Post by jcline on Mar 30, 2006 13:23:08 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
A Lesson for all the Financial Media Experts – March 30, 2006
David Patch
It was June 2004 that the Commission of the Securities and Exchange Commission approved Regulation SHO. Then Director of Market Regulation Annette Nazareth called this “the most sweeping short selling reform in over sixty years”.
The financial media experts never blinked at the news.
The most sweeping short selling reforms in sixty years failed to make the back pages of the financial print let alone the front. CNBC, our full time televised connection to the Wall Street operations couldn’t muster up 5-minutes of discussion in amongst their hours of garbage broadcasting.
With an SEC document now filed in the Federal Register containing language stating “more significantly, naked short sellers enjoy greater leverage than if they were required to borrow securities and deliver within a reasonable time period, and they may use this additional leverage to engage in trading activities that deliberately depress the price of a security” the media failed to inform the investing public of what perils have existed in our markets. Yea, who needs to know about that?
Why? Why would the financial press completely ignore coverage on this issue? Completely!
In February the Securities and Exchange Commission sent their first round of subpoenas to members of the financial press possibly to find out. The issue, we are coming to learn, was with regards to possible collusion between members of the financial press, research analysts, and Hedge Funds to manipulate the price of securities. Short Sale manipulations!
Instead of objective professionalism, the financial press circled the wagons and created their own smear campaign against everything and everyone remotely involved with the subject matter. Facts was not of concern, researching the issue was not of concern this was about self-preservation. According to the media, the Companies and investors damaged are simply whining because their stock price fell, the SEC Attorney’s are mindless boobs incapable of a lucid thought or action, First Amendment violations, McCarthyism. CNBC’s Jim Cramer, who received a subpoena bellowed his disgust and threw the subpoena on the floor of the TV Studio but not before writing “BULL” on it in big red letters for all to read.
Only one journalist to date has stood to question the actual concerns the SEC is investigating. While CNBC commentator Charles Gasparino questions the events under suspicion, the remainder of the print and televised financial media deny any wrong doing. CNBC anchors leading the way with daily one-sided coverage that draws to impossible conclusions.
Well here is a lesson for the “experts”.
Hedge Funds presently control our markets. Hedge Funds like SAC Capital generate upwards of $150 Million in trade commissions annually. That is real money to Wall Street members whose bonus money is derived directly from revenue generated. Last year over $20 Billion in bonuses were handed out on Wall Street. These guys live and die for the fat that makes up that check and $150 Million in commissions from one Hedge Fund is a lot of fat.
As for that $150 Million in trade commissions paid out annually, that’s a lot of trading volume. You don’t sit on positions long and pay those types of Commissions. SAC Capital moves stock around.
We already know that Wall Street orchestrated a massive scheme to defraud by allowing Hedge Funds to late trade a stock after hours using prices defined by the close. Bear Stearns actually admitted to handing over the keys to the trading desk and simply asked the Hedge Funds to turn the lights out when they left. Why then would the press believe that these same Hedge Funds who paid kickbacks to Institutions to commit fraud would not garner the support of research analysts and media representatives to aid in their profitability?
The most recent case in question involves Canadian drug manufacturer Biovail and a research report published by Gradient Analytics. The reports in the media now claim that Gradient was paid by Hedge Fund SAC Capital to initiate this report and then to publish the report as an “independent” analysis to the Gradient client base (Hedge Funds) and to those members of the press who have access to upload these reports.
This is the classic 17(b) violation that was addressed by Spitzer during the conflict of interest scandal between investment banking and research. Paying for a report that with specific benefit and then not disclosing the payment.
But now, the financial press ignores such abuses. The press was aghast when the “independence” was lost within Wall Street Banks but now we are talking Hedge Funds. With wagons circled, the financial press is actually defending the Hedge Fund and the research firm at the root of this recent scandal using the analysis that the report was accurate so what was the harm.
It is against the law stupid!
According to the financial press, with the most vocal being those who were initially issued subpoenas in February, the Gradient report was accurate. The media quickly identifies that the SEC has an open investigation into Biovail for accounting issues, which the Gradient report identified. The fact that the SEC has not concluded their investigation, or that Gradient knew of this investigation prior to Biovail knowing is not a red flag to the press. With WSJ Reporter Jesse Eisinger contacting the company about the investigation, before the company knew, and Eisinger reportedly linked directly to Gradient, how can’t the hairs on the back of your neck not tingle?
The fact that the SEC just concluded an accounting investigation into Goodyear, as they have with many other companies including media and short seller target TASER, without any enforcement is also irrelevant to the financial press. In this case, since the media’s own ethics have come into question, the media has decided to manipulate the dissemination of information to insure their side is properly covered.
More lessons for the experts!
SAC Capital did not want to wait for the natural market events to take place. Hedge Funds are impatient. Time is money. Get in, create profit, and get out. Don’t wait for something outside your control risk your investment. Control the situation.
Again, according to affidavits filed, SAC had already done their own research, which is what soon became the foundation of the Gradient report. If SAC already conducted the research, for what purpose was a Gradient report disseminated to others?
Simple, It generated negativity and negativity creates selling pressures. For SAC, it put controls back into the situation.
Hedge Funds do not want an orderly drop in the market; hedge Funds wanted it to be disorderly. An effectual “Bear Raid” of frenzied and panicked shareholders. The goal is to get shareholders to bail on the negativity surrounding the stock. Get them to lose money and you will win.
A stock with a gradual decline can still garner buy-side interest. A collapse is a short sellers dream. Create mini tech crashes and the profits will come to fruition.
The SEC created a “grandfather clause” into Regulation SHO to prevent the unnatural stock valuations created during a short squeeze. The market volatility during a squeeze creates investors buying into over-valued stock prices. The SEC expressed openly their concerns about such events and thus risked violating the Congressional Securities Act of 1934 to introduce the questionable “grandfather clause.”
What has taken place with Biovail and many others is a syndrome of mini raids orchestrated by the short sellers to create a perfect reverse squeeze. To create artificial lows in which investors take substantially greater losses due to the panic and fear orchestrated by the manufactured negativity. Negativity aided by a financial press corp. willing to bite the poison apple fed by the Hedge Funds
How does a Hedge Fund make a 40% profit year over year? By trading in and out quickly and maximizing those trade strategies. If a stock is not moving on the timetable required, create an event to bring the program back on schedule. Idle stocks are lost opportunities elsewhere.
The Financial press, the experts, fails to pay any attention to this well-known market strategy because they are in a love fest with the Hedge Fund community. Their best inside information comes from the Hedge Funds. Information that is freely provided and self-serving.
Marketwatch columnist and subpoena recipient Herb Greenberg lives to tell his readers how he is protecting the investing public from the next scam company or over-valued stock. His sources, those who need the stock price to go down. Herb has also freely admitted that he uploads Gradients’ reports. Follow the crumbs.
At a time where conflict exists in every nook on Wall Street, where Hedge Funds are under tighter and tighter scrutiny, and where Securities regulators are making sweeping reforms on short selling based on observed problems, why has the financial press completely stayed away from disseminating any negativity regarding Hedge Funds and short selling? Absolutely no real coverage of the dangers the Hedge Fund communities can impose on the investing public when they move markets with excessive volatility.
That is my Red Flag for the Day.
Lesson Summary for all the Experts: It is not about the stock falling stupid; it is about the unnatural slope of the decline and how those raids were manufactured. It is illegal to manipulate a stock value and manufacturing an event to do just that is illegal.
Investors suffer and the responsibility of the financial press is to be objective in your coverage and to inform the investing public of all potential abuses. If you want respect for the people remember that fact.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006
An online newspaper reporting the issues of Securities Fraud
A Lesson for all the Financial Media Experts – March 30, 2006
David Patch
It was June 2004 that the Commission of the Securities and Exchange Commission approved Regulation SHO. Then Director of Market Regulation Annette Nazareth called this “the most sweeping short selling reform in over sixty years”.
The financial media experts never blinked at the news.
The most sweeping short selling reforms in sixty years failed to make the back pages of the financial print let alone the front. CNBC, our full time televised connection to the Wall Street operations couldn’t muster up 5-minutes of discussion in amongst their hours of garbage broadcasting.
With an SEC document now filed in the Federal Register containing language stating “more significantly, naked short sellers enjoy greater leverage than if they were required to borrow securities and deliver within a reasonable time period, and they may use this additional leverage to engage in trading activities that deliberately depress the price of a security” the media failed to inform the investing public of what perils have existed in our markets. Yea, who needs to know about that?
Why? Why would the financial press completely ignore coverage on this issue? Completely!
In February the Securities and Exchange Commission sent their first round of subpoenas to members of the financial press possibly to find out. The issue, we are coming to learn, was with regards to possible collusion between members of the financial press, research analysts, and Hedge Funds to manipulate the price of securities. Short Sale manipulations!
Instead of objective professionalism, the financial press circled the wagons and created their own smear campaign against everything and everyone remotely involved with the subject matter. Facts was not of concern, researching the issue was not of concern this was about self-preservation. According to the media, the Companies and investors damaged are simply whining because their stock price fell, the SEC Attorney’s are mindless boobs incapable of a lucid thought or action, First Amendment violations, McCarthyism. CNBC’s Jim Cramer, who received a subpoena bellowed his disgust and threw the subpoena on the floor of the TV Studio but not before writing “BULL” on it in big red letters for all to read.
Only one journalist to date has stood to question the actual concerns the SEC is investigating. While CNBC commentator Charles Gasparino questions the events under suspicion, the remainder of the print and televised financial media deny any wrong doing. CNBC anchors leading the way with daily one-sided coverage that draws to impossible conclusions.
Well here is a lesson for the “experts”.
Hedge Funds presently control our markets. Hedge Funds like SAC Capital generate upwards of $150 Million in trade commissions annually. That is real money to Wall Street members whose bonus money is derived directly from revenue generated. Last year over $20 Billion in bonuses were handed out on Wall Street. These guys live and die for the fat that makes up that check and $150 Million in commissions from one Hedge Fund is a lot of fat.
As for that $150 Million in trade commissions paid out annually, that’s a lot of trading volume. You don’t sit on positions long and pay those types of Commissions. SAC Capital moves stock around.
We already know that Wall Street orchestrated a massive scheme to defraud by allowing Hedge Funds to late trade a stock after hours using prices defined by the close. Bear Stearns actually admitted to handing over the keys to the trading desk and simply asked the Hedge Funds to turn the lights out when they left. Why then would the press believe that these same Hedge Funds who paid kickbacks to Institutions to commit fraud would not garner the support of research analysts and media representatives to aid in their profitability?
The most recent case in question involves Canadian drug manufacturer Biovail and a research report published by Gradient Analytics. The reports in the media now claim that Gradient was paid by Hedge Fund SAC Capital to initiate this report and then to publish the report as an “independent” analysis to the Gradient client base (Hedge Funds) and to those members of the press who have access to upload these reports.
This is the classic 17(b) violation that was addressed by Spitzer during the conflict of interest scandal between investment banking and research. Paying for a report that with specific benefit and then not disclosing the payment.
But now, the financial press ignores such abuses. The press was aghast when the “independence” was lost within Wall Street Banks but now we are talking Hedge Funds. With wagons circled, the financial press is actually defending the Hedge Fund and the research firm at the root of this recent scandal using the analysis that the report was accurate so what was the harm.
It is against the law stupid!
According to the financial press, with the most vocal being those who were initially issued subpoenas in February, the Gradient report was accurate. The media quickly identifies that the SEC has an open investigation into Biovail for accounting issues, which the Gradient report identified. The fact that the SEC has not concluded their investigation, or that Gradient knew of this investigation prior to Biovail knowing is not a red flag to the press. With WSJ Reporter Jesse Eisinger contacting the company about the investigation, before the company knew, and Eisinger reportedly linked directly to Gradient, how can’t the hairs on the back of your neck not tingle?
The fact that the SEC just concluded an accounting investigation into Goodyear, as they have with many other companies including media and short seller target TASER, without any enforcement is also irrelevant to the financial press. In this case, since the media’s own ethics have come into question, the media has decided to manipulate the dissemination of information to insure their side is properly covered.
More lessons for the experts!
SAC Capital did not want to wait for the natural market events to take place. Hedge Funds are impatient. Time is money. Get in, create profit, and get out. Don’t wait for something outside your control risk your investment. Control the situation.
Again, according to affidavits filed, SAC had already done their own research, which is what soon became the foundation of the Gradient report. If SAC already conducted the research, for what purpose was a Gradient report disseminated to others?
Simple, It generated negativity and negativity creates selling pressures. For SAC, it put controls back into the situation.
Hedge Funds do not want an orderly drop in the market; hedge Funds wanted it to be disorderly. An effectual “Bear Raid” of frenzied and panicked shareholders. The goal is to get shareholders to bail on the negativity surrounding the stock. Get them to lose money and you will win.
A stock with a gradual decline can still garner buy-side interest. A collapse is a short sellers dream. Create mini tech crashes and the profits will come to fruition.
The SEC created a “grandfather clause” into Regulation SHO to prevent the unnatural stock valuations created during a short squeeze. The market volatility during a squeeze creates investors buying into over-valued stock prices. The SEC expressed openly their concerns about such events and thus risked violating the Congressional Securities Act of 1934 to introduce the questionable “grandfather clause.”
What has taken place with Biovail and many others is a syndrome of mini raids orchestrated by the short sellers to create a perfect reverse squeeze. To create artificial lows in which investors take substantially greater losses due to the panic and fear orchestrated by the manufactured negativity. Negativity aided by a financial press corp. willing to bite the poison apple fed by the Hedge Funds
How does a Hedge Fund make a 40% profit year over year? By trading in and out quickly and maximizing those trade strategies. If a stock is not moving on the timetable required, create an event to bring the program back on schedule. Idle stocks are lost opportunities elsewhere.
The Financial press, the experts, fails to pay any attention to this well-known market strategy because they are in a love fest with the Hedge Fund community. Their best inside information comes from the Hedge Funds. Information that is freely provided and self-serving.
Marketwatch columnist and subpoena recipient Herb Greenberg lives to tell his readers how he is protecting the investing public from the next scam company or over-valued stock. His sources, those who need the stock price to go down. Herb has also freely admitted that he uploads Gradients’ reports. Follow the crumbs.
At a time where conflict exists in every nook on Wall Street, where Hedge Funds are under tighter and tighter scrutiny, and where Securities regulators are making sweeping reforms on short selling based on observed problems, why has the financial press completely stayed away from disseminating any negativity regarding Hedge Funds and short selling? Absolutely no real coverage of the dangers the Hedge Fund communities can impose on the investing public when they move markets with excessive volatility.
That is my Red Flag for the Day.
Lesson Summary for all the Experts: It is not about the stock falling stupid; it is about the unnatural slope of the decline and how those raids were manufactured. It is illegal to manipulate a stock value and manufacturing an event to do just that is illegal.
Investors suffer and the responsibility of the financial press is to be objective in your coverage and to inform the investing public of all potential abuses. If you want respect for the people remember that fact.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006