GameStop And The Ongoing War Between Elites And Populists

GamestopSean Davis – For those who haven’t heard, there’s a bit of a brouhaha brewing with the video game retailer GameStop, which is publicly traded. Much of Wall Street soured on the company, believing it to be the next Blockbuster or Radio Shack: a dinosaur from a bygone era that has no hope of succeeding in the increasingly internet-run future. As a result, a major Wall Street hedge fund worth billions decided to make a bet that the company’s already low stock price would just keep going lower.

The traditional way to make money in stocks was to find a company that was worth more than what its stock price indicated, purchase the stock at a bargain, and then make your money either through the company’s distribution of its profits back to its equity owners or the appreciation of its stock price. Buy low, sell high. But you can also make money betting on a company to eventually circle the toilet. This is called shorting. Continue reading

Securities And Exchange Commission Hacked

insider tradingJoseph P Farrell – We’ve seen a spate of hacking lately that makes one wonder what is going on and who is behind it: indeed, are we dealing with just one “who”? or a multitude? And if a multitude, are their activities coordinated in any way? If one looks at all the stories in recent years, going all the way back to 9/11 (and indeed further), then the total picture looks grimly compelling.

There was the Sony hack, of course, but since then, we’ve heard stories and allegations of the hacking of major banks: JP Morgan Chase, even the Federal Reserve, and, just yesterday I blogged about the implications of recently fired Vatican bank auditor Libero Milone, who’s short statement implicates similar activity against (or by?) the Vatican bank.  Then the Social Security administration, credit reporting agencies like Equifax, and so on.

On 9/11, as I outlined in my book Hidden Finance, Rogue Networks, and Secret Sorcery, there were reports from workers at Deutsche Bank in New York that their system had been invaded and non-responsive for about seven seconds, apparently trades were executed, just before the planes struck. As is known, during the following week, normal securities clearing regulations were suspended, which allowed securities to be substituted for other securities that were scheduled to clear. We’ll get back to the SEC in a moment. Continue reading

Court Officially Declares Bitcoin A Real Currency

bitcoinA federal judge has for the first time ruled that Bitcoin is a legitimate currency, opening up the possibility for the digital crypto-cash to soon be regulated by governmental overseers.

United States Magistrate Judge Amos Mazzant for the Eastern District of Texas ruled Tuesday that the US Securities and Exchange Commission can proceed with a lawsuit against the operator of a Bitcoin-based hedge fund because, despite existing only on the digital realm, “Bitcoin is a currency or form of money.”

Trendon Shavers of Bitcoin Savings & Trust (BTCST) was accused last year of scamming customers out of roughly $4.5 million worth of the cryptocurrency through his online hedge-fund. Shavers promised investors a weekly return of 7 percent, according to the federal complaint, but shut-down his site after collecting upwards of 700,000 bitcoins. When the SEC charged Shavers last month with operating a Ponzi scheme, he fought back by saying Bitcoin is not actual currency and can’t be regulated.

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Matt Taibbi ~ Jobs Act Fallout: More Fraud

Rolling Stone | RS_News | June 8 2012

Initial public offeringOPINION ~ I’m on vacation, very far from home, so apologies for the short post. I’ll be back online next week, and we have a fun story coming out in Rolling Stone the week after that.

In the meantime, I wanted first of all to thank everyone who participated in the Thunderclap Twitter experiment. I’m away, and haven’t heard the full report yet, but I understand it was a rousing success. I’ll find out more when I come home, but until then, thank you all again for taking the time to sign up.

One story I did want to pass on while I was gone is a very interesting Wall Street Journal piece entitled, “Meet the JOBS Act’s Jobs-Free Companies.” A few months ago, I wrote a few articles about the JOBS Act, which a number of friends of mine from congress and from the regulatory community insisted would pave the way for a return to the IPO fraud boom of the late nineties, if not for a return to the penny-stock fraud age.

Well, eight weeks after the passage of the law, we’re finding some unexpected results. Among the more controversial provisions of the JOBS Act, remember, was a sort of blanket regulatory exemption for so-called “Emerging Growth Companies,” which were loosely defined as public companies with less than $1 billion in annual revenues. Among other things, the new law allows such companies to avoid independent accounting requirements for the first five years of their existence.

According to the WSJ, what’s happening now is that the JOBS Act is being used to facilitate what are known as “reverse mergers.” Because it’s traditionally been difficult for new companies to meet the regulatory requirements for going public, what’s often happened is that young companies look for dormant or dead corporations that are already registered. They then merge with those “empty shell” companies, use their corporate structures, and thusly avoid the IPO process altogether. This process is called a “reverse merger.”

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Big Banks Keep Paying a Pittance to Settle Fraud Charges

By Pat Garofalo | Nation Of Change
October 23 2011

CitiThis week, Citigroup announced that it had settled with the Securities and Exchange Commission over charges that the mega-bank misled investors in a derivatives deal and then bet against them. Under the terms of the settlement, Citi agreed to pay $285 million.

Citi is not the first bank to settle these sorts of charges with the SEC. Previously, Goldman Sachs had agreed to a $550 million settlement, while JP Morgan Chase paid $154 million. (Goldman’s settlement was over the now infamous “shitty deal.”)

Having to fork over hundreds of millions of dollars may seem like a lot, but it’s chump change to these banks. Citigroup, for instance, just announced profits of $3.8 billion for the last quarter alone, while JP Morgan made $4.2 billion. Goldman Sachs this week announced just the second losing quarter since the bank went public in 1999, but it paid its SEC settlement in 2010, a year in which the bank made $39.2 billion overall.

And as ProPublica pointed out, Citi’s settlement will not only cost it a pittance, but ends the SEC’s inquiries into the vast multitude of junk the bank peddled onto its unwitting customers:

The bank says it has settled all of its potential liability to a key regulator – the Securities and Exchange Commission — with a $285 million payment that covers a single transaction, Class V Funding III. ProPublica first raised questions about the deal [1] in August 2010. In announcing a case, the SEC said it had identified one low-level employee, Brian Stoker, as responsible for the bank’s misconduct.

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