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From: StockDung5/15/2007 3:34:20 PM
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MARK FAULK fired DEBI and canceled her CFRN Tuesday radio show

Mark is the new President and Ceo of Togi

CMKX Rally at the Depository & Trust Corporation

Watch the video of CFRN's very own DEBI youtube.com


Share RecommendKeepReplyMark as Last Read


From: StockDung5/15/2007 5:11:01 PM
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First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park

Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 3/25/2006 11:00 AM
Here is the first in a series of interview questions posed by Bob O'Brien, and fielded by Dr. Susanne Trimbath - a noted and acknowledged authority on stock clearing and settlement. Dr. Trimbath's questions are in blue, and Bobo's questions are in bold:

1) Tell us a little about your background at the DTCC…

Being an economist is my second career. I have 20 years experience in financial services, from Prudential Insurance, through the Federal Reserve Bank and 3 different depositories. I was with the Pacific Clearing Corporation and the Pacific Securities Depository Trust Company the last 2 years before they shut down (1985-1987). I was in operations there both as an analyst and as a manager. After the shutdown, Depository Trust Company (DTC) moved me to New York as Director of Transfer Agent Services, an industry liaison position. Since the same companies that ran transfer agencies (Chase, US Trust, BoNY, etc.) were also broker/dealer Participants at DTC, I was frequently called on to help them with problems that extended beyond my job description into reorganizations, dividends, proxies and even settlement.

At DTC (now a subsidiary of DTCC), one of my more important accomplishments was to propose and then enhance a service for the direct mail of certificates by agents to shareholders at the request of participants. I also proposed, developed and tested automated direct withdrawals and deposits at custodians. Both programs are complementary services to Direct Registration offered by issuers, which the NYSE is trying to have made a listing requirement. After leaving DTC, and before entering the PhD program at NYU, I worked about a year in Russia helping them build clearing, settlement and depository operations.



2) Some have expressed the sentiment that you are a whistleblower, and that it is high time a whistleblower came forward. Do you consider yourself a whistleblower? And, just for the record, are you being compensated for your statements about NSS?

Legal protection for whistleblowers is largely reserved for those who take on the government. Otherwise, you would at least be employed by the party you are decrying. I wouldn’t meet either of those qualifications. Since I’ve never left a share of stock with a broker (once you’ve seen how the sausage is being made, you never eat it again), I can’t claim to have been individually harmed by the activity. Of course, if DTCC attempts to withhold my pension because I talked about their role in this mess, then I might have a claim to “whistleblower.” We’ll have to wait an undisclosed number of years before I’m eligible to test the matter.

As I described earlier, I am on my second career, working full time as an independent researcher and consultant in economics and finance. Although capital markets and corporate finance are in my research portfolio, I first addressed the specific topic of NSS at the request of paying clients beginning in late 2003. Since that time, I have worked and will continue to work as an advisor and consultant on NSS for a variety of firms. What it comes down to is that someone pays me to give them direct advice on NSS; when I make public statements it’s usually not for hire but rather in the interest of civic education. Part of my marketing strategy is to be sure all the stakeholders in NSS know that I can help them. I apply a similar strategy to my other areas of specialization such as international finance and economic analysis of law.



3) Given your background there, what do you make of the current FTD issue – let’s start with, why does the DTCC keep all the data secret?

As the saying goes, “Macy’s doesn’t tell Gimble’s.” DTCC keeps certain data private so that Shearson won’t figure out Merrill’s business strategies. All the Participants compete with each other, so DTCC is careful about data that might reveal firm-specific holdings or transactions. That said, there is much aggregate data that the DTCC could release that would not reveal any trade secrets but that could reveal the real magnitude of the problem.



4) Some refer to the SBP as a “self-replenishing, anonymous lending pool.” Would you agree with this characterization?

Yes. It is definitely anonymous (unless rules are being broken). And since nothing prevents the buyer who receives a borrowed share for settlement from depositing shares into the lending pool at the Depository, it is self-replenishing.



5) The DTCC takes great pains to make it clear that the SBP doesn’t allow a broker to lend the same share twice via the SBP. My contention is that they certainly allow the same share to be lent by different brokers, thus their rhetoric is disingenuous. Do you agree, or disagree?

It’s a word game. The stock borrow program doesn’t track who lent the share (only who borrowed it). So the stock borrow program doesn’t allow ANY shares to be lent…only borrowed, get it? They play the same word game when they say they don’t make money on the stock borrow program.

They don’t.

What they DO make money on is the stock lending program.

By the way, they also make money on fails to deliver. OK, so the same shares aren’t lent twice by the same broker because the lender’s account is reduced by the number of loaned shares until the loan is repaid. Fine. What they aren’t saying is that the shares are a “fungible mass,” and no one keeps track of which share was used to settle which trade. So, a Participant who receives 100 shares of OSTK at settlement could be getting 50 borrowed shares. And it is those 50 shares that can be loaned a second time since all settlement is considered to be “final.”



6) I believe that most of the current FTD issue is caused by two things – the de-linking of clearing and settling, and the allowing of access to the proceeds from a failed delivery over and above collateralization requirements. Would you agree, or disagree, and care to comment on any other issues you feel are contributors to this?

It depends on what the meaning of “is” is…. No, wait, that was something else.

It depends on how you define “(T)he current FTD issue”. Regarding “the allowing of access to the proceeds from a failed delivery over and above collateralization requirements” this is a very convoluted statement. Are you referring to the release of collateral on borrowed stock as the price of shares is driven into the ground? Are you referring to the fact that the seller gets paid for a failed delivery because of net settlement and the ever present “fungible mass”? I see the FTD issue as additive to the NSS issue and the stock lending issue. In other words, I see the problem as being at least 3 times as big as any one observer is willing to admit.

The over-arching problem actually got much worse when clearing and settlement (in the form of NSCC and DTC) were connected under DTCC. Think blue-suited brokers at NSCC and grey-suited bankers at DTC. NSCC was run by the trading side where net settlement minimized the number of cash and share deliveries to one per day (basically). DTC on the other hand is like a bank for brokers; it’s where they keep the shares they need to effect settlement. DTC’s status as a quasi-bank provided more regulators and more oversight. Both NSCC and DTC had different Boards, populated from different sides of the houses, with different interests. When they brought them together, it appears that the blue suits won and their Wall Street Cowboy mentality is dominating the organization.

That said, I always believed that they should not have been separated at birth. It is my opinion that there were two dominant personalities at the time and each aggressively sought to have their own area of authority. After those guys retired, the door was open to reunite the two sides. Unfortunately, by then they had grown to be very different. Perhaps because of weak understanding on the part of the Federal Reserve and the SEC about what these two do, the clearing side was allowed to dominate and with that, “trust” was no longer the middle name.



7) Do you have any opinion as to how large the “ex-clearing” FTD situation is versus the “in-system” FTDs? A ratio?

The by-the-rules version of market infrastructure dictates that the ex-clearing portion should be very small, maybe 15% of the whole problem. In fact, since the clearing system enables NSS, FTD and stock loan, there’s no reason to go ex-clearing with the dirty deeds. Here’s a simple example of how to engage in money laundering and counterfeiting using the Stock Borrow Program and the “in-system” mechanisms.

In a future response, I’ll show a diagram where the entire operation can be accelerated if there is at least 1 ex-clearing transaction. It basically shows that things move much faster if you can get at least 1/3 of the transactions processed ex-DTCC.



8) Any opinion as to how large the total grandfathered position of FTDs was?

Big enough to give me nightmares

Copyright ©2006 Bob O'Brien
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Comments (48)
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Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By jza4 on 3/25/2006 2:35 PM
WOW!!! a real eye opener! Hope she is on the prosecutions side when this goes to court!! :-))) Keep up the good work Bobo. Can't wait for 60 Minutes!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By mhelburn on 3/25/2006 2:42 PM
In your examples, this trades could not happen without the stock borrow program.
The first example is for laundering money which one assumes is done to mask the origination of the funds.

The second example is a way to drive the price down by selling without maintaining a position that would be subject to a loss as the share price declines.

Right?



Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By mfairview on 3/25/2006 11:07 PM
Bob,

You might consider printing the time to the post header until you can figure out this jumbling of messages. It would help people maintain their reference until those technical things get resolved.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By j davis on 3/26/2006 4:50 AM
What we're witnessing is the principle of "Fractional Reserve Banking" applied to the markets. Those in control create something from nothing and voila; they draw interest income from it.

Thomas Jefferson, speaking of Banks and the CORPORATIONS they would spawn, said:

"The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of the lending institutions and moneyed incorporations."

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.


Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By AMMASS on 3/26/2006 5:20 AM
Is there a question if the stock one owns is delivered to the Buyerthat the stock certificate themselves are Counterfits?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By adegracia1950@yahoo.com on 3/26/2006 5:38 AM
No "Baloney" peddling here.
Excellent questions and very illuminating responses.
Dr Trimbath is another welcomed addition to the already deep expertise on this board.
I can not wait to read the shallow rebuttals to her responses.

Thanks again to both of you for your efforts.

Alan



Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By t shafer on 3/26/2006 6:06 AM
can i puke now!!! the older i get the more i don't like about it!!! HEDGE FUNDS NEED TO GIVE THERE GAINS BACK AS BUY ORDERS! PERIOD

GRANFATHERING WTH

we all open our eyes on at a time SOON there will be enough eye's on the problem THAT IT WILL HAVE TO BE FIXED.

my eyes are open DTCC/refco the jig is up!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By troydian on 3/26/2006 7:21 AM
this artical, when read sober, has a chilling effect on the magnitude of THIS PROBLEM arcticbeacon.com

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By lenofus on 3/26/2006 7:22 AM
Doctor, Doctor,
Tell me the news
I gotta bad case
Of gettin' screwed

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By Niel Storts on 3/26/2006 7:32 AM
Fellow members of " the tin foil hat brigade". It has occurred to me that we are dealing with the same foe that humanity has suffered with for ages. Might be some new names, but throughout history our forefathers have been supporting the parasitism of a "ruling class' that has continuously fed off of the vitality of the common man. Some times those folks might be the robber barons. Might be the csars, or king of England. Might just be a collection of powerful indiviuals who wish their own enrichmnet at the expense of the good of everyone else. Seems discouraging at times that some flaw in our society, or nature produces a seemingly never ending group of these parasites. Still these are our times, this is the manifestation of the evil that we are now dealing with. We all owe it to ourselves, and our children, to stand up against those folks. Eternal vigilance, and ceaseless efforts are the requirement for any hope of eventually ridding the body politic from this ancient infection, or at least stemming the total loss of any hope of ever doing so. Good luck. Keep fighting.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By lurker66666 on 3/26/2006 7:36 AM
Yes, of course, thank you. But wouldn't it be a good idea to copy this exchange and then email it in a flood to Floyd Norris at the New York Times, the great defender of Ms. Nazareth of the SEC?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By Niel Storts on 3/26/2006 7:41 AM
Teach your children well.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By BRUCE BARRETT on 3/26/2006 8:31 AM
IT IS ABOUT TIME THAT ALL SENATORS, REPRESENTATIVES AND STATE ATTORNEY GENERALS WERE WOKEN UP ABOUT THEIR CONSTITUIENTS BEING ROBBED ON A DAILY BASIS. TIME FOR ALL OF US TO SEND OUR SO CALLED PROTECTORS AND LEADERS A WAKE UP CALL THAT WE ARE TIRED OF LEGALIZED ROBBERY

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By browntrout on 3/26/2006 9:05 AM
BRUCE BARRETT- All of the people that you mention above ARE aware of this problem. They have been sent thousands of letters and emails. Who do think they listen to? Big money or the people? They are part of this massive problem. The only solution is to draft new candidates and give these corrupt politicians the boot.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By Clearthinker on 3/26/2006 10:48 AM
browntrout is correct....we have been putting pressure on the SEC, the NASD, the DTCC and our elected officials for years, and they hae chosen to defend the dark side for their own self interests....they have ignored the shareholders and blamed the victim...."If your company were profitable, they wouldn't pick on you"....

We better get rid of all the red dresses in the world..



Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By Joey on 3/26/2006 11:22 AM
If the same shares are being lent out more than once who pays the dividends?

A. Do bother shorts split paying out the dividend

B. Do both shorts pay out the dividend and person owning the stock gets paid twice?

What happens?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By Chris "Limpy" Cox on 3/26/2006 12:36 PM
Sunday, Sunday what to do? Maybe a round of golf? Maybe catch up on a little work I haven't done since I joined the SEC. Nah. Hey I guess I can plan some more trips around the world to tell everyone how to run their markets. Maybe I can think of more buddies to lift the bans on working on Wall Street like I did for Frank this past week. Hmmmm. I wonder what Boesky, Milken, Dennis Levine are doing? Well maybe I will just flip the channels and see if there are any reruns of my favorite show; Mad Money. That Jimbo is a funny guy. Hmmm Er What the heck is this on 60 Minutes? Oh Crap! Now everyone will know I haven't been doing my job. I mean those senior citizens are going to start asking hard questions next time I give a speech telling them how I am protecting them Oh boy- What to do? Monday, Monday!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By InTheKnow on 3/26/2006 3:39 PM
The shorter pays the dividend. Any and all who are short pay the dividend!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By InTheKnow on 3/26/2006 3:44 PM
What OSTK should do is to issue a special one-time dividend . The value is based on the outcome of the current court case.
Halt trading take a share count and only the shareholders as of a certain date get the dividend. If you don't get your physical dividend you know you got bupkis!



Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By hwh on 3/26/2006 4:28 PM
I personally believe the commission met to find answers at the bequest of the President. The referring judge has claim, but in the world of courtrooms as my experience has shown, it was a slap in the face to the commission. They & the President had been ill advised by the international bankers and were looking for a possible answer from an honest man. They found it in Rod Young.

He is tremendously supported by Dr. Trimbath. There is an exponential derrivative from the combination of the two . Their integrity & motivation is indefeasible.

Patrick,Robert, Mark, & Dave... here is your sword & shield , run with it and protect them like you oun children

Where better than to go than to pioneers like Rod Young & Dr. Trimbath for a new outlook to an old problem.

Remember: Pioneers cut their own path's...hwh

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By robelita on 3/26/2006 4:46 PM
Turn on 60 Minutes-NOW!


Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By SEC DOUBLE DIPS GRADIENT - NEW SUBPOENAS on 3/26/2006 5:30 PM

SEC Subpoenas Gradient Again

Market-Manipulation Probe
Seeks Records of Contacts
That Include Reporters
By KARA SCANNELL
March 27, 2006

WASHINGTON -- The Securities and Exchange Commission, investigating possible market manipulation, requested documents about communications that Gradient Analytics Inc. had with journalists and others.

The SEC's San Francisco office sent a subpoena dated March 10 to Gradient, a Scottsdale, Ariz., securities research firm. The agency requested phone records, emails and other materials Gradient had exchanged with several hedge-fund advisers and journalists.

The SEC's action follows a round of subpoenas in which agency staff subpoenaed several journalists about their contacts with Gradient and others. That effort drew an outcry from journalists and an admonition from SEC Chairman Christopher Cox to the agency's staff. The new subpoena appears to let the SEC seek information about Gradient's contacts with journalists without seeking the information directly from the journalists themselves.

Gradient received a subpoena from the SEC several weeks ago, in addition to the one this month. Subpoenas, some dated Feb. 7, were sent to TheStreet.com and its founder James Cramer, as well as two journalists who work for Dow Jones & Co., publisher of The Wall Street Journal. The subpoenas to the journalists asked about their communications with a number of organizations, including Gradient, about Overstock.com Inc., an online discount retailer. Overstock.com has accused hedge funds of using the news media to drive down the price of its shares. The news organizations said they wouldn't comply with the request for documents.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By browtrout on 3/26/2006 6:30 PM
HWH- You really believe the White House and the five commissioners of the SEC give a crap about the truth. They only needed to learn how to twist it in their favor not to honor it. Rod Young will not see vindication from them-only in an unbiased courtroom if he can find one. The SEC already knew what the truth was but chose in the past not to enforce the law. Now they are looking for a way out that does not involve taking the money back from the crooks.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By cobrajock on 5/13/2006 7:29 PM
If you ask "Annette" at the SEC about naked shorts, she says we are just a bunch of disgruntle share holders. I say it's time for a revolution.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By browntrout on 3/25/2006 2:48 PM
Susanne- Thanks for elaborating about your background and your situation with the DTCC. Basically your answers about what the DTCC does and says confirms they are knowingly involved in a massive looting and misleading scam. I would like to see you give more information about the grandfathering of FTD's that gives you nightmares because it is also what I believe. I expect the DTCC will have to make another misleading statement next week attacking your credibility, background, etc. P.S.-Did you happen to talk to Sixty Minutes in the past few weeks?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By bobo on 3/25/2006 2:50 PM
The second is a way to drive the price down using the same pool of dollars. The first is a nice way for organized crime or terrorists to launder funds.

Nice system we have, huh?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By some questions on 3/25/2006 2:51 PM
Its probably too late, however I have some questions:
1. How many "accounts" should my broker need at the DTCC to ensure my IRA securities are not lent out?
2. Is it possible for the DTCC to lend out shares that are specifically identified as non lendable (i.e., IRA, 401K, cash accounts, etc.).

Wonderful explainations! - keep up the good work!!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By smuopr8r on 3/25/2006 2:59 PM
So example 2 is the game BS is playing? Piling up short sales they "might" eventually have to buy back, and all they need to show is enough money for their largest funds transfer transaction to do it, which the never actually spend? We need a court-ordered injunction, stat!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By bobo on 3/25/2006 3:07 PM
Somequestions:

The Stock Borrow Program operates on the honor system - there is no regulation to ensure that your broker isn't violating the rules and depositing your shares into the SBP, in violation of the rules. We just have to trust that he isn't.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By tommytoyz on 3/25/2006 3:08 PM
The requirement to link clearance and settlement is clear in the 1934 Securities Exchange Act :

Section 17A -- National System for Clearance and Settlement of Securities Transactions

1. The Congress finds that--

1. The prompt and accurate clearance and settlement of securities transactions, including the transfer of record ownership and the safeguarding of securities and funds related thereto, are necessary for the protection of investors and persons facilitating transactions by and acting on behalf of investors.

4. The linking of all clearance and settlement facilities and the development of uniform standards and procedures for clearance and settlement will reduce unnecessary costs and increase the protection of investors and persons facilitating transactions by and acting on behalf of investors.

2.

The Commission (SEC) is directed, therefore, having due regard for the public interest, the protection of investors, the safeguarding of securities and funds, and maintenance of fair competition among brokers and dealers, clearing agencies, and transfer agents, to use its authority under this title--

1. to facilitate the establishment of a national system for the prompt and accurate clearance and settlement of transactions in securities (other than exempted securities); and
2. to facilitate the establishment of linked or coordinated facilities for clearance and settlement of transactions in securities, securities options, contracts of sale for future delivery and options thereon, and commodity options;

Bob's belief is spot on. Once settlement and clearance are de linked, the broker dealer are free to manufacture security entitlements out of thin air. So we get it from all sides. The NSCC failing to deliver, and the broker dealers misrepresenting security entitlements.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By mhelburn on 3/25/2006 3:14 PM
It is no wonder that the DTCC is anxious to discredit Dr. Trimbath. Are there legitimate reasons to use ex-clearing? What is the advantage of using ex-clearing?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By mhelburn on 3/25/2006 3:25 PM
In the second example it limits the number of shares one has to have to drive the price of the stock down and eliminates the need to "unwind" the position because they constantly get the shares back that they sold. The worst that can happen is if some of the shorted shares escape into long accounts that aren't part of the fix. On a thinly traded stock, the movement of price between linked accounts is not where the money is made. It is made with options. The stock is used to make the options valuable. Get rid of options, the volatility of the stock would disappear.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By x. trapnell on 3/25/2006 3:55 PM
Great commentary: a nice blend of expert commentary and understated wit.

"Since I’ve never left a share of stock with a broker (once you’ve seen how the sausage is being made, you never eat it again), . . .

I've got a feeling we'll be seeing much more of Dr. Trimbath speaking on these issues in various public forums in the future.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By jcline on 3/25/2006 4:09 PM
Really...

and the DTCC says they do not have a problem....we do not know whereof we speak, we do not know how the system works....... we just want our stocks to go up!!!!....

well Houston...me thinks you do have a problem!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By bobo on 3/25/2006 4:17 PM
Note that Susanne didn't say that the ex-clearing mess is only 15% of the size of the overall FTD issue. She said the "by-the-rules" interpretation should limit it to 15%. And we all know how well Wall Street likes to follow the rules - take Refco for example...

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By golden1101 on 3/25/2006 4:18 PM
Nuts . . . Thats all I can say . . . This is nuts. Thanks Susanne and thank you Mr. Bobo for getting this stuff out there.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By bobo on 3/25/2006 4:27 PM
There's way more where that came from.

You have to love how anyone with in-depth knowledge of the system not only recognizes how badly out of whack it is, but further can easily demonstrate how the system can be gamed for money laundering, endless selling sprees, etc.

And all the while, Wall Street claims it is innocent of all wrongdoing, and the band played on...

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By mhelburn on 3/25/2006 4:29 PM
Dr. Trimbath,

Did the participants really think that they would make more money by taking the NYSE public or is this a mechanism to unload the liability of all the fraud onto retail investors? Is the NYX another Refco?

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By jpc on 3/25/2006 4:41 PM
Bobo, I would like to reprint your earlier post from the “The Amazing Overstock 107% Solution” blog. It really provides sort of an outline for a new system of financial markets – and maybe belongs “front and center” here at Sanity Check so that it can be read and read and read again by all those who visit. It’s that good. Thanks again to all of you smart people here for fighting this jihad. Thanks too to that wascally wabbit.

The notion that I am saying don't allow short selling is an interesting, but specious one. I am saying only trade in genuine shares. If you want to short sell, go borrow the shares first, from someone that is now told that they just lost all their rights by lending the shares. If they aren't OK with that, too bad, you don't get any shares. Simple. Tell everyone the truth. Whenever I hear the crap about how valuable it is to combat pump and dumps, I know I'm dealing with an apologist crackpot. It is akin to saying that vigilantes are good to combat crime - maybe some are, but it doesn't justify vigilante-ism nor the unchecked and arbitrary and often incorrect application of "justice."

Short selling is a bet against a stock or a company. Period. It is not some noble undertaking that is a national treasure. It is a bet on a price decline. The system is currently set up so that it invites fraud (misrepresenting IOUs as shares) to facilitate a practice that makes brokers lots of money - from lending shares and increased commissions. Period. Those that own and operate the system that allows this are those financially benefiting from the practice. Period. The reason they don't want shareholders to understand the truth about their non-rights bearing IOUs is because they know that nobody would want the worthless IOUs if they told the truth, and their little money making scheme would collapse. Period.

It isn't about protecting folks from pump and dumps, it is about Wall Street making obscene profits by misleading investors. And naked short selling is about predators making even more obscene profits by engaging in stock manipulation, and prime brokers making obscene profits by creating stock out of thin air.

It is all about Wall Street making obscene profits at the expense of investors. Period. And all the rhetoric about how vital short selling is, or how trustworthy the system is, is horseshit. It is all about the money, and all the self-serving circular logic is nothing more than facile rationalizations by those generating obscene profits.



Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By rtway1 on 3/25/2006 4:49 PM
Please express my sincere thanks to all involved, especially Dr. Trimbath. It is a shame she is not allowed to speak at Sen. Shelby,s dog and pony show. America needs a wake up call.

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By hwh on 3/25/2006 7:00 PM
An eloquent & understated confirmation of Rod Young's pleading to the Commissioner's Court. Taken together they explain the reason the SEC commissioners held the unprecedented fact finding session.

The epidemic is in need of an innoculation much worse than the small pox, cholera, cancer, & bird flu added together. Many have been lost, some are beyond hope.

The global economy is at risk and will be a global depression if everyone involved does not start thinking the word "ANSWER!"

Dr. Trimbath is the closest thing yet to a resolution short of global economic meltdown. At this point the question is who will be affected but how badly will all be injured.

Solution is the germane term. The history beeks can work through the blame game. We need answers now...hwh

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By dave on 3/25/2006 7:10 PM
If you are able to interview her further, can you ask her who Cede & Co. is?


Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By browntrout on 3/25/2006 7:21 PM
Hwh- The SEC did not hold their hearing on Eagle Tech by choice. The judge refered the case back to them. They would have liked to have escaped that bullet. They were not looking for facts- they want to expedite deregistering any stock as quick as possibly that is a victim of naked shorting and is making noise to protect the crooks. I agree with the rest of your statement about the "epidemic" and "the answer". It is truly upon us , time is running out and the crooks keep right on marching. TIC TOC TIC TOC!

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By opcowboy03 on 3/25/2006 7:27 PM
I am concerned about the safety and well being of Dr Trimbath. Maybe because I watch too much tv, but it concerns me that a person of her background and knowledge has come forward. I admire and respect her courage but hope and pray that she has taken steps to protect herself. Perhaps evidence secreted away in a safety deposit box that names names with the key in a locker at the bus station in Falling Rock, BFE. Just like on tv.

Surely she knows that these guys are dangerous and she must take steps. To late to go undercover like EB.

The safest thing to do would be go to the State AG and big name news outlets with certain proof after putting names away in that security box.

No matter what the good Dr does I thank her and EB for their time and efforts. Hopefully this will all get aired and there will be a revolution in this country with the good Americans in charge again.

op

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By robelita on 3/25/2006 7:45 PM
Word is getting out:

ragingbull.lycos.com

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By troydian on 3/25/2006 7:59 PM
I personaly dont buy into the (world market collapse and blood in the streets) analogy of the repercutions .. they have plenty of dollars to be disgourged. Just for once their charades should be payed for out of thier accounts not the taxpayers. Even if they must relinquish their homes boats cars and jewels. all My opinion of course

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By opcowboy03 on 3/25/2006 8:33 PM
troydian . . . .

You are very much of the correct opinion!!!!! atleast in my opinion!!!!

op

Re: First In The "Experts Speak Out" Series - Dr. Susanne Trimbath Knocks One Out Of The Park By captspell on 3/25/2006 10:52 PM
troydian - I could not agree more. Good job Dr. Trimbath and EB. Good job.


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From: StockDung5/16/2007 2:01:59 PM
   of 2593
 
"Frizzell states, proves they manipulated CMKM stock by creating and selling nonexistent shares to the tune of millions of dollars in illegal gains and resulting in the subsequent loss of market trading privileges for the company and value for the shareholders. " faulkingtruth.com

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To: StockDung who wrote (2569)5/16/2007 2:38:35 PM
From: CBurnett
   of 2593
 
Truthy, I thought the whole stock thing was a sham orchestrated by Urban and his band of thieves ?
The Naked short was just fiction. They diluted the shares.

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To: CBurnett who wrote (2570)5/16/2007 3:10:20 PM
From: StockDung
   of 2593
 
NAKED SHORT SELLING IN CMKX NOT FICTION. IT WAS IN THE MILLIONS LOL A PICAYUNE $300

Mr. Frizzell obtained the data for delivery failures in CMKM for April of 2005. Setting aside the observation that not all delivery failures represent naked short sales, the information provided to Mr. Frizzell shows that the failures in CMKM were insignificant and transient.

Indeed, the delivery failures topped out at approximately 186 million shares on April 22, 2005, a trifling amount for a company with 703.5 billion shares outstanding. Moreover, even that insignificant number of fails was settled a few days later. At the end of the month the delivery failures amounted to only approximately 3.1 million shares worth a picayune $300.

In any event, the vaunted task force perpetuated the fantasy about a massive naked short position, to the evident delight of many of CMKM's loyal followers.

Alas, the "cert pull" further debunked the notion of a massive naked short position and, as the scheme was winding down, Mr. Frizzell removed the claim about a potential short position of two trillion shares from the task force website

========================================================

CMKM Diamonds makes the big time in NYT article

2006-10-04 10:55 ET - Street Wire

by Lee M. Webb

CMKM Diamonds Inc., Saskatchewan native Urban Casavant's revoked pink sheet woofer, has made the big time, if that can be measured by an unflattering article in The New York Times and an equally biting follow-up blog entry by chief financial correspondent Floyd Norris.

The hook for Mr. Norris's Sept. 29 New York Times column was a National Association of Securities Dealers (NASD) enforcement action against Nevada-based NevWest Securities Corp. and its two senior officers, president Sergey Rumyantsev and vice-president Antony M. Santos.

As previously reported by Stockwatch, the NASD complaint alleges that the respondents violated anti-money laundering rules, failed to file suspicious activity reports with the U.S. Treasury Department's Financial Crimes Enforcement Network and basically looked the other way as a client with 32 accounts dumped a staggering 259 billion shares of CMKM for proceeds of $53-million. (All amounts are in U.S. dollars.)

The respondents have not yet filed a response to the complaint and no findings have been made regarding the allegations.

The NevWest client, identified only by the initials "JE" in the complaint is actually John Edwards, who is not a party to the NASD action.

As part of his column headlined "Selling Shares by the Billions to Racing Fans," Mr. Norris sketched some of the background of the wild CMKM sub-penny promotion.

The column

"Was this stock being traded by crooks?" Mr. Norris asks in his opening. "Should the brokers have noticed?

"How about the regulators, who now charge that the brokers missed 'red flags' but may have missed a few themselves."

According to Mr. Norris, who does not identify Mr. Edwards in his column, the NevWest client unloaded the vast majority of his 259 billion CMKM shares "before the company had bothered to let investors know so many shares existed."

In fact, while not mentioned by Mr. Norris, Mr. Casavant did what he could to keep investors in the dark about the massive dilution, including gagging the company's transfer agent.

Moreover, while he was peeling off hundreds of billions of shares that ended up in the hands of family, friends and business associates as well as his own, Mr. Casavant had his investor relations lackey Melvin O'Neil spread the word to the company's cult-like following that, far from diluting the company, he was retiring shares.

Much to the dismay and even continued disbelief among some of the CMKM fanatics, by the time the printing press was turned off there were an incredible 703.5 billion shares issued and outstanding.

Touching on CMKM's purported business, Mr. Norris goes on to say that CMKM claimed to be in the diamond business in Canada.

In fact, CMKM did scoop up some moose pasture in Saskatchewan and, along with a couple of Canadian joint venture partners, did manage to poke a few holes into the previously discovered and abandoned Smeaton kimberlite. That provided some promotional mileage.

CMKM's limited exploration also included drilling a hole at the Smeaton town dump, which at least provided a few laughs in the absence of any toutable results.

According to Mr. Norris, while the company could not come up with the money to work its claims, "it did spend $4 million to promote itself at 'funny car' races by sponsoring the CMKXtreme car, which had a drawing of a diamond and a miner on its side."

Given that CMKM has not filed any financial statements, the $4-million may be a best guess based on the letter of an auditor who was fired after reporting that he had uncovered possible criminal activities at the company.

Among other things, ousted auditor Brad Beckstead disclosed to CMKM and subsequently the SEC a possibly illegal transfer of $4-million to CMKXtreme Inc., a company controlled by Mr. Casavant.

In any event, CMKM at one time sponsored two funny cars, including one with a caricature of what appeared to be a construction worker wielding a jackhammer on some substance from which fully cut diamonds bounced into the air. CMKM also sponsored a speed truck and a motorcycle as part of its racy promotion.

As noted by Mr. Norris, the U.S. Securities and Exchange Commission (SEC) finally pulled the plug on CMKM. However, the revocation did not become final until Oct. 28, 2005, more than seven months after the regulator filed its administration proceeding against Mr. Casavant's dog of dogs and long after hundreds of billions of shares had been dumped on gullible investors.

After sketching the NASD complaint against NevWest and its two officers, Mr. Norris offers some final thoughts.

"What does all this prove?" Mr. Norris asks nearing the end of his column. "It may indicate that the Patriot Act gives regulators an unexpected tool to force brokers to tell the government when they see funny business. It may also reflect the fact that regulators do not even look at many filings.

"And it shows that this can go on and on. CMKM has reached a deal to sell what assets it has to Entourage Mining, a penny stock company based in Vancouver, British Columbia, which will pay with shares that will be distributed to CMKM holders."

Indeed, in a peculiar deal announced last year as CMKM dropped its appeal of the SEC ruling, paving the way for the regulator to finalize the revocation order last October, Entourage issued 45 million shares to the pink sheet promotion for some Saskatchewan claims under the control of Mr. Casavant's business associate Emerson Koch.

Entourage, which changes hands for less than 30 cents per share in light trading on the OTC Bulletin Board, has seen the majority of the claims acquired in the deal with CMKM expire, many of them before the 45 million shares were even issued.

"Looks like a hot stock to me," Mr. Norris remarks at the end of his column.

It remains to be seen whether the 45 million shares of that "hot stock" are eventually distributed to CMKM's shareholders.

In a rare SEC filing on Oct. 24, 2005, CMKM disclosed that it was in default on all of its mineral property agreements, did not have the money to continue operations and would be winding up its affairs.

As part of the winding up, the company announced that the 45 million Entourage shares would be distributed to CMKM shareholders.

To effect the liquidating distribution, CMKM struck a "task force" consisting of the company's former trophy co-chairman, 87-year-old Robert Maheu, corporate counsel Donald Stoecklein and Texas lawyer Bill Frizzell.

As previously reported by Stockwatch, Mr. Frizzell, a CMKM shareholder, represented about 5,000 other shareholders who anted up $25 each for his services during the administrative proceeding against the company.

Mr. Frizzell was among the company's cult-like followers convinced that the massively diluted pink sheet woofer's woes could be largely attributed to naked short selling.

The vaunted CMKM task force insisted that shareholders take physical delivery of their shares and fax copies to Mr. Frizzell's office in order to qualify for the Entourage distribution.

While the certificate pull was ostensibly instituted as part of the "orderly and verifiable pro rata liquidating distribution" of Entourage shares, the cockamamie scheme was underpinned by the belief that it would disclose a huge short position in CMKM.

Indeed, the task force, effectively spearheaded by Mr. Frizzell, proclaimed on its website that it had "credible information" indicating that there was a potential short position of two trillion shares.

As previously reported by Stockwatch, a review of CMKM's trading data debunks the incredible claim of a potential short position of two trillion shares.

From the time Mr. Casavant took control of CMKM in November of 2002 until the SEC yanked the company's stock registration in October of 2005, approximately 1.77 trillion CMKM shares changed hands.

It should be clear to most people that it is impossible to have a short position of two trillion shares when only 1.77 trillion shares have traded.

Interestingly, the impossible notion of a possible naked short position of two trillion shares was also debunked by information regarding delivery failures that was provided to Mr. Frizzell by the SEC.

Mr. Frizzell obtained the data for delivery failures in CMKM for April of 2005. Setting aside the observation that not all delivery failures represent naked short sales, the information provided to Mr. Frizzell shows that the failures in CMKM were insignificant and transient.

Indeed, the delivery failures topped out at approximately 186 million shares on April 22, 2005, a trifling amount for a company with 703.5 billion shares outstanding. Moreover, even that insignificant number of fails was settled a few days later. At the end of the month the delivery failures amounted to only approximately 3.1 million shares worth a picayune $300.

In any event, the vaunted task force perpetuated the fantasy about a massive naked short position, to the evident delight of many of CMKM's loyal followers.

Alas, the "cert pull" further debunked the notion of a massive naked short position and, as the scheme was winding down, Mr. Frizzell removed the claim about a potential short position of two trillion shares from the task force website.

The cert pull kicked off in November of 2005 and officially ended on May 15 of this year. According to the task force website, 39,648 CMKM shareholders faxed copies of their share certificates.

While that it is certainly a remarkable achievement, those certificates represented only approximately 633.3 billion shares, according to the task force's tally. That is approximately 70 billion shares less than CMKM's 703.5 billion issued and outstanding shares.

The ballyhooed task force officially dissolved on June 6, but the liquidating distribution of Entourage shares still has not taken place.

Reportedly, the task force recommended that CMKM proceed with an interpleader action in a U.S. District Court. In effect, CMKM would hand the 45 million Entourage shares over to the court and let a judge decide who has a legitimate claim to them and how they should be divided up.

So far, CMKM has not taken up the task force's recommendation and the liquidating distribution remains in limbo.

Meanwhile, some of CMKM's shrinking band of cult-like followers still believe that there is a massive naked short position in the revoked pink sheet dog of dogs.

Apparently some of the CMKM fanatics decided to set Mr. Norris straight on the matter.

Mr. Norris responded with what was essentially another article on his New York Times blog.

The blog

Evidently a quick study, by the time Mr. Norris posted his blog article on the evening of Sept. 29, he had identified Mr. Edwards as the NevWest client who dumped 259 billion CMKM shares for proceeds of $53-million.

"According to the NASD, many of the shares sold by J.E. had been registered in the name of the stock transfer agent used by the company, a rather unusual procedure," Mr. Norris wrote.

In fact, the NASD alleges that from August of 2004 and continuing into 2005, Mr. Edwards began depositing CMKM certificates in the name of NevWest's clearing firm, not the company's stock transfer agent.

As it happens, during that period, NevWest used Computer Clearing Services Inc. as its clearing agent.

A review of information from the master shareholders list as of Dec. 31, 2004, reveals that approximately 165 billion shares were issued in the name of Computer Clearing Services.

Interestingly, Computer Clearing Services routed almost all of its non-directed trades through subsidiaries of Knight Trading Group Inc., now known as Knight Capital Group.

During CMKM's racy promotion as billions of shares regularly traded on a daily basis, many of the company's cultish followers were stridently claiming that Knight was one of the firms shorting the stock. Of course, there was no evidence to back up the shorting claims.

Some of CMKM's loyal fans took the purported shorting issue up with Mr. Norris, who was clearly surprised at the choice of concerns.

In his blog article, Mr. Norris notes that Mr. Casavant invoked his Fifth Amendment right not to incriminate himself and refused to testify at the SEC administrative hearing in May of 2005.

He also notes that Mr. Maheu, then the company's touted co-chairman, knew nothing about CMKM's financial condition and had never even visited the company's office.

"So who are shareholders mad at?" Mr. Norris asks. "The management? The man who sold more than a third of the shares outstanding without ever filing a form saying he owned more than 5 percent, and who may have been an insider?

"The S.E.C. for letting this go on for a couple of years before revoking the company's registration, or for having not yet brought any charges against J.E. for selling them shares that may well be worthless?

"No, not any of them.

"A few shareholders who contacted me today were furious about my column because it failed to identify the real villains, as they saw it -- the naked short sellers who they say sold the shares without borrowing them."

Rounding out his blog entry, Mr. Norris reproduced a bit of correspondence from one of the CMKM "get shorty" fanatics.

"What possibly could be the reason you wrote about a worthless little pennystock CMKM Diamonds..and placed it on the first page of the NY Times business section," the writer wanted to know.

"Could it possibly be that the company has just about implicated every major brokerage firms in the country in the systematic rape of the American people due to the insidious practice of NAKED SHORT SELLING...COUNTERFEITING," the fantasizing correspondent continued.

"Your boss's (sic) on Wall Street will have to do some heavy spin on this one Floyd," the writer added.

Mr. Norris's blog response clearly did not satisfy some of the company's faithful followers.

"I will guilt this SOB into action!" an Internet poster identified as Jim Farn declared, pasting a copy of another message to Mr. Norris.

"You might be interested to know that Harvey Pitt would be disappointed that you have chosen to focus your efforts on 259 billion shares and John Edwards," Mr. Farn wrote.

It is not clear why the posited disappointment of Mr. Pitt, who was essentially forced out as SEC chairman in November of 2002 after only a 15-month stint, might be of any interest at all to Mr. Norris.

"IMO this is a naked short selling sting led by Mr. Bob Maheu," Mr. Farn continued. "You focussed on some questionable aspects of this story. I respectfully ask you to do some digging with regards to Maheu and 'forced communication'. You might find some similarity with Hughes planes and Casavants cars.

"You are grossly underestimating what you are discussing.

"As a Times subscriber and avid fan, I expect more and I simply do not understand your simplistic analysis and angle."

Ah, yes; welcome to the wild and woolly world of CMKM and its remaining gullible cult-like followers, Mr. Norris.

Meanwhile, CMKM has a new "interim" chief executive officer, Kevin West, who was appointed on Sept. 19. Mr. West, who has been a CMKM shareholder for a long time, worked on the certificate pull scheme initiated by the vaunted CMKM task force.

Mr. West also served as vice-president of The Owners Group Inc., a budding stock touting service that grew out of Mr. Frizzell's representation of CMKM shareholders during the SEC administrative proceeding against the company.

CMKM's new interim chief executive officer has been an ardent crusader against naked short selling, as he understands it.

Among other things, Mr. West circulated a letter written to U.S. President George Bush, SEC chairman William Donaldson and others in which he natters about collusion between the Depository Trust and Clearing Corp. and the SEC regarding short selling and suggests that journalists are paid to deceive people "into believing that there is no corruption."

"There are literally tens of thousands of average Americans who are now aware of the SEC's complicity in the sordid tale of abusive and illegal naked shorting," Mr. West wrote. "The DTCC 'earns' hundreds of millions of dollars annually by facilitating this violation of the small investor, and moreover we know the SEC gets a 'commission' on every violation."

Mr. West, who did a fair amount of Internet touting of CMKM, also once served up a "conservative" valuation of the company, pegging it at a modest $64-billion and suggesting that it could realistically be worth many times that amount.

CMKM's new leader also offered a rather interesting assessment of Mr. Casavant in a message to so-called bashers as the promotion was stumbling in October of 2004.

"No matter what you believe, Urban Casavant is a Godly man and God is using him to re-distribute the wealth on this earth," Mr. West wrote. "If you are one that try (sic) to mess with this plan, may God have mercy on your soul."

Since his appointment as interim chief executive officer, Mr. West has asked CMKM shareholders to help out with prayers.

The silly saga continues.

Comments regarding this article may be sent to lwebb@stockwatch.com.

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To: StockDung who wrote (2571)5/16/2007 3:39:05 PM
From: CBurnett
   of 2593
 
So what you are saying is an illegal activity was applied to another illegal activity ? A scam perpetrated upon a scam ?

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From: CBurnett10/13/2007 8:54:44 AM
   of 2593
 
Sooooooo...I have been hearing Accadacca says a buyout is coming ! I ask a buyout for what ? No assets, no claims...who in the world would want this crap ?
I'm guessing here but ACCADACCA appears to be a person who is compensated for promulgating mis-truths in order to hold off a more shareholder lawsuits.
I have never witnessed such a fiasco in the stock trading world.
I listened to a pal-talk session where he was treated like the CEO of a major corporation. This chap Acca, as I understand it, is a trade contractor who has a poor grasp of reality.
I felt such deep pity for those who lost their retirements and life savings on this scam, they were hanging on his every word.
Will their be justice ?

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From: anniebonny4/7/2008 2:33:51 PM
   of 2593
 
SEC Charges Fourteen Defendants In Scheme To Issue And Sell Unregistered Cmkm Diamonds Stock

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20519 / April 7, 2008
Securities and Exchange Commission v. CMKM Diamonds, Inc., et. al, United States District Court for the District of Nevada, Civil Action No. 08- CV 0437
SEC Charges Fourteen Defendants In Scheme To Issue And Sell Unregistered Cmkm Diamonds Stock
The Securities and Exchange Commission today filed a civil injunctive action against fourteen defendants involved in the alleged illegal issuance and sale of unregistered stock of CMKM Diamonds, Inc., purportedly a diamond and gold mining company located in Las Vegas. With assistance from a transfer agent and an attorney, allegedly CMKM fraudulently issued hundreds of billions of shares of purportedly unrestricted stock to John Edwards, the scheme's mastermind, and his nominees, as well as to the nominees of Urban Casavant, the company's chief executive officer. The Commission alleges that as Casavant generated demand for CMKM stock through fraudulent promotion of the company, Edwards, Casavant, and their nominees sold their shares into the public markets for at least $64.2 million in profit, much of which was paid to Casavant to support his extravagant lifestyle. Allegedly, Edwards profited by about $26.4 million from sales through a single broker-dealer, Casavant profited by about $31.5 million, and Casavant's nominees profited by about $6.3 million.

The Commission's complaint, filed in U.S. District Court for the District of Nevada, alleges that, from January 2003 to May 2005, CMKM improperly issued up to 622 billion shares of purportedly unrestricted stock. According to the complaint, these issuances were based in large part on both written authorizations and attorney opinion letters prepared by Brian Dvorak, CMKM's lawyer, which were often facially inadequate, suspect, and inconsistent. Allegedly, based on these faulty documents, CMKM's transfer agent, 1st Global Stock Transfer LLC, and its owner, Helen Bagley, issued stacks of stock certificates without restrictive legends. Edwards, his nominees, Kathleen Tomasso and Anthony Tomasso, and Casavant's nominees, James Kinney and Ginger Gutierrez, then allegedly deposited the certificates with various broker-dealers and sold the shares into the market. NevWest Securities Corporation and its employees, Anthony Santos, Sergei Rumyantsev, and Daryl Anderson, are alleged to have sold more than 259 billion shares of CMKM stock for Edwards, despite numerous red flags indicating a massive unregistered distribution. Meanwhile, Casavant allegedly generated investor interest in CMKM by using false press releases, Internet chat boards, and "funny car" race events across the country. The complaint alleges that this promotion was extremely successful, and about 40,000 investors purchased CMKM stock during the period of the fraud without knowing that Casavant ran the company from his house in Las Vegas, and that CMKM's primary activity was to issue and promote its own stock.

The Commission charged CMKM, Casavant, Edwards, Gutierrez, Kinney, the Tomassos, 1st Global, Bagley, NevWest, Anderson, Rumyantsev, Santos, and Dvorak with violating Section 5 of the Securities Act of 1933 by participating in an unregistered distribution of securities. The Commission also charged CMKM and Casavant with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. In addition, CMKM is alleged to have violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Casavant is alleged to have violated Rule 13b2-1 under the Exchange Act. Finally, the Commission charged Casavant with aiding and abetting CMKM's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, as well as violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a 13 thereunder for which CMKM was previously found liable in an administrative proceeding.

The Commission seeks a permanent injunction against all defendants. The Commission also seeks an accounting, disgorgement with prejudgment interest, and civil penalties against Casavant, Edwards, Gutierrez, Kinney, the Tomassos, 1st Global, Bagley, NevWest, Anderson, Rumyantsev, Santos, and Dvorak. In addition, the Commission seeks a penny stock bar against Casavant, Edwards, Gutierrez, Kinney, Anthony Tomasso, Kathleen Tomasso, Bagley, Anderson, Rumyantsev, Santos, and Dvorak. Finally, the Commission seeks an order prohibiting Casavant from acting as an officer or director of any public company.

The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) and the Saskatchewan Financial Services Commission.

The Commission's investigation is continuing.

SEC Complaint in this matter

sec.gov

--------------------------------------------------------------------------------

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To: anniebonny who wrote (2574)4/7/2008 6:06:17 PM
From: CBurnett
   of 2593
 
That was quite a slap on the wrist. I want restitution.

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From: StockDung4/9/2008 5:02:13 PM
   of 2593
 
CMKM Diamonds players face stiff penalties in SEC suit
stockwatch.com

2008-04-09 14:53 ET - Street Wire

Also Street Wire (C-*ASC) Alberta Securities Commission
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission

by Lee M. Webb

CMKM Diamonds Inc.'s key players Urban Casavant and John Edwards, along with their nominees and other defendants, face the possibility of stiff penalties in a $64.2-million securities fraud lawsuit filed by the U.S. Securities and Exchange Commission (SEC) on April 7. (All amounts are in U.S. dollars.)

As previously reported, the SEC filed a 27-page complaint against 14 defendants including CMKM, Mr. Casavant and Mr. Edwards in the U.S. District Court for the District of Nevada.

None of the defendants has yet filed an answer to the SEC lawsuit and the allegations have not been tested in court.

According to the U.S. regulator, the defendants were involved in "a massive and complex scheme" to dump hundreds of billions of shares of CMKM on gullible investors during the fraudulent promotion of the Las Vegas-based pink sheet woofer from January of 2003 until May of 2005.

Other defendants include Mr. Casavant's nominees and general-purpose gofers Ginger Gutierrez and James Kinney, both of Las Vegas. In addition to serving a stint as CMKM's investor relations representatives, the SEC claims that the pair unloaded approximately 88 billion shares of CMKM and, after taking a cut, funelled the proceeds to Mr. Casavant and his family members.

Anthony and Kathleen Tomasso, a husband-and-wife team from the notorious paperhangers haven of Boca Raton, Fla., allegedly served as nominees for Mr. Edwards, a British citizen living in Las Vegas.

The SEC alleges that approximately 77.3 billion unrestricted shares of CMKM were issued to five entities controlled by the Tomassos, who promptly sold the stock and wired more than $2.2-million to Mr. Edwards and transferred substantial amounts of money to other of his associates. The Tomassos allegedly cut themselves in for approximately $648,500.

CMKM's accommodating Las Vegas transfer agent, 1st Global Stock Transfer, and its owner, Helen Bagley, are also named as defendants.

According to the SEC, Ms. Bagley received hundreds of thousands of dollars in suspicious payments from Mr. Edwards and the Tomassos and turned a blind eye to "obviously incomplete and suspicious and, in some cases, forged documentation" while issuing more than 589.7 billion shares of unrestricted stock to Mr. Edwards, Mr. Casavant, their nominees and others.

The now-defunct NevWest Securities Corp., a Las Vegas-headquartered three-monkeys brokerage firm used by Mr. Edwards, and three of its principals are also named as defendants.

The SEC claims that NevWest's chief executive officer Sergey Rumyantsev, a Russian citizen living in Las Vegas, its chief compliance officer and lawyer, Anthony Santos, and former broker Daryl Anderson, now living in Laguna Beach, Calif., saw no evil, heard no evil and definitely spoke no evil as Mr. Edwards opened 36 accounts and unloaded a staggering 259.9 billion shares of CMKM for proceeds of more than $53.3-million.

Over the entire period of the fraud, the approximately $2.58-million in commissions generated by Mr. Edwards's trades accounted for 35.7 per cent of NevWest's total revenue. Mr. Anderson earned approximately $2.3-million for handling the trades.

Rounding out the list of defendants is shady lawyer Brian Dvorak, who is currently living in Boulder, Colo., and who recently filed for bankruptcy protection.

According to the U.S. regulator, in return for at least $495,000, Mr. Dvorak held his nose and wrote hundreds of bogus opinion letters fraudulently authorizing the issuance of more than 606 billion unrestricted shares of the smelly promotion.

Dozy gatekeepers

In conjunction with filing the lawsuit, the SEC issued an April 7 press release commenting on the subpenny promotion and the gatekeepers who allegedly facilitated the fraud.

"The allegations in this case highlight the significant investor harm that results from abuses in the penny stock market," the acting director of the SEC's Los Angeles office Rosalind Tyson remarked.

"Although CMKM's stock sold for well under a penny a share, the defendants were able to reap millions in profits by conspiring to flood the market with billions of unregistered shares while falsely promoting CMKM's value," Ms. Tyson added.

Indeed, Saskatchewan native Mr. Casavant, who honed his touting skills on a number of Canadian mining plays before moving his act to Las Vegas after getting the boot from former Alberta Stock Exchange company Petro Plus Inc., brought a whole new dimension to the world of pink sheet promotions.

Instead of trying to run up the price of his pink sheet dog, Mr. Casavant simply devoted his efforts to generating enough demand among gullible investors to sop up the flood of subpenny stock as he peeled off hundreds of billions of shares for himself, family members and associates.

In the process, Mr. Casavant issued more CMKM shares than previously issued by any company on the planet. By the time the SEC yanked CMKM's stock registration in October of 2005, a staggering 703.5 billion shares were outstanding.

The head of the SEC's enforcement division, Linda Chatman Thomsen, also had something to say about the lawsuit, issuing something of a warning to so-called "gatekeepers" of the securities markets.

"The perpetrators of this massive scheme include several securities professionals and an attorney," Ms. Thomsen commented. "Today's action demonstrates that we will aggressively pursue individuals who ignore their obligations as gatekeepers to our markets and instead collude with their clients to violate the federal securities laws."

Canadian regulators, comprising a patchwork of provincial and territorial securities watchdogs with limited jurisdictional powers, have a remarkably dismal record when it comes to enforcing their nebulous gatekeeper rules and a similarly poor record in suing stock fraudsters and their accomplices.

The SEC, however, has been cracking down on companies and individuals for gate-keeping lapses and is much more aggressive, as well as more successful, in suing crooked market players, including Canadians. Indeed, many consider the SEC to be Canada's most respected securities regulator.

The U.S. regulator is seeking significant penalties against the defendants in the CMKM lawsuit, including Saskatchewan native Mr. Casavant.

The penalties

Among other things, the SEC is seeking judgments against the defendants enjoining them from future violations of securities regulations. That, of course, is pretty standard fare in securities lawsuits.

The U.S. regulator is also seeking an order permanently banning Mr. Casavant from acting as an officer or director of any public company. That, too, is a standard request in such cases.

The SEC further seeks judgments permanently barring each of the 11 individual defendants "from participation in any offering of a penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase of any penny stock." That would effectively boot the defendants out of the market.

With the exception of CMKM, which is penniless and a company in name only, the regulator is also asking for civil penalties to be assessed against the defendants.

Perhaps of most concern to the defendants, apart from CMKM, the SEC is seeking disgorgement of "all ill-gotten gains from their illegal conduct, together with prejudgment interest thereon."

The regulator claims that Mr. Casavant pocketed approximately $31.5-million, Mr. Edwards made off with $26.4-million and Mr. Casavant's nominees raked in approximately $6.3-million.

Ms. Bagley might be on the hook for several hundred thousand dollars, including $344,000 she allegedly received from the Tomassos, who might be looking at disgorgement of approximately $650,000.

NevWest, which had its registration yanked last year, allegedly made approximately $2.58-million for its participation in the scheme, with $2.3-million going to former broker Mr. Anderson.

Mr. Dvorak allegedly received $350 for each of the hundreds of opinion letters he wrote and received at least $495,000 from Mr. Casavant and his nominees during 2004.

It remains to be seen whether the SEC, if it prevails in the case and is successful in obtaining the disgorgement orders, will be able to collect any of that money.

Saskatchewan sightings

Mr. Casavant, who allegedly pocketed the most money from the scheme, abandoned his "extravagant lifestyle" in Las Vegas and lit out for Saskatchewan after handing the company off to one of CMKM's biggest cheerleaders, Kevin West, last March.

Mr. West, who once touted CMKM as being conservatively valued at $64-billion and possibly worth as much as $1-trillion and praised Mr. Casavant as a godly man doing God's work in redistributing the wealth of the world, apparently had something of an epiphany after the Saskatchewan promoter took a powder.

Under Mr. West's direction and with the assistance of his Texas associate and lawyer Bill Frizzell, another former cheerleader and proponent of the ridiculous claim that the pink sheet company was the victim of naked short selling to the tune of two trillion shares, CMKM is suing Mr. Casavant for allegedly looting the company of $200-million.

Mr. Casavant, now living a less extravagant lifestyle and frequenting Saskatoon casinos rather than his favourite Las Vegas gambling dens, has not yet been served with the year-old CMKM lawsuit. He is also dodging other U.S. lawsuits and creditors.

Perhaps the SEC will be more successful in reeling the Saskatchewan promoter in.

Meanwhile, in an administrative action that points to the peculiarity, if not dysfunctional nature, of the Canadian regulatory system, the Alberta Securities Commission (ASC) has scheduled a hearing for April 9 to consider whether a cease trade order should be issued against CMKM.

The ASC action comes more than three years after the Saskatchewan Financial Services Commission issued a cease trade order against the company and almost 30 months after the SEC revoked CMKM's stock registration, ending any public trading of the shares.

Stockwatch will pick up its review of the SEC lawsuit and continue to follow developments in future articles.

The saga continues.

Comments regarding this article may be sent to lwebb@stockwatch.com.

(Further information regarding CMKM Diamonds and associated companies can be found in Stockwatch articles dated Oct. 21, 2003; June 22; Sept. 16 and 24; Oct. 1, 15 and 20, 2004; Feb. 11, 14, 18, 22 and 23; March 1, 3, 4, 7, 14, 15, 16 and 21; June 6, 8, 9, 10, 13, 14, 15, 16, 17, 20, 21, 22, 29 and 30; July 1, 4, 6, 12 and 13; Aug. 2, 5 and 9; Sept. 7, 12, 27 and 30; Oct. 24, 26 and 31; Nov. 7, 11, 22 and 25; Dec. 1, 6, 9, 15 and 22, 2005; Jan. 3; Sept. 29; Oct. 4, 2006; Aug. 30, 2007; and April 7, 2008.)



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Reader Comments - Comments are open and unmoderated, although libelous remarks may be deleted. Opinions expressed do not necessarily reflect the views of Stockwatch.

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Will there be in bloody jail time for this wanker?

Posted by Gordon Ramsay @ 2008-04-09 15:34

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