“The development of our financial oligarchy followed, in this respect, lines with which the history of political despotism has familiarized us: usurpation, proceeding by gradual encroachment rather than by violent acts; subtle and often long-concealed concentration of distinct functions….
……which are beneficial when separately administered, and dangerous only when combined in the same persons. It was by processes such as these that Caesar Augustus became master of Rome.
The makers of our own Constitution had in mind similar dangers to our political liberty when they provided so carefully for the separation of governmental powers”.
(1914) Other People’s Money and How the Bankers Use It– Chapter I: Our Financial Oligarchy
When you compare the structure of our financial markets to what was revealed in the Pujo Committee and the articles cited in the book, “Other People’s Money and How the Bankers Use It”, you will quickly realize how little of a difference there is between the anti competitive robber baron’s that existed during the early 20th century, and our capital markets today.
They own the banks; they own brokers; they own the financial news media; they own the regulators; they own the clearing houses; they control the government; and worst of all, they block competition — even if offers new technology that could revolutionize entire industries. But why should we be surprised by any of this? As history has shown time and time again, “absolute power corrupts absolutely”.
The Depository Trust and Clearing Corporation
Stock and bond Clearing is exclusively owned and controlled by the biggest banks and brokers in America. Simply put, Central Clearing is the middleman that sits between a trade, guaranteeing both the buyer and the seller receives their cash or securities. If a buyer or seller fails to deliver the cash or securities, the clearing house guarantees delivery to the counterparties by making up for the loss with their own money.
Without this essential service, a stock exchange will struggle to survive because nobody will be sure if the counterparty will deliver, and all it takes is the slightest bit of doubt for the entire system to collapse. The exchange may be able to operate on a small scale, but not at the capacity that you would expect to see on a recognized exchange like the NASDAQ or NYSE, and if you have competitors — and you always do — bankruptcy is not just a possibility, but a certainty.
In the United States of America, there is only one central clearinghouse: The Depository Trust and Clearing Corporation, and for almost 50 years they have maintained a virtual monopoly over this essential service. It is a private corporation owned by the major banks and brokerage houses.
The Federal Reserve Bank of New York shares many similarities. It is the only institution that is legally sanctioned through the Federal Reserve Act to manipulate interest rates through what they refer to as Open Market Operations, and it is also owned by the banks and brokers.
FINRA is one of the only regulatory entities in America that through its industry-run arbitration process is allowed to operate outside of common law — a judicial system that has been practiced by many countries in the western world since the early Middle Ages. It too is owned by the brokers
This means if you are a client of Goldman Sachs, Morgan Stanley, Merrill Lynch, or any of the other major brokers in America, and you have evidence proving one of their 100’s of thousand of employees has harmed you financially, you will be forced to sue them through a separate arbitration process that they fund, that they control, and who’s management they elect, all outside of common law.
As you can see in the screenshot pictured below, they own the only centralized clearinghouse in America: The DTCC
Blocking New Technology
Just to give you an idea of the influence these TBTF banks have over these institutions, we are going to analyze a recent lawsuit filed by a consortium of pension funds against the largest banks and brokers in the United States.
It perfectly illustrates their stranglehold over our capital markets, proving beyond any shadow of a doubt that not only will these massive companies work together behind closed doors to stifle competition, but they also have the ability to coerce the directors of the DTCC — practically the only clearinghouse in America — into blocking new entrants that could pose a threat to their hegemony. When you click on the image below, it will take you to the exact line of text.
There is probably no better example of their monopolistic, anti-competitive behaviour than in the stock loan industry, where pension funds are being forced to use their services for lack of any alternative.
Most retirement funds tend to hold their investments long-term, so to increase their clients returns, fund managers will often loan out these large positions to short sellers and market makers so they can be used for arbitrage.
There is one big problem, though: there is no centralized exchange available, forcing massive money managers like Blackrock and CalPERS — along with every hedge fund in America — to employ brokers to match borrowers and lenders, effectively siphoning $100’s of billions from our retirement savings.
Today, most of these transactions are still facilitated over-the-counter, and lenders and borrowers have no way of accessing live price data. Only the brokers and “TBTF” banks have access to this information, which gives them the ability to charge practically whatever they want without anybody knowing if they received a fair market price.
“And then as time went on and/or a position got bigger, the rate would get jacked up on us, which we found to be, one, very expensive and, two, horrific. So our cost of doing business in a particular name would go from not costing us anything to costing us tens of millions of dollars… Marc Cohodes, Copper River Partners
Experts have described this system as the mother of all dark pools, and people have been calling for change for more than two decades now.
Below is a example of how this whole process works.
“The current stock loan market involves high search costs and inefficient pricing.
It can take numerous phone calls over several hours to locate a hot stock and negotiate pricing. The lender has no indicative level of pricing other than the demand information provided by the brokers, which the lender has no way to verify. In other words, the securities lending market requires considerable manual effort to complete transactions that in other markets take seconds or minutes at most. Because of the fragmented nature of the market, identical loans can trade simultaneously through different channels at very different prices. These high search costs preclude arbitrage across liquidity pools”
https://archive.is/c0Qt6#selection-24833.5-24875.41
Quadriserv/AQS, SL-x, and Data Explorers all attempted to bring to the market an electronic exchange for this massive $1.75 trillion market, and their technology could have finally put an end to this backward and opaque system that has been plaguing pensioners, endowments, and hedge funds for more than 20 years. Unfortunately, even though their technology took decades of collaboration and $100’s of millions in start-up capital, they were all blocked by these mega-banks.
It threatened their cartel
The mega-banks that dominate this industry simply had too much to lose by allowing us to have access to this data, so in order to stop this technology from reaching the market, they banded together and refused to provide key services to these bright start ups, even going so far as to threaten their top hedge fund clients with the loss of critical prime brokerage services if they found out they were using their platforms.
This is why still to this day in the year 2020, with AI tech; quantum computing; social media; smart phones; automated vehicles; and all the other amazing technologies that have completely changed our world, there is still no centralized exchange, and no electronic platform for stock loans. Unfortunately, as a citizen of America, you are simply not allowed to know the going interest rate for Apple, Amazon, General Electric, and all the other great American companies that every pension fund and endowment rely’s on for their retirement savings.
In 2016, it was estimated that these brokers were extracting 65% of the revenues from the stock loan market; most of which is going to a very small group of investment banks. Even as of the time of writing, we are still being forced to pay these people massive fees like it’s some protection racket run by the mafia. They even think it’s funny, referring to themselves as “The Five Families”.
Over time, the cumulative effect this can have on our retirement savings is astronomical. Just to put that into perspective, Frontline estimated that as little as a 2% annual fee charged by your average mutual fund over a period of 50 years would result in a 66% reduction to your retirement savings.
On an annualized basis, the stock loan industry is estimated to produce $9 billion in revenue, which equates to $180 billion in profits over a period of 20 years, and this is without accounting for compounding interest. Quadriserv — one of the companies that attempted to challenge these brokers stranglehold over the industry — estimated that their platform would have saved pensioners $4.5 billion per year, and in the words of one high level bank executive, it could “do the work of 6 traders in 1“.
The New York Clearing Cartel
As we all know, history has a tendency to repeat itself, and this Quadriserv/AQS, SL-x, and Data Explorers situation is definitely not the first time something like this has happened. Such anti-competitive activity perfectly emulates the Cartel from the days of the New York Clearing Association; a consortium of the country’s largest banks that had the power to shutdown any bank in the nation simply by refusing to clear their accounts. They eventually went on to become the primary focal point of the Pujo Committee investigation in 1913 immediately before the passing of the Federal Reserve Act.
Included below are key excepts from that Committee which will show you the true power of a clearinghouse. Key quotes from the book, “Other People’s Money and How the Bankers Use It”(1914), will also be included. Everything has been broken down so it will only take about 5 minutes to read.
From the Depository Trust and Clearing Corporation’s 2018 Annual Report
(February 28, 1913) “Report of the Committee appointed pursuant to House resolutions 429 and 504 to investigate the concentration of control of money and credit”.
Knickerboker Trust was banned from using the clearing services of National Bank of Commerce of New York, leading to its immediate collapse.
Without the services of the the New York Association, the most dominant Clearing House at the time, it was well known by customers and bank owners alike that they would almost certainly fail within as little as a few days.
Even so much as a rumor would cause a bank run
The New York Clearing House forces Oriental Bank to stop working with two Brooklyn Banks, even though they pose no risk to anybody and represent an important percentage of Oriental Bank’s profits
“The men who through their control over the funds of our railroads and industrial companies are able to direct where such funds shall be kept and thus to create these great reservoirs of the people’s money, are the ones who are in position to tap those reservoirs for the ventures in which they are interested and to prevent their being tapped for purposes of which they do not approve. The latter is quite as important a factor as the former. It is the controlling consideration in its effect on competition in the railroad and industrial world.”
(1914) Other People’s Money and How the Bankers Use It
https://archive.is/FjfOR#selection-2791.0-2794.0
A sort of gentleman’s agreement decided the fate of the entire nation..
“These bankers are, of course, able men possessed of large fortunes; but the most potent factor in their control of business is not the possession of extraordinary ability or huge wealth. The key to their power is Combination….
“There is the obvious consolidation of banks and trust companies; the less obvious affiliations–through stockholdings, voting trusts and interlocking directorates–of banking institutions which are not legally connected; and the joint transactions, gentlemen’s agreements, and “banking ethics” which eliminate competition among the investment bankers”.
“Other People’s Money and How the Bankers Use It”, (1914)
All it took was 1/4 of its members to block somebody from joining, regardless of their qualifications, and even if these people were competing with the appellant.
Even if the bank was a member of the club, in the event of a change of control, the bank would be expelled if the members did not approve of the new management.
It’s a clique; a private club; a Cartel.
They tanked an entire trust simply by blocking it from using their services! A lot of peoples savings were in that bank, and this was before federal safety nets. Back then, if your bank went under, you could literally starve; you and your family! But they shut it down anyway. That’s how Cartels work, and this is why they are supposed to be illegal. They also shut down two healthy banks, and for no reason whatsoever.
You see, it’s not just about the profits for these people. Sure, profits are always good, but it goes much deeper than that, and there’s a reason why the blood drained out of that bankers face at the mere mention of Quadriserv’s technology.
If the stock loan market were to emerge from the shadows of the “OTC” and on to a public exchange where everything is closely scrutinized, it would be much easier to track who was borrowing stock, and at what price, which could potentially reveal what these mega-banks are up to behind the scenes. People might even start recommending that they include all these loans into a Consolidated Tape, making it much harder for them to hide their activities. This is why our current “Five Families” likes to keep the stock loan industry “OTC”.
“Under Graber, I learnt that Wall Street was an illusion,”.. “There were different magicians using different tricks in different ways. But everyone cheated. It shocked me so much in the beginning. I admired these people. And they cheated”, Samuel Israel III
Keeping this market in the dark doesn’t just give you control over the spread, like what is seen here.
It also gives you control over the supply of equities, and it even allows you manipulate voting outcomes in contested elections.
…I think the securities lending market is just like the mob. I think it’s completely rigged. It’s a completely manipulated black hole, non- transparent market
Marc Cohodes, Copper River Partners
This exact same scenario occurred before the financial crisis when CDO’s were still popular. The banks refused to let anybody have access to live pricing data, and everything was traded on the OTC markets with no central clearing. Even when they were offered the opportunity to trade on a public exchange, they still refused
“Give me control over nations equity supply and I care not who makes its laws”
You might be surprised to find out that you don’t technically own your shares in a company, and that it’s actually the banks and brokers that own them. You are just issued an entitlement; an unusual relationship that they characterize as “street name” ownership, and all shares are held in book-entry form at the DTCC, with banks the brokers acting as the registered holders on a company’s books
By transferring ownership to the DTCC and registering the brokers as the true holders of your investments, it solved the problem of constantly having to transfer physical certificates from one location to another, a process that was cumbersome and created liability issues. Ownership also became easier to track.
Back the in the 70’s they refer to this relationship as a “Jumbo Certificate”
A perfect example of this ownership structure is illustrated in the document snapshot pictured below from a recent Broadridge Financial Services note offering, dated Dec.5th, 2019, only a few months ago.
They refer to this debt obligation as a “Global Note” that is owned by the DTC (a DTCC subsidiary).
It also says that the owners of the “beneficial interests” will not be legally considered owners of “any notes” under the “Global Note”. A “beneficial interest” would be you, as you are the brokers’ customer for which they have granted you “entitlements” to these investments.
“Under Article 8, the beneficial owner of the shares held in a custodial account with an intermediary (such as a broker) is considered to be the holder of a “securities entitlement” in a “financial asset” which is ultimately held by a depository”,
Marcel Kahan, The Georgetown Law Journal
They say explicitly in the first paragraph that the DTC will credit the “beneficial interests” represented by the “global note” to the accounts of the “participants“.
But who are these ‘participants?
The “participants” are the same banks and brokers that are buying the debt securities from Broadridge.
But wait a second, doesn’t that make them the “indirect” owners of this “Jumbo Certificate” — or in this case, “Global Note” — through their ownership of the DTCC?
The answer is yes, it does.
In the age of artificial intelligence, crypto currencies, smart phones and quantum computing, you might be wondering why we still need these brokers and banks to act as the legal owners of our investments. Nobody uses paper certificates anymore, and certainly there should be some kind of SAAS technology out there by now that could solve the liability and book-keeping issues that come with transferring these ownership interests.
The truth is, it’s not necessary at all. Many experts have expressed their frustration about this unusual “entitlement” system, and reminiscent of the stock loan industry, it hasn’t been necessary for practically for 20 years.
They don’t even let companies send “proxy” (voter) materials directly to their shareholders; the company is forced to send the voting materials to the brokers first, and only then will they send it to you.
That seems kind of odd in this day and age, doesn’t it? What could be so wrong with sending voting materials directly to shareholders? If your argument is that it could give management too much control over the outcome, then why would we need the banks to protect us for this? We don’t need them to hold our hand; not that much anyways.
Pictured below is an illustration of how this process works.
If you had trouble with that first one, this next illustration might be easier to understand. The other one is kind of old — from 1976. Yes, the same system that existed back then still exists today.
Wanna take a wild guess who the brokers contract out to send you these “proxy” materials (voting cards).
Broadridge Financial Services..
They control 80% of the “proxy” (voter) communication industry. Don’t worry, we’re just getting started. It gets much worse.
Did you know that you can borrow shares immediately before a corporate election to influence the outcome? In America if you borrow shares, the voting rights get transferred to you.
You get to keep the dividend, but not the vote. Seems pretty counter intuitive, doesn’t it? Or better yet, ripe for exploitation?
..That’s because it is..
“The existing system of shareholder voting is crude, imprecise, and fragile. Gil Sparks, a leading Delaware lawyer, estimates that, in a contest that is closer than 55 to 45%, there is no verifiable answer to the question “who won?”“, The Hanging Chads of Corporate Voting
Apparently votes are constantly being misappropriated, and the only entity that can reconcile this problem is owned and controlled by them: The Depository Trust and Clearing Corporation.
Broadridge even admits in their company filings that their relationship with these brokers constitutes as a “conflict of interest“, and they even put it in caps..
You can make $100’s of million’s from being on the right side of a corporate merger, and as recent history has shown, these banks will rig anything so long as they can get away with it. Only 30% of shareholders were shown to have voted in 2014, so it’s not like it would be hard. Should we really trust these people to fairly tabulate our votes?
That alone should be enough to cause you concern, but combined with the fact that they can borrow shares for the sole purpose of influencing an election, and you’ve got a big problem. They even have a name for this practice: Vote Buying.
Yes, Vote Buying..
From now on we’re going to try to avoid using the word “Proxy” because it acts to cloak what is actually going on here: a vote, not a “proxy”. That word makes it sound much more complicated than it actually is, especially considering all the technology we have today.
Every country in the Western World holds elections, and the only place that seems to exhibit such unusual complications is on the stock market, the lifeblood of the American economy.
Bob Drummond wrote an article about this for Bloomberg a long time ago, (in typical Bloomberg fashion, it was deleted)
From: “Double Voting in Proxy Contests Threatens Shareholder Democracy”, Bloomberg
“It is an abomination,” says Thomas Montrone, chief executive officer of Cranford, New Jersey-based Registrar & Transfer Co., which oversees shareholder elections. “A lot of the time we have no idea who’s entitled to vote and who isn’t. It’s nothing short of criminal.”
“In a little-known quirk of Wall Street bookkeeping, with the growth of short sales, which involve the resale of borrowed securities, stocks can be lent repeatedly”.
https://archive.is/PR9Ww#selection-3583.0-3586.0
….”The loans allow three or four owners to cast votes based on holdings of the same shares”.
https://archive.is/PR9Ww#selection-3587.0-3590.0
Drummond later described three specific contested elections where this was known to have occurred. As you can see in the image below, all one needs is a few extra shares to tip the pendulum in a contested election, making the corporate executives and wolf -packs who front-run these predatory schemes millions from carefully facilitated mergers, acquisitions and hostile take overs.
(CARL T. HAGBERG AND ASSOCIATES) “Over-voting is, quite simply, untenable. Allowing it to continue makes a mockery of the idea of corporate democracy. There is ample evidence that people do try to “game” the system, since votes do indeed have value – especially when the voting outcomes have the potential to move the stock price, as often they demonstrably do. (See, for example, “Vote Trading and Information Aggregation” which is easily accessible on the Internet and which documents huge spikes in share purchases near meeting record dates and corresponding sales immediately thereafter). There is also a great deal of evidence that the “gamesters” quite often succeed in gaming the vote, since, (a) as the study pointed out, one can buy votes for about $6 per million votes and (b) vote buyers will vote 100% of the time, while long-term owners tend not to vote at all, which allows the voters with “duplicate voting credentials” not just to go undetected, but to have their way in terms of the election outcomes. It is especially important to note in the context of election “gaming” that the interests of short-term and long-term owners are, almost always, diametrically opposed in election contests”.
https://archive.is/aUv1B
http://www.sec.gov/comments/s7-14-10/s71410-68.pdf
“”The customer doesn’t know this is happening,” says John Wilcox, head of corporate governance at TIAA-CREF, the biggest private U.S. pension plan for teachers. Often, the broker still permits the customer to vote the shares even though they’re out on loan. That policy is not sound. It definitely means that shares can be voted twice.””
https://archive.is/PR9Ww#selection-4015.0-4018.0
But most of the time they don’t actually need to do this, because again, nobody usually shows up to vote anyways.
“It’s invisible,” says Paul Schulman, executive managing director of Altman Group Inc., a proxy solicitor based in Lyndhurst, New Jersey. Most of the time you don’t get overvotes because so many shareholders don’t vote.”
They’ve already been shown to coerce the directors of the DTCC into blocking new technology, costing pensioners literally hundreds of billions of dollars. Pensioners: like your Mom and Dad; those people who worked their whole lives and brought you up; they taught you how to read; they taught you how to write; they took you to school everyday; they turned you into the man or woman you are today; they were there at your wedding; they were there at your graduation; they cleaned your diapers, cared for you when you were a child.
Yes, those people.
This is all provable fact, and none of it is conspiracy. Again, you can click on the image below and it will take you directly to the exact line of text.
Imagine the power you would have if you could manipulate the voting outcome of a corporate election. Directors can exert significant control over the company finances, and they also pour billions into our elections. Just going off the Wilshire 5000, the combined market cap of every publicly traded company in America is equal to roughly $33 trillion, and some of these corporations are larger than most countries.
“How Broadridge and its customers—the bank and broker custodians—adjust overvotes, revocations, and other problems within its system is entirely opaque”. The Hanging Chads of Corporate Voting
If you wanted to influence the outcome of an election, what do you think would be the easiest way to do this? You would probably wait until you could see the results first, right?
Guess what, that’s how they can do it! It’s up to them whether they want to count the votes before, or after receiving the tally’s. Yes, they can literally wait until they know the results, then tabulate everything knowing what the outcome is going to be. If the American people found out a political election was handled like this, there would probably be a revolution the very next day..
… “there is no guidance in the rule (NYSE’s Rule 452) itself or from the Exchange in any other form as to how a member firm is to handle a situation where it receives proxy voting instructions for more shares than it holds in record ownership. Thus a member firm apparently enjoys substantial flexibility when it cannot act on all the instructions received, and in particular it presumably may select at its own discretion which voting instructions it will disregard” . . . (SEC (1991), p. 28)
Vote Trading and Information Aggregation,
These people rig everything, so what makes you think the won’t rig an election too? This isn’t even the half of it. There is much more, if you can believe that..
Let’s say there is a voting discrepancy because these TBTF banks and brokers decided to issue more voting entitlements than actually exist; it turns out that the entity that counts the votes doesn’t even have a fixed procedure for dealing with this problem.
Sometimes they will count the votes on a “first-in” basis, and other times they will count the votes on a “last-in” basis, meaning your votes could be completely discounted in favor of somebody who borrowed stock immediately before the record date, or worse, they could include fake votes because one of their better customers had an interest in the outcome. Again, they own the DTCC, and Broadridge openly admits in their company SEC filings that their relationship with these brokers constitutes as a “Conflict of Interest”
According to the NYSE, these firms have been shown to do this all the time.
“As set forth more particularly below, during the period from about January 2000 to April 2004, the Firm: voted more shares than it was entitled to vote in corporate elections (“over-voting”) in numerous instances“
From, “Economic Warfare – Risks and Responses, by Kevin D. Freeman“
….”the day of the vote there were roughly 17.2 million shorted shares of TASER stock. Thus, even if all of the TASER shares that were sold short were able to vote… there were at least 3. 7 million shares that were undoubtedly counterfeit.
…..”When investigated, however, there is substantial evidence that over- votes are increasingly impacting elections, even if participation by traditional shareholders remains low. In 2005, for example, the Securities Transfer Association reviewed 341 shareholder votes finding evidence of over voting in every single case”.
Let me guess, you’re probably thinking all those citations are old, and it’s been almost 20 years since that NYSE complaint, so something must have been done about this by now?
Unfortunately, no, still to this day in the year 2020, nothing has changed, and they still use the same old system. Just look online and you will see numerous articles and white papers from reputable sources addressing all of the problems outlined in this article.
Just last year in 2019, one investor advocacy group sent several letters to the SEC addressing this strange phenomenon of “over-voting” share entitlements.
Unfortunately, you can’t visit their website anymore because this will happen.
You can read their letter though..
It also looks like their website was recently shutdown
They appear to have published numerous reports on this topic, but even now as of the time of writing, if you try to visit their pdf’s, you will still get this message.
This is what you get when you visit another one of their websites
What does this all mean?
Who knows..
They’ve been at this for more than a decade, so it just seems kind of unusual that you can’t even visit the website of what appears to be one of the most prominent advocacy group’s fighting for change on this matter without risking having your computer being infected with a virus.
Does corporate election meddling happen all the time?
Probably not.
Can it happen? Yes, it’s been shown to happen on numerous occasions, and there has been extensive research published on this fact. The ability to just issue stock loans to investors in the dark and devoid of any public scrutiny is obviously something that creates a multitude of opportunities for misuse; especially when you can fail to deliver — issue fictitious entitlements — which we are about touch on very soon.
“As a result of these NYSE administrative proceedings, the securities industry adopted written guidelines to address this reconciliation problem.These guidelines permit brokers to select one of two reconciliation methods“
The securities industry guidelines that provide two methods of beneficial owner reconciliation should be replaced with an SEC rule that requires pre-mailing reconciliation (finding out which Shares Entitlements Are Fake and which ones are real before letting everybody vote, obviously) as the only method for brokers and other intermediaries.
Street name positions should be reconciled as of the record date (the record date is the last day you are allowed to vote) for each shareholder meeting, in order to avoid discrepancies in tabulating final vote counts and to avoid distributing proxy materials to beneficial owners who are ineligible to vote (Fake Shares).
You see, money is just the icing on the cake for these people. As they say, it comes, and it goes. What is much more valuable is maintaining control over key infrastructure, giving you the power to swing the pendulum in your favor when the opportunity presents itself.
If you have the ability to facilitate a merger through your control of the voting mechanism, not only can you make money for yourself, but you can also facilitate transactions for your preferred customers, whether that be a manager of one of these corporations, or a hedge fund client.
This control over the nations equity supply also applies to pricing. Through failure to delivers, these banks and brokers can artificially control supply and demand through selling entitlements to investors that don’t actually exist.
This can become problematic because it gives you the ability to sell large volumes of stock at artificially inflated price levels. It can also incentivize market manipulation schemes that involve coordinated groups of people pumping up the share price so they can sell IOU’s to unsuspecting investors. This was recently shown to have occurred when a market maker was caught selling fake shares in variety micro-caps using his market maker exception, and it happens more often than you might expect.
TLRY is a great example of a situation where this could be abused. The market is supposed to regulate itself through supply and demand, but if you can just fabricate a parabolic move, then issue shares when there shouldn’t be any shares available in the first place, you’ve essentially just sold people stock at a fictitious price that otherwise would not have existed under normal market conditions.
Other problems could arise when people start lending these IOU’s (also known as a “fictitious loan), which is one of the most egregious forms of financial frauds one can imagine. That would be like loaning someone fake gold 100 years ago, then charging them interest under the threat that if they didn’t pay you would come seize their assets.
Extensive research has been published on this topic by many victims of this fraudulent activity, with even academics, politicians and regulators chiming in on this strange phenomena.
Issuing multiples rights to investors on the same securities — you don’t think they’d do it? They’ve done it before; they do it with everything, so why not equities?
There is so many different options on the same stock that it would probably make your head spin; so many different bonds on the same company; bonds of bonds; GSE’s and ETF’s representing the same group of companies and sectors; bet’s on bets — so why should it be surprising if they would issue more entitlements to shares than actually exist?
Remember, they’ve been shown to rig everything else. They rigged the municipal bond market, they’ve rigged the treasury bond markets; they rigged the foreign exchange market; they rigged the metals market; they rigged the energy market; they rigged the Credit Default Swap market; they rigged the mortgage market; they rigged initial public offerings (and probably still do — it is known); they rig analyst ratings; they’ve practically rigged every market in existence.
They already entitle their clients to fictitious votes, and it’s not like it would be hard. Remember, they own the clearinghouse, and enjoy a virtual monopoly over the stock market, with 39% of deposits concentrated into only 4 banks, and 50% of the prime brokerage industry controlled by only three companies. Considering everything else they’ve been caught doing in the past, the real question we should all be asking ourselves is why wouldn’t they do something this? They don’t even care about their own clients, referring to them as “Muppet’s”
Wanna know something funny?
It’s already happened..
Part 2
Banana Republic
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE DOLE FOOD COMPANY, INC. STOCKHOLDER LITIGATION
“There were 36,793,758 shares in the class. At the conclusion of the claims process, however, claimants had submitted facially valid claims for 49,164,415 shares“.
…..”Despite diligent efforts, the settlement administrator and class counsel could not resolve the discrepancy“.
“Dole held a special meeting of stockholders on October 31, 2013. A narrow majority of 50.9% of the disinterested shares voted in favor, 21.2% voted against, 10.5% abstained, and 17.4% did not vote. The transaction closed on November 1, 2013“
Vice Chancellor Laster, Memorandum Opinion
During the financial crisis, David Murdock was in deep on debts. After a leveraged buy-out of Dole Foods, years of philanthropic projects, and the recent completion of his Westlake Wellness Center — a 700 000 square foot luxury hotel directly across the road from Dole’s Corporate headquarters — it was beginning to look like he had finally stretched his finances close to the breaking point.
(APRIL 9, 2008, LA Times) “The asset sales may relieve pressure on 84-year-old billionaire Chairman David Murdock to make an emergency cash infusion into the Westlake Village-based company. Credit-default swaps suggest a 74% chance of default in the next five years, according to a JPMorgan Chase & Co. valuation model“.
https://archive.is/etRGC#selection-1889.0-1892.0
At the time, the high risk bond market had practically frozen, causing many of his loans to go into default.
Fortunately for him, he had formed long term relationships with some of his lenders, so they decided to come to his rescue.
But the terms were far from favourable. Pictured below is a snapshot from one of those agreements.
13.87% interest on $349,903,000 — an astronomical figure. That’s $48 000 000 per year in interest, or $240 000 000 over a 5 year period, and this was only one of the notes. Just to put that into perspective, a Bank of America Travel Rewards Card charges 17.24%.
The note was secured by his newly built Westlake Wellbeing hotel.
(August 30, 2007) “Bond investors may wish Murdock would spend less time on his health crusade and more improving Dole’s bottom line. Last year, the company lost $89 million on $6.2 billion in sales. The assessment of its $2.4 billion in bonds and bank debt by Fitch Ratings ranges from “speculative” to “high default risk.”. Bloomberg
“Moody’s expects leverage to remain high in support of Mr. Murdock’s strategic initiatives, such as construction of a wellness center and acquisition of other food product lines with perceived health benefits”.
https://archive.is/xAthi#selection-1543.184-1543.395
To deal with the crushing debt load, Dole Foods was forced to sell several large assets in 2008/09.
“Dole set a goal of selling $200 million in non-core or underperforming assets in 2008, which we have exceeded. During 2008, cash consideration related to our asset sale program totaled approximately $236 million, including sales of land in Hawaii, our fresh-cut flowers headquarters building in Miami, Florida, our citrus and pistachio operations in California, two farms in Chile, a land parcel in Turkey, two older refrigerated ships, a distribution facility in Europe, our JP Fresh and Dole France subsidiaries, and additional acreage located in California. For 2009, we have set a target of $200 million in asset sales. On January 29, 2009, Dole announced progress on our asset sale program. First, Dole closed the first phase of the sale of our flowers division. With the closing of the first phase, Dole completed the sale of our flowers business and retains only certain real estate of the former flowers division to be sold in the subsequent phases of the transaction. Second, Dole closed on the sale of certain banana properties in Latin America. Third, Dole signed a definitive purchase and sale agreement to sell certain property in North America. The sale closed during March 2009. Dole received net cash proceeds of approximately $83 million from these three transactions. When all phases of the transactions are complete, net proceeds to Dole will be approximately $130 million. The cash proceeds will be used to pay down Dole’s debt under its senior secured credit facilities and/or to reinvest in the business. Pending reinvestment, cash proceeds will be used to pay down Dole’s revolving credit facility”.
https://archive.is/qMt7a#selection-4997.3-5004.0
He was even considering selling the entire company at one point.
But because the economy was so weak at that time, finding buyers wasn’t as easy as it was before the financial crisis, and he was forced to sell equity interests instead, offering 41% of the company to the public at a price of $12.50 per share.
Headstrong, stubborn, but still full of energy at the ripe age of 86, he liked being the boss, and wasn’t used to taking orders from other people. It was even said that he preferred to be addressed simply as “Chairman” during the company board meetings.
He definitely earned that title, though, going from fighting in World War 2 and later homelessness, to becoming one of the richest people in the world.
He was your picture perfect example of an American business magnet.
“Murdock keeps a close watch on all of his far-flung real estate, racking up some 200,000 miles a year on his Bombardier Global Express corporate jet. Among his staff he is known for his attention to every detail”.
https://archive.is/zYjwi
The company’s IPO prospectus was so long that if you had tried to scroll through the entire page, it probably would’ve have taken you 5 minutes straight..
Through out the life cycle of Dole’s existence as a public company, Murdock seemed to be always on the look out for a way to either sell the company, or take it private again, entertaining various deals along the way, but none of them materialized.
Dole Food Co Inc – ‘IPO’ on 10/26/09
Most of the IPO proceeds went towards paying off his personal debts related to the Wellness Center.
Just to give you an idea of how up to his knees he was on that hotel, he only had to give the company an extra 415 000 shares for his 85% ownership interest.
At a cost $450 000 000, this was a massive hotel that included 267-rooms spanning 700 000 square feet, with a 40,000-square-foot-spa and 28 treatment rooms. This all covered a span of 20 acres.
That’s 26 football fields.
It was his prized possession, and old-school as he was, Mr. Murdock didn’t want somebody else owning a project he had worked so hard to build when it was right on his land.
(CNBC) “But his latest venture is called the WellBeing Institute, a $450 million project he just opened inside the swanky Four Seasons Hotel in Woodland Hills, Calif., and directly across the street from the red-brick adorned world headquarters of Dole Foods. Just what is this place?” link
The other 15% was owned by Wellpoint Inc., but that’s neither here nor there.
“WellPoint Inc., one of the nation’s largest health-insurance companies, has paid $50 million for a 15% stake in the institute. A second location is set for 2008 in a Four Seasons resort on the Hawaiian island of Lanai. Mr. Murdock owns the resort and all but a tiny part of the island”. wsj
This is where things get interesting.
He still hadn’t fully paid off the rest of his debts connected to that hotel, which is where you begin to see the banks come into the picture.
In order for Mr.Murdock to pay off that hotel, he would’ve been forced to sell his controlling interest in the company, but because some of these banks had worked with him for so long, they wanted to keep him around, so they facilitated a transaction that was able to solve this problem.
The transaction allowed him and his partners — the banks — to maintain a controlling interest in this massive 150 year old company; what at one point represented 1/4 of all banana sales worldwide; 131,000 acres of farms and other land holdings; six modern corrugated box manufacturing plants in Latin America and Asia; and the largest dedicated refrigerated containerized fleet in the world representing 14,800 refrigerated containers, and 11 owned and 13 chartered vessels. In short, this was an empire, and you don’t just give something like that up easily
They set up an off-balance sheet entity that they called, “MACES Trust“, and the deal was that his creditors would hold on to the stock and use it as collateral for a loan. Now that the company was public, it was easier to sell this ownership interest, whereas before finding a buyer could be a long and arduous process.
You see, contrary to what most people might naturally suspect, these banks were much more than just Mr. Murdock’s disinterested lenders, and not only did this come out in court documents, but it is also clearly displayed on their balance sheet.
Just take a look at the interest Dole was being forced to pay these banks.
This was Mr. Murdock’s ownership percentage before the leveraged buyout. As you can see, it’s only 23%.
10-K for 2002
Filed on Wednesday, 3/26/03, at 8:08am ET
In 2007, the interest payment practically doubles, almost touching $200 million in 2007.
Don’t forget, this is on no capital intensive work or investment whatsoever. Yes, it costs money to run a bank, but nothing like running Dole Foods, the largest producer of fresh produce in the world.
There is a lot of work, a lot more risk, and hell of a lot more blood, sweat, and tears that goes into bringing the world their fresh produce. As it was noted before, Mr. Murdock clocked 200 km on his corporate jet on any given year, and as to the workers toiling his fields in those overseas plantations, God only knows how many back breaking steps they had to take in the hot sun just to bring us that fresh fruit. Compared to that, along with the shipping, planning, training, and all the manpower that goes into Dole, the banks virtually did nothing for this money.
You don’t think they wanted to keep Mr. Murdock in power? Murdock was their man. They still had a lot of money on the line, and there’s nothing that a bank hates more than uncertainty.
Notice how you never see the “or loss” sign beside the interest payments?
God’s work, right?..Who knows; the lord works in mysterious ways as they say.
The deal was that he would transfer ownership of the stock — again, 27% of the great Dole Food company, founded June 2, 1851; 168 years ago — on November 1st, 2012, which you see happening in the snapshot below.
This is from his first 13-D following the IPO. It again shows the parties to the “Trust” offering — “MACES Trust”.
The creditors transferred the money in exchange for share collateral at one of Sullivan and Cromwell’s offices in Los Angeles.
They even felt the need to specify that delivery of the stock did not constitute as a payment of interest.
And you can see here that he paid down a large portion of that debt with the proceeds of the “Trust” offering.
This was one the original notes issued in connection with the leveraged buyout; the same note he paid down with the IPO proceeds.
Listed below are the buyers of one these notes, or to put it simply, the banks that loaned Mr. Murdock the money.
It was the same day Mr. Murdock took the company private.
But back to “MACES Trust”.
Why would his creditors pay $21 million dollars for IOU certificates (THE MACES) on those pledged shares in the trust? And why does this “Trust” offering provide an option to buy an extra 3 600 000 shares? That’s virtually indistinguishable from an over allotment-option. Why would they feel the need to issue an over allotment option for shares that are not even going to be registered?
What is going on here?
Let’s take a step back.
Who really owns this company?
Is it Mr. Murdock?
That was his ownership before the merger: only 23%.
Where did the other 3/4’s come from? It didn’t just appear out of nowhere.
You can see in document snapshot above that the majority of the shares were purchased with borrowed money.
After careful analysis, you will also see that the majority of the earnings from this massive fruit empire actually went to the banks, and not Mr.Murdock.
In fact, when you add up all the interest payments from 1998-2009, you get $1.6 billion..
Wanna take guess how much net income Dole Food’s and Mr.Murdock generated over that same time period?
Only $630 million
Yes, the banks were making almost triple the net income that Dole was making.
Unfortunately, we don’t get to know who owns all these promissory notes because debt securities are typically not subject to the same beneficial ownership reporting rules as equities. Banks usually buy promissory notes so they can sell them to other people, usually their depositors. For all we know, it could be Lord Rothschild himself that owns all those notes, and we would have no way of knowing. Hey, you never know. 52% of the equities are controlled by 1% of the population; 35% of which is owned by foreign investors.
Are you starting to understand how the system works? Technically nobody actually knew who was taking in the majority of the profits from the largest fresh produce manufacturing company in the world; a company representing 1/4th of all banana sales WORLDWIDE.
If you own a company, but you only receive 1/3rd of the profits (after paying for all expenses, INCLUDING taxes), who is the real owner?
Not you..
Mr. Murdock and his banking partners did eventually land that sale they were looking for.
And the proceeds were used to pay off their debts
But he was forced to give up Asia to the Japanese.
Good timing. You can see in the snapshot pictured below that the record date was only 6 days before he was set to lose his controlling interest. Remember, he was due to transfer ownership of that 27% stake to his “creditors” on November.1st.
And you can see here that he no longer had a controlling interest in the company.
Then something miraculous occurred: he somehow managed to buy back the company only one year later..
And he only had to pay $1.00 more than the IPO price..
After fighting to remain in control during the worst financial crisis since the great depression; offering to sell the whole company for as low as $700 million; and setting up this unusual trust entity that allowed him and his bankers to initiate a sort of unregistered mini off-balance sheet side-deal, weird IPO beside the real IPO kind of transaction (“MACES Trust“); all the while demanding to be addressed simply as “Chairman” at their company board meetings, he then sold his controlling interest, but miraculously bought back the company one year later, AND he got to keep the Wellness Center??
That’s one heck of a deal, don’t you think?
You might also be wondering how he was able to buy it back so easily. Don’t worry, you’re not alone on that front; soon after the deal closed he was quickly sued by a consortium of activist investors. One of them bought 8.3% of the company only a few weeks before the vote. It was even claimed that his “creditors” (partners) privately believed the company was worth $23 per share.
(WSJ, Nov. 22, 2013 2:31 pm ET) “In all, holders of nearly 14 million shares, more than 25% of all Dole shares not owned before the buyout by CEO David Murdock, are seeking more money in court. That makes Dole’s one of the largest appraisals ever in Delaware, where most such suits are brought, according to a review of court filings”.
“Dole held a special meeting of stockholders on October 31, 2013. A narrow majority of 50.9% of the disinterested shares voted in favor, 21.2% voted against, 10.5% abstained, and 17.4% did not vote. The transaction closed on November 1, 2013”
During Dole‘s first two years as a public company, they only netted $4.2 million under Generally Accepted Accounting Principles…
Wanna take a guess how much these banks ‘netted’ over that same period of time? (technically they don’t “net” like everybody else since they don’t expend anything — at least not compared to a company like Dole Foods, the largest producer of fresh produce in the world)
$305 million..
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE DOLE FOOD COMPANY, INC. STOCKHOLDER LITIGATION
“There were 36,793,758 shares in the class. At the conclusion of the claims process, however, claimants had submitted facially valid claims for 49,164,415 shares“.
…..”Despite diligent efforts, the settlement administrator and class counsel could not resolve the discrepancy“.
Wanna know something else? Only the the banks and brokers can view the list of eligible voters. Remember, they are the real stockholders — not you. The shares are registered in their name, and you are just owed an “entitlement”, meaning you will never know if your vote was actually tallied.
They even tell you this in Dole’s articles of incorporation. Also, don’t forget, these banks and brokers clear and track everybody’s positions through their ownership of the DTCC.
(Securities and Exchange Commission, Investor Publications)
“Under street name registration, your firm will keep records showing you as the real or “beneficial” owner, but you will not be listed directly on the issuer’s books. Instead, your brokerage firm will appear as the owner on the issuer’s books”,
“Under Article 8, the beneficial owner of the shares held in a custodial account with an intermediary (such as a broker) is considered to be the holder of a “securities entitlement” in a “financial asset” which is ultimately held by a depository”
Marcel Kahan, The Georgetown Law Journal
Part 3
The Vote
Only 0.9%. That was a tight margin of victory, wasn’t it?
As the banks and their customers were reaping the majority of the profits from this massive fruit empire, they also took delivery of 24 million shares — 27% of the company — from that “Trust Offering” on November.1st, 2012, exactly 1 year before the vote. Unfortunately, we have no idea who received these shares because they are not required to report this. They just said institutional investors, and we know it wasn’t the banks because it never shows up on any of their quarterly holdings reports.
You do see Goldman report a put call pair, which could potentially indicate that they sold shares for somebody else; a practice commonly used by insiders to get around rules that keep management from trading in their own company’s stock, but that’s neither here to nor there.
4th quarter 2012
3rd quarter 2012
Dole Foods — the largest producer of fresh produce in the world — also wasn’t required to register these shares, so they were issued without a “restrictive legend”.
Usually you have to file a prospectus and get it approved by the SEC in order to have that restrictive legend removed, but exceptions are sometimes made for institutional investors if enough time has passed since the date they were purchased.
But back to the vote.
Let’s just look at the facts
-the banks and their customers made $1.5 billion from 1998-2009, while Murdock — the supposed owner of the company — technically only made $635.5 million under generally accepted accounting principles. That’s a fact.
-the margin of victory was only 0.9%
-Shareholders filed a lawsuit, and won, but when it came time for the claimants to be paid, it was discovered that there was 12.3 million unauthorized shares in circulation (“entitlements“), and nobody could explain why.
-Experts have stated explicitly that it is impossible to determine the victor in a tightly contested corporate election.
-The banks were shown to have colluded with Murdock to manipulate the price of Dole; the same banks that control the DTCC, list themselves as the true record holders of the majority of the equities in America, and have been shown on numerous occasions that they will rig practically every major market in existence. This is a known fact, not a conspiracy.
The DTCC says they stopped tracking who owned the shares three days before the vote, and that all 12.3 million extra shares somehow just appeared in peoples accounts during this short period of time, but we technically have no way of knowing that. For all we know, those shares could have been circulating the whole time, because again, they own the clearinghouse, they own the regulators, and they own the banks and brokers that also legally own all the stocks.
There is even a chance that the “institutional investors” who purchased those “MACES” decided to hedge their bet by borrowing shares from one of those various pension funds so they could take a short position, and then when they were asked to return the shares, the banks just credited their accounts. We have no idea, all we know is that there was $167 million worth of extra stock, and for some strange reason the only excuse they have is that they didn’t have the technology or the infrastructure in place to identify who actually owned the stock.
Take a guess what their explanation was?
That it would be too hard.
Seriously, that’s actually what they said. Check this out.
They even refused to cooperate with the court, and the story was that they had no way of actually knowing who owned the shares. They also weren’t prepared to work with each other to figure it out either, if you can believe that. As we know, courts force people to do all kinds of outrageous and redundant things, but when it comes to figuring out who owns the largest fresh produce company in the world, it apparently just wasn’t humanly possible.
When they say DTCC participants, don’t forget: 70% of the prime brokerage industry is controlled by 6 companies massive corporations.
They don’t just rely on the DTCC by the way. They have their own clearing departments, and some of them are massive. In the year 2000, Goldman Sach paid US$6.5 billion for Spear, Leeds & Kellogg, L.P., a securities clearing, execution, and market making firm — a company with origins that go back as far as 1932.
(WSJ) “In addition, Spear claims to run the country’s largest clearing business by number of stock and options trades cleared. Acquiring Spear vaults Goldman into the leading ranks of clearing brokers alongside Bear Stearns Cos ., Merrill Lynch, and Donaldson Lufkin & Jenrette (now being acquired by Credit Suisse First Boston“.
https://archive.is/1AE1R#selection-2167.0-2183.13
From Morgan Stanley’s Annual Report, 12/31/18
They spent billions on these services..
JPM’s 2018 Annual Report
All of these massive corporations own clearing divisions — obviously..Yet apparently finding the actual owners of these stocks is not worth the time, and would require a, quote:
“Herculean effort” for which “The journey down the rabbit hole would require mapping the entire warren“
hmm…
Interesting choice of words..
Guess who the courts told Dole to pay first? The banks. Remember, they are the real record holders. The banks then distributed the merger consideration to their “beneficial owners“.
The reason why the courts chose the banks as the ones who would receive the merger consideration was because they had access to all the records, and specifically:
“the terms on which shares are borrowed“.
If that’s the case then what was the problem? You really think these mega-banks can’t keep track of who owns what for 3 days?
Common, you’re smarter than that.
Sometimes it helps if you simplify things, so let’s do that.
How would reconcile this?
Let’s say there was a merger, and somebody bought that one share, but there was two shares in circulation.
How would you reconcile that??
The broker would give the money back to the person who bought the shares from the short seller, then give the shares back to the original owner. That shouldn’t be complicated for these massive companies, and if it is, we’ve got a big problem now, don’t we?
Those are facts. The largest bank in America is also a two-time felon. That’s another fact. Meaning, the corporation itself was indicted — not the people who run the corporation, but the corporation.
It makes no sense, but that’s what happened. Wanna know another fact: the guy who headed this corporation through both of these indictments wasn’t even fired; he still sits on the board, and he’s still the CEO, and get this, while his firm was being investigated by the New York Fed, he sat on their board the entire time; the only institution in America that is legally allowed the manipulate the daily interest rate of a government treasury bond.
You definitely wouldn’t want the wrong person in control of something like that. Technically all they would have to do is instruct the New York Fed to buy their treasuries at inflated prices during their intraday Open Market Operations, repeating the cycle over and over again.
Remember, the New York Fed is no different than any other government contractor, and what do government contractors usually do best? Rip off the government. Why? Because politicians are usually misinformed about the industry at hand, and sometimes even corrupt.
This is a big problem in construction. A recent example being the Sturgeon refinery in Canada that ended up costing taxpayers 8 times more than a similar sized refinery built by the private sector, that when all was said and done, actually ended up being the most expensive oil refinery ever built.
It produces a whopping 40,250 bbl/day.
The CEO of a two time felon (“The Company“) also sat on the New York Feds board while the two time felon (“The Company“) was being investigated, so it’s not like it should be surprising if there is something illegal going on behind the scenes.
The image below lists all the biggest players in the “tri-party” repo market, another one of Wall Streets strange industry terms that they use to describe the short-term lending market. The “tri” is just meant to signify that there is a clearinghouse involved. As you can see, they loan money to themselves; money that they usually get from the fed.
As of now, money market funds are able to borrow from the fed at 1.5%, which means if you loan this money out to the public at 6%, your margins will increase by a factor 300%. Just imagine if Dole’s margins went up that much?
Does the New York Fed assist these banks with their fraudulent activity? Who knows. What we do know is that the CEO of a twice convicted felon (“The Company“) sat on the board of the New York Fed while they were being investigated. They also fired one of their key bank supervisors for daring to suggest that one of their member banks didn’t have a clear conflict of interest policy, and this was not long after its member banks had essentially pumped and dumped the entire country of America — the largest economy in world history — into, as Ben Bernanke put it, the worst financial crisis in America history.
The member bank’s argument was that they were not a “depository institution”, and thus did not fall under the scope her investigation, even though they were being regulated by the New York Fed and had recently gained access to the Federal Reserve discount window; something that was unprecedented for an investment bank at that time.
And like most crooks, apparently they even threaten people with violence.
These are your owners of the Depository Trust and Clearing Corporation.
But it’s all just so terribly complicated, you see. Like when T. Rowe Price, a firm that manages $1.3 trillion in assets, voted “No” to the Dell Computers take private merger in 2013 — but found out later that its proxy adviser, “ISS” (Institutional Shareholder Services), “accidentally” voted “Yes” — the whole situation was just…..well….
complicated…
In fact, it was so complicated that when Matt Levine — a well known financial writer for Bloomberg News and recent Goldman Sachs alumni –wrote about this strange phenomena of spontaneous vote switching, he mentions the word “complicated” 14 times.
You see, this whole issue of double-triple-quadruple voting, fake shares, and votes mysteriously changing from “No”, to “Yes”….
…it’s just…..
….complicated…
….You know…
…You get it, right?
..Complicated…
Unfortunately, we will never truly know what happened because they own all the infrastructure that facilitates these transactions. They also claim that it is not humanly possible to know who the original entitlement holder truly is, even when it’s the largest producer of fresh produce in the entire world, a company that at one point represented literally a full quarter of banana sales worldwide, because figuring this out would require a, quote:
“Herculean effort” ..for which.. “The journey down the rabbit hole would require mapping the entire warren”.
Since nobody can truly know, and all of this is just too hard to figure out, all we can do really do at this point is speculate, so do you wanna know what probably happened?
Mr. Murdock and his lenders set up the trust so they could maintain a controlling interest in the company long enough for them to sell Asia, and when it came time to take back control from all the pension funds and institutional investors, they just rigged the vote. It’s not a coincidence that they Asia to ITOCHU right around the time that Murdock transferred the shares from that “Trust Offering” to those “institutional investors”(whoever they are).
If they cared that much about maintaining control over this massive fruit empire (why wouldn’t they), and with 12.3 million extra share entitlements spontaneously appearing in peoples accounts, and when you consider the fact that him and his lenders were shown to have — by all intensive purposes — defrauded their investors, why should it be so hard to believe that they would rig the vote too? Remember, the margin was only 0.9%, and many people were already against this merger before it closed. Three hedge funds even bought shares before the vote for the sole purpose of suing the company for an appraisal.
Another possibility is that somebody shorted fictitious shares during the days leading up to shareholder vote. As you can see in the chart pictured below, the price temporarily spiked above $13.50 — the price Murdock paid to buyback the company. Considering the tight margin of victory, this could indicate that somebody knew Murdock was going to win before everybody else.
You can see the trading volume spike significantly in the two days leading up to the shareholder vote.
There’s also a chance that these extra entitlements were the product short sales by the “institutional investors” who held the “MACES“. This is actually common practice for convertible note holders. They will buy the notes, then immediately take a short position to hedge their bet, a practice known as convertible bond arbitrage. But again, we can only speculate at this point because the DTCC and the court of Delaware say it is impossible to truly know who the original entitlement holders are, which thus makes it impossible to know why there was 12.3 million extra “facially eligible” shares in circulation before the merger, even when it’s the largest producer of fresh produce in the world, founded June 2, 1851, 168 years ago, representing 1/4th of all banana sales worldwide; just like it is impossible to truly know who made the $305 million in interest during the first two years of Doles existence as a public company.
It’s all just so terribly…..complicated…
You understand, right?
It’s…..complicated..
When they steal money from our grandparents, print fake shares, and issue phony voting cards…
It’s just …………………………
……you wouldn’t understand…..
It’s……
…………………………………complicated…..
Part 4
Entitlements
Back in 2008, and in the middle of the financial crisis, Marc Cohodes ran a large hedge fund that specialized in short selling. He had been in the business for 24 years, and he seemed poised to make big time profits from his short positions. Unfortunately due to an unusual turn of events, his fund ended up doing the opposite of what he and his partners expected, and he was soon forced into liquidation.
He claims that as the entire market was in freefall, several of his short positions were spontaneously closed out by his broker under what he describes as “mathematically impossible” circumstances, and in his leaked deposition, he says that if not for these strange close outs by his broker, his fund would have made upwards of $1 billion.
In this leaked testimony, Mr. Cohodes revealings something stunning. He says that even after informing his broker of news that he had secured a guarantor who was willing to take ownership of his short positions — thus transferring liability away from his broker to a third party — they still closed him out anyways, even going so far as to take full control of his accounts against his will.
“I think the securities lending market is just like the mob. I think it’s completely rigged. It’s a completely manipulated black hole”.
It’s important for you to understand that there is a reason why you won’t find anybody writing about this online. In fact, other than archive.org and the original place it was leaked, this article is probably the only place you will see this deposition. Most of the names have been redacted or replaced with the word “they”, or “them”, and some of the dubious objections and irrelevant questions have also been removed for the sake of brevity. Nobody else will show you this so candidly online — for obvious reasons.
“BNP was prepared to take all our positions and they wouldn’t release them. So I scrambled to find, you know, someone to back us since they wouldn’t, and I arranged for BNP to take them and they refused to release them”.
(continued) ……”the deal was you could have made a cash deposit to ease house call, BNP was prepared to come in and take all our positions and they wouldn’t let it happen“.
Q. All of your positions in every account?
A. Yes.
Q. And do you have any understanding as to why that was?
A. Never got an answer.
(continued)…..”I don’t know the prop desk. I know that Bill Duhamel and a guy named Lee Hicks were meeting with us to go over our positions because they were going to take them, take the positions or give us money to solve the thing”.
….”That was described in this book where the guy went to the bathroom and threw up somewhere in there. Duhamel went to the bathroom and threw up because he was so disgusted by what was going on, because he saw markets falling apart, and the names we’re talking about were going straight up. And Duhamel suggested to me that I talk to them and tell them someone’s frontrunning the thing, which I did, and then that didn’t work out so well either”
I think the securities lending market is just like the mob. I think it’s completely rigged. It’s a completely manipulated black hole, non- transparent market .
Q. Now, when you say you think they’re just like the mob, are you referring to them?
A. Yes. I think they are like the mob .
Q. And are you referring to them in particular or them and the rest of the market altogether?
A. I think they are a racketeering entity that does whatever they can to make a dime without conscience, thought, foresight or care about ramifications. I think they are cold-blooded and could care less about the law. That’s my opinion. I think I can back it up.
Q. And that became your opinion when?
A. When they put us out of business.
Q. In 2008?
A. Yes
Why would anybody do something like that? Someone comes along and says they will act as the guarantor for a customer you’ve had for 24 years — take all that baggage off your hands — and not only do you say no, but you then proceed to take full control of your customers account and close out all of their positions. You are no longer liable, so what could you possibly have to gain from doing that? Cohodes later went on..
And the thing that just gets me to no end was this guy **** was leaving in two weeks . He was retiring in two weeks, and he’s the guy who made the call to do us in. And he was two weeks away from retiring. So why wouldn’t he just say, “You’ve been a customer for 24 years. You pay us $100 million in stock loan fees a year, right? You clearly have it right .
“Why did they have to do us in? And this guy was leaving in two weeks. And I begged him — oh, it’s troubling for me but I begged him to leave it alone, but they didn’t, so —
Q. I understand it’s upsetting. I’m going to just going to ask you a few more questions about it . I move to strike your last answer —
A. Okay.
Q. Is it accurate that if they had not made that house call, looking back on it, or had just waited until couple of weeks and not forced your firm to cover its positions, essentially your investment strategy would have proved right and you would have made even more profits from what you already made for the year.
A. We probably would have maybe another billion dollars, with a B. We would have made fifty percent more at least .
Q. Now, you said you had to close out the positions because they made you close out, correct?
A. Yeah. And on those subsequent days, they actually took over the accounts. They actually took over them.
Q. And started buying back the short positions?
A. Uh-huh.
Q. Is it accurate that it was also possible to meet the house call by bringing in new capital such as making a cash deposit into the fund?
A . Possible, yes .
He then goes on to suggest that he believes there was a chance that they had issued his firm fictitious share entitlements, using an old industry term, “naked short selling” to describe this practice — a catch phrase created decades ago that has since fallen out of favor in the financial community.
Well, we knew — we knew that we were paying large sums of money for borrowed stock, so we knew we didn’t have naked positions, Copper River, but we also wondered what would force them to act so aggressively and heavy-handed over such a short period of time in a stock market that was basically in free-fall and not give us rationale. So we assumed — assumed, didn’t know — that this could have been an issue with them.
Q. By “this,” you mean that there were naked short positions?
A . Yeah, yes .
Q. And were you trying to — when you said you tried calling ***** fifty times, is that one of the things you wanted to ask him?
A. I wanted to ask him, what the fuck is going on, that ‘ s what I wanted to ask him, and “What are you doing?”
Q. Did you want to ask him if they had a naked short position?
A. Yes, among many things, yes. . I mean, basically the theory was by them putting us out of business, if — and that’s a big “if” because I don’t know — I’m not privy to what they do — by a putting us out of business and forcing us to cover, would that have solved their issue, their naked issue because they had no economic reason to do what they did, and they caused us an awful lot of harm. That ‘ s for sure . BY MR. SOMMER:
Q. Did you try discussing that with ***********?
A. Yeah, yes, we did.
Q. And did he ever give you any concrete information in response?
A. Yeah. The quote he told me, and I’ll never forget it, is — he said, “Sometimes when there’s a house fire, you end up burning down the block.” You know, and what I implied from that was that we were an unintended consequence of what was
He then goes on to describe margin calls and how they influenced his brokers unusual decision to suddenly close out all of his short positions — in the middle of a financial cataclysm not seen since the crash of 1929 — putting him and fund out of business.
What is a margin call, to your understanding?
A. Well, there’s different well, in general terms, there’s a Fed margin call and then there’s a house margin call. The house margin call is subject to the house and Fed margin calls, that’s nonnegotiable . That’s subject to the government. So if you have a Fed margin call, that’s the government, and you have to meet it. If you have a house margin call, it tends to be negotiable, and if the house says, you know, there’s no negotiation on it, then you got to meet it.
Q. Well, when you’re referring to a house margin call, the house that you’re referring to is whoever is extending credit, right
A. Right, the brokerage firm
Q. So in the case of the margin calls that faced your firm in September ’08, the house was ****** & Co., right?
A. Yes
Q. What were the what’s your understanding of the circumstances that were occurring in the stock market that led to the point where your firm received a margin call, a house margin call from ****** & Co.?
A. Well, that weekend before, Lehman went bankrupt . I think Lehman went bankrupt or Lehman went bankrupt on a Monday. We had collateral securities and cash at Lehman Brothers International
Q. Was that in London?
A. That was in London, LBIE — that was locked up, confiscated, whatever — lost access to that. That wasn’t a problem. I mean, it was a problem, but it wasn’t that big a problem. So I think the markets went down Monday or Tuesday or maybe Wednesday, and then the government, without warning on Wednesday or Thursday, put through a must-cover, that Reg SHO deal must-cover in three days .
Q. There was an amendment to Reg SHO?
A. Yes. There was an amendment that was basically put through Wednesday at night, in the middle of the night, and immediately hit the next day. No, you had three days. So then the stocks we were involved in that had that went up. That still wasn’t a problem. The next day, the government banned short selling in financials or financial- related, and then the market really went up. And that was the day that they called us and said “We have a problem.” We said, “Okay. How do we fix this?” —
(continued)
A. Yeah, Lehman went bankrupt and the government put through two emergency rules back to back .
Q. And would it refresh your recollection if I told you that the second one of those, the banning of short selling of approximately 800 stocks, went through late on a Thursday night and was announced or disclosed very early on a Friday morning of the same week that Lehman Brothers failed?
A. That’s probably right, yes.
Q. So that problem started all in that week?
A. Yes.
Q. And was it over like that week and the next — so the Friday of that week is when you first had a problem with ***** & Co. telling you
A. Sort of that Thursday
Q. — that you got a house margin call?
A. Sort of that Thursday, that Friday. And one of the problems was because the stocks they said were acting erratic, they changed the haircuts on our loans, meaning if our multiplier was .15, they’d change it to . 5 . So not only did we have a house call, they said instead of putting up .15, you now have to put up .5. So what should have been a small issue was a huge issue because they changed two things on us — two things they didn’t change, two things changed on it. One, we lost a shitpot full of money; and two, they said because we lost a shitpot full of money, we need to have a whole lot more collateral. So it wasn’t a Fed call; it was a house call .
Q. It started with you losing a bunch of money because the stocks that you were short went way up in value; is that right?
A. Yes.
Q. And were some of those stocks among those that the government banned short selling in, some of the stocks you were short in?
A. Not — some, but not really.
It was more other shorts were getting killed in the finance stocks, so they were covering anything that they could. The government tried to basically orchestrate a short squeeze, which they did for two days .
Q. Is it accurate to say, I mean, just hypothetically on that Friday and not knowing what the future holds, if the stocks that your firm was short had continued to increase at the same rate for the next couple of weeks that your firm could have lost everything on those investments?
A. That’s a stretch, but hypothetically, you could say that.
Q. And is it also accurate hypothetically to say that if that situation had continued and the stocks that your firm was short continued to go up, that eventually ****** & Co. could be left essentially in a money-losing position where it was losing the money because your firm no longer had any cash?
THE WITNESS: Well, to frame it, frame the argument, by then, we were $2 billion of a fund; we had 2 billion. And coming into that Monday, we were up 30 percent for the year. So we had a pretty big cushion and we were doing well before let’s just say the shenanigans went on. Hypothetically everything the same, okay, when people say they short stocks they have unlimited risk, I totally get that. The problem began that Monday of that next week when the market completely and utterly fell apart, and as the market was literally going down the drain, our shorts were going through the roof.
BY MR. FLOREN: Q. The stocks that your firm was shorting?
A. Yes.
Q. And you thought that was just really bizarre and should not have been happening, correct?
A. Mathematically it’s impossible for that — I mean, I can remember them closing us out of American Capital Strategies at $33 on that Monday, and when they stopped doing whatever they had to do, when the smoke cleared, we finished covering the thing four weeks later at 2, something like that. We finished covering it at 2 but they took us out of eighty percent of our position in the thirties, and when they were done, we covered at 2. They took us out of Tempur-Pedic at 16, covered that, the rest of it four weeks later, at 3 . mean, it was insane. So it’s kind of like I played the entire thing for a complete collapse, got the collapse and was closed out, closed out right before and during. And then after they completely did me in, said, “Oh, you know, we’ll let you go.”
Q. If **** & Co. had not made these house calls and had extended you more credit during this time period —
A. We didn’t need more credit. All they had to do was not make the house calls.
Q. But wasn’t the credit at issue is the margin requirement of a short position, correct?
A. There’s a Fed call which we were in compliance of — that’s the government and then there’s a house call. The house call is at the discretion of the house. And the thing that just gets me to no end was this guy **** was leaving in two weeks . He was retiring in two weeks, and he’s the guy who made the call to do us in. And he was two weeks away from retiring. So why wouldn’t he just say, “You’ve been a customer for 24 years. You pay us $100 million in stock loan fees a year, right? You clearly have it right . ” Why did they have to do us in? And this guy was leaving in two weeks. And I begged him — oh, it’s troubling for me but I begged him to leave it alone, but they didn’t, so —
Q. I understand it’s upsetting. I’m going to just going to ask you a few more questions about it . I move to strike your last answer —
A. Okay.
Q. Is it accurate that if ****** & Co. had not made that house call, looking back on it, or had just waited until couple of weeks and not forced your firm to cover its positions, essentially your investment strategy would have proved right and you would have made even more profits from what you already made for the year.
A. We probably would have maybe another billion dollars, with a B. We would have made fifty percent more at least .
Q. Now, you said you had to close out the positions because ****** made you close out, correct?
A. Yeah. And on those subsequent days, they actually took over the accounts. They actually took over them.
Q. And started buying back the short positions?
A. Uh-huh. (answering yes, “uh huh”)
Q. Is it accurate that it was also possible to meet the house call by bringing in new capital such as making a cash deposit into the fund?
A . Possible, yes .
Q. Now, you said that you were upset that **** wouldn’t return your phone calls during this time period, right?
A. Upset, that’s not even the word I’d use.
Q. You were very upset? Okay. Do you know whether Mr. Conley or his securities lending department had anything whatsoever to do with the house call decision?
A. I knew the house call was at the discretion of somebody.
Q. Somebody at ***** & Co., correct ?
A. Exactly. And I knew that since it was generated by a machine, that if it’s generated by somebody, I was hoping someone with reason would have talked to somebody to calm someone down to come up with a plan.
Q. You don’t have any understanding that ****** and the other folks in the securities lending department, are the ones who made this decision about the house call, do you?
A. I don’t think they did it, no. The one that did it was Ravi Singh. That was the one that did it. It was his call.
Q. And the way the markets were acting in the stocks that you were investing in, in this week of the Lehman Brothers bankruptcy and then the following week, had you in your life, either before or since, ever seen a market that acted the way the stock market acted during those weeks?
A. I was actually working part-time at Merrill Lynch in college and that was when you had the Bunker Hunt silver margin fiacso where they almost bankrupted Bache and a whole bunch of other guys. That was the closest thing I ever saw to it. But basically the world was coming to an end. I mean, totally it was coming to an end. But we were short so much, it was exactly what I had been waiting for. It’s exactly what I thought was going to happen.
Q. So was that the most severe such volatile and — you described it as “world coming to an end” market that you had ever seen?
A. Yes.
Q. And how many days really was it from the beginning of this problem to the end of it with the problem with the margin call from ****** & Co. was your firm — did your firm and its funds lose most of their money?
A. Eight days, something like that. But the problem was we were off the house call and we were still salvageable. Sure, we had one fund which was up eighty percent and even with all the damage that was done still closed it up 35, so they couldn’t kill that one as hard as they tried. But it’s when we got off the house call, they wouldn’t let us go. And as I recall, to answer your other thing about infusing money, BNP was prepared to take all our positions and they wouldn’t release them. So I scrambled to find, you know, someone to back us since they wouldn’t, and I arranged for BNP to take them and they refused to release them
Now here comes the worst part. According to Cohodes, his broker even went so far as to call one of the people who intended take over his positions and warned them not to take over his accounts. Remember, the entire market was in freefall, and these short positions all crashed soon after.
Q. Did he stop taking your calls at some point?
A. Yes, yeah.
Q. Did you try leaving messages with him?
A. Oh, sure.
Q. Could you estimate how many messages you left with him?
A. Maybe fifty.
Q. He never called you back after that when you left those fifty messages?
A. No. We had another conversation with him because I had the Farallon guys in the office because they were going to take our positions, and Goldman made an outgoing call to Farallon saying that they shouldn’t take our positions.
Q. That’s what Farallon told you?
A. Uh-huh, that’s what the CFO of Farallon told Bill Duhamel when they were in the office, that they made an outgoing call to them and said they shouldn’t take Copper River positions because we’ll be out of business in a couple days anyway.
Q. Who is — Bill Duhamel?
A. Bill Duhamel.
Q. Who is that?
A. He used to be a money manager at Farallon in the city.
Q. Is that someone you knew at the time?
A. Yes.
Q. And he’s the one who told you that?
A. Uh-huh, yes. He’s the guy who — Acme Capital was considered as Farallon for the book sake .
Q. And if they had taken some of your positions, would Copper River have been able to survive, in your estimation?
A. Absolutely.
Q. And was it your understanding that it was someone on the the prop trading desk who had said what you just described to Farallon?
A. Yes.
Q. And did you know, was it told to you who it was on the ***** prop trading desk who said that?
A. No, because that person wouldn’t be around today.
Q. Did it surprise you that Farallon told you it was someone on the ***** prop trading desk?
A. Well, again, life-changing events you never forget, which this was. And the market, the stock market, was literally falling apart, going straight down. And our short positions would have benefited hugely by the market falling apart and melting down. But the stocks that we had to cover were all going straight up in violent fashions in a straight down market . So someone was running in front of these trades, someone was. So the fact that the ***** prop desk knew about this is not a surprise to me because I think the guys at **** are common criminals, just common criminals.
Q. Do you recall mentioning that you — your firm had paid hundreds of millions of dollars to ***** a few minutes ago?
A. Yes.
Q. And by paying hundreds of millions of
Q. Do you recall mentioning that you — your firm had paid hundreds of millions of dollars to **** a few minutes ago?
A. Yes.
Q. And by paying hundreds of millions of dollars, did you mean paying hundreds of millions of dollars in borrow fees for short stock?
A. Yes.
Q. I want to show you one other sentence on page 300 of “Selling America Short, ” which was Exhibit 6. This is in the next paragraph in the middle. There’s a sentence that says, “Also, we have noticed that they — ” do you see where I’m looking now?
A. Yes.
Q. “Also, we have noticed that ****** & Co. has sometimes been able to provide locates not available elsewhere.” Do you see where I read that?
A. Yes.
Q. Was it your regular practice in shorting a stock to contact ****** to try to locate the stock first?
(continued) Q. Well, did you have personal — strike that . Was it your understanding that the firm would contact — your firm would contact Goldman to ask for a locate before shorting a stock?
A. Absolutely.
Q. And what’s your understanding based on?
A. That was protocol at the firm. Before we could short any stock, we had to get a locate because naked shorting is illegal. And although we were accused many times by your customer Overstock, or specifically Byrne, of naked shorting, we never, ever, ever, ever shorted a stock we couldn’t borrow.
Q. Okay. And did you find, you, Mr. Cohodes, find that sometimes locates were available at ****** that weren’t available at some other clearing firm?
A big argument ensues; various back and forths about objections — probably more so than any other time during the deposition
Q. You have spent most of your working life involved in short sales of stocks; is that fair to say?
A. Yes.
Q. And you were a managing partner of Copper River Partners in 2006, correct?
A. Yes.
Q. Okay. And as part of shorting a stock, it was standard practice in your firm to call up ****** and ask for a locate before shorting the stock; isn’t that true?
A. Call or email, yes.
Q. And did you find that sometimes ***** was able to provide locates that these other clearing firms couldn’t get for you?
MR. FLOREN: Objection, vague and ambiguous .
THE WITNESS: Yes.
Q. And can you explain to me what your experience was in that regard? A. You know, at the time, you know, I thought that the stock loan department at ****** was the best in the business by far, that they were always able to find borrows when others either couldn’t or the borrows were too expensive. And ***** to that end was very good. They always would you know, find borrows. And that ‘ s what we cared about . We didn’t — it wasn’t our business to find out who, what, where, where do you get it from or this, that and the other. If they’d say it’s okay to short the stock, we’d short it.
Q. And is that one of the reasons why you wanted to have them as your clearing firm?
A. Yes. That was the only reason. That was the only reason.
It seems very likely that Mr. Cohodes’ suspicions were correct, and that his broker was most likely reacting to the newly enforced SEC regulations that were meant to restrict “naked” short selling activity in wake of the financial crisis.
If this is true, it could indicate that his broker might have been issuing his fund fictitious loans that, in the words of Mr. Cohodes, led to the firm profiting to the tune of somewhere around “$100 million in stock loan fees a year” — but that is purely speculation of course.
What is also very telling is how these forced close outs — with apparent foreknowledge of the fact that Cohodes had secured a credible guarantor for his holdings — seemed so counter-intuitive to the people who were involved in the planned deal that it led to a full grown adult male running to the bathroom and throwing up in disgust.
Why would a broker close out one of their best customers after being told that someone was willing to take over ownership and act as a guarantor for positions that seemed poised to deliver up to $1 billion in gains? The market was in collapse, and transferring these short positions to someone else would have — at least apparently — relieved them of liability. What could they possibly have to gain from doing something like that? It simply doesn’t make any sense.
They must have been well aware of how bad this story would look because they tried very hard to seal that testimony. Luckily, an unnamed individual that was close to the case ended up leaking the transcript to the New York Times (they were probably paid)
This isn’t the only time something like this has happened either. Overstock, a company that at one point had a baseball stadium named after it, fought for years to expose the problem of brokers selling more share entitlements than actually exist.
Ironically, Cohodes used to be Patrick Byrne’s arch rival, and in that same deposition, he says he used to think Patrick Byrne was “crazy”, but that all changed when his fund was shutdown.
You can say what you want about Patrick Byrne, but at the end of the day he’s still a PhD, a former CEO of a multi-billion corporation — a position that he held for two decades — and a two time cancer survivor. His dad also saved Geico from bankruptcy, turning it into he company we all know today, so seems rather illogical to simply just dismiss anything he has to say.
He even started an entire website devoted almost exclusively to fictitious stock loans, publishing hundreds of articles over a period of several years — all replete with that big smile he always has. If you would like to learn more about the strange phenomena of “extra share entitlements“, just click here
It’s important to understand that stock trades are just broker to broker transactions, so all these IOU’s are simply credits from one broker to another, with the DTCC acting as their ledger.
Just those six brokers pictured above account for 70% of the prime brokerage industry, and as we noted before, they are the true record holders listed on the company’s books, with the DTCC — owned by them — acting as the true legal owner.
The origins of ledger accounting stems from the middle-ages when merchants were forced to travel long distances with their gold in hand before a transaction could clear. This was not only very risky, but it also slowed down commerce.
Ledger accounting eliminated this problem, allowing for contracts to be quickly enforced with the stroke of a pen. Grain could be purchased in Rome in March, baked into bread in Venice, in July, and then the bread could be sold in Constantinople in October—all recorded on the same day in the books at a home office, without anybody leaving their place of origin.
But the ledger system is based upon trust, and the ability to simply issue credits without actually requiring delivery to facilitate large commercial transactions gives the owner of the ledger a tremendous amount of power, so you definitely wouldn’t want the wrong people in control of something like this.
The Venetian Banking Crisis of 1584 is a good example of how this system of trust can be abused, where ledger based accounting was stretched so far beyond it’s carrying capacity that it caused the entire system to collapse.
You know, it’s funny. After all these shenanigans — the double voting, switched votes, fake shares, and the court of Delaware saying it’s not humanly possible to know for sure who actually owns a public company (even if it’s the largest producer of fresh produce in the world, representing a full quarter of banana production worldwide) — the DTCC actually tried lobbying the SEC into blocking Michael Bloomberg’s planned alternative to this archaic Centralized Clearing Cartel that every American has been forced to use for so many years.
Their reasoning?
They claim that 1 point of access is less risky than 2 (as if that makes any sense). As we all know, people will do, and say, practically anything for money sometimes — some more than other others — so you cant blame them for trying.
It’s an old boys club, and if they don’t want you in, irregardless of your capabilities, you’re simply not allowed to participate. Just like Quadriserv/AQS, SL-x, and Data Explorers, even if their technology could save people — elderly people — $100’s of billions, if you threaten their hegemony, they don’t care how much benefit you offer to society, they will just block you anyways.
The New York Fed shares many similarities. You’re not allowed in unless they let you in. Look no further than how they chose Timothy Geithner, a man who was seen wining and dining with Citigroup executives as they were lobbying for bailout money after their reckless gambling crashed the entire financial system. Or Robert Rubin, who went from first repealing the Glass-Steagal act as Treasury secretary and helping to facilitate the merger of Travelers Group and Citicorp, to making over $100 million sitting on their board while the entire country was pumped and dumped due to his removal of decades old financial regulations that were put in place to prevent exactly what caused the 2008 financial crisis only 7 years later. Each of the links below will take you to a key section the article that will show you how tightly knit this ‘private club’ truly is.
“I’m pleased Tim Geithner will be at the helm; he’ll do a great job,” Mr. Peterson said. “He has done an outstanding job at Treasury and the IMF and is admirably equipped to confront the unique domestic and international challenges that will face our financial system over the coming years.”
Mr. Geithner will succeed William J. McDonough, who served as the bank’s president from July 1993 until he stepped down in June of this year to assume the post of chairman of the Public Company Accounting Oversight Board in Washington, DC. Jamie B. Stewart, the New York Fed’s first vice president, has assumed on an interim basis the duties of president since Mr. McDonough’s departure.
Mr. Peterson was assisted in the search by an outside advisory committee with ties to the New York Fed: Ann Fudge, Ellen Futter, Maurice R. Greenberg,Walter Shipley, Paul Volcker, John Whitehead and Robert Wilmers. Search committee members, all current members of the New York Fed’s Board, are: Jill Considine, Loretta Lynch, John Sexton, Jerry Speyer and Charles Wait. Mr. Peterson also was advised by Robert Rubin, E. Gerald Corrigan, Lawrence Summers, and Fred Bergsten. He also was assisted by Tom Neff, Chairman US of Spencer Stuart.
You see, it’s never been about the money, and it never will be about the money. Those are just the certificates that they give everybody so society can function. It’s always been about control.
If you control the issuance of credit; if you control the supply and demand of equities; if you control the price of commodities; and if you can decide who sits on the board of all these corporations, why should you need money?
This goes for everything. If you own the oil refineries, you can just manipulate supply and demand. You don’t need money if you can do that. If you can just borrow other peoples money at will, then set your own interest rates — and even print it sometimes — and if you can manipulate the price of all the basic necessities of life..
…you control the world..
To quote George Carlin, it’s a big club, and if you’re not part of it, the profits are simply too great, and life is simply too short for these people to care about the impact they are having on society.
Anybody who would knowingly collude to steal billions from the elderly doesn’t care about you; doesn’t care about the law, and most importantly, doesn’t care about how you feel. To the financial Oligarchs who rule this world, you are just a means to an end; one where freedom speech is no longer a right, but a privilege bestowed upon us by them, and one where human workers are slowly phased out and replaced by machines. To them, there is too many people on the planet anyways, so what do they care if they take your money..
(1914) Other People’s Money and How the Bankers Use It– Chapter I: Our Financial Oligarchy
“The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people’s own money. If the bankers’ power were commensurate only with their wealth, they would have relatively little influence on American business. Vast fortunes like those of the Astors are no doubt regrettable. They are inconsistent with democracy. They are unsocial. And they seem peculiarly unjust when they represent largely unearned increment. But the wealth of the Astors does not endanger political or industrial liberty. It is insignificant in amount as compared with the aggregate wealth of America, or even of New York City. It lacks significance largely because its owners have only the income from their own wealth. The Astor wealth is static. The wealth of the Morgan associates is dynamic. The power and the growth of power of our financial oligarchs comes from wielding the savings and quick capital of others. In two of the three great life insurance companies the influence of J. P. Morgan & Co. and their associates is exerted without any individual investment by them whatsoever. Even in the Equitable, where Mr. Morgan bought an actual majority of all the outstanding stock, his investment amounts to little more than one-half of one per cent. of the assets of the company. The fetters which bind the people are forged from the people’s own gold”.
“But the reservoir of other people’s money, from which the investment bankers now draw their greatest power, is not the life insurance companies, but the banks and the trust companies. Bank deposits represent the really quick capital of the nation. They are the life blood of businesses. Their effective force is much greater than that of an equal amount of wealth permanently invested. The 34 banks and trust companies, which the Pujo Committee declared to be directly controlled by the Morgan associates, held $1,983,000,000 in deposits. Control of these institutions means the ability to lend a large part of these funds, directly and indirectly, to themselves; and what is often even more important, the power to prevent the funds being lent to any rival interests. These huge deposits can, in the discretion of those in control, be used to meet the temporary needs of their subject corporations. When bonds and stocks are issued to finance permanently these corporations, the bank deposits can, in large part, be loaned by the investment bankers in control to themselves and their associates; so that securities bought may be carried by them, until sold to investors. Or these bank deposits may be loaned to allied bankers, or jobbers in securities, or to speculators, to enable them to carry the bonds or stocks. Easy money tends to make securities rise in the market. Tight money nearly always makes them fall. The control by the leading investment bankers over the banks and trust companies is so great, that they can often determine, for a time, the market for money by lending or refusing to lend on the Stock Exchange. In this way, among others, they have power to affect the general trend of prices in bonds and stocks. Their power over a particular security is even greater. Its sale on the market may depend upon whether the security is favored or discriminated against when offered to the banks and trust companies, as collateral for loans”.
“Furthermore, it is the investment banker’s access to other people’s money in controlled banks and trust companies which alone enables any individual banking concern to take so large part of the annual output of bonds and stocks. The banker’s own capital, however large, would soon be exhausted. And even the loanable funds of the banks would often be exhausted, but for the large deposits made in those banks by the life insurance, railroad, public service, and industrial corporations which the bankers also control. On December 31, 1912, the three leading life insurance companies had deposits in banks and trust companies aggregating $13,839,189.08. As the Pujo Committee finds:”The men who through their control over the funds of our railroads and industrial companies are able to direct where such funds shall be kept and thus to create these great reservoirs of the people’s money, are the ones who are in position to tap those reservoirs for the ventures in which they are interested and to prevent their being tapped for purposes of which they do not approve. The latter is quite as important a factor as the former. It is the controlling consideration in its effect on competition in the railroad and industrial world”.
“But the power of the investment banker over other people’s money is often more direct and effective than that exerted through controlled banks and trust companies. J. P. Morgan & Co. achieve the supposedly impossible feat of having their cake and eating it too. They buy the bonds and stocks of controlled railroads and industrial concerns, and pay the purchase price; and still do not part with their money. This is accomplished by the simple device of becoming the bank of deposit of the controlled corporations, instead of having the company deposit in some merely controlled bank in whose operation others have at least some share. When J. P. Morgan & Co. buy an issue of securities the purchase money, instead of being paid over to the corporation, is retained by the banker for the corporation, to be drawn upon only as the funds are needed by the corporation. And as the securities are issued in large blocks, and the money raised is often not all spent until long thereafter, the aggregate of the balances remaining in the bankers’ hands are huge. Thus J. P. Morgan & Co. (including their Philadelphia house, called Drexel & Co.) held on November 1, 1912, deposits aggregating $162,491,819.65”.
They own the regulators and they are exempt from trial in a court of law, meaning their clients are incapable of filing suit unless it is through FINRA — the regulator that they own.
(TheStreet) “every individual investor in America with a brokerage account is forced to forego court and agree instead to use a closed-door council endorsed by Wall Street”.
https://archive.is/dMijU#selection-2729.0-2770.0
“The hearings are held behind closed doors, the rules are written by an operation that’s financed by Wall Street and the decisions of the arbitrators typically are issued with no explanation. Little surprise that many ugly details about the process stay private, too”.
https://archive.is/dMijU#selection-2729.0-2770.0
(Investmentnews.com) “Dairy farmers who saw a $1.5 million portfolio incur $1.3 million in trading costs in a single year”.
“It’s a hollow victory because the award is probably not worth the paper it’s printed on,” said Andrew Stoltmann, president of the Public Investors Arbitration Bar Association.
https://archive.is/ZrxQz
https://www.investmentnews.com/article/20180814/FREE/180819974/finra-panel-awards-clients-5-million-for-churning-but-from-defunct
FINRA, which is owned by the brokers, is also paid to regulate the Nasdaq, along with every other major stock exchange.
Three companies control half of the brokerage industry
Four companies represent 39% of total bank assets
They own the mechanism that buys and sells government debt.
Learn more by clicking the image below. It’s only about a 5 minute read.
“The control by the leading investment bankers over the banks and trust companies is so great, that they can often determine, for a time, the market for money by lending or refusing to lend on the Stock Exchange. In this way, among others, they have power to affect the general trend of prices in bonds and stocks. Their power over a particular security is even greater. Its sale on the market may depend upon whether the security is favored or discriminated against when offered to the banks and trust companies, as collateral for loans”.
(1914) Other People’s Money and How the Bankers Use It
https://archive.is/FjfOR#selection-2641.0-2644.0
They also sit on the board of the mechanism that buys and sells government debt.
They also sit on the board of the committees that choose the people who will head the mechanism that buys and sells government debt
“I’m pleased Tim Geithner will be at the helm; he’ll do a great job,” Mr. Peterson said. “He has done an outstanding job at Treasury and the IMF and is admirably equipped to confront the unique domestic and international challenges that will face our financial system over the coming years.”
Mr. Geithner will succeed William J. McDonough, who served as the bank’s president from July 1993 until he stepped down in June of this year to assume the post of chairman of the Public Company Accounting Oversight Board in Washington, DC. Jamie B. Stewart, the New York Fed’s first vice president, has assumed on an interim basis the duties of president since Mr. McDonough’s departure.
Mr. Peterson was assisted in the search by an outside advisory committee with ties to the New York Fed: Ann Fudge, Ellen Futter, Maurice R. Greenberg, Walter Shipley, Paul Volcker, John Whitehead and Robert Wilmers. Search committee members, all current members of the New York Fed’s Board, are: Jill Considine, Loretta Lynch, John Sexton, Jerry Speyer and Charles Wait. Mr. Peterson also was advised by Robert Rubin, E. Gerald Corrigan, Lawrence Summers, and Fred Bergsten. He also was assisted by Tom Neff, Chairman US of Spencer Stuart.
They control the government
“These bankers are, of course, able men possessed of large fortunes; but the most potent factor in their control of business is not the possession of extraordinary ability or huge wealth. The key to their power is Combination….
“There is the obvious consolidation of banks and trust companies; the less obvious affiliations–through stockholdings, voting trusts and interlocking directorates–of banking institutions which are not legally connected; and the joint transactions, gentlemen’s agreements, and “banking ethics” which eliminate competition among the investment bankers”
(1914) Other People’s Money and How the Bankers Use It
https://archive.is/FjfOR#selection-1313.0-1316.0
Dangerous Liaisons, Sec Revolving Door
“Others, including academics, whistleblowers, and the SEC’s Inspector General, have suggested that the constant movement of employees between the SEC and powerhouse firms has biased the agency’s enforcement efforts.
The “revolving door problem” may help explain why the SEC has gone after “individuals in small-bore cases,” but has not brought many charges against the “people in the financial crisis of 2008 who went over the line and should have been held accountable,” a former federal prosecutor told POGO.
“As the former prosecutor explained it, taking aggressive action against companies represented by powerhouse law firms can hurt the future job prospects of SEC attorneys: “Rocking the boat is just not. . .an optimal way to segue into a major white-shoe law firm role.”
https://archive.org/stream/602191-20130211-dangerous-liaisons-sec-revolving-door/602191-20130211-dangerous-liaisons-sec-revolving-door_djvu.txt
(The Intercept)
THE MAN FROM SULLIVAN & CROMWELL
“Clayton is a man Wall Street itself might have picked to run its most important federal regulator. Except for the two years that Clayton clerked for a federal judge after graduating law school, he has worked his entire adult life at Sullivan & Cromwell, an elite law firm based in downtown Manhattan that includes many of the country’s largest publicly traded companies as clients. Its sleek Washington, D.C., offices overlook the Washington Monument, where the firm’s attorneys assist banks and other large firms in their business before the Federal Reserve, the Consumer Financial Protection Bureau, and the SEC. Clayton, who made $7.6 million in his last year at Sullivan & Cromwell, has advised clients on everything from sensitive regulatory problems to initial public offerings to the large-scale mergers and acquisitions that make Page 1 of the business section. Clayton represented the likes of William Ackman and Paul Tudor Jones, some of the most prominent names in the hedge fund world, the very sorts of figures Trump had skewered early in his presidential campaign, saying, “The hedge fund guys are getting away with murder. … I have hedge fund guys that are making a lot of money that aren’t paying anything.”
https://archive.is/ReRbV#selection-681.0-689.138
“The Claytons (Current SEC Chairman) own a place in Ocean City, a beach community in southern New Jersey, that Clayton valued at $1 million to $5 million; a rental property there worth more than $1 million; and another property in Philadelphia, worth up to $5 million. And that doesn’t include their 3,000-square-foot loft apartment on Hudson Street, in Manhattan’s Tribeca, which they bought for around $3.2 million in 2006, according to city records. All told, the couple has a net worth of more than $50 million”.
https://archive.is/ReRbV#selection-879.0-882.0
https://theintercept.com/2018/01/30/jay-clayton-sec-donald-trump-wall-street
(Wall Street Credit is Subsidized by the Government)
“Our aforementioned friend from the Bank of England, Andrew Haldane, estimates the current implicit TBTF global subsidy to be roughly $300 billion per year for the 29 global institutions identified by the Financial Stability Board (2011) as “systemically important.”…
…Richard Fisher, former President and CEO of the Federal Reserve Bank of Dallas
Citigroup literally writes the legislation word for word to remove restrictions on commercial banks holding exotic derivatives; the very financial products that brought down the financial system. Holding these financial products outside of their bank increases the cost because they cease to be insured by the FDIC.
https://dealbook.nytimes.com/2013/05/23/banks-lobbyists-help-in-drafting-financial-bills/?_r=0
https://archive.is/3HteN#selection-227.0-234.0
(NewRepublic)
“This was October 6. The election was November 4. And yet Froman, an executive at Citigroup, which would ultimately become the recipient of the largest bailout from the federal government during the financial crisis, had mapped out virtually the entire Obama cabinet, a month before votes were counted. And according to the Froman/Podesta emails, lists were floating around even before that”.
https://archive.is/J3QbE#selection-493.0-496.0
https://web.archive.org/web/20161014145735/https://newrepublic.com/article/137798/important-wikileaks-revelation-isnt-hillary-clinton
In 2018, the month of December posted its worst trading session since the Great Depression
Then the Treasury Secretary called the banks, announces this on twitter, and miraculously the market sets an intraday record the very next day
The IRS, CFTC, SEC, FINCEN, and Treasury were all operating on skeleton crews at the time.
Coincidence? Probably not, but we can only speculate how this affected that historic intraday spike.
The News Media is also highly conflicted
The lions share of Michael Bloomberg’s profits originate from the very banks and investments funds that his news organization reports on.
To get an idea of how biased they can be, look no further than his decision to block investigative reporting on himself, and all Democrats.
Now. it’s not completely fair to dismiss his credibility simply because of this one misstep, because they still do some excellent reporting. They were the ones that forced the banks to disclose the details of the Federal Reserve bailout package during the financial crisis in 2008; something that will forever shed light into the mechanics of central banking.
One could even go so far as to say this was a revolutionary act, because even though the majority of his profits were derived from these banks, he still fought them, and he should forever be remembered for this.
But those were very trying times. America has been brought to its knees by a financial cataclysm that in the words of Ben Bernanke, the Federal Reserve Chairman at the time, was worse than the Great Depression.
At the end of the day, Bloomberg still has competitors, and most of his profits derive from these banks, so maybe notwithstanding a financial crisis like we saw in 2008, his decisions will still be highly motivated by his relationship with these banks.
It also wasn’t exactly Michael Bloomberg himself that was fighting to expose the details of that bailout package, but his reporter Mark Pittman — who died soon after.
He still stood up to them though — him, his reporters, and Bloomberg L.P. — and they should forever be remembered for this.
Thank you Michael Bloomberg, and RIP Mr. Pittman.
Click on the image below to learn more
December 23, 2010,
DEF 14A 5/19/11
December 30, 2011
March 30, 2012
September 17, 2012
(Date of Event Which Requires Filing of this Statement)
On: Monday, 9/24/12, at 6:12am ET
PREM14A’ for 11/27/12
Filed on Monday, 9/24/12, at 1:19pm ET
Tuesday, 10/2/12, at 9:26pm ET
October 1, 2012
(Date of Event Which Requires Filing of this Statement)
In relation to a previously described term loan, certain shares pledged to secure the loan were released. The number of pledged shares is now 18,935,086.
October 16, 2012.
Mr. Murdock also pledged 18,935,086 shares to DB Private Clients Corp. as collateral to secure his obligations under a term loan
– ‘PRER14A’ on 10/19/12
‘PRER14A’ on 10/19/12
Friday, 10/19/12, at 5:26pm ET
Wednesday, 10/31/12, at 5:25pm ET
October 29, 2012, 13-D
‘PRER14A’ on 11/15/12
Thursday, 11/15/12, at 5:06pm ET
‘PRER14A’ on 11/15/12
Thursday, 11/15/12, at 5:06pm ET
‘DEFM14A’ on 11/16/12
Friday, 11/16/12, at 2:11pm ET
‘DEF 14A’ for 5/23/13
Friday, 4/12/13, at 4:04pm ET
6/3/13 13/d
‘PREM14A’ for 8/21/13
‘PRER14A’ on 9/20/13
‘PRER14A’ on 10/1/13
‘PRER14A’ on 10/3/13
‘DEFM14A’ on 10/3/13
