Congress Sells America Short
By Mark Faulk
September 20, 2005
In yet another twist in the stock market scandal known as Stockgate, the Faulking Truth has learned that Senator Richard Shelby (R-AL), Chairman of the Senate Banking Committee, has shelved a planned Senate Subcommittee Hearing investigating the issue. Originally scheduled for February of this year, and then postponed several times, the hearing, which has been advocated by Senator Robert Bennett (R-UT), has been cancelled indefinitely.
According to a reliable source inside of the planned investigation, "The authority and the responsibility to take the necessary steps to deal with the issue of naked short selling lies squarely at the feet of Senator Shelby, and he has chosen not to allow the planned Senate Banking Subcommittee hearing to go forward." In an earlier interview with the same source, we were told that "Senator Shelby tends to grab things like this for his own purposes, and his own purposes don't always mesh with what's best for the public."
Translation: Senator Shelby has sold out America in the name of special interests, and sold out the small investors to the hedge funds and their multi-millionaire clients. According to a trader who has been in the business for over 20 years, "the issue of naked short selling, or to put it more bluntly, 'stock counterfeiting', affects nearly every person who has ever bought or sold stock or invested in mutual funds. This scandal has cost investors and companies trillions of dollars, cost our country billions in tax revenues, and the money stolen from investors has even found its way into the hands of organized crime and terrorist organizations."
While Congress and the SEC, who are and should be responsible for insuring that our markets are fair and honest, do nothing as company after company is forced into bankruptcy, and while private investors lose millions of dollars every single day, offshore hedge funds, whose clients are already multi-millionaires, continue to move money out of America and into tax havens in Bermuda and the Cayman Islands.
When the stock market began its precipitous crash in 2000, eventually losing 38% of its value (with NASDAQ stocks losing 60%) and trillions of dollars, that money didn't simply "disappear." It just changed hands, from long investors to hedge funds and short sellers, and much of it was moved to offshore tax havens, out of our economy, out of our tax coffers, out of America. It is the largest money drain in the history of our country, and thanks to the inaction of Congress and the SEC, it is still going on every day.
In the meantime, an eleven state task force, under the auspices of the North American Securities Administrators Association, has begun its own investigation into naked short selling, and is already plotting a strategy to deal with the massive scandal. In a September 8th letter from Ralph Lambiase, the head of the Connecticut division of securities and business investments, who is heading the task force, to Dave Patch editor of www.investigatethesec.com , Lambiase says:
Members of Congress are confronted with a myriad of constituent concerns, many of which may, at first blush, appear to have a more direct affect on constituents than the problem of abusive naked short selling. In fact, abusive short selling poses a direct threat to the economic well being of small business and the entire community.
Congressional legislators want and, by necessity, must have the utmost confidence in governmental agencies capacity to carry out their legislative mandates. The SEC is moving slowly forward as REG SHO in its current state is studied and debated seemingly ad infinitum. While slight modifications to the existing Rule may result from such an approach, a far more threatening pattern of abuse is certain to continue unless wholesale reforms are made to remedy the concerns of the small business community. Without further substantive reform to REG SHO, many more small companies in our communities will succumb to failure - not through the mechanism of the marketplace but at the hands of manipulators.
Why, once again, are the states being forced to deal with issues that Congress should be responsible for? It was former New York Attorney General Eliot Spitzer who uncovered abuses in the stock market in 2003....while the SEC did nothing....and now it's a consortium of state officials who are spearheading efforts to once again reform the stock market....while Congress and the SEC do nothing.
This is no longer an issue that can be dismissed as speculation. The evidence is clear and unmistakable. Since the SEC implemented REG SHO, many well known companies have been listed for significant "failure to deliver" of stock transactions, many since the very first day that the list was issued (172 days and counting). Billions of dollars in lawsuits have been filed by companies and stockholders against brokerage firms, hedge funds, and the SEC and DTCC themselves, and the NASD has requested information from brokerage firms to deal with what one regulator called an "epidemic of naked short selling."
So what will it take for Congress to act in the best interest of its constituents, instead of caving in to special interest groups and the ultra-wealthy? According to our source inside of the aborted subcommittee hearing, while Senator Bennett, who grilled former SEC Chairman William Donaldson on the issue of naked short selling in March of this year, "remains very committed to this issue, he does not have the authority to bring together a hearing at this time. What has happened is that the enormous pressures on the committee have simply tipped them from being able to raise this issue to a level where a hearing can be held. There simply isn't enough pressure from the grassroots, from constituents, to force a hearing."
So there you have it.
Senator Shelby, and all of the other members of the Senate Banking Committee, apparently
want to hear from everyone who has been ripped off in the stock market because of naked
short selling, or for that matter, from anyone who wants publicly traded companies to have
a fighting chance at success, or who wants a fair and honest stock market. We'll post a
link to the Senate Banking Committee members, so you can contact every one of them, but in
the meantime, Senator Shelby's phone number in Washington is (202) 224-5744, and his email
address is email@example.com Give
him a call, and tell him what you think. I'm sure he'll be glad to hear from you.
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