a screenplay and a book about Letterman unless he was given money. There were two subsequent meetings, with the man given a phony $2 million check at the last one. Letterman joked it was like the giant ceremonial check given to winners of golf tournaments.”
He told the audience that he had to testify before a grand jury on Thursday.
“I was worried for myself, I was worried for my family,” he said. “I felt menaced by this, and I had to tell them all of the creepy things that I had done.”
He said “the creepy stuff was that I have had sex with women who work for me on this show. My response to that is yes, I have. Would it be embarrassing if it were made public? Yes, it would, especially for the women.”My Comment:
What an irony (but not an oddity) that the comedian who was making vulgar jokes about Sarah Palin’s minor daughter - presumably, to prove how trashy the Palins are - has a history himself.
Letterman admitted to numbers of affairs with co-workers, while revealing a black-mail plot from another CBS news employee, whose name hasn’t been confirmed yet. It’s interesting that this critic of the Palins* - who’ve been married for years and who had children within their marriage - married his long-term girlfriend only in March this year, though he had a child with her in 2003.
This is not a judgment about Letterman’s lifestyle. That’s his business. It’s a judgment about his good sense and his psychological motivations. You’d think the man would zip up about anyone else’s family or sexual history.
File this away as another instance of the corruption of the media. In recent posts, I’ve talked about sexual blackmail as one way in which public figures are ruined or hounded out of office. We’ve had the example of Eliot Spitzer, most famously.
The other point to note is that the perpetrator is a newsman (and not just any newsman - an Emmy award winning CBS producer and crime reporter for “48 hours.” Although this has nothing to do with the “deep capture” of the media in the financial story, it does add to the evidence that the media really is the problem, at every level. When reporters are so intent on making their names that they’re prepared to “out” public (or even less than public) figures over personal matters that are irrelevant to any public interest, why should we be surprised that one of them takes a more direct route and uses the information to make money from his target directly?
*Note: As I’ve said before, I’m not a fan of Sarah Palin’s but dislike the way she was treated.
Duvall ‘Fesses Up To Bark, Not Bite
Now Mike Duvall admits to “inappropriate story-telling” but denies having had an affair with either of the two lobbyists. That denial is seconded by Ms. Barsuglia. The man to whom he told the story now denies hearing it. He wasn’t paying attention, he says. Duvall talks a lot.
We were wondering ourselves…..
If the denials are accurate, it looks like Ms. Barsuglia and her family might have a case for defamation.
We’re all agog.
And we have another question: Just what level of IQ does it take to be a California assemblyman?
We’re all agog about that too.
Many’s the time we’ve seen a female employee slandered for no more than being more personable and competent than the males around her. Her career is then almost sure to be attributed to her sexual wiles.
If Duvall is any indication, there seem to be married men whose rich imaginations don’t come equipped with the ethical compass that tells them that dragging your associates into your adolescent fantasies does irreparable damage to their professional credibility and personal reputation.
If the denials hold water, Ms. Barsuglia should be paid substantially for the damage done to her career and her family’s sensibilities.
Of course, the denials may not hold water.
Overstock CEO on Wall Street Corruption
“For many months I have gone to bed knowing somewhere in America there is a grandmother eating dog food tonight so that some ass … on Wall Street can drive a new Porsche.”
– Patrick Byrne, CEO of Overstock (Fortune, 2005)
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