- Market Commentary -

November 1, 2010 (FinancialWire) (Investrend Forums Syndicate) (By Bud Burrell) (Entire post at http://www.investrendsyndications.net/12-content/manl/burrell/2010/10/php/30.php) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — In 1994, an advisor to the Board of Solvex asked me if I could identify a US Co-Manager for the Company’s planned IPO by Deutsche Morgan Grenfell in London. I was aware of a broker-dealer not conflicted with then Exxon, and I approached them about becoming Co-Manager for the Company’s offering. The Board of Solvex rejected the offer from this broker-dealer, probably believing their market capitalization of $660 Million was justified by the retail demand its stock and its technology for tar sands had generated. Over the period of the next 12 months, while their IPO fell out of bed, Solvex was dissected like a dead frog in a lab, their stock decimated by a highly orchestrated attack led by an assortment of predatory broker-dealers and other emerging short sellers, working with research firms willing to produce reports for pay adverse to the Company and its plans. The end result was the bankruptcy of the Company, wiping out tens of millions of dollars of investments and market capitalizations by thousands of mainly small investors over a period of years.

I had little reason to see that this transaction’s demise would only be the first of many large and small companies destroyed by short selling syndicates working together to beat SEC and NASD rules prohibiting certain kinds of short selling, along with illegal manipulations of markets across the board. NASD and SEC rule changes made in 1996 and 1998 made these tactics that much more profitable, and they spelled the destruction of thousands of small, medium and eventually large public companies who were without recourse of any kind. If they complained to the SEC about manipulation, the SEC would immediately target the victim company and its management for harassing investigations in which they were automatically assumed to be guilty of criminal malfeasance, without a presumption of innocence. The perpetrators and beneficiaries of these manipulations had to go Courts on several occasions but for the most part, they were shielded by the regulators and their Courts.

Even when the cases actually led to DOJ getting criminal convictions and pleas from the perpetrators, the companies and their shareholders were savaged, frozen in place, made meaningless promises of many more indictments to come, and worse, in some cases much worse. In case after case, the DOJ would prove conspiracy to operate short selling syndicates and manipulations by figures with direct ties to organized crime, yet would not support damage claims against these criminals by the real victims. In one case, where there were several indictments of international criminals, the pending civil case was stayed for a DECADE, while the DOJ protected God only knows what part of their criminal proceedings.  Of course, they did not and could not extend the statute of limitations for victims to assert civil claims.

The criminals could always afford the best and highest price criminal and civil counsel representation, and judges, particularly Federal Judges sided with these high priced counsel and their regulatory alter egos who didn’t want their incompetence and malfeasance exposed to the light of day. In case after case, except where the result was unavoidable, either the DOJ or the Courts systematically dropped the ball, hinting at a criminal reach into ex parte communications within the judicial systems of the State and Federal Governments.

Only a few champions emerged to oppose this egregious set of repeated circumstances. In one case after another which involved criminal prosecutions, the DOJ promised super-ceding indictments to the victims companies and their shareholders. Without exception, these indictments never materialized, not in cases ranging from the 88 convictions of the Bermuda Short Sting Case of 2002 made around Mark Valentine, or the 17 felony convictions made around the Bryn Mawr Securities manipulation and destruction of Eagletech Communications, or the convictions of the biggest swindler and short syndicate operator of the decade, Amir (Anthony) Elgindy and his coterie of 650 site members, who took responsibility for attacking over 2200 companies alone, and too many more.

These criminals had competent representation, and for the most part, these lawyers facilitated the protection of these criminals and their co-conspirators with a fervor rarely seen from the Prosecutors in the cases.  In one case, a defendant jumped bail for 14 months, to be re-arrested and convicted of two counts of security fraud, coming to trial only 9 years after his original crime.  In his case, he never served a day in jail, when he should have been looking at 10 years in prison. He avoided prison by giving up information on a flight tax felon and professional associate named Joe Conforte, who had relocated to Brazil.

In one of the most serious cases, two securities lawyers were to be tried on 64 counts of securities fraud and other assorted felonies. Just at they were to go to trial, and after many of their associates had already pled guilty, their counsel asserted inaccurately that the federal prosecutors had wrongly withheld exculpatory information totaling 600 pages of a total evidence file of over 4 Million pages. The Judge in the case cut them loose. I knew these two scoundrels, and they deserved felony convictions just on the back of their criminal affiliations with professional con-men who had worked the securities arena for decades.

The American people no longer trust our Government, and the USG has no one but itself to blame. From FINRA, to the SEC, to our legal systems, they see nothing but corruption and insulting abuse. No lie is too big for them to tell, whether it is that illegal short selling doesn’t exist (an astonishing taken by the SEC Chairperson Mary Schapiro), to the SEC having done nothing improper in its protection of Bernard Madoff, and worse, much worse.

I could see this as clearly as my hand in front of my face. I had been a trader, salesman, marketing specialist in derivatives, investment banker, corporate principal and more, almost as if I had known I would spend my life learning the skills that would make this scandal so transparent to me. The weaknesses of other advocates is that it took them much longer to understand what had been done to them, and longer yet to believe the USG was an instrumental supporter of this rape.

It is just a matter of time before the scope of the thefts supported by these parties become part of the public record. There will then be a butcher’s bill to be paid by these arrogant and condescending regulators and their friends that they can’t imagine. Let them find jobs in the companies they destroyed, working with the investors they decimated.  Good Luck.

Again, let them eat cake. Rats will always find a way to feed. Conversely, this Nation will learn how to protect this attack on its national security and foundational financial structure. The latter depends on trust, and they have insulted that trust to a point beyond the pale. America’s securities markets led the world. That is no more. Let someone explain why.

Source: Investrend Weblogs (http://www.investrendweblogs.net/).

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