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May. 4 2010 - 6:19 pm | 2,980 views | 4 recommendations | 34 comments

Goldman, Naked

Goldman Sachs Group Inc’s GS.N market-making unit has been censured and fined $450,000 after U.S. regulators found hundreds of violations over how it processed customer trades involving short sales of stocks.

via UPDATE 2-US fines Goldman unit over short-sale violations | Reuters.

Apologize for being absent from the blog of late, have been in transit and much consumed with this ballooning Goldman business.

In an interesting side note to the much more publicized businesses involving John Paulson, Greece, and whatever else Goldman is currently getting tarred and feathered for, the bank was quietly slapped on the wrist by the SEC for violations related to naked short-selling.

I wrote about this last year. The story was that Goldman (and others) had extremely lax standards for locating the securities it lent out to short-sellers. When you lend securities to someone without locating the stock first, that makes it possible for that person to sell the stock without actually possessing it or intending to possess it. That’s called naked short-selling and it’s a kind of counterfeiting that pretty much everyone admits is fairly common on Wall Street, although there is wide disagreement over how harmful it is to the market.

The current story reports that the SEC fined Goldman for failing to prevent crappy locates in late 2008. They’re describing the violations as a “bookkeeping error,” probably because a systematic effort at profiteering via the enabling of naked short-sellers is not a simple thing to prove. To quote Reuters:

Regulators said that because of a bookkeeping error, the Goldman unit between Dec. 9, 2008, and Jan. 22, 2009, accepted about 385 orders to short stocks where it had not first borrowed or arranged to borrow the securities as collateral.

They also said the Goldman unit failed about 68 times over that period to timely close out market-making positions in stocks or notify customers about such lapses.

In a piece I wrote about naked short-selling last year I published transcripts of Goldman officials discussing their shoddy locate systems at a conference of SIFMA, the Securities Industry and Financial Markets Association:

In a conference held at the JW Marriott Desert Ridge Resort in Phoenix in May 2008… a compliance officer for Goldman Sachs named Jonathan Breckenridge talks with his colleagues about how the firm’s customers use an automated program to report where they borrowed their stock from. The problem, he says, is the system allows short-sellers to enter anything they want in the text field, no matter how nonsensical – or even leave the field blank. “You can enter ABC, you can enter Go, you can enter Locate Goldman, you can enter whatever you want,” he says. “ Three dots – I’ve actually seen that.”

On the list of crimes perpetrated by the big banks during the crisis period, naked short-selling probably isn’t near the top. But it definitely exists and it was almost certainly a tool that contributed to the mammoth-killing of firms like Bear and Lehman Brothers. The big banks like Goldman enabled this game by closing their eyes to shoddy locates in order to make sure they kept their prime brokerage clients. They’ve been caught at it before and now they’re being caught at it again. But you can add this to the list of offenses that the banks will get off for with a mild fine ($450,000? Are you joking) and the usual facsimile of legal consequence. From Reuters again:

Half the penalty will go to NYSE Regulation, a unit of NYSE Euronext… and the rest to the federal government. Goldman agreed to settle without admitting wrongdoing.

When was the last time there was a settlement with one of the big banks without that phrase attached? Just once I’d like to see an SEC settlement that included a transcript (plus a photo) of a bank official on his hands and knees, weeping into his tie, shouting, “I did it! You got me! I did it!” I suppose that’s a little too much to ask, however…


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  1. collapse expand

    Fines might actually mean something or have an impact if they were more than a pebble in these companies shoes. Shouldn’t the fines be on a sliding scale based on the size of offense and how many crimes were committed – rather than a flat fee? I guess a fine as a consequence isn’t even relevant in the big picture of what these people have done. I have a strong feeling These people, if given a choice, would opt to give their first born away so long as no one touches their(own personal)money.

    The only thing that seems to work ( or at least put a stop) to these people is sending them to jail. Unfortunately that just is not happening. Like you sated, they eventually settle – a minuscule fine or penalty paid – with out even admitting any wrong doing.

    • collapse expand

      It’s just another example of how companies are treated far better than people in the courts.

      Here is Australia this week the health department published a ‘name and shame’ list of food establishments that had been fined for code breaches. Stuff like ‘dead insects near food prep area’, ’smoking allowed in kitchen’, etc. The fines are ‘up to’ $500,000. But there wasn’t a single fine more then $800. In once case, a cafe was caught using soy milk that had been recalled after several very public poisoning episodes. They continued to use this stuff in their coffee, despite the risk of putting someone in hospital approaching 100%.

      And yet they were fined $660. I can’t imagine what sort of this they would have to do to attract a fine near the half-million maximum…. possibly serving up human flesh as beef, after injecting it with HIV? God knows. But I do know that $660 means about as much to a busy cafe as $450,000 means to GS.

      As for the publicity, GS in some ways actually benefits from this, because potential clients now know for sure that they will do anything for money.

      In response to another comment. See in context »
  2. collapse expand

    I feel your frustration. The bad publicity is something, but the continuing slaps on the wrists of GS employees is about as effective as saying (in a sweet tone) “no, no” to your dog when he shits on your brand new carpet.

    I’m met people who will say this kind of crime is in no way the equivalent of some thug mugging you for the contents of your wallet, and technically I agree. The difference is that I think Wall Street’s crimes far outweigh that kind of mugging, reaching into the bank accounts of numerous people who trusted them because so many people in charge (the SEC, Kramer and his ilk, Wall Street employees, legislators, investors who made a killing riding the naked short order lunch) said everything on the Street was hunky-dory. Those somewhat opposite of me agree with the settlement “without wrongdoing” and feel that the buyer should beware. Indeed.

  3. collapse expand

    Ok folks ,time for a little comic relief from all this bullshit:

    From the ONION: Headline:
    Nation ready to be lied to about economy again

    WASHINGTON—After nearly four months of frank, honest, and open dialogue about the failing economy, a weary U.S. populace announced this week that it is once again ready to be lied to about the current state of the financial system.
    Tired of hearing the grim truth about their economic future, Americans demanded that the bald-faced lies resume immediately, particularly whenever politicians feel the need to divulge another terrifying problem with Wall Street, the housing market, or any one of a hundred other ticking time bombs everyone was better off not knowing about.
    In addition, citizens are requesting that the phrase, “It will only get worse before it gets better,” be permanently replaced with, “Things are going great. Enjoy yourselves.”
    “I thought I wanted a new era of transparency and accountability, but honestly, I just can’t handle it,” Ohio resident Nathan Pletcher said. “All I ever hear about now is how my retirement has been pushed back 15 years and how I won’t be able to afford my daughter’s tuition when she grows up.”
    “From now on, just tell me the bullshit I want to hear,” Pletcher added. “Tell me my savings are okay, everybody has a job, and we’re No. 1 again. Please, just lie to my face.”
    The national call for decreased candor began last month, after the Department of Labor released another soul-crushing report that most Americans agreed “wasn’t helping anything” and “didn’t need to be so specific, at least.”
    The report estimated that 663,000 private and public sector jobs were lost in the month of March—a revealing statistic many people found shockingly blunt. Responding to the new information, an overwhelming majority of citizens said they believe that, during these extremely uncertain times, our leaders have a responsibility to come together, sit the American people down, and lie through their teeth about everything from misappropriations of taxpayer dollars to the severity of the credit crisis.
    “I don’t need to be constantly reminded that the lack of regulations on Wall Street compounded with failing institutions like AIG basically plunged the world economy into a global recession,” said 32-year-old office manager Alexis Harrington. “What I want is for someone to tell me with a straight face that the GDP is through the roof so that I can feel better and instantly forget what all these terms even mean.”
    “For the first time in my life I know who the secretary of the treasury is,” Harrington continued. “And I don’t like it.”
    Reluctantly informed citizens like Harrington have also asked that CEOs of the nation’s five largest banks release a joint statement saying that the October bailout worked perfectly, normal lending has resumed, and that we’re nowhere close to having the entire monetary system collapse upon itself like a house of cards.
    According to a CBS News/New York Times poll, 98 percent of Americans no longer appreciate President Barack Obama’s attempts to break down the economic crisis into simple terms they can understand. Instead, many say the president should have the decency to insult their intelligence by using complex jargon to confuse and deceive them, perhaps even implying that the subprime mortgage fallout was just a big misunderstanding that resulted from a clerical error.
    “I know when he’s telling the truth, and it bothers me,” recently laid-off schoolteacher Mary Hanover said of Obama. “He gets this serious expression on his face and says things like, ‘This is the worst economic crisis since the Great Depression.’ Who needs to hear that? For Christ’s sake, smile a bit and say we just found a diamond mine under Montana that’s going to pay for everything. I’ll believe you.”
    “Please, treat me like a child. Treat me like a five-year-old,” Sacramento resident David Cooke, 64, wrote in a letter to Congress. “I lost everything when the Dow tanked, and I’m too old to start working again, so why punish me further by explaining in detail the clever ways these investment firms ripped me off and how they’re all going to get away with it?”
    Thus far, many policymakers in Washington have responded favorably to their constituents’ requests, saying they respect and understand the public’s need for dishonesty.
    “I think we can accommodate the American people on this,” Senate majority leader Harry Reid (D-NV) told reporters. “Why, just today we made excellent progress with GM, whose CEO Fritz Henderson told us that every penny of federal and taxpayer funds would go directly to the construction of three new auto plants in Detroit that will create over 90,000 new jobs and spark the economic rebound we’ve been waiting for.”
    Continued Reid, “Things are looking very, very bright”

    Before closing: something serious to leave you good and depressed (and/ or outraged) about human beings. Maybe I should have posted this part before the comical stuff…Anyways.. I want to refer you all to the best little book on financial euphoria and speculative episodes that I have ever read. And it is witty also. I am referring to John Kenneth Galbraith’s “A financial history of financial euphoria” , written just after the 1987 crash. According to the author ,every speculative episode in history has the same pattern going back to the early history of capitalism , like the Tulip Mania in Holland in the early 1700’s. It’s like we never learn. His description of the general speculative pattern EXACTLY fits the latest crash. And it’s not just the corporations and banks that are culpable,according to the author, but, of course, a lot of ordinary people stupidly or inadvertently or neurotically get swept up in the high. It seems like like a drug or alcohol high: nice at first, and then comes the crash…And then you gotta get high again. I know…I’m going out for a few beers right now…

    Marco

    Marco

  4. collapse expand

    I too hate the “without admitting wrongdoing” phrase. Would it accompany criminal settlements? “He agreed to serve three years in prison without admitting wrongdoing.” That way the guy could say, “I didn’t do anything wrong, but it was too expensive to fight it in court.”

  5. collapse expand

    The price tag of the penalty may only cover the costs of the investigation, if that. But I agree with the idea of a light penalty along with a documented infraction. This way, if it happens again, the penalty can be severe.

    Question: does this decision prevent civil action from parties that can demonstrate they were harmed by naked short-selling? If not, this action could prove much more costly for GS.

    • collapse expand

      A) Goldman already was caught doing this once, in 2007, and fined $2 million. So the fines are actually decreasing in size.

      B) I don’t know of a precedent for anyone winning a civil action in a suit in which a prime broker was accused of colluding with naked short-sellers. That would be almost impossible to prove.

      In response to another comment. See in context »
      • collapse expand

        Perhaps not “win” in the technical sense of trial to a verdict, but I’ve heard Overstock.com’s CEO, Patrick Byrne, speak about his shortselling litigation (some of which I believe is ongoing) and he has had some litigation success in terms of winning interlocutory rulings and obtained a monetary settlement.

        Regardless of the niceties of claiming to admit no wrongdoing, when a party pays money to walk away, that speaks volumes. (As does the amount, as you noted.)

        In response to another comment. See in context »
      • collapse expand

        Matt, please correct me if I’m wrong here but there is something screwy about the time frame in question.

        The article mentions that Goldman violated emergency SEC requirements instituted in Sep 2008 with trades it made between Dec 2008 and Jan 2009.

        Well here’s the SEC notice from 2008. You’ll note that it is not to prevent naked short selling, it is a ban on all short selling of financial stocks for a temporary period. The ban was extended but only through mid-October as far as I can tell. Personally I don’t think there should have been a ban on legal short selling of insolvent companies at all, but that’s beside the point.

        The point is that the shorting Goldman was fined for took place after the ban they had supposedly violated had expired. From the Reuters article:

        Regulators said that because of a bookkeeping error, the Goldman unit between Dec. 9, 2008, and Jan. 22, 2009, accepted about 385 orders to short stocks where it had not first borrowed or arranged to borrow the securities as collateral.

        Now that does describe naked short selling, but naked short selling is and was already illegal, it was simply ignored by the SEC. To date I have not seen any investigation of who was responsible for the illegal naked short selling that drove Lehman’s price into the ground in a matter of days. Would anybody be surprised at this point to find that Goldman was the driver for that too?

        So if Goldman is being fined for naked short selling, that has nothing to do with the SEC ban of legal short selling from what I can tell. As you’re aware, naked short selling is and already was illegal at the time despite the fact that Goldman didn’t have to admit to wrongdoing. The author of this article does not seem to grasp the difference between regular shorting and naked shorting.

        What this looks like to me is a blatant and deliberate collusion between Goldman and the SEC where Goldman pays a slap on the wrist fine, admits no wrongdoing, and the whole practice of illegal naked shorting gets brushed under the rug.

        Am I missing something here? Because the article you linked to and this one from the WSJ both seem to miss the fact the the ban on legal short selling of financial stocks had expired before the trades Goldman was fined for took place.

        In response to another comment. See in context »
      • collapse expand

        The only case I know that was filed was dismissed in 2007 (from news.morningstar.com, 12-20-07, 11:32 AM EST):
        U.S. District Judge Victor Marrero in Manhattan threw out the suit, saying in part that a “fine and complex line” exists between conduct permitted by the Securities and Exchange Commission in its regulation of the securities industry and conduct that would typically not be permitted under federal antitrust laws, most notably certain daily communications between brokers-dealers to effectuate locating and borrowing securities for short sales.
        “The threat of a ’nonexpert jury’ mistaking lawful conduct under the securities laws as
        evidence of a conspiracy under the antitrust laws …, would place immense pressure on defendants to curtail the open exchange of
        information,” the judge said. “Such antitrust suits would likely chill a broad range of
        activities that the securities laws permit and encourage, and would likely inhibit the short selling activity that provides market liquidity and pricing efficiency.”
        The complaint, originally filed by Electronic Trading Group LLC in April 2006 and amended
        earlier this year, had alleged that the major broker-dealers charged unearned fees, commissions or interest on short sales where those broker-dealers failed to borrow or deliver the stock to back a short position.

        In response to another comment. See in context »
  6. collapse expand

    During lunch I caught part of an NPR interview of Gretchen Morgenson, talking about GS. Not bad, she explained things pretty well (hopefully to further increase the size of an informed public)

    http://www.npr.org/templates/story/story.php?storyId=126414989

    One thing she implied, I am not sure I have read it here or not, is the fact that those who work with the rating agencies, paid far less than GS scum, gave good ratings to the crappy CDOs GS was unloading in order to gain favor with the possibility of aspiring to join the GS fraternity. Is this another rock to be underturned?

  7. collapse expand

    I had another thought. With the plethora of Goldman Sachs wrongdoings, would it make sense to create a website with a bullet list of their numerous transgressions with some sort of status or metric on each item? Something eyecatching, colorful, and easy to understand. The trangressions could be categorized as past, concurrent, and possible future wrongdoings. The site could be augmented with a global economic model simulating the tangible economic harm this investment/holding bank has done. It could answer questions like… what portion of GS bonuses were paid by US taxpayers.

  8. collapse expand

    Not surprisingly, our 5 senses correlate with our needs for clean food, clean water, safety and reproduction. The senses of touch, smell, taste, sound, and of sight. These are resource based research, tools. We are all researchers in our own right.

    The planet provides the resources and our survival is a testament to a high functioning, ability to find and use these resources. We get together and passionately volunteer our time and energy to promote freedom.

    Funny, no sense of an on going monetary computation, required to sustain life? Somewhere along the way we picked up this parasite that promotes, taxation, indebtedness, aggression greed…etcetera, etcetera, U could help me fill many pages. The evidence shows, as reported world wide, in many, languages, that this monetary system threatens our freedom.

    As for human flourishing, when u care about the monetary system, u care about the wrong system. When a parasite is found do U promote, regulate – “fix” it?… or eliminate and replace with a resource based, system, that we are designed to deal with. We have never been more capable.

  9. collapse expand

    Thank you Matt. Naked Short selling basically ruined companies…absolutely absurd to be allowed EVER!!!
    Stay on top of them. We may be late in getting them, but we will not stop…this BS has ruined countless 401 K’s. Trillions.
    Americans may be stupid, but some of us are NOT.

  10. collapse expand

    Ah, add to this that The Buffet sez that he feels GS did nothing wrong. I did get that right, yes? Maybe it was a misread…
    Anyway, let me muddle through this as I see Buffeteers around the world who will rally to his redoubts and carry the day, the money and whatever else is left. I can see BH shares going to a half million or more if his weight pulls GS through. I can see…yawn…nothing will change. QED

  11. collapse expand

    “…a bank official on his hands and knees, weeping into his tie, shouting, “I did it! You got me! I did it!” I suppose that’s a little too much to ask, however…”

    When the stinking, rotten corpses of 500 stinking, rotten investment bankers drip from 500 lamp-posts, bring out #501 and listen to the sweet song.

  12. collapse expand

    It may be a slap on the wrist to Goldman, but it’s a slap in the face to the American public.

    I don’t understand how entering incorrect text 385 times is a “bookkeeping error.” Seems to me it’s fraud. I can see one person goofing off. I can see two people entering nonsense one or two times. It’s pretty stupid to enter nonsense in a vital field, but I can see it happening. But 385 times? C’mon.

    It’s not even a pebble in Goldman’s shoe. It’s a grain of sand. Do the math.

    And if the fines are decreasing, we’re all in trouble. Perhaps the new attempts to go after Goldman are a dog and pony show after all.

  13. collapse expand

    Warren Buffet has entered this discussion. This entire debacle is a failure of government and lax regulation. According to the wisdom of the infallable Oracle: GS is blameless and Matt Taibbi has no credibility and is by default full of shit. Greedy people will never stop going into investment banking. But incompitent regulators can be replaced (if you believe in government). Matt, you need a new vector on this. Demonizing a demon like Lloyd Blankfein is stating the obvious. Do you envy his money? Are you a closet godless anti-semite?

  14. collapse expand

    Funny how so little has changed over the past century.

    Check out how Wall Street bankers used naked short-selling to ruin a progressive magazine called “Hampton’s” back in 1911:

    “Something like twenty brokers on the Wall Street curb began to advertise our five dollars par stock at four dollars, down to three dollars a share. We sent to them and offered to buy the stock and were never able to buy one share. One of the brokers afterwards admitted to us that they had none of the stock, and that they were paid to do the advertising.”

    - Ben Hampton in “The Brass Check” by Upton Sinclair c 1920

    “Hampton’s” was effectively driven out of business. It’s amazing this kind of stuff is still going on … or maybe not so much.

  15. collapse expand

    Keep calling them out Matt,but as long as the country stays stuck in the ‘Republicrat’ rut we won’t see any change. D.C. is captured and the legacy parties are totally owned.

  16. collapse expand

    Who is the actual biggest enabler?

    Not GS, but CALPERS…the $200 billion california public employees retirement system, a government run, tax free, investment house

    CALPERS loans out about a billion worth of stock every year to short sellers

    Calpers operates on tax money forcibly taken from the taxpayers…..GS operates on funds
    voluntarily invested by americans

    The government run calpers is closed to everone but government employees….GS is open to investment by everyone

  17. collapse expand

    It’s called “Kiting”, (sounds pretty doesn’t it), when an organization shorts out and sinks the stock price to ±$0, and explains how/why Enron can still be bought/sold. Selling something beyond the number of gross shares available shouldn’t happen, ever, under any circumstances, but it does, and as such may be the only actual proof of overselling.

  18. collapse expand

    I think Goldman is a parasite, so lets get that out of the way.

    But I don’t understand the argument as to how naked short selling is somehow unethical/unduly damaging. I can buy a put or sell a call on just about any public company, and I don’t see how it is inherently damaging to be bearish, and in fact I would think that it is healthy to the market that one can take a bearish position, and that it would unhealthy if one was prohibited from doing so. A market where we can only be optimists does not seem based in reality.

    • collapse expand

      Quick FYI, as of the close yesterday the DJIA is still 60+ points *below* where it was when it opened when George Bush was Inaugurated President.

      The first time.

      In January of 2001. You can look it up.

      Short selling is a legal, viable practise that helps ensure the overall health of the market. Some companies shouldn’t be in business and it is short-selling that helps identify them quicker than most other methods.

      Naked short selling, on the other hand, is as ethical as selling a property that you don’t own.

      Over and over again, Brooklyn Bridge Deed Stylee, which is exactly what it is.

      One of the unique elements of naked short selling is that since the original shares aren’t located, never mind being physically on hand with the seller, a naked short seller can short the same stock not only once, but theoretically can put it out there an *unlimited* amount of times.

      Given Wall Street’s dirty little, (not so), secret of just how prevalent naked short selling is, reaching these theoretical limits is not only possible, but highly probable. I find the number of 385 mis-booked trades over a 5 week period to be laughable at best, it’s more likely that that number is reached within the first hour of any given day’s trading on the NYSE/NASD.

      That’s why it’s described as a form of counterfeiting, and that’s why it’s a problem.

      In response to another comment. See in context »
    • collapse expand

      The problem is reality vs. phoney-baloney. Your put option is a legitimate contract to sell shares at a specific price. The contract exists until it expires or is executed. Real shares (such as those owned by Calpers) back the contract. Naked short selling is not a contract and there is no substance behind it. But, there is a price associated with it and it screws up the pricing of the other instruments associated with that stock, usually in favor of the bookies.

      In response to another comment. See in context »
  19. collapse expand

    I’m reminded of the episode of the Simpsons where Mr. Burns and Smithers are hiding nuclear waste in public parks and are caught by the EPA. Mr. Burns loses in court, and must pay a small fine.

    “Smithers, my wallet’s in my right front pocket. Oh, and I’ll take that statue of justice too.”

    “Sold!” says the judge.

  20. collapse expand

    There is now speculation that there could be a a Goldman settlement of $1 to $5 billion. So the eventual news story could very well read: Goldman agrees to pay $2 billion in penalties — without admitting wrongdoing. How ludicrous would that be?

    The SEC really, really needs to disallow that phrase.

  21. collapse expand

    According to Sec actions they only had to pay $225000 in fines
    http://www.secactions.com/?p=2206

    Short sales: In the Matter of Goldman Sachs Execution & Clearing, L.P., Adm. Proc. File No. 3-13877 (May 4, 2010) is a settled administrative proceeding against Goldman Sachs Clearing, formerly Spear, Leeds & Kellogg, L.P. The proceeding is based on the SEC’s September 17, 2008 emergency order enacting temporary rule 204T to Regulation SHO which was part of the response to concerns about naked short selling during the market crisis. The rule required participants of a registered clearing agency to either deliver securities by a trader’s settlement date or for short sales purchase or borrow the securities to close out the fail to deliver position by no later than the beginning of regular trading hours the day after settlement date. Respondent implemented procedures to comply with the rule which turned out to be deficient in several instances. As a result the firm was in violation of the rule. Pursuant to a New York Stock Exchange Hearing Board decision the Respondent agreed to pay a $225,000 fine. The Commission directed Respondent to cease and desist from committing or causing any violations and future violations of Exchange Act Rule 204. Respondent was also censured and directed to comply with the order of the NYSE Hearing Board.

  22. collapse expand

    “On the list of crimes perpetrated by the big banks during the crisis period, naked short-selling probably isn’t near the top. But it definitely exists and it was almost certainly a tool that contributed to the mammoth-killing of firms like Bear and Lehman Brothers. The big banks like Goldman enabled this game by closing their eyes to shoddy locates in order to make sure they kept their prime brokerage clients.”
    =============================================

    Matt, with all due respect you’re dead wrong on this one.

    The hedge fund cabal (that includes Goldman-Sachs) that has worked together using naked short selling as it’s primary tool to wreck companies and the economy as a whole is right at the top of the “list of crimes perpetrated by the big banks during the crisis period”.

    And the DTCC is the party responsible for shoddy locates. That’s because Michael Milken and company made sure the DTCC was in on the scam years ago.

  23. collapse expand

    Wall Street is basically legalized criminality……it’s a way for lazy and devious people to make a pile of money off of other peoples’ labors

    And then you have the government hacks working day and night to steal from these thieves…..

  24. collapse expand

    For a good primer on Stragetic Fails to Deliver, also known as naked shorting, including how this damages and destabilizes our financial system, check out “Darkside of the Looking Glass: The corruption of our capital markets”.
    http://www.businessjive.com/

    Not sure who the writer is. Found it on Patrick Byrnes Deep Capture blog dedicated to exposing the deep capture of the financial regulatory structure by Wall Street and hedge fund thugs. You can reach this link from deepcapture.com under the section Related Links: Naked Shorting Explained. There is much more useful information on Deep Capture Blog as well.

    One has to wonder what affect naked shorting may have had on yesterday’s 1000 point drop. They talking heads keep saying there was no volume on the exchanges, however much of the heaviest trading is now being done through dark pools. My understanding is that the volume traded in these pools never reaches the exchanges to be counted. It may very well be that these pools are also strategically failing to deliver outside of the exchanges in order to be out of the site of any regulatory body. Sunlight cannot curently reach these pools to disinfect them. It is not surprising then that there is a loophole in the new proposed regulations that will to allow them to continue this criminal act without any accountability to any regulatory body or have any real penalty exacted for their crimes.

    Until the average American wakes up to what is happening these dark pools will continue to be allowed to plunder widows and orphans of their retirements and inheritances. I am just an unemployed grandma and I must say this isn’t too difficult to understand once you can wrap your mind around the fact that our system has been corrupted, perhaps beyond repair, unless people wake up to the fact that we are systematically being robbed. Then we must hold our legislators accountable for neither addressing or correcting this problem.

  25. collapse expand

    My wife and I were discussing the Euro crisis and how it related to the back story of the real estate/banking crisis. We both though that the real estate/banking was about something larger than fraud and theft and that we are still missing some of the back story. She speculated that it was possible that the bank crisis was engineered on purpose with the specific intent of destroying the Euro, and taking down the Euro’s dominance over the dollar. Does anybody know if there is any truth to this, and if so, what was Goldman’s level of involvement, and who else might have been involved?

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