A DAY OF RECKONING
Here is something that may give you a little more insight. I believe the naked short position is a massive one and when TMMI's TruDef is released it will be a nuclear event for the criminals behind this massive fraud that has been perpetrated against the shareholders of this company. Here is another view point even though somewhat dated, could be applied to TMMI's situation....
Dr. Jim DeCosta
January 9th, 2009 at 1:52 pm
http://www.deepcapture.com/940-million-holes-...ent-143319
Any solution to the abusive naked short selling crime wave we are in the midst of has to involve a “day of reckoning”. There is absolutely no way to get around this in order to end the perpetual nature of this particular fraud. The immense amount of readily sellable “securities entitlements” currently manipulating the share prices of victimized corporations downwards can only grow UNTIL this invisible toxic waste is forcibly removed from the share structures of these corporations under attack. That’s clearly the only way that the purchasers of these securities can finally get delivery of that which they purchased. When abusive naked short sellers absolutely refuse to deliver that which they sell there is only one cure and that is via forced buy-ins of these “open positions”.
About five years ago the SEC openly admitted that the number of failures to deliver (FTDs) and the readily sellable “securities entitlements” they procreated had gotten so far out of hand that they needed to be “grandfathered in” with regards to Reg SHO in order to avoid the untoward “market volatility” associated with buying-in these refusals to deliver that which was sold. One must not overlook the irony involved when the party congressionally mandated to provide “investor protection and market integrity” refers to the forcing of those that absolutely refuse to deliver that which they sell to finally deliver the shares sold to their purchasers as involving “untoward” consequences. Was this a Freudian slip by a regulator clearly “captured” by the financial interests of those they are supposed to be regulating?
Without a “day of reckoning” associated with buying-in these open delivery obligations the “house of cards” forming the foundation for our clearance and settlement system will get even higher and that much tougher to deal with. The cover up frauds that have been perpetrated to deny or to hide the existence or the pandemic nature of the underlying fraud are no longer sufficient as this cat is pretty much out of the bag. The ability of the SEC to rein in this as well as the myriad number of other securities frauds has been pretty much exposed. The assumption that this industry with trillions of dollars up for grabs could “self-regulate” was insane. Every time an investor tries to exercise one of the rights associated with this “package of rights” we refer to as a share of a corporation a cover up fraud needs to be committed to cover up the fact that mere “securities entitlements” have no rights attached to them. Recall that they’re simply an accounting measure and only the board of directors of a corporation can issue legitimate “shares” of a corporation with its “package of rights” tightly attached.
To illustrate one of the cover up frauds needing to be constantly perpetrated picture a corporation “Acquiringco” (“Aco”) launching a tender offer for “Beingacquiredco” (“Bco”). “Aco” has 100 million shares issued and outstanding with all of them being held in “street name” at the DTCC. They have no outstanding naked short position. “Bco” also has 100 million shares outstanding with all of them being held in “street name” at the DTCC. They currently have an outstanding naked short position of 80 million shares being held amongst DTCC “participants”. These 80 million “securities entitlements” are being represented on monthly brokerage statements as “securities held long” by the brokerage firms hosting the investors’ account.
Let’s assume Aco’s tender offer of 1 share of “Aco” for every share of “Bco” tendered has been approved. The transfer agent of “Aco” will issue a certificate for 100 million shares of “Aco” to the DTCC to be distributed to the holders of “Bco” on a one-for-one basis. Obviously there won’t be enough shares of “Aco” to be distributed to the buyers of the 180 million shares of “Bco” sold. How does the DTCC handle this disparity? Do they buy-in the 80 million FTDs of “Bco” to make up for this disparity? No, remember that they plead to be “powerless” to effect buy-ins. What they do is to allow their “participants” that refuse to deliver these shares to the NSCC as the CCP (central counterparty) to the trade to credit 80 million “securities entitlements” for shares of “Aco”. Aco’s board of directors thought that it was paying 100 million of its legitimate shares for the acquisition of “Bco” and that they would have exactly 200 million “shares” outstanding after the acquisition. They were wrong because they now have 200 million readily sellable “shares” outstanding PLUS 80 million readily sellable “securities entitlements”. If bad news should befall “Aco” that results in 10% of its investors selling their shares then 28 million shares will be dumped onto the market and not 20 million.
Would the BOD of “Aco” made this acquisition if they knew the truth about the 80 million “securities entitlements” worth of toxic waste that was hidden within the share structure of “Bco”? Who knows? Should “Bco” be held liable for this fraud? Of course not, they knew nothing about the 80 million readily sellable “securities entitlements” poisoning their share structure. The party owed delivery of these failures to deliver is the NSCC which acted as the CCP to the associated trades. Note that even if the acquisition was accretive to earnings the share price of “Aco” will go down since “supply” and “demand” still interact to determine share prices via the “price discovery” process. Have you ever wondered why the price of an acquiring company almost always “tanks” after the acquisition?
Why didn’t the NSCC force the buy-in of the naked short position prior to the acquisition? Because it was not in the financial interests of its abusive participants and if they would have then thousands of short squeezes could be induced via similar methodologies. They were forced to cover up this fraud because one of the rights associated with legitimate “shares” is the right to partake in tender offers and acquisitions and they know that none of those mere “securities entitlements” have any rights whatsoever.
Note that the terms of the acquisition were one legitimate “share” of “Aco” with its “package of rights” intact to be given to the “Bco” investors on a 1-for -1 basis. “Securities entitlements” are not legitimate voting “shares” of a corporation. When it comes to voting rights how is the NSCC going to allocate the 200 million voting rights to the investors in the 280 million “shares” and/or “securities entitlements”? What kind of a cover up fraud is going to be necessary? Which particular investors will get their voting rights diminished? Will these shareholders be compensated for this invisible theft? Will it be all investors in a pro rata manner or just the ones who use clearing firms with massive amounts of delivery failures on its books?
The point to be made that is until there is a “day of reckoning” these frauds can do nothing but spread geometrically and ensnare that many more U.S. investors. Imagine the surprise in store for any company taking over “Aco” in a similar share swap takeover. Is this not “the fraud that just keeps taking” UNTIL a day of reckoning occurs to finally end the bloodletting?
Note that most businesses have “month ends” and “year ends” to reconcile accounts in order to detect frauds. The NSCC in charge of covering up the fraudulent behavior of its abusive participants instead has “continuous net settlement” where this is no date to reconcile accounts. In the last 5 years since the attempted “grandfathering in” of FTDs any relatively clean players on Wall Street would have voluntarily cleaned up their naked short positions. The naked short positions in existence now are clearly those belonging to the hard core criminals. The beauty of mandated buy-ins is that they act like a heat-seeking missile and they selectively land squarely in the lap of the party pulling the trigger on the abusive naked short sales. All of the market intermediaries that “facilitate” these frauds will stand to the side and watch.
The various regulators, SROs like the DTCC and FINRA and exchanges no longer have any safe middle ground to occupy in this regard. Now that the cat’s out of the bag you’re either part of the solution or part of the cover up.
Here is something that may give you a little more insight. I believe the naked short position is a massive one and when TMMI's TruDef is released it will be a nuclear event for the criminals behind this massive fraud that has been perpetrated against the shareholders of this company. Here is another view point even though somewhat dated, could be applied to TMMI's situation....
Dr. Jim DeCosta
January 9th, 2009 at 1:52 pm
http://www.deepcapture.com/940-million-holes-...ent-143319
Any solution to the abusive naked short selling crime wave we are in the midst of has to involve a “day of reckoning”. There is absolutely no way to get around this in order to end the perpetual nature of this particular fraud. The immense amount of readily sellable “securities entitlements” currently manipulating the share prices of victimized corporations downwards can only grow UNTIL this invisible toxic waste is forcibly removed from the share structures of these corporations under attack. That’s clearly the only way that the purchasers of these securities can finally get delivery of that which they purchased. When abusive naked short sellers absolutely refuse to deliver that which they sell there is only one cure and that is via forced buy-ins of these “open positions”.
About five years ago the SEC openly admitted that the number of failures to deliver (FTDs) and the readily sellable “securities entitlements” they procreated had gotten so far out of hand that they needed to be “grandfathered in” with regards to Reg SHO in order to avoid the untoward “market volatility” associated with buying-in these refusals to deliver that which was sold. One must not overlook the irony involved when the party congressionally mandated to provide “investor protection and market integrity” refers to the forcing of those that absolutely refuse to deliver that which they sell to finally deliver the shares sold to their purchasers as involving “untoward” consequences. Was this a Freudian slip by a regulator clearly “captured” by the financial interests of those they are supposed to be regulating?
Without a “day of reckoning” associated with buying-in these open delivery obligations the “house of cards” forming the foundation for our clearance and settlement system will get even higher and that much tougher to deal with. The cover up frauds that have been perpetrated to deny or to hide the existence or the pandemic nature of the underlying fraud are no longer sufficient as this cat is pretty much out of the bag. The ability of the SEC to rein in this as well as the myriad number of other securities frauds has been pretty much exposed. The assumption that this industry with trillions of dollars up for grabs could “self-regulate” was insane. Every time an investor tries to exercise one of the rights associated with this “package of rights” we refer to as a share of a corporation a cover up fraud needs to be committed to cover up the fact that mere “securities entitlements” have no rights attached to them. Recall that they’re simply an accounting measure and only the board of directors of a corporation can issue legitimate “shares” of a corporation with its “package of rights” tightly attached.
To illustrate one of the cover up frauds needing to be constantly perpetrated picture a corporation “Acquiringco” (“Aco”) launching a tender offer for “Beingacquiredco” (“Bco”). “Aco” has 100 million shares issued and outstanding with all of them being held in “street name” at the DTCC. They have no outstanding naked short position. “Bco” also has 100 million shares outstanding with all of them being held in “street name” at the DTCC. They currently have an outstanding naked short position of 80 million shares being held amongst DTCC “participants”. These 80 million “securities entitlements” are being represented on monthly brokerage statements as “securities held long” by the brokerage firms hosting the investors’ account.
Let’s assume Aco’s tender offer of 1 share of “Aco” for every share of “Bco” tendered has been approved. The transfer agent of “Aco” will issue a certificate for 100 million shares of “Aco” to the DTCC to be distributed to the holders of “Bco” on a one-for-one basis. Obviously there won’t be enough shares of “Aco” to be distributed to the buyers of the 180 million shares of “Bco” sold. How does the DTCC handle this disparity? Do they buy-in the 80 million FTDs of “Bco” to make up for this disparity? No, remember that they plead to be “powerless” to effect buy-ins. What they do is to allow their “participants” that refuse to deliver these shares to the NSCC as the CCP (central counterparty) to the trade to credit 80 million “securities entitlements” for shares of “Aco”. Aco’s board of directors thought that it was paying 100 million of its legitimate shares for the acquisition of “Bco” and that they would have exactly 200 million “shares” outstanding after the acquisition. They were wrong because they now have 200 million readily sellable “shares” outstanding PLUS 80 million readily sellable “securities entitlements”. If bad news should befall “Aco” that results in 10% of its investors selling their shares then 28 million shares will be dumped onto the market and not 20 million.
Would the BOD of “Aco” made this acquisition if they knew the truth about the 80 million “securities entitlements” worth of toxic waste that was hidden within the share structure of “Bco”? Who knows? Should “Bco” be held liable for this fraud? Of course not, they knew nothing about the 80 million readily sellable “securities entitlements” poisoning their share structure. The party owed delivery of these failures to deliver is the NSCC which acted as the CCP to the associated trades. Note that even if the acquisition was accretive to earnings the share price of “Aco” will go down since “supply” and “demand” still interact to determine share prices via the “price discovery” process. Have you ever wondered why the price of an acquiring company almost always “tanks” after the acquisition?
Why didn’t the NSCC force the buy-in of the naked short position prior to the acquisition? Because it was not in the financial interests of its abusive participants and if they would have then thousands of short squeezes could be induced via similar methodologies. They were forced to cover up this fraud because one of the rights associated with legitimate “shares” is the right to partake in tender offers and acquisitions and they know that none of those mere “securities entitlements” have any rights whatsoever.
Note that the terms of the acquisition were one legitimate “share” of “Aco” with its “package of rights” intact to be given to the “Bco” investors on a 1-for -1 basis. “Securities entitlements” are not legitimate voting “shares” of a corporation. When it comes to voting rights how is the NSCC going to allocate the 200 million voting rights to the investors in the 280 million “shares” and/or “securities entitlements”? What kind of a cover up fraud is going to be necessary? Which particular investors will get their voting rights diminished? Will these shareholders be compensated for this invisible theft? Will it be all investors in a pro rata manner or just the ones who use clearing firms with massive amounts of delivery failures on its books?
The point to be made that is until there is a “day of reckoning” these frauds can do nothing but spread geometrically and ensnare that many more U.S. investors. Imagine the surprise in store for any company taking over “Aco” in a similar share swap takeover. Is this not “the fraud that just keeps taking” UNTIL a day of reckoning occurs to finally end the bloodletting?
Note that most businesses have “month ends” and “year ends” to reconcile accounts in order to detect frauds. The NSCC in charge of covering up the fraudulent behavior of its abusive participants instead has “continuous net settlement” where this is no date to reconcile accounts. In the last 5 years since the attempted “grandfathering in” of FTDs any relatively clean players on Wall Street would have voluntarily cleaned up their naked short positions. The naked short positions in existence now are clearly those belonging to the hard core criminals. The beauty of mandated buy-ins is that they act like a heat-seeking missile and they selectively land squarely in the lap of the party pulling the trigger on the abusive naked short sales. All of the market intermediaries that “facilitate” these frauds will stand to the side and watch.
The various regulators, SROs like the DTCC and FINRA and exchanges no longer have any safe middle ground to occupy in this regard. Now that the cat’s out of the bag you’re either part of the solution or part of the cover up.
