Post by kranker on Jan 20, 2007 16:08:50 GMT -4
"July 18, 2005 (FinancialWire) Former SEC Attorney Peter Chepucavage, formerly a staffer for the U.S. Securities and Exchange Commission’s Division of Market Regulation, and a key participant in the release of Regulation SHO, has left the SEC and is now challenging his former agency over the regulation’s inability to reign in illegal market manipulations.
Regulation SHO has only highlighted the illegal naked short sales continuing to plague hundreds of public companies, including Martha Stewart Living Omnimedia (NYSE: MSO), Prudential (NYSE: PUK), Netflix (NASDAQ: NFLX) and China Life Insurance (NYSE: LFC).
Meanwhile, the demonstrators that targeted the U.S. Securities and Exchange Commission and Times Square this past spring are now scheduling what they believe will be a giant demonstration in front of the Depository Trust and Clearing Corp. in New York City July 29 to protest an “act of financial terrorism.”
Chepucavage has forwarded his comments to the SEC, under File Nunber 265-23:
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“I am responding to your Request for Public Comments on Summary of Proposed Committee Agenda. I wish to incorporate and expand upon the comments of Brad Smith regarding a macro or more comprehensive approach to small companies and to use his term small to medium enterprises (SME'S). A more comprehensive approach is necessary and appropriate because there is a need to review not only the small company issuers but also the markets and broker dealers involved in the raising of capital for SME's and the public perception of the regulation of those markets.
“In a recent explanation of the key points of Reg. SHO, the staff stated “Speculative stocks, such as microcap stocks, often have a high probability of declining in value and a low probability of experiencing above average gains." The committee should review the underlying data for this proposition to determine whether it is true for all low priced stocks in general or just those traded on the pink sheets and otcbb with a view to determining whether such stocks could ever be suitable for retail investors or whether they should only be sold to investors qualified by knowledge of these markets.
“In the column Washington Investing, Wash Post 5/23/05 p.1 Jerry Knight refers to the "purgatory of the Pink Sheets, a nearly unregulated neither market for trading stocks.” The committee should evaluate this statement and if necessary recommend increased practical regulation such as short sale reporting and Reg SHO coverage.
“Reg. SHO excluded these stocks from its coverage and the committee should therefore review why the most speculative stocks are not included.
“The SRO short sale reporting rules exclude these stocks from their coverage. See petition of the Pink Sheets to include them as an example of a market seeking more regulation.
“The SRO'S have failed to enforce their locate requirements for short sales thereby encouraging naked shorting in these markets. Except for one case, the penalties imposed over the last 10 years include modest fines probably less than trading profits made. ”These stocks are not eligible for margin or options and thus the loan supply is curtailed enabling naked shorts and the inability to hedge. See Comments of Professor Angle to Reg SHO.
“The Commission is reluctant to provide an arbitrage exemption for short sales which makes the distribution of many small company issues thru Pipes and Wt arbitrage. The committee should review the merits of such an exemption.
“The presidents and CEO'S of small broker -dealers believe they are often held responsible for their employees conduct while those of large broker dealers rarely are . They also believe penalties imposed on small bd's constitute a much larger portion of their net capital and are inherently unfair. This is an old argument but continues to resurface and should be addressed.
“The chairman of the PHLX recently noted that he worried that the Commission staff would be overwhelmed with the NYSE/ARCHIPELAGO and NASDAQ/INSTINET mergers and not have time for the rule filings of other smaller SRO's.
“Small companies are more likely to be referred to as penny stocks, unless like Lucent at $2.50 a share they are listed on the NYSE.
“There may be no reliable evidence that small bd's and small companies create more regulatory issues than the Enrons, Worldcoms, Tycos and other similar large companies that have required significant regulatory resources. The committee should review whether they do in fact create more regulatory issues.
“There is a proliferation of unregistered finders operating in the area of SME'S because of the lack of clear guidance from the Commission. It should also consider studying the role of finders in the process and might consider whether those finders should be registered as investment advisers rather than bd's.
“The Committee should not be reluctant to challenge conventional norms in its approach. The Committee should therefore recommend a special study of the regulation of SME's and small bd's to determine if the regulatory scheme is adequate and consistent and does not impose a greater burden on them especially in light of their job creating value in the U.S. It might also recommend the creation of an independent small business/small bd office at the Commission with a significant increase in staffing. While it is not the Commission's role to encourage small to medium enterprises or bd's, it is their obligation not to hinder them and to pay equal attention to them. This Committee has a rare opportunity to set a future agenda for SME'S in this country .As the markets rapidly consolidate, attention to SMEs and bd's is important whether it results in more or less regulation or more reasonable regulation,” the former SEC attorney stated.
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A controversial audio of a purported conference call conducted by officials of Bear Stearns (NYSE: BSC) contains allegations that the SEC had shared with Bear Stearns the names of hundreds of companies that it had said would be on the threshold lists but which were not on the official lists published, and that regulators had confided to Bear Stearns and others that the regulators are selectively enforcing provisions against “fails to deliver” securities according to a kind of floating set of “interpretations” rather than strictly according to the law.
The blockbuster audio is posted at www.investigatethesec.com/Bear080705.wma .
The DTCC has been accused in various lawsuits as having a stock borrow program that allows illegal counterfeiting of stocks.
The DTC has admitted to billions of dollars in unsettled trades every day.
At the same time U.S. Senator Elizabeth Dole (R-SC) has joined U.S. Senators James Talent (R-MO), Richard Shelby (D-AL), Susan Collins (R-ME), Robert Bennett (R-UT) and Richard Durbin (D-IL) in questioning U.S. Securities and Exchange Commission about what they call the “failure” of Regulation SHO to curtail unlawful, predatory securities trading.
And while General Electric’s (NYSE: GE) Dateline NBC continues to keep its naked short sales expose in forced or unforced hiatus, the “Corporate Strategies” radio program is taking up the slack.
The upcoming demonstration in front of the Depository Trust and Clearing Corp., at 55 Water Street, is scheduled at 10 a.m. July 29. Details are at www.CounterfeitConspiracy.com
Regulation SHO has only highlighted the illegal naked short sales continuing to plague hundreds of public companies, including Martha Stewart Living Omnimedia (NYSE: MSO), Prudential (NYSE: PUK), Netflix (NASDAQ: NFLX) and China Life Insurance (NYSE: LFC).
Meanwhile, the demonstrators that targeted the U.S. Securities and Exchange Commission and Times Square this past spring are now scheduling what they believe will be a giant demonstration in front of the Depository Trust and Clearing Corp. in New York City July 29 to protest an “act of financial terrorism.”
Chepucavage has forwarded his comments to the SEC, under File Nunber 265-23:
------
“I am responding to your Request for Public Comments on Summary of Proposed Committee Agenda. I wish to incorporate and expand upon the comments of Brad Smith regarding a macro or more comprehensive approach to small companies and to use his term small to medium enterprises (SME'S). A more comprehensive approach is necessary and appropriate because there is a need to review not only the small company issuers but also the markets and broker dealers involved in the raising of capital for SME's and the public perception of the regulation of those markets.
“In a recent explanation of the key points of Reg. SHO, the staff stated “Speculative stocks, such as microcap stocks, often have a high probability of declining in value and a low probability of experiencing above average gains." The committee should review the underlying data for this proposition to determine whether it is true for all low priced stocks in general or just those traded on the pink sheets and otcbb with a view to determining whether such stocks could ever be suitable for retail investors or whether they should only be sold to investors qualified by knowledge of these markets.
“In the column Washington Investing, Wash Post 5/23/05 p.1 Jerry Knight refers to the "purgatory of the Pink Sheets, a nearly unregulated neither market for trading stocks.” The committee should evaluate this statement and if necessary recommend increased practical regulation such as short sale reporting and Reg SHO coverage.
“Reg. SHO excluded these stocks from its coverage and the committee should therefore review why the most speculative stocks are not included.
“The SRO short sale reporting rules exclude these stocks from their coverage. See petition of the Pink Sheets to include them as an example of a market seeking more regulation.
“The SRO'S have failed to enforce their locate requirements for short sales thereby encouraging naked shorting in these markets. Except for one case, the penalties imposed over the last 10 years include modest fines probably less than trading profits made. ”These stocks are not eligible for margin or options and thus the loan supply is curtailed enabling naked shorts and the inability to hedge. See Comments of Professor Angle to Reg SHO.
“The Commission is reluctant to provide an arbitrage exemption for short sales which makes the distribution of many small company issues thru Pipes and Wt arbitrage. The committee should review the merits of such an exemption.
“The presidents and CEO'S of small broker -dealers believe they are often held responsible for their employees conduct while those of large broker dealers rarely are . They also believe penalties imposed on small bd's constitute a much larger portion of their net capital and are inherently unfair. This is an old argument but continues to resurface and should be addressed.
“The chairman of the PHLX recently noted that he worried that the Commission staff would be overwhelmed with the NYSE/ARCHIPELAGO and NASDAQ/INSTINET mergers and not have time for the rule filings of other smaller SRO's.
“Small companies are more likely to be referred to as penny stocks, unless like Lucent at $2.50 a share they are listed on the NYSE.
“There may be no reliable evidence that small bd's and small companies create more regulatory issues than the Enrons, Worldcoms, Tycos and other similar large companies that have required significant regulatory resources. The committee should review whether they do in fact create more regulatory issues.
“There is a proliferation of unregistered finders operating in the area of SME'S because of the lack of clear guidance from the Commission. It should also consider studying the role of finders in the process and might consider whether those finders should be registered as investment advisers rather than bd's.
“The Committee should not be reluctant to challenge conventional norms in its approach. The Committee should therefore recommend a special study of the regulation of SME's and small bd's to determine if the regulatory scheme is adequate and consistent and does not impose a greater burden on them especially in light of their job creating value in the U.S. It might also recommend the creation of an independent small business/small bd office at the Commission with a significant increase in staffing. While it is not the Commission's role to encourage small to medium enterprises or bd's, it is their obligation not to hinder them and to pay equal attention to them. This Committee has a rare opportunity to set a future agenda for SME'S in this country .As the markets rapidly consolidate, attention to SMEs and bd's is important whether it results in more or less regulation or more reasonable regulation,” the former SEC attorney stated.
-------
A controversial audio of a purported conference call conducted by officials of Bear Stearns (NYSE: BSC) contains allegations that the SEC had shared with Bear Stearns the names of hundreds of companies that it had said would be on the threshold lists but which were not on the official lists published, and that regulators had confided to Bear Stearns and others that the regulators are selectively enforcing provisions against “fails to deliver” securities according to a kind of floating set of “interpretations” rather than strictly according to the law.
The blockbuster audio is posted at www.investigatethesec.com/Bear080705.wma .
The DTCC has been accused in various lawsuits as having a stock borrow program that allows illegal counterfeiting of stocks.
The DTC has admitted to billions of dollars in unsettled trades every day.
At the same time U.S. Senator Elizabeth Dole (R-SC) has joined U.S. Senators James Talent (R-MO), Richard Shelby (D-AL), Susan Collins (R-ME), Robert Bennett (R-UT) and Richard Durbin (D-IL) in questioning U.S. Securities and Exchange Commission about what they call the “failure” of Regulation SHO to curtail unlawful, predatory securities trading.
And while General Electric’s (NYSE: GE) Dateline NBC continues to keep its naked short sales expose in forced or unforced hiatus, the “Corporate Strategies” radio program is taking up the slack.
The upcoming demonstration in front of the Depository Trust and Clearing Corp., at 55 Water Street, is scheduled at 10 a.m. July 29. Details are at www.CounterfeitConspiracy.com