Post by jcline on Apr 3, 2006 19:20:32 GMT -4
STOCKGATE TODAY- Pressing for answers.
An online newspaper reporting the issues of Securities Fraud
Pressing for Answers – April 3, 2006
David Patch
Okay, for years I have sought out a formal investigation into the activities and decisions made at the management levels of the Securities and Exchange Commission. I even started an online petition at www.investigatethesec.com to get Congress to respond to the people and find out why we have not been getting protected from fraudulent activities on Wall Street. We, the petitioners, want to know who is responsible at the Commission for allowing the Hedge Funds to manipulate our investments over these past decades.
So how is it that I am now writing in support of the Commission? I guess it is because I can finally say I start to see progress being made by the rank and file.
Today in the NY Post a brazen Chris Byron claimed that nearly every major SEC case of the last quarter-century originated not with the commission, but with some reporter covering Wall Street who uncovered the illegal behavior and wrote about it first. It is for this reason Byron lashed out at the SEC for issuing subpoenas against members of the financial press and subpoenas seeking information pertaining to possible securities fraud.
I can only think after reading Byron’s column that he, along with his peers actually believe they are the catch all to securities fraud and thus immune, as a population, from regulatory investigations. Even if the facts in a case support such investigations.
To me in fact, it appeared Byron’s article was a shot against the SEC for stepping up to the plate and being proactive in finally rooting out a fraud before the financial press felt it was time to uncork it from their arsenal. Byron is asking the SEC to step back on investigating fraud until he can become some hero and let us in on this secret we already know exists. Where the heck has that genius Byron been? Is he still waiting for that tip from his sources?
How long was the financial press willing to let the fraud prosper? How much investor loss was to be introduced before any coverage was disseminated to the investing public? Those questions are to be passed on to Byron and his peers. Why is it Mr. Byron that you failed to report on the facts presented by members of the staff, fact that surely lead to conclusions that a problem exists despite the lack of coverage provided by you and your peers?
Today the SEC is reacting ahead of schedule and the financial press is attacking instead of applauding – why? Is there something deeper the financial media is attempting to hide?
On February 16, 2006 Commissioner Paul Atkins spoke before the US Chamber Institute for Legal Reform. As is the case with all speeches made by the staff members of the Commission, the speech was published on the SEC’s web site for all to read. While there are those within the financial press that specifically cover the Securities and Exchange Commission this speech, along with a few that followed, were never broken down and disseminated to the investing public for their protection.
On that day Commissioner Atkins stated “I have personally seen instances of this before I came to the Commission -- the two groups can act in concert to systematically drive down the price of a company's stock, to their mutual gain and the company's and its shareholders' loss.” Commissioner Atkins followed up by addressing a recent Wall Street Journal opinion that he claimed provided detail into a couple of these alleged schemes, stating that hedge funds take short positions in a company, then embark on a campaign to drive down the price of the company's stock. Atkins stated “we should be careful to ensure that the appropriate amount of enforcement resources are directed to the type of activity described in the Journal piece, as well as the separate but no less important issue of illegal naked short selling.”
Atkins resume, before his appointment as Commissioner, he assisted financial services firms in improving their compliance with SEC regulations and worked with law enforcement agencies to investigate and rectify situations where investors had been harmed. Certainly Atkins had opportunity to personally witness the acts he now addresses.
Amazingly, this documented speech transpired approximately 8 days after the subpoenas were issued against members of the financial press and some 8 days prior to the public being made aware of these subpoenas.
The media’s response to the subpoenas was to challenge the San Francisco Office of the SEC and make accusations of a division gone awry. The media has not stopped since despite statements made by Chairman Cox and Commissioner Campos who claim the San Francisco Office was not a division gone rogue.
In his own speech on March 3, 2006 Commissioner Campos chastised the media and their reporting by stating “In my view these statements have been incorrectly interpreted in the media and in the public to indicate that our Enforcement Staff did something wrong. In other words, our Staff, in my opinion, seems to have gotten "a bum rap."
Campos responded to an earlier Stockgate Today article “Did Chairman Cox Really Approve those Subpoenas” by simply claiming that his position on the subject matter was clearly stated in the March 3 speech. That it was and the Commissioner, by that speech, stands behind his enforcement teams actions.
Did any of this stop the media from spinning this issue away from the facts? Not at all! Instead of providing the investing public with the truth, the financial media continued to divert the attentions away from possible stock fraud and re-focus of protecting potentially illegal activities by some of their own.
Since February 24 CNBC personalities Becky Quick and Jim Cramer have denied that they had any communication with Gradient Analytics, or even knew whom they were, prior to Cramer being served with a subpoena. CNBC also features Marketwatch.com columnist Herb Greenberg who also denied any wrong doing in the matter. Greenberg was yet another from the financial media who received a subpoena from the SEC.
But last week, Overstock.com CEO Patrick Byrne posted on the Motley Fool public message board that he in fact held in his possession copies of e-mails between Quick and Gradient in which Ms. Quick is quoted as writing “Jim Cramer loves the Gradient hatchet jobs." and Cramer is having CEO XYZ on and asks the recipient to “get him the latest Gradient stuff on them."
Likewise, Byrne admitted to knowing the password that was set up for Herb Greenberg so that Greenberg could access the Gradient site at any time similar to the way a paying client would access the site. Greenberg was being provided real time access to Gradient Reports.
For the weeks after the subpoenas first surfaced, Greenberg denied any such access and up until the day before Byrne’s posting, was stating publicly that any reports he was provided would have been weeks after the reports were disseminated to the Gradient clientele. But Greenberg had to recant that story once exposed now using the excuse that he had the password but had so many he forgot he had it.
Greenberg has never denied that he uses Gradient as a source for his stories so, if he uses Gradient wouldn’t he not remember his password to access these reports?
Yet with all these questions now surfacing over stock fraud associated with “short and distort” campaigns. Fraud a Commissioner at the SEC admits he witnessed first hand, the financial press continues to take a different tact on the subject matter. The financial press continues to attack the accusers and the regulators seeking answers.
This weekend the NY Post put out a story by Roddy Boyd which represented a smear campaign on Biovail. The article was nothing more than a re-iteration of a previous article written as if timely smear stories re needed to detract from the realities we face. Boyd is now another member of the financial press whose communications with Gradient is being questioned.
The Post is not alone in taking up a position attacking the accusers as nearly 90% of the media across the nation has taken a similar tact. Overstock.com and Biovail have both become pet projects for the media to attack regardless of the facts that support their claims.
So how long has the media willingly ignored this particular issue?
It was December 2003 that the Department of Justice issued arrest warrants to Rhino Advisors Executives Thomas and Andreas Badian for fraud and manipulation. In the documents filed by the DOJ were transcripts of audio recordings between Andreas Badian and two brokers whom we have later found to work for Refco Securities. The transcripts stated that Badian instructed the brokers to sell Pennsylvania software company Sedona Corporation’s stock “with unbridled levels of aggression”. The transcripts also identify that Badian later “congratulated the brokers on the collapse of the stock.”
Rhino Advisors quickly went out of business and Refco Securities has subsequently imploded over securities fraud only weeks after going public. The Refco implosion last October is believed to have cost investors billions of dollars as the bankruptcy motions continue.
Based on this evidence, one SEC Attorney was astonished that nobody from the financial press ran with the story. “It is a Pulitzer opportunity” and yet we have no takers.
How many companies destroyed? How many more sound bites does it take from Commission Staff identifying this as a problem before the problem is investigated and disseminated into the unsuspecting public by the media?
Chairman Cox Concluded an interview with CNBC on March 2 by stating to anchor Liz Clayman “indeed, you [financial press] might be held to a different standard and it might be a higher one in the same way that a dirty cop really...has the book thrown at him or her. The media, and in particular when it comes to our capital markets, financial journalists, share a public trust…when someone abuses that trust I think the American public and American investors have every right to expect that the full force of the law would be felt.”
The Chairman’s comments were again re-iterated by Commissioner Campos the following day when the Commissioner stated, “Finally, it goes without saying, no one is above the law. If in any matter it is important for the integrity of the investigation to enforce a subpoena, it will be done through appropriate legal process of the federal court system, without hesitation.”
Today the financial press wants to take full credit for discovering and reporting each of the last major scandals that rocked Wall Street. As each event unfolded, the SEC became the fodder for not reading the tea leaves earlier and picking up the signs of fraud before investors suffered heavily at the hands of the violators. As some of us are still pressing for answers, the press is intent on shooting the messenger.
This time the financial press is attempting to stop the SEC from doing their job and the only question to be asked is why. Chairman Donaldson once asked the Fed Chairman “How much fraud are you willing to accept for [Hedge Fund] liquidity?” We now see that we should be asking certain members of the financial press “how much fraud are you willing to overlook for a source?”
Now I have not given up on looking into who is responsible at the SEC for allowing illegal shorting practices to continue to grow to the dangerous levels we have before us but for now, at least the SEC is making progress and moving in the right direction.
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
Pressing for Answers – April 3, 2006
David Patch
Okay, for years I have sought out a formal investigation into the activities and decisions made at the management levels of the Securities and Exchange Commission. I even started an online petition at www.investigatethesec.com to get Congress to respond to the people and find out why we have not been getting protected from fraudulent activities on Wall Street. We, the petitioners, want to know who is responsible at the Commission for allowing the Hedge Funds to manipulate our investments over these past decades.
So how is it that I am now writing in support of the Commission? I guess it is because I can finally say I start to see progress being made by the rank and file.
Today in the NY Post a brazen Chris Byron claimed that nearly every major SEC case of the last quarter-century originated not with the commission, but with some reporter covering Wall Street who uncovered the illegal behavior and wrote about it first. It is for this reason Byron lashed out at the SEC for issuing subpoenas against members of the financial press and subpoenas seeking information pertaining to possible securities fraud.
I can only think after reading Byron’s column that he, along with his peers actually believe they are the catch all to securities fraud and thus immune, as a population, from regulatory investigations. Even if the facts in a case support such investigations.
To me in fact, it appeared Byron’s article was a shot against the SEC for stepping up to the plate and being proactive in finally rooting out a fraud before the financial press felt it was time to uncork it from their arsenal. Byron is asking the SEC to step back on investigating fraud until he can become some hero and let us in on this secret we already know exists. Where the heck has that genius Byron been? Is he still waiting for that tip from his sources?
How long was the financial press willing to let the fraud prosper? How much investor loss was to be introduced before any coverage was disseminated to the investing public? Those questions are to be passed on to Byron and his peers. Why is it Mr. Byron that you failed to report on the facts presented by members of the staff, fact that surely lead to conclusions that a problem exists despite the lack of coverage provided by you and your peers?
Today the SEC is reacting ahead of schedule and the financial press is attacking instead of applauding – why? Is there something deeper the financial media is attempting to hide?
On February 16, 2006 Commissioner Paul Atkins spoke before the US Chamber Institute for Legal Reform. As is the case with all speeches made by the staff members of the Commission, the speech was published on the SEC’s web site for all to read. While there are those within the financial press that specifically cover the Securities and Exchange Commission this speech, along with a few that followed, were never broken down and disseminated to the investing public for their protection.
On that day Commissioner Atkins stated “I have personally seen instances of this before I came to the Commission -- the two groups can act in concert to systematically drive down the price of a company's stock, to their mutual gain and the company's and its shareholders' loss.” Commissioner Atkins followed up by addressing a recent Wall Street Journal opinion that he claimed provided detail into a couple of these alleged schemes, stating that hedge funds take short positions in a company, then embark on a campaign to drive down the price of the company's stock. Atkins stated “we should be careful to ensure that the appropriate amount of enforcement resources are directed to the type of activity described in the Journal piece, as well as the separate but no less important issue of illegal naked short selling.”
Atkins resume, before his appointment as Commissioner, he assisted financial services firms in improving their compliance with SEC regulations and worked with law enforcement agencies to investigate and rectify situations where investors had been harmed. Certainly Atkins had opportunity to personally witness the acts he now addresses.
Amazingly, this documented speech transpired approximately 8 days after the subpoenas were issued against members of the financial press and some 8 days prior to the public being made aware of these subpoenas.
The media’s response to the subpoenas was to challenge the San Francisco Office of the SEC and make accusations of a division gone awry. The media has not stopped since despite statements made by Chairman Cox and Commissioner Campos who claim the San Francisco Office was not a division gone rogue.
In his own speech on March 3, 2006 Commissioner Campos chastised the media and their reporting by stating “In my view these statements have been incorrectly interpreted in the media and in the public to indicate that our Enforcement Staff did something wrong. In other words, our Staff, in my opinion, seems to have gotten "a bum rap."
Campos responded to an earlier Stockgate Today article “Did Chairman Cox Really Approve those Subpoenas” by simply claiming that his position on the subject matter was clearly stated in the March 3 speech. That it was and the Commissioner, by that speech, stands behind his enforcement teams actions.
Did any of this stop the media from spinning this issue away from the facts? Not at all! Instead of providing the investing public with the truth, the financial media continued to divert the attentions away from possible stock fraud and re-focus of protecting potentially illegal activities by some of their own.
Since February 24 CNBC personalities Becky Quick and Jim Cramer have denied that they had any communication with Gradient Analytics, or even knew whom they were, prior to Cramer being served with a subpoena. CNBC also features Marketwatch.com columnist Herb Greenberg who also denied any wrong doing in the matter. Greenberg was yet another from the financial media who received a subpoena from the SEC.
But last week, Overstock.com CEO Patrick Byrne posted on the Motley Fool public message board that he in fact held in his possession copies of e-mails between Quick and Gradient in which Ms. Quick is quoted as writing “Jim Cramer loves the Gradient hatchet jobs." and Cramer is having CEO XYZ on and asks the recipient to “get him the latest Gradient stuff on them."
Likewise, Byrne admitted to knowing the password that was set up for Herb Greenberg so that Greenberg could access the Gradient site at any time similar to the way a paying client would access the site. Greenberg was being provided real time access to Gradient Reports.
For the weeks after the subpoenas first surfaced, Greenberg denied any such access and up until the day before Byrne’s posting, was stating publicly that any reports he was provided would have been weeks after the reports were disseminated to the Gradient clientele. But Greenberg had to recant that story once exposed now using the excuse that he had the password but had so many he forgot he had it.
Greenberg has never denied that he uses Gradient as a source for his stories so, if he uses Gradient wouldn’t he not remember his password to access these reports?
Yet with all these questions now surfacing over stock fraud associated with “short and distort” campaigns. Fraud a Commissioner at the SEC admits he witnessed first hand, the financial press continues to take a different tact on the subject matter. The financial press continues to attack the accusers and the regulators seeking answers.
This weekend the NY Post put out a story by Roddy Boyd which represented a smear campaign on Biovail. The article was nothing more than a re-iteration of a previous article written as if timely smear stories re needed to detract from the realities we face. Boyd is now another member of the financial press whose communications with Gradient is being questioned.
The Post is not alone in taking up a position attacking the accusers as nearly 90% of the media across the nation has taken a similar tact. Overstock.com and Biovail have both become pet projects for the media to attack regardless of the facts that support their claims.
So how long has the media willingly ignored this particular issue?
It was December 2003 that the Department of Justice issued arrest warrants to Rhino Advisors Executives Thomas and Andreas Badian for fraud and manipulation. In the documents filed by the DOJ were transcripts of audio recordings between Andreas Badian and two brokers whom we have later found to work for Refco Securities. The transcripts stated that Badian instructed the brokers to sell Pennsylvania software company Sedona Corporation’s stock “with unbridled levels of aggression”. The transcripts also identify that Badian later “congratulated the brokers on the collapse of the stock.”
Rhino Advisors quickly went out of business and Refco Securities has subsequently imploded over securities fraud only weeks after going public. The Refco implosion last October is believed to have cost investors billions of dollars as the bankruptcy motions continue.
Based on this evidence, one SEC Attorney was astonished that nobody from the financial press ran with the story. “It is a Pulitzer opportunity” and yet we have no takers.
How many companies destroyed? How many more sound bites does it take from Commission Staff identifying this as a problem before the problem is investigated and disseminated into the unsuspecting public by the media?
Chairman Cox Concluded an interview with CNBC on March 2 by stating to anchor Liz Clayman “indeed, you [financial press] might be held to a different standard and it might be a higher one in the same way that a dirty cop really...has the book thrown at him or her. The media, and in particular when it comes to our capital markets, financial journalists, share a public trust…when someone abuses that trust I think the American public and American investors have every right to expect that the full force of the law would be felt.”
The Chairman’s comments were again re-iterated by Commissioner Campos the following day when the Commissioner stated, “Finally, it goes without saying, no one is above the law. If in any matter it is important for the integrity of the investigation to enforce a subpoena, it will be done through appropriate legal process of the federal court system, without hesitation.”
Today the financial press wants to take full credit for discovering and reporting each of the last major scandals that rocked Wall Street. As each event unfolded, the SEC became the fodder for not reading the tea leaves earlier and picking up the signs of fraud before investors suffered heavily at the hands of the violators. As some of us are still pressing for answers, the press is intent on shooting the messenger.
This time the financial press is attempting to stop the SEC from doing their job and the only question to be asked is why. Chairman Donaldson once asked the Fed Chairman “How much fraud are you willing to accept for [Hedge Fund] liquidity?” We now see that we should be asking certain members of the financial press “how much fraud are you willing to overlook for a source?”
Now I have not given up on looking into who is responsible at the SEC for allowing illegal shorting practices to continue to grow to the dangerous levels we have before us but for now, at least the SEC is making progress and moving in the right direction.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006