An SEC document from 17th Sep 2008 detailing everything about naked shorts and counterfeiting of shares! The document is titled “Where are Our Regulators and Who are They Protecting?” And it mentions “market manipulation” and government advisor’s conflict of interest!
Edit: I stumbled upon this document during my research about Fannie Mae and Freddie Mac. Because in July 2008 Congress passed the Housing and Economic Recovery Act.16 which gave the Treasury Department authority to guarantee as much as $25 billion in loans held by Fannie Mae and Freddie Mac. It created a new regulator for Fannie and Freddie called the Federal Housing Finance Agency.
The document is related to Government Sponsored Enterprises (GSE’s) – is it me or is history repeating itself almost literally? GSE & now GME. Anyway, back to the topic..
Summary of Key Points copied directly from the document
● The number of legal shares issued by the GSEs was not sufficient to account for such large trading volumes.
● From October 2007, all shares issued for trading by the GSEs, 1.6 billion shares, were reported to be owned by just the reporting institutional investors.
● Ownership other than the reporting institutions obviously exists.
● The GSEs have traded over 16 billion shares since October 2007.
● The shares illegally supplied through counterfeiting in Fannie Mae and Freddie Mac caused over a 90 billion dollar decrease in their value.
● On June 30, 2008, when all shares available to trade were owned by reporting institutions and less than one month before the SEC‘s emergency order went into effect, the NSCC reported that the fails to deliver of real shares of Fannie Mae and Freddie Mac was zero.
● The zero reported fails to deliver at the NSCC are in direct opposition to the facts that show delivery failures should be significant. Basically, all of the shares are in known ownership, therefore, legal settlement of these large trade volumes from October 2007 to date with real GSE‘s shares, was and is not, mathematically logical.
● The ill-gotten, gains from counterfeiting the GSEs‘ shares appears to exceed 1/2 trillion dollars. 23
● Less than thirty market participants show up as professional market makers in these stocks.
● U.S. citizens‘ pension funds, state employee retirement accounts and other important investors in the U.S. markets have been financially harmed in these GSE investments; while the stock counterfeiters continue to profit.
● Absent the manipulation of their stocks, the GSEs could have raised significant capital. This is evidenced by the fact that mutual funds, pension funds and other large investment funds continued to purchase shares of the GSEs.
● The counterfeiters of the GSEs stock continued their relentless manipulation of the stock prices during the SEC emergency order.
● These are violations of the anti-fraud provisions of the U.S. securities laws and may violate the U.S. laws against counterfeiting. Where were the regulators?
● The NYSE, FINRA, SEC and Treasury should know there are illegal counterfeit shares trading in the GSEs because they have all of the information readily available to prove it.
● Instead of enforcing the laws against the illegal activity, the regulators took over conservatorship of the GSEs, which benefited the counterfeiters at the expense of the U.S. taxpayers and their future generations.
The section about conflict of interest that happened back then which resembles what’s happening right now:
Advisor to the U.S. Government and Market Maker
Paulson was reported to be advised by Morgan Stanley to have the U.S. government take the GSEs into conservatorship status. When the market manipulation of the GSEs began in the fourth quarter of 2007, Morgan Stanley & Co. sold 94% of their 34 million shares of the GSEs. These positions were sold to other investment, mutual and pension funds. Morgan Stanley is a market maker in the GSEs and may not have been a neutral party for Paulson to bring in as an advisor.
Finally, the conclusion as laid out in the document:
Certain market participants, trading illegally, appear to be making a concerted effort to take down some of the most important financial institutions in the United States. Who would counterfeit shares of these vital U.S. institutions to cause their financial collapse without regard for the U.S. citizens?
It is not possible to carry out this massive fraud without the cooperation of large Wall Street firms and regulatory complicity, indifference or lack of competence. Some firms are blatantly selling shares that do not exist.
It is impossible to ward off the downward price pressure from counterfeit shares diluting a company‘s value. The entire nation‘s value is diminished when the counterfeiting of securities is rampant. Simply put, this is a defining moment in the history of the financial strength of the United States. Other than home ownership assets, the largest U.S. household assets are tied to the stock market through retirement accounts. If counterfeiting continues, investment and retirement accounts will be backed by nothing but counterfeit shares, which they may already be holding in substantial amounts. To conceal the fraud perpetrated on the retirement accounts is simple, manipulate the markets to crash. The money previously plundered from these accounts remain in the hands of the counterfeiters and the statements sent by the Wall Street firms to retirement investors will reflect a crashed market value of their assets, i.e., you lost your retirement savings.
The counterfeiting of U.S. traded securities is nothing less than a fraud of epic proportions. As with other illegal stock market activity, offshore shell companies are a likely depository of the ill-gotten gains.
While U.S. citizens would like to trust that government regulators are putting the citizens first and protecting investors, this may not be the case. The ownership and trading irregularities in Fannie Mae and Freddie Mac discussed above, seem so obvious, that surely our government would have taken the steps necessary to protect investors in these very important financial institutions from fraud in the market. Unfortunately, the facts do not support that the government did enforce the securities laws against fraud and market manipulation. It is necessary for the United States to do everything within its power to recover the enormous amount of monies that have been plundered from this country and its citizens.
And the document’s conclusion ends by stating:
Bring the few illegal dealers responsible for counterfeiting stock to justice in order to assure that this United States economic disaster will never repeat itself. There is simply too much at stake to do otherwise.
13 years ago that was…
Edit: 🚨A footnote from the document. This footnote might actually explain why Gary has yet to deliver.. It also explains why the document has no author!!
“1 Historically, when the issue of Wall Street firms selling stock they do not own has been brought to the attention of large Wall Street firms and the financial media they own, their response has been to shoot the messenger so the truth of the message can be ignored. This has played out time after time when the subject has been addressed and those commentators who have continued to call for Wall Street to stop the practice have been pressured by the industry to drop the issue. The DTCC has publicly published information to discredit economists who have written about the subject.
Even the former Chairman of the SEC, Harvey Pitt claims that when he publicly discusses naked short selling, the DTCC contacts him. This is not the time for these types of games to be played in this country as we are facing very difficult times ahead because of the counterfeiting of U.S. assets.
Therefore, at this time, this report comes without an author to discuss, leaving only the data to discredit. All data is supported by citations and is easily reproducible to verify the accuracy of the information.”
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