Global Articles on what is going on...posted daily

[sandi66]

22 November 2010
FBI Raids Two Hedge Funds In Insider Trading Case: Plus Ça Change?
Genuine enforcement or bread and circuses?
Only time will tell.
The fish seems to be getting a little bigger. But only a little, and still on the relative periphery of the school.
What will be most interesting to watch is how the investigations and settlements, if any, unfold. Will they be 'cost of business as usual with no admission of guilt' fines, or will serious federal prosecutors get involved and start turning over the small fry to get to the heart of the scandals. Will they merely rustle the branches or strike to the roots? That is the difference between the appearance and the reality of reform.
However it turns out, be aware that fraud is still pervasive on Wall Street and in the US markets, and the status quo has been maintained by both political parties who receive enormous funds from the corporations in the FIRE sector.
Connecticut is to financial racketeering what Chicago was to the Mob and Prohibition. But always the real power is headquartered in New York.
Massive Insider Trading Investigation Could Nail Wall Street's Biggest Names
I would be quite a bit more impressed if the raids were on a few of the TBTF banks who make these hedge funds look like small time street dealers by comparison. But that would expand the investigation uncomfortably close to the inner warrens of the Washington Beltway, and the real seats of power and corruption, the old powers and monied interests.
WSJ
FBI Raids Two Hedge Funds Amid Insider-Trading Case
By SUSAN PULLIAM, JENNY STRASBURG And MICHAEL ROTHFELD
Federal Bureau of Investigation agents raided the Connecticut offices of hedge funds Diamondback Capital Management LLC and Level Global Investors LP amid a far-reaching insider-trading investigation.
"The FBI is executing court-authorized search warrants in an ongoing investigation," said Richard Kolko, an FBI spokesman, who declined to comment further.
Both hedge funds are run by former managers of Steve Cohen's SAC Capital Advisors. Level Global Investors LP is a Greenwich, Conn., hedge-fund firm run by David Ganek, a former SAC Capital trader and art collector. He started Level Global in 2003 and earlier this year reported managing about $4 billion in assets.
Diamondback Capital Management LLC is based in Stamford, Conn., and was started in 2005. It oversees more than $5 billion in assets, according to SEC filings.
The move by the FBI follows an article by The Wall Street Journal describing an insider-trading investigation that is expected to encompass consultants, investment bankers, hedge-fund and mutual-fund traders. The investigation is said by people close to the situation to eclipse in size and magnitude past insider-trading probes..."

jessescrossroadscafe.blogspot.com/ 22 November 2010




ty joye

[sandi66]

YouTube - THE U.S. IS A CORPORATION SHIPWRECK ON THE SEA OF SOULS



www.youtube.com/watch?v=JZzgGdxYGR0



ty PAYUS

[sandi66]

EXTENSION OF TEMPORARY EXEMPTIONS FOR ELIGIBLE CREDIT DEFAULT SWAPS TO FACILITATE OPERATION OF CENTRAL COUNTERPARTIES TO CLEAR AND SETTLE CREDIT DEFAULT SWAPS



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Under the amendments, the expiration dates of the temporary rules are extended to July 16, 2011.

sec.gov/rules/interim/2010/33-9158.pdf




TY nalmann

[sandi66]

Off To Kokomo
5:53 pm November 22, 2010, by Jamie Dupree

On Tuesday, President Obama and Vice President Biden go to Kokomo, Indiana, where they will tout gains under the controversial economic stimulus law. The White House issued the following "background" press release on the Obama-Biden trip. You can review the Obama Administration claims and leave your own review of the stimulus.
=

The White House
Office of the Press Secretary
FOR IMMEDIATE RELEASE
November 22, 2010


BACKGROUND ON THE PRESIDENT'S TRIP TO KOKOMO, INDIANA TOMORROW

On Tuesday, November 23, 2010, President Obama and Vice President Biden will take their White House to Main Street Tour to Kokomo, Indiana, a community that is turning the corner, in part as a result of innovative investments from the American Recovery and Reinvestment Act, as well as the Obama Administration's auto industry restructuring plan. Kokomo is leveraging opportunities from the Recovery Act to not only provide much-needed economic relief for middle class families, but to invest in new, sustainable industries and technologies. During the visit, the President and Vice President Biden will visit Indiana Transmission, a Chrysler plant in Kokomo.

ECONOMIC BACKGROUND AND CURRENT CLIMATE IN KOKOMO

President Obama last visited Kokomo, Indiana in April 2008. As part of that visit, he held a town hall meeting where he discussed recent layoffs in the community and called for new investments in clean energy, manufacturing and education to help bring secure, well-paid jobs to places like Kokomo.

In recent years, Kokomo, a midsized industrial town in north central Indiana, was hard-hit by devastating plant closings and layoffs. In late 2007, Kokomo Sanitation Pottery closed, laying off nearly 100 workers. And when Chrysler laid off over 11,000 workers nationwide in 2007, Kokomo lost even more jobs. In mid-2008, hundreds of manufacturing jobs were lost at the local Delphi plant. By the end of 2008, Kokomo had been labeled one of "America's Fastest Dying Towns" because of the sharp decline in local manufacturing and auto jobs. Unemployment hit over 20 percent in 2009, making Kokomo's one of the highest unemployment rates in the country.

With the help of the Recovery Act and the Administration's auto restructuring plan, along with smart investments by the mayor that subsequently leveraged additional private capital, Kokomo is on the rebound today. Unemployment is down nearly 8 percent to 12 percent as of September 2010 and the downtown has experienced significant revitalization. Kokomo is a key example of how federal government investments, when used wisely, can work together to impact an entire community.

Kokomo Mayor Greg Goodnight was able to leverage hundreds of thousands of dollars in Recovery Act funds to help revitalize the downtown. Since then, about a dozen new small businesses have opened in downtown Kokomo over the last year.

The city also significantly benefited from auto restructuring. According to recent press coverage, "without the federal auto bailout, many feel 3,500 workers in Kokomo would have lost their jobs." And according to the Mayor, Chrysler's presence in the city helps them generate about $18 million a year in property taxes. Had Chrysler gone under, the city would have suffered an enormous economic setback.

Indiana has received more than $8.4 billion in Recovery Act funds. As a result, the Council of Economic Advisors estimates that the Recovery Act is already responsible for 71,000 jobs in Indiana through September 2010. To date, more than $6.2 billion of this funding has been spent. These dollars and awards to come will continue to support even more jobs in Indiana in the months ahead.

AUTO INDUSTRY RESTRUCTURING IN KOKOMO

Without the steps the President took, Chrysler would have liquidated resulting at least a million jobs lost for workers across the country, including in Kokomo. Now, just over a year later, Chrysler is returning to profitability, hiring workers, keeping plants open. And because of the steps the Administration has taken with Cash for Clunkers and the Recovery Act, the industry overall is strengthening - including America's auto dealers.

The Chrysler plant the President and Vice President will visit in Kokomo on Tuesday received a $343 million private investment in June 2010 to retool and modernize its Kokomo transmission plant, which has helped to retain more than 1,000 workers this year for the production of a future eight-speed automatic transmission. According to the Kokomo Tribune, Chrysler has recently recalled 400 employees that were previously laid off as a result.

A new report, released last week by the Center for Automotive Research in Ann Arbor, Michigan, estimates that the President's efforts saved over 1.14 million jobs overall, and averted $28.6 billion in costs to the government. Over the past year and a half, the auto sector has rebounded: industry employment has increased nearly 10 percent, and each of the big three - Ford, General Motors, and Chrysler - is operating at a profit.

RECOVERY ACT FUNDING IN KOKOMO

Overall, the Kokomo area has received over $400 million in direct Recovery Act funding for a variety of programs and projects. These projects represent vital investments in the local community, including:

<!--[if !supportLists]-->· <!--[endif]-->Delphi Automotive, a Michigan based company, was awarded over $89 million from the Department of Energy to expand manufacturing capacity of passenger and commercial hybrid vehicles components. The "new" Delphi, with the help of the Recovery Act, is beginning to manufacture circuit boards that control hybrid vehicles, otherwise known as the "brains of a hybrid vehicle."
<!--[if !supportLists]-->o <!--[endif]-->The Recovery Act is responsible for nearly 60 jobs to date at Delphi and in total will enable the company to retain and hire nearly 200 additional workers as production of the hybrid vehicles parts ramp up over the next several years.
<!--[if !supportLists]-->o <!--[endif]-->Delphi currently supplies power electronics components such as inverters, chargers, and DC/DC converters to production hybrid vehicles from manufacturers, such as GM, Ford, Daimler, and BMW.
<!--[if !supportLists]-->o <!--[endif]-->As a result of this grant, Delphi already has agreed to supply power electronics to GM, Allison Transmission, and Coda Automotive.
<!--[if !supportLists]-->o <!--[endif]-->Production began in July and Delphi began shipping products to customers in August.

<!--[if !supportLists]-->· <!--[endif]-->In his July 4, 2010 radio address, President Obama announced a conditional offer of $400 million from the Department of Energy's 1705 loan guarantee program for Colorado-based thin film solar PV manufacturer Abound Solar. Abound will use nearly $300 million of the loan guaranteed to open a new plant in an empty Chrysler supplier factory just 20 miles outside of Kokomo, in Tipton, IN. Construction will begin on the Tipton plant in early 2012 and Abound plans to hire 900 workers at the plant once it's up and running. The loan, which is expected to close by the end of the year, will not only enable Abound drive additional economic activity across the industry and down the supply chain, but will also help establish U.S. leadership in cutting edge solar technology around the world. The project represents the first time new manufacturing technology for Cadmium-Telluride panels is deployed commercially anywhere in the world. Ninety percent of Abound's product is being exported abroad to places like Germany, Italy and the United Kingdom.

<!--[if !supportLists]-->· <!--[endif]-->Kokomo Mayor Goodnight is using $214,600 in Energy Efficient Conservation Block Grant (EECBG) funds from the Department of Energy to install energy-efficient lighting in Foster Park, along Kokomo's "Walk of Excellence" and to retrofit parts of City Hall. This funding is contributing to the revitalization in downtown Kokomo that has helped to lure nearly a dozen new small businesses in the last year.

<!--[if !supportLists]-->· <!--[endif]-->In addition to the new lighting downtown, the City is also replacing sidewalks and curbs throughout neighborhoods in Kokomo with $265,700 in Community Development Block Grant (CDBG) funding from the Department of Housing and Urban Development. HUD also provided over $1 million from in Public Housing Capital Funds to improve and modernize various public and low-income housing developments in Kokomo. The Kokomo Housing Authority reported hiring 5 new workers and retaining 38 additional workers as a direct result of the Recovery Act.

<!--[if !supportLists]-->· <!--[endif]-->Mayor Goodnight was also able to hire 5 new police officers with over $1 million from the Justice Department's Community Oriented Policing Services (COPS) program. DOJ also provided $200,000 in Byrne Justice Assistance Grant funds to the City of Kokomo.

<!--[if !supportLists]-->· <!--[endif]-->Howard County, where Kokomo is located received over $17 million in Recovery Act funding from the Department of Transportation, including:
<!--[if !supportLists]-->o <!--[endif]-->$11.4 million for the Kokomo Bypass (Route 31), which is being use to improve and realign the highway and upgrade several bridges along the route. This section of roadway is part of a $345million, 14-mile project that is part of the Indiana Governor's Major Moves program. The Recovery Act-funded section of the bypass project is 95 percent complete. The contractor is Primo, Inc., and the project has created approximately 49 jobs to date.
<!--[if !supportLists]-->o <!--[endif]-->Over $2 million to rehabilitate Dixon Road and add additional travel lanes. This major local project is still underway, even though construction has ended for the season.
<!--[if !supportLists]-->o <!--[endif]-->Over $1 million for other resurfacing projects including 18 locations on Routes 400N, 750W, and 100N in Howard County, all of which were finished in late 2009.
<!--[if !supportLists]-->o <!--[endif]-->Over $1 million from the Federal Transit Administration to purchase and renovate an existing building in downtown Kokomo to be used for both for transit operations for the City's paratransit system, the Spirit of Kokomo, and for the administration of the local metropolitan planning organization (MPO). The project is halfway completed, and created 34 jobs last quarter.

<!--[if !supportLists]-->· <!--[endif]-->The Department of Education provided the Kokomo-Center Township Consolidated School Districts with over $12 million in Recovery Act funding, including:
<!--[if !supportLists]-->o <!--[endif]-->Over $5 million in State Fiscal Stabilization Funds (SFSF) to fill budget gaps;
<!--[if !supportLists]-->o <!--[endif]-->Nearly $5 million in IDEA funding for students with disabilities;
<!--[if !supportLists]-->o <!--[endif]-->$1.7 million to expand Kokomo's existing Head Start and Early Head Start programs; and
<!--[if !supportLists]-->o <!--[endif]-->Over $1.5 million in Title I funds to improve schools in the district.

<!--[if !supportLists]-->· <!--[endif]-->The Department of Education also provided $1 million in Pell Grants to colleges and universities in Kokomo to increase access to higher education.
<!--[if !supportLists]-->o <!--[endif]-->Approximately 30,000 students in Indiana are benefiting from increased Pell Grants as a result of the Recovery Act.
<!--[if !supportLists]-->o <!--[endif]-->That total includes approximately 125 students in Kokomo alone.

<!--[if !supportLists]-->· <!--[endif]-->The Small Business Administration (SBA) supported 14 loans for small businesses in the Kokomo area totaling $7.3 million including:
<!--[if !supportLists]-->o <!--[endif]-->Gingerbread House Bakery: Lauren Gaines and her husband received a $140,000 loan through the Recovery Act to purchase the Gingerbread House Bakery. Thanks to the Recovery Act loan, they were able to save about $2,500 in fees. This loan enabled them to take over the former donut shop and make it their own. Since then, business has been booming. This loan was the only way Lauren and her husband could have started the business. They currently have 4 people on their payroll and expect to expand. The Gingerbread House Bakery has evolved and, while it still specializes in donuts, it now also makes traditional baked goods, cookies and cakes on special order and specialty treats during the holidays. Lauren reports the bakery has been increasingly busy since opening last December 1st. They expanded the kitchen in April to meet demand and they hope to expand and build another building in the next six months.
<!--[if !supportLists]-->o <!--[endif]-->Stephens Machine Inc., which is a Kokomo-based machine shop that received two SBA loans through the Recovery Act ($487,000 and $375,000). The company has two local facilities totaling more than 45,000 square feet where they engineer, design and build automated production machinery, do tool and die work and produce prototypes used for research and development. They've already reported 12 new jobs as a result of the Recovery Act loans.
<!--[if !supportLists]-->o <!--[endif]-->Blondie's Cookies, which received an $890,000 SBA loan through the Recovery Act and report creating 30 new jobs as a result of it. The company was started in 1984 when the owner was a student at Indiana State University and has 11 locations in malls around Indiana, including one in Kokomo's Markland Mall. They hope to add two to three more locations in Indiana, as well as expanding to other states.
<!--[if !supportLists]-->o <!--[endif]-->Coldline Manufacturing, which is a Kokomo-area business that is using an $80,000 Recovery Act SBA loan to revamp their business plan from manufacturing refrigerated trailers to custom auto parts and metal fabrication. As a result of their shift in strategy, they have been able to hire several new part-time workers and have saved $1,440 in fees with the loan.

RECOVERY ACT IN INDIANA

Total Jobs & Spending

<!--[if !supportLists]-->· <!--[endif]-->JOBS CREATED AND SAVED - CEA estimates that 71,000 jobs were created or saved by the Recovery Act in Indiana through September, 2010.

<!--[if !supportLists]-->· <!--[endif]-->TOTAL SPEND - More than $8.4 billion in Recovery funds has been made available to Indiana - and over $6.2 billion has already been spent.

Investing in Infrastructure

<!--[if !supportLists]-->· <!--[endif]-->INFRASTRUCTURE: Over $1.3 billion has been obligated for 1320 infrastructure projects in Indiana, funding 2,400 jobs through September, 2010.

<!--[if !supportLists]-->· <!--[endif]-->TRANSPORTATION - Over $807 million has been obligated for 1,161 transportation projects in Indiana.

<!--[if !supportLists]-->· <!--[endif]-->SMALL BUSINESS - 1,536 Recovery Act SBA-backed small business loans have been given to Indiana small businesses, supporting more than $584 million in lending.

Relief to Individuals

<!--[if !supportLists]-->· <!--[endif]-->TAX RELIEF - Because of the Making Work Pay tax credit, 2,400,000 Indiana working families will collectively receive $1.3 billion in tax relief.

<!--[if !supportLists]-->· <!--[endif]-->UNEMPLOYMENT BENEFITS - More than 580,000 Indiana residents have expanded unemployment benefits because of the Recovery Act.

<!--[if !supportLists]-->· <!--[endif]-->STIMULUS PAYMENTS - More than 1.1 million Indiana seniors, veterans and other high-need residents have received one-time economic relief payments of $250, totaling over $295 million.

Helping States

<!--[if !supportLists]-->· <!--[endif]-->TEACHERS - More than 4,300 education positions were reported as funded by the Recovery Act in Q2 2010 in Indiana - which has received more than $1 billion in State Fiscal Stabilization Funds (SFSF).

<!--[if !supportLists]-->· <!--[endif]-->MEDICAID - The Recovery Act has already made more than $1.5 billion available to Indiana for Medicaid assistance. The state of Indiana has spent more than $1.1 billion of the available funds.

<!--[if !supportLists]-->· <!--[endif]-->'COPS' PROGRAM: Law enforcement agencies in Indiana received over $26.6 million in funding from the Recovery Act to support 126 police officers' salaries and benefits for three years, including 5 officers at the Kokomo Police Department with $1,146,950.

blogs.ajc.com/jamie-dupree-washington-insider/2010/11/22/off-to-kokomo/?cxntfid=blogs_jamie_dupree_washington_insider

[sandi66]

Bailout pulled Kokomo back from the brink
City gets ready for visit today by President Obama and Vice President Joe Biden


November 23, 2010



From the auto workers who have returned to jobs to a popcorn shop in Kokomo's revitalized downtown, hopes are rampant that the worst of the economic skids are now in this auto town's rear-view mirror.



It's an optimism that President Barack Obama will be celebrating today as he, joined by Vice President Joe Biden, makes his first visit to Kokomo since he campaigned there in April 2008.



Obama is expected to point to Kokomo as a success story. Unemployment, once at 20.4 percent and still high at 12.7 percent, has been dropping with business investments increasing.



It's a rebound that many, including Kokomo Mayor Greg Goodnight, say is due, at least in part, to the fact that the federal government kept General Motors and Chrysler from going under, with stimulus funds.



Some of those funds have been spent sprucing up the downtown, helping to spur development.



Tashia cq Johnson-St. Clair credits those stimulus funds for helping her business, the Sweet Poppins' popcorn shop, which moved to downtown Kokomo in June. She just wishes that Obama would stop in today so she can say thanks.



That's not likely. Obama has no publicly announced stops on his schedule other than remarks he and Biden will make to at one of Chrysler's transmission plants in what is the first time a president and vice president have shared a stage in Indiana.



But Johnson-St. Clair would like him to know that his programs reached down and helped someone like her.



Before the stimulus funds were spent here, she said, "the downtown used to be like a ghost town. I even avoided downtown."



She changed her mind, and her business location, when she saw how stimulus funds were improving the looks of the city's center, and changing traffic patterns.



"It's absolutely beautiful. It looks like a scene off a TV show," she said.



It's brought customers to downtown, walking into her shop when before, when she was located along U.S. 31 near the Howard-Miami county line, traffic was simply passing her by. Business is much better, she said.



One reason may be that people are feeling some optimism again. Business investments are up, and many of those laid off at the auto plants have now been called back to work.



With the demise of auto-parts production in Anderson and Indianapolis, Kokomo is Indiana's last big automotive center. The city of 46,000 contains more than 10 plants operated by Chrysler, General Motors and Delphi, a former GM unit that emerged from bankruptcy in 2009.



Kokomo faced calamity in 2009 when the credit crunch and a 36-percent drop in auto sales veered General Motors and Chrysler into desperate financial straits.



Goodnight, the city's Democrat mayor, said that by propping up Chrysler and General Motors, the bailout put a floor under Kokomo just when the city most needed the support.

..... through this difficult period," Goodnight said. "That's exactly what it did. It enabled us to avoid catastrophic decisions."



Had the Detroit automakers been left to flounder, and possibly go out of business, Kokomo might not have been bankrupted, Goodnight said, "but obviously it would have left a void in our city."



Of the 40,900 jobs now filled in Kokomo, the bulk of the best paying work is in the auto factories even after Delphi cut wages and the automakers turned to two-tier wage scales. Plants employ 4,400 Chrysler, 1,500 Delphi and 1,500 General Motors workers. That's down from almost 11,000 in total in December 2007 when the recession began. Most of the cuts were at Delphi.



"I doubt it ever comes back to that level (of 2007) or if it does, it'll take a very long time," Goodnight, a former steelworker union official, said about auto employment in Kokomo. "In this economy, in this country, I don't know if anybody is out of the woods. Our margin of error is very minimal..... But the bailout gave us a stabilizing factor to do some of the things we've been doing."



Even in this auto-dominated city, though, critics of the bail-outs abound. Kenlyn Watson and Deb Hearn, two small business owners here who founded the Kokomo Tea Party, posted on their website a statement opposing Obama's actions.



"Let businesses fail and restructure the way they do business instead of throwing money at them. That is the American way," they wrote.



And State Treasurer Richard Mourdock, who fought the government bail-out of Chrysler in court, got more votes in Howard County than any other Republican statewide candidate in the Nov. 2 election.



That galled Rick Ward, the Howard County Democratic Party chairman and a 22-year employee of Chrysler.



He thinks, though, that while Obama did not carry Howard County in 2008, he will in 2012. People then, he argued, will credit him for delivering the federal help that is turning Kokomo around.

The White House auto team, based in the U.S. Treasury, released more than $77 billion in bailout loans for GM and Chrysler. Another $27 billion in technology loans and grants for green cars nationwide included $89 million for Delphi electronics in Kokomo.



Delphi contributed $89 million of its own money to the project and opened a 119-employee plant in Kokomo to assemble electronics for hybrid transmissions. The first customer, Allison Transmission in Indianapolis, was followed by orders from GM and California electric car startup Coda.



"The private-public stimulus really helped to accelerate what we were planning to do," said Gary Cameron, Delphi director of engineering for power electronics. "We did not have U.S. based electronics manufacturing after we emerged from Chapter 11 bankruptcy. This (federal loan) allowed us to create U.S.-based manufacturing with a competitive footprint and jobs for decades to come."



With Chrysler and GM having cut debts and burdens in their 2009 bankruptcies, analysts expect both automakers can do well in the next few years. While Delphi plans to expands it Kokomo electronics technical center, GM workers anticipate the automaker could bring new business to the electronics plants. Chrysler is considering making 9-speed transmission for front-wheel-drive vehicles.



"We're hoping that Chrysler is going to make an announcement that we're going to get the 9-speed here," said Jerry Price, vice president of UAW Local 685 in Kokomo.



Michael Harris, chancellor at Indiana University-Kokomo, said that despite the positive signs, "people know that there's a long way to go. It's a new economy, a new world and the past is not going to return."



It's one reason why enrollment is at an all-time record at IU-Kokomo, with more than 3,000 students. Many, Harris said, are former or current autoworkers seeking training for new careers. In the past, he said, people in that area didn't need a college degree to make a good living in manufacturing. Only about 14 percent of people there have a college degree, he said, compared to about 19 percent statewide and about 24 percent nationally.



He'll be at the Chrysler plant today to hear Obama, along with IU President Michael McRobbie, Sen. Evan Bayh and U.S. Reps. Joe Donnelly and Andre Carson, among others.People, he said, will be looking for "where is Kokomo going to go?"



"It's not only celebrating that people went back to work," Harris said. "They want a better understanding of what the future will bring."



www.thestarpress.com/article/20101123/BUSINESS/11230336

[sandi66]

Ex-SEC Head Pitt Interview About Insider-Trading Probe www.bloomberg.com/video/64707550/

Nov. 22 (Bloomberg) -- Harvey Pitt, chief executive officer of Kalorama Partners LLC and former chairman of the U.S. Securities and Exchange Commission, talks about a U.S. investigation into possible insider-trading networks. FBI raids seeking documents from three investment firms are related to the investigation directed by the office of Manhattan U.S. Attorney Preet Bharara, according to a person familiar with the probe. Pitt talks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg by Lee M. Webb

Canada StockWatch

October 4, 2006 CMKM Diamonds makes the Big Time in NYT article

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.

[sandi66]

U.S. Banks Will Close 5,000 Branches, Whitney Says
By Michael J. Moore and Yalman Onaran - Mon Nov 22 22:56:56 GMT 2010

U.S. banks will close 5,000 branches in the next 18 months as they face profit declines from decreased loan demand and lower fee revenue, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm.

Banks face an “uphill battle” in generating loan growth as consumers reduce debt and will receive less revenue from fees because of new regulations and the lack of a securitization market, Whitney, 41, said in a report dated Nov. 18 and obtained today by Bloomberg News.

Whitney has said earnings pressures and new regulation will lead to some lower-income customers losing access to banking services. The number of households without access to the “traditional banking system” will rise to 41 million by 2015 from 30 million in 2009, she said in the Nov. 18 note.

“The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable ‘debanking’ of the U.S. financial system,” said Whitney, who started New York-based Meredith Whitney Group after correctly predicting Citigroup Inc.’s dividend cut in 2007. “Fewer ‘bankable’ customers will contribute to the trend in fewer bank branches.”

Whitney also sees slower growth in investment banking. U.S. securities firms may cut as many as 80,000 jobs in the next 18 months as revenue growth slows, she said in September.

Bank branches in the U.S. fell by 1,035, or 1 percent, over the 12 months ended June 30, Whitney said, citing data from the Federal Deposit Insurance Corp. Banks may cut 10,000 branches by 2015, she said.

Bank failures in the U.S. climbed to 149 last week, surpassing last year’s total of 140. The FDIC’s tally of “problem” banks climbed to 829 lenders with $403 billion in assets at the end of the second quarter, a 7 percent increase from the 775 on the list in the first quarter.

To contact the reporter on this story: Michael J. Moore in New York at [e-mail]; Yalman Onaran in New York at [e-mail].

To contact the editor responsible for this story: David Scheer at [e-mail]

www.bloomberg.com/news/2010-11-22/u-s-banks-will-close-5-000-branches-in-18-months-whitney-says.html

[sandi66]

Flight restrictions established over portions of Indiana November 23rd
November 22nd, 2010 3:53 pm CT
The FAA has issued a temporary flight restriction (TFR) over Kokomo, Indiana for Tuseday, November 23, 2010 due to a visit by President Barrack Obama and Vice-President Joe Biden. The Notice to Airman (NOTAM) was issued yesterday effective November 23rd from 10:30 a.m. until 4:30 p.m. local time. The restriction should not result in any delays or cancellations of any flights departing or arriving at Chicago or Indianapolis airports, however, it's best to check with your airline if planning to fly tomorrow around the times of the TFR. General aviation pilots that may be flying near the affected area should review the NOTAM and ensure their flight will not conflict with the restrictions. Presidential TFR's encompass a diameter of 30 nautical miles and will affect the general aviation airports of Kokomo Municipal (OKK), Galveston (5I6), Glenndale (8I3), Converse (1I8), Mississinewa Reservoir Landing Area (43I), Peru Municipal (I76) Logansport/Cass County (GGP), Wabash Municipal (IWH), Flora Municipal (5I2), Marion Municipal (MZZ), Boyer Flight Park (7W7), Sheridan (5I4), Delphi Municipal (1I9), Frankfort Municipal (FKR), Fulton County (RCR) and White County (MCX) airports.

For full details on the TFR NOTAM, pilots should refer to the FAA TFR website as well as obtain a full briefing prior to any flights in or near the TFR area November 23rd.

Given the number of violations of TFR's that have recently occurred, it is extremely important that pilots always obtain a full flight briefing prior to any flight as the FAA can issue a TFR at any time.

President Obama will be in Kokomo along with VP Biden visiting the Chrysler transmission plant. They are visiting the plant to see the effect of the stimulus funds and bailout firsthand. Chrysler announced it will provide updates throughout the visit via Twitter.



www.examiner.com/general-aviation-in-chicago/flight-restrictions-established-over-portions-of-indiana-november-23rd

[sandi66]

Obama’s car czar faces new lawsuits in kickback scheme
By Jerry White
23 November 2010
On the same day that Wall Street celebrated a windfall from General Motors’ stock sale last week, one of the chief architects of Obama’s forced bankruptcy and restructuring of the US automaker was hit with two lawsuits. Steven Rattner is accused of participating in a kickback scheme to gain $150 million in business from the New York State pension fund.

New York State Attorney General Andrew Cuomo filed the lawsuits against Rattner, the co-founder of the Quadrangle Group private equity firm, who was chosen by the White House to head the Auto Task Force. Cuomo is investigating illegal payoffs aimed at influencing investment decisions by pension fund officials who oversee $130 billion in assets. Charges have already led to several guilty pleas from key players.

The attorney general is seeking a $26 million settlement from Rattner and to bar him from the securities industry in New York for the rest of his life. The Securities and Exchange Commission has already obtained a less severe settlement with Rattner over the so-called “pay-to-play” allegations.

The Wall Street Journal reported that Rattner agreed to pay $6.2 million in his SEC settlement. He is also banned for two years from associating with any investment adviser or broker dealer. Rattner settled with the SEC without admitting or denying wrongdoing.

On Monday, Henry “Hank” Morris—the former chief political advisor to former New York State Comptroller Alan Hevesi—pled guilty to securities fraud. He acknowledged that he had used his influence with Hevesi, who manages the New York pension fund, to steer investments to some of Wall Street’s largest firms, including the Carlyle Group, HM Capital and Rattner’s Quadrangle Group.

According to Cuomo’s securities fraud suit, Rattner hired Morris for $1 million as part of a scheme to win an investment for Quadrangle, which Rattner then headed. In 2004 and 2005, the state retirement fund channeled $150 million to Quadrangle.

Rattner’s former company reached a settlement with the attorney general’s office last spring and agreed to cooperate in the probe of Rattner. Quadrangle issued a statement saying, “We wholly disavow the conduct engaged in by Steve Rattner. That conduct was inappropriate, wrong and unethical.”

Rattner’s evident involvement in the scheme underscores the criminal character of the Wall Street financiers who the Obama administration put in charge of destroying the jobs and living standards of auto workers. Selected by Timothy Geithner and Lawrence Summers—who were both deeply involved in the deregulation of the finance industry and the Wall Street bailout—Rattner wrote in his recently released book Overhaul that his lack of knowledge of the auto industry was not important. “This was not a managerial job it was a restructuring and private equity assignment,” he wrote.

The crisis in the auto industry—provoked by the 2008 financial breakdown and the plunge in auto sales to the lowest per-capita rate since World War II—was used by Wall Street and the US government to destroy jobs and wages and transform the industry into a lucrative investment for the same speculators who provoked the catastrophe.

Rattner recently told investors that, after its restructuring, GM would soon “gush” profits. As for the lack of popular enthusiasm for an auto industry rescue, which benefited only Wall Street, Rattner told MSNBC, “The American people seem to have trouble processing the success not only of this [auto] bailout but even the bank bailout. These are things that saved the country.”

Rattner left a career as a New York Times business reporter to go to Wall Street in the early 1980s. He rose through the ranks at Lehman Brothers and Morgan Stanley before landing the number two spot at investment firm Lazard Freres & Co. At Lazard he was an integral player in media mega-deals, such as the sale of Paramount Communications to Viacom. In 2000, Rattner co-founded a private equity firm, Quadrangle Group LLC, which manages New York Mayor Michael Bloomberg's $13 billion-plus personal fortune and advises him on his media empire.

According to Fortune, the man who demanded that auto workers accept poverty level wages and retirees do without optical and dental care lives in a “sprawling” Manhattan apartment building—also the residence of billionaire George Soros—which “overlooks Central Park and the Metropolitan Museum of Art (where he is on the board).” The magazine continued, “He has a horse-farm in North Salem, New York, in northern Westchester County, near his friend, New York City Mayor Mike Bloomberg, and is building a 15,575-square foot house on the water in Martha’s Vineyard”—where he often pilots his private jet.

On his way up the financial ladder, the Washington Post reported, Rattner also became a central figure in Democratic politics and a leading fundraiser for Al Gore, John Kerry, Hillary Clinton and Barack Obama. His wife is former Democratic National Committee finance chairwoman Maureen White.

With friends in such high places, Rattner has vowed to fight the lawsuits and accused Cuomo of “bullying” him. Rattner suggested Cuomo was resentful because Rattner and his wife had provided financial support for political rivals of the attorney general and now governor-elect of New York.

Having sought to loot the pension fund for thousands of New York state employees, Rattner worked with the UAW to offload GM’s retiree health care fund on the union, paid with GM stock. This was a key factor in boosting the value of GM shares last week. While the UAW officials cashed in—receiving more than $3 billion during GM’s IPO—the union-controlled retiree trust is severely under funded and is expected to push through even deeper cuts in health care benefits.



www.wsws.org/articles/2010/nov2010/ratt-n23.shtml

[sandi66]

Requiem for a Banker
November 22, 2010 | 11:41 p.m

There was a peculiar buzzing sound coming from somewhere inside the Credit Suisse meeting, a mildly annoying vibrating bleep. Paul Calello, the bank's commodities and derivatives chief, checked his briefcase. The buzzes got louder.

His daughter had decided to send her Tamagotchi toy pet to work with him, and it was hungry. Mr. Calello stopped the meeting, according to Wilson Ervin, one of the other executives there, took the pet out, smiled and fed it a digital hamburger.

The financier, who became chief of Credit Suisse's investment bank in 2007, when cuts to risk and costs helped make the giant one of the few that weren't bailed out, died on Nov. 16 of non-Hodgkin's Lymphoma. He was 49.

There is something about Wall Street executives who are as important as Mr. Calello—who four years ago helped arrange Industrial & Commercial Bank of China's record-setting $21.9 billion IPO—that makes them difficult. People who dominate high finance do not tend to enchant outside of it. "He's the heart of our family, center of the swirl, itchy instigator of the well spent day, pied piper of not just adventure, but intellectual curiosity and passion," one of his three sisters, the poet Cathy Staples, wrote. "Passionate engagement in the world has never been a solo adventure for Paul, he's intent upon bringing us all with him."

"He didn't sacrifice other parts in order to do what he did well," said his brother-in-law, Alex Gibney, the documentarian who made Enron: The Smartest Guys in the Room and Taxi to the Dark Side. "He was just generous as a person, always thinking about other people. It sounds so corny to say, but that's what was so miraculous."

He was short-listed to replace Tim Geithner at the New York Fed last year. Two of his neighbors in Beaverkill, N.Y., the conservationist Laurance Rockefeller Jr. and the former Massachusetts governor Bill Weld, both said he could have eventually been secretary of the Treasury.

But those neighbors also talk about the Calello house's musicales, where the executive and one of his sisters played guitar and their father sang in a self-taught operatic voice. "Uproarious fun," Mr. Rockefeller said. Others brought Dobros and 12-strings. They played songs like Lowell George's "Willin'" and John Prine's "Angel from Montgomery."

He sang with his family a few days before his death.



BORN TO SOCIAL workers, Mr. Calello was raised outside of Boston. He burst with energy, Mr. Gibney said, causing a bit of a ruckus on school bus rides. It was suggested that he and a friend run to school, which they found too boring, so they would run past it and back, ready for the day. "I'd watch him out the school bus window, running," Ms. Staples wrote, "swag of dirty blond hair crossing his eyes, stride loose and easy, and, if he saw me or my sisters, that grin." He tried to run the Boston Marathon at 11 and 12, and succeeded at age 13. He gave up marathons after that.

He met his wife, Jane DeBevoise, at Bankers Trust in Tokyo, where they bonded over a 20-year yen-dollar amortizing swap for United Airlines. Mr. Gibney was living a more bohemian life when he first met the banker. "I looked at him: tassel loafers, no socks. I thought, 'Oh, brother,'" he said. "I underestimated the depths of the man on that first encounter, but I never did it again."

Mr. Calello left Bankers Trust to co-found Credit Suisse Financial Products, a derivatives giant. "He was the first industry leader to advocate consistent, effective regulation of derivative instruments globally," a memo to staff from Credit Suisse CEO Brady Dougan says, "at a time when this was highly controversial."

By 2002, he'd become CEO of the investment bank in Asia. "We've been on holidays together," Ronald Arculli, the chairman of the Hong Kong stock exchange, said. "Occasionally my wife would joke and say, 'I wish you'd sound like Paul.'"

At a family trip to Mr. Weld's house in Keene Valley, the governor's wife, Leslie Marshall, woke up at 5 a.m. "There was Paul, sweeping the kitchen and making sandwiches," she said, "ready to launch everybody on the day."

"Family was paramount and work was just work, and that's not the vibe you feel with most senior executives. Some don't even talk about their families, as if they're invisible, or verboten," said Credit Suisse's Grace Koo, who heads a team that structures derivatives for clients. "He's let me scroll through his digital camera when we were on conference calls."

He came back to New York in 2007 to helm Credit Suisse's investment bank. Mr. Ervin, then the firm's chief risk officer, and now a senior adviser to Mr. Dougan, said that Mr. Calello understood the intensity of what was happening, and what was about to happen. In September 2008, as Lehman and AIG quaked, he was one of the senior executives brought to the New York Fed to work on saving the system.

In December, he and Mr. Dougan announced that executive bonuses would be paid in toxic assets. "He was one of the executives who really did lament the excesses of Wall Street," Ms. Koo said. "And really did say so."

In the middle of 2009, he mentioned to colleagues that he wasn't feeling well. "He said, 'I haven't been feeling up to my game,' which is unusual for Paul; he was one of those guys that needed about 15 minutes of sleep and was game," Mr. Ervin said. "We attributed that to the strain he was under."

In September, after his cancer diagnosis, the bank announced he was stepping down temporarily. "You could see it slow him down emotionally once or twice, briefly," Mr. Ervin said, "but then he would climb back in, and say, 'How about you? How are you doing?'"

This year, he was named chairman of the investment bank. He was still coming to Credit Suisse about a month before his death. "He was thinner, his hair was gone, but his voice was strong, his intellect was strong," Mr. Ervin said. "He'd take his Vespa in."

"What did occur," Mr. Rockefeller said, "was a very full life of great success."

He is survived by Ms. DeBevoise, a daughter, triplet sons, three sisters and his parents.



www.observer.com/2010/wall-street/requiem-banker

[sandi66]

Former SocGen trader found guilty of code theft
Up to five years in prison for taking bank's secret algorithms
10:20, 23 November 10

A former Société Générale trader has been found guilty of stealing the bank’s secret algorithms in a New York court.

Samarth Agrawal was arrested and charged in April, around the time he was set to start a job with Société Générale competitor, hedge fund Tower Research Capital.



According to Reuters, the jury took just two hours to return the guilty verdict against Agrawal. Testimony during the trial revealed that he planned to use the code to help build a high-frequency trading system at the hedge fund.

Some City banks not reviewing security after SocGen scandal
Update: Rogue trader exploits tech knowledge to cost SocGen £3.6bn
Soc Gen trader on trial for high speed algorithm theft
Agrawal, a 27-year old man who worked for two years at Soc Gen’s Manhattan offices, is accused of copying thousands of lines of algorithmic code into word processing documents and printing them off to take elsewhere.

The code, developed and owned by Soc Gen, was vital for the bank’s high-speed trading and was protected in the same way Coca Cola might defend its list of ingredients and KFC “guards its recipe for chicken”, according to prosecutor Thomas Brown.

Register
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Although Agrawal maintained his innocence throughout the trial, on Wednesday (17 November) he admitted in a testimony that he knew copying and printing the code was wrong.

Agrawal will be sentenced on 24 February, and faces up to five years imprisonment. He is also exported to be deported from the US, back to India where he is a citizen.

On 29 November, a similar code theft trial will take place in the same court, when a former Goldman Sachs programmer, Sergey Aleynikov, will appear on charges he stole algorithms to take to his new employer.

The issues at Societe Generale follow an unrelated trial, in which rogue trader Jerome Kerviel, a former employee, was last month convicted of unauthorised computer use, forgery and breach of trust. He was handed a three-year prison sentence and an unprecedented €4.9 billion (£4.3 billion) fine.



www.computerworlduk.com/news/security/3249903/former-socgen-trader-found-guilty-of-code-theft/

[sandi66]

Hedge Funds Raided in Probe
FBI Agents Seize Documents in 3 Cities as Insider-Trading Investigation Widens
NOVEMBER 22, 2010


A three-year insider-trading investigation shifted into high gear Monday as government agents raided the offices of three large hedge funds, sending shock waves through the financial world.



In coordinated raids in New York, Connecticut and Massachusetts, Federal Bureau of Investigation agents seized documents at the offices of Level Global Investors LP, Diamondback Capital Management LLC and Loch Capital Management LLC.

"The FBI is executing court-authorized search warrants in an ongoing investigation," said Richard Kolko, an FBI spokesman, who declined to comment further. Diamondback and Level Global confirmed the raids and said they were cooperating with the investigation. A lawyer for Loch Capital, Leonard Pierce, declined to comment.

Level Global and Diamondback are both run by former managers of Steve Cohen's giant SAC Capital Advisors hedge fund. A spokesman for SAC, which wasn't raided, declined to comment.

The raids, first reported on The Wall Street Journal's website, underscore the potential breadth of the investigation, which is being conducted by the FBI, the Manhattan U.S. Attorney's office and the Securities and Exchange Commission. More raids are likely in the next few days, according to people familiar with the matter.

The raids helped push the Dow Jones Industrial Average down about 150 points before a rally left the index down 24.97 points. Financial stocks were hit, with Goldman Sachs Group Inc. down 3.4% following news that investigators also were examining whether Goldman bankers had leaked information about deals. Goldman declined to comment.

The action Monday follows disclosure of the investigation by the Journal on Friday night. Authorities are worried about the potential for possible subjects of the overall probe to flee or destroy documents, say people familiar with the matter. Representatives of the Manhattan U.S. attorney's office, FBI and SEC declined to comment.

The Journal reported that federal authorities are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the U.S., and that some charges could be brought by year-end.

A Diamondback spokesman said the firm "is fully operational" and continues "to manage the portfolio and Diamondback's business for the benefit of our investors."

At Level Global, roughly two dozen agents staged the raid, according to a person familiar with the matter. A Level Global spokesman said it is "fully operational" and continues "to work diligently for the benefit of our investors."



The broad investigation illustrates how law-enforcement agencies are using an increasingly wide range of tools to pursue alleged insider-trading rings. Insider trading has been difficult to prove to juries, since law-enforcement agencies need to demonstrate the intent to defraud.

Some aspects of the current probe could be particularly difficult to prove, if charges are brought. Some legal specialists say authorities appear to be seeking to criminalize typical market behavior, such as hedge funds vying to gain an edge by gathering intelligence on a company from a wide range of sources.

The issue is blurry because insider trading isn't defined by statute. The dividing line between criminal and legitimate behavior has evolved in cases stretching back decades, as courts interpreted the antifraud provisions of securities laws enacted after the 1929 stock-market crash.

Level Global, based in Greenwich, Conn., is run by David Ganek, a former SAC Capital trader, and manages about $4 billion. Diamondback Capital, in Stamford, Conn., oversees more than $5 billion in assets.

Loch Capital, based in Boston, had $750 million in assets at the start of this year, according to SEC filings. The firm, run by brothers Timothy and Todd McSweeney, didn't return messages seeking comment.



There appear to be ties among some of the players being investigated. Level Global partner Anthony Chiasson is a former client of John Kinnucan, a Portland, Ore., analyst who was visited by FBI agents last month. Mr. Kinnucan said Monday that Level Global cancelled Mr. Chiasson's subscription to his service in August because the firm was not happy with the product.

People close to the situation say Mr. Chiasson also was an associate of former Galleon Group fund manager Todd Deutsch, whose activities the Journal has reported are being examined. Galleon was ensnared in an insider-trading case last year that has generated 14 guilty pleas. Mr. Chiasson didn't respond to requests for comment.

Mr. Deutsch, who received a subpoena last fall, and Mr. Chiasson spoke frequently and exchanged stock ideas, people close to the matter say. Mr. Deutsch's lawyer declined to comment.



online.wsj.com/article/SB10001424052748704243904575630693960704872.html

[sandi66]

Bill Browder: The Russians are out to kill me...
David Cohen
23.11.10

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London-based businessman Bill Browder has vowed to avenge the death of the lawyer who helped him uncover a '$230 million tax fraud' — wherever it leads...

A year ago last week, millionaire hedge fund boss Bill Browder received a chilling call at his north-west London home that would change his life for ever. The call was from Russia and it was to say that Browder's lawyer, Sergei Magnitsky, who had been held on trumped-up charges and tortured in a Moscow prison, was dead.

“It was the worst moment of my life,” recalls Browder. “I walked round my bedroom in a daze, full of dread. I'm the head of a $1 billion hedge fund, I always know what to do, but for the first time in my life I felt lost. Sergei was 37. He had a wife and two sons and everything to live for. Yet he had been tortured and died —all because of his refusal to falsely testify against me.

“Every day I wish Sergei had done a deal to save his life — any deal, because it would have made no difference to me now that I live in London,” says Browder. “But he was a man of such integrity. And rather than lie, he gave his life to protect my name.”

Magnitsky, a Russian anti-corruption lawyer, believed he had discovered that Russian police had stolen Browder's shell companies and used them to embezzle $230 million of public funds in the largest tax-refund fraud in Russian history. Yet instead of prosecuting the crime, the state detained Magnitsky without trial and tortured him to withdraw his testimony. He was held for nearly 12 months in a cell with no toilet and raw sewage spilling everywhere. He was beaten and denied medical care for his acutely painful pancreatitis. And yet all he had to do to be free was testify that his client Bill Browder — once the biggest foreign investor in Russia before his expulsion in 2005 — was the guilty party.

“They only took Sergei because they couldn't get to me,” says Browder, 46, who grew up in Chicago and became a British citizen 11 years ago. “Every waking moment I'm thinking of Sergei and how to get justice for him. I'll never stop. Catching those responsible — and we know who they are — is the only thing that will give me comfort.”

Indeed, when I meet Browder at the office of his firm, Hermitage Capital Management, in London's West End, it is hard to appreciate that this ordinary looking balding man in a pinstripe suit is engaged in a deadly life and death battle with the Russian authorities.

For make no mistake, deadly it most certainly is. Prior to Magnitsky's death, Browder had received coded death threats which have since intensified. Voicemail messages blatantly warn him: “We're coming to get you, motherf**ker.” Another voicemail message, which runs for 45 seconds, carries the screams of somebody being beaten. And he's had texts that say: “History tells us anyone can be killed”.

For obvious reasons, Browder won't talk about his personal security, but he is unflinching when he says that he refuses to look over his shoulder. “I walk looking straight ahead, figuring what I'll do next to bring his killers to justice. I'm motivated by anger, not fear, and I'll travel the world to get justice, if that is what it takes.”

With the Russian government not investigating Magnitsky's death, Browder's approach has been to seek justice outside Russia. “Because of Sergei's prison diaries, published by Novaya Gazeta, and 450 complaints filed by him against his torturers, we know exactly who is responsible for what: we have the names of 60 high- and middle-ranking officials who we know were involved in his torture and imprisonment, and in the conspiracy he uncovered.”

They include top Russian policeman Lieutenant Colonel Oleg Silchenko, as well as dozens of “corrupt” judges, prosecutors, prison doctors, jailers and lawyers. The two senior policemen Magnitsky accused of the $230 million fraud are Lieutenant Colonel Artyom Kuznetsov and Major Pavel Karpov. Silchenko rejects all the accusations. He told the BBC's Newsnight: “The attempt to accuse law enforcement agencies of involvement in this crime is absurd.” Kuznetsov and Karpov also deny all charges of fraud and have launched libel actions in Russia, backed by the state.

Browder wants to ban the 60 officials he claims are involved from having access to the West — a plan that today took a leap forward with news that the foreign affairs committee of the European Parliament has voted 50 to zero to put forward a resolution calling on the EU to ban the 60 officials from entering the EU and to freeze their assets outside Russia. It follows Browder's trip to Washington DC which resulted in the taking up of a near-identical bill, called the 2010 Justice for Sergei Magnitsky Act, which is currently making its way through the House and the Senate.

Investing in Russia made Browder rich — in 2005 his hedge fund was worth $4.5 billion — but he now wishes he could “turn back the clock”, and that he'd “never set foot in Moscow”.

Browder first journeyed to Russia in the early Nineties as a Stanford MBA graduate working for the investment bank Salomon Brothers. It was the beginning of the great privatisation programme in which 22 people ended up with 40 per cent of the country's wealth, and Browder found himself 300 miles north of the Arctic Circle advising the management of the Murmansk trawler fleet.

“When I got there, I found that half the fleet of 100 ships, valued at $1 billion, was being offered to management at the ridiculous price of $2.5 million! That was the moment I realised the outrageous opportunities to make money in Russia.”

BY 1996 Browder had moved with his wife (whom he has since divorced) to Moscow and set up Hermitage Capital Management, whose value grew from $25 million to $1 billion in just 18 months. Hermitage was named the “best performing fund in the world” in 1997 and Browder was lauded on the front page of the New York Times, as well as in Newsweek and Time magazines.

But a year later the market crashed and Hermitage lost 90 per cent of its value. Humiliated that he had not seen it coming and that he had lost his clients $900 million, Browder resolved to get it back by taking on the oligarchs and becoming an activist investor — someone who buys into a company to expose corporate corruption and ultimately boosts the share price.

He investigated the gas giant Gazprom, successfully encouraging employees to be whistleblowers, and published a dossier that exposed stealing on a massive scale and which led President Putin to fire the head of the company and the share price to double. By 2004 Browder had probed half a dozen companies and rebuilt his fund to $4.5 billion. But when Putin arrested Russia's richest man, Mikhail Khodorkovsky, the political climate changed and in 2005 Browder was blacklisted and expelled from Russia.

Browder liquidated his Russian investments, paying off a $230 million tax bill, and relocated his entire staff and their dependants to London, leaving a solitary secretary to manage the office of various shell companies in Moscow. But in June 2007 his Russian office was raided by the police, who seized seals and certificates, and a few months later a court judgement was entered against Browder's companies for an unpaid debt he knew nothing about.

That was when Browder called in Russia's smartest tax lawyer, Sergei Magnitsky, who with his team of six lawyers uncovered a breathtaking scam. The police who had raided Hermitage had allegedly used the seals to transfer the shell companies into their control and had fabricated losses enabling them to claim a $230 million tax rebate.

“The biggest rebate in Russian history was granted and paid out in one day, on Christmas Eve, no questions asked,” says Browder. “Sergei discovered this in July 2008. We figured that since the crime was against the state, the culprits would soon be rounded up, but instead the state opened a criminal case against
our lawyers.”

Browder decided to get everyone out and asked all seven lawyers to come to London for their safety. All but one agreed. “The only one I couldn't convince was Sergei — he was confident he'd done nothing wrong, that the rule of law would prevail, and he went ahead and testified against Kuznetsov and Karpov.”

A month later, on November 24, 2008, Magnitsky was arrested in front of his wife and two sons, aged seven and 17. A year later, having endured horrific deprivation and torture, he was dead. “The people who are involved in his detention, torture and death are beyond evil,” says Browder.

His next priority, he says, is to get the British Parliament to agree to propose economic sanctions against the 60 officials. “I listen to our naïve politicians talking about reset buttons', but these are corrupt people who don't share any values with us. My goal is to generate such international pressure and outrage that the Russian government will have no alternative but to throw those responsible to the wolves — and bring them to justice.”



www.thisislondon.co.uk/standard/article-23900152-bill-browder-the-russians-are-out-to-kill-me.do

[sandi66]

Shariah Scholar on More Than 50 Boards Opposes Limit Plan: Islamic Finance
By Dana El Baltaji and Haris Anwar - Nov 23, 2010 5:42 AM ET

Restricting the number of boards religious scholars are involved in would curb growth in the $1 trillion Islamic finance market, says a Bahraini scholar who advises Citigroup Inc. and HSBC Holdings Plc.

The Accounting & Auditing Organization for Islamic Financial Institutions, a Manama-based agency, said in August it’s considering guidelines on scholars owning shares in the institutions they serve and the number of advisory boards they can join, to reduce the risk of conflicts of interest. The top 20 scholars serve on 621 boards globally, said Zawya and Funds@Work AG, a Dubai-based research company.

“Capping the number of boards will be devastating to the industry’s growth,” Sheikh Nizam Yaquby, who was born in 1959, said in an interview in Beirut on Nov. 4. “Sometimes people ask me, are you Superman? How can you sit on so many boards? I tell them it’s hard work.”

Yaquby and Syria’s Abdul Sattar Abu Ghuddah ranked first among the top 20 experts, each serving on 85 boards of Islamic financial institutions, according to Zawya’s report. Yaquby is listed as serving on more than 50 boards, according to data compiled by Bloomberg.

The Islamic finance industry, with assets the Kuala Lumpur- based Islamic Financial Services Board will almost triple to $2.8 trillion by 2015, is struggling to develop global standards and a centralized regulator for scholars. Banks and companies can’t find enough experts to meet demand for new Shariah- compliant products, creating a “bottleneck,” said Khalid Howladar, Dubai-based senior credit officer at Moody’s Investors Service, in an e-mailed response yesterday.

Fragmented Industry

“One scholar advising so many companies doesn’t help make an Islamic product universal,” Kaleem Iqbal, a senior executive vice president at the Pakistani unit of Bahrain-based Albaraka Banking Group said in a telephone interview yesterday from Islamabad. “Unless we adopt a more standardized model, the industry will remain fragmented.”

Islamic institutions typically have their own panels of scholars who pass rulings, or fatwas, to determine that products comply with Shariah principles. Shariah scholars need to be experts on the Koran, commercial law and finance. Yaquby has a degree in economics and comparative religion from McGill University in Montreal.

Mohamad Nedal Alchaar, secretary-general of AAOIFI, said in August that a shortage of experts means they tend to sit on several advisory boards simultaneously. The Bahrain-based agency also plans to address concerns that these scholars’ private companies receive preferential treatment from banks they advise.

‘Conflict of Interest’

“There’s a potential case for conflict of interest, and a case of information leakage or perhaps competition impact,” Alchaar said. “We wanted to address the concerns in an unbiased manner.”

AAOIFI, which has more than 200 members, sets accounting and auditing standards that are used in Bahrain, the Dubai International Financial Centre, Jordan, Lebanon and Qatar, according to its website. The agency said its guidelines have also been used to help frame policy in Indonesia, Malaysia, Pakistan, Saudi Arabia and South Africa.

“What’s key is to create a robust framework in which the industry can thrive and grow,” said Yavar Moini, senior adviser of global capital markets at Morgan Stanley, in an interview in Dubai yesterday. “Clearly scholars’ expertise and representation on Shariah boards are an integral part of such a framework. Placing limitations in this regard will hinder the industry’s growth potential.”

Declining Bond Sales

Global sales of Islamic bonds fell 29 percent to $13.7 billion this year from the same period in 2009, according to data compiled by Bloomberg. Islamic law restricts investors to transactions based on the exchange of assets rather than money alone because interest payments are banned.

Sukuk returned 11.7 percent this year, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index, compared with a 14.5 percent gain in developing markets, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows.

Pakistan’s central bank requires Islamic banks to appoint one scholar as a “Shariah adviser,” who is barred from serving at other financial institutions in the country, Karachi-based Saleem Ullah, director of the Islamic banking department at the State Bank of Pakistan, said in an e-mailed response yesterday.

“The restriction is aimed at addressing the issue of conflict of interest and giving comfort to the banks regarding confidentiality of their business policies and product structures,” he said. The scholar can advise Islamic banks outside the country.

No Restrictions

Some Islamic banks also have Shariah boards and committees which have between three and seven scholars, Saleem Ullah said. There are no restrictions on how many boards scholars can serve on, he said.

“If a country wants to put a limitation, it is up to them,” said Yaquby. “Countries have to question if there are enough scholars to put such limitations.”

Chicago-based Failaka Advisors LLC, an advisory company which monitors and publishes data on Islamic funds, lists 253 practicing scholars worldwide in its 2008 report. There are now an estimated 600 scholars, said Yaquby. Among the top 10 are Mohammad Daud Bakar of Malaysia and Saudi Arabia’s Mohammed Elgari, according to the report by Zawya and Funds@Work.

The difference between the average yield for emerging market sukuk and the London interbank offered rate was little changed at 341 basis points yesterday, having narrowed 32 basis points since Sept. 30, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. A basis point is 0.01 percentage point.

The yield on Malaysia’s 3.928 percent Islamic note due in June 2015 rose two basis points to 2.71 percent today, according to prices provided by Royal Bank of Scotland Group. The extra yield investors demand to hold Dubai’s government sukuk rather than Malaysia’s narrowed 9 basis points to 384.8, according to data compiled by Bloomberg.

Islamic financial institutions “want scholars who understand finance and banking, and can speak languages,” Yaquby said. “This is not a popularity contest. This is a multi-disciplinary specialization, which is rare to find.”



www.bloomberg.com/news/2010-11-23/shariah-scholar-on-more-than-50-boards-opposes-limit-plan-islamic-finance.html

[sandi66]

South Korea Returns Fire on North After Shells Wound Troops
By Bomi Lim - Nov 23, 2010 5:08 AM ET

North Korea lobbed shells at a South Korean island near their border, killing two soldiers and setting houses ablaze in the worst attack on its neighbor in at least eight months.

South Korea returned fire with 80 shells and scrambled fighter jets as President Lee Myung Bak vowed to respond “sternly.” Local television channel YTN showed smoke billowing from Yeonpyeong island off South Korea’s northwest coast and said residents took cover in bomb shelters. Stocks and U.S. futures dropped while the dollar and Swiss franc strengthened.

Tensions with Kim Jong Il’s regime have risen in the past year after the sinking of the South Korean warship Cheonan in March killed 46 sailors. U.S. President Barack Obama this week dispatched envoy </a>Stephen Bosworth to Asia after reports by a U.S. scientist that North Korea had revealed a “stunning” uranium-enrichment plant.

“They want to direct attention to themselves, to say: ‘Look we are here, we are dangerous and we cannot just be ignored,’’ said Andrei Lankov, an associate professor at Kookmin University in Seoul. The U.S. position had been to engage in talks when there was a prospect of democratization in the North, he said. ‘‘Now the chances for democratization are virtually zero, so they have nothing to talk about.’’

The MSCI Asia-Pacific excluding Japan Index declined 2.3 percent to 454.14 as of 6:00 p.m. in Hong Kong, set for its biggest loss since June 29, while the Stoxx Europe 600 Index fell 0.9 percent. Standard & Poor’s 500 Index futures sank 1 percent. The dollar rose against all of its major counterparts except the Swiss franc as the Korean crossfire fueled demand for safer assets.

‘Tinder Box’

‘‘The North Korean issue is a tinder-box for the region,’’ said Gavin Parry, managing director of Hong Kong-based Parry International Trading Ltd. ‘‘They like to saber rattle for attention, but on the heels of a nuclear inspection that indicated they could have bomb capabilities, markets can’t afford to ignore any instability for the region.’’

By attacking Yeonpyeong Island, 2 miles (3.2 kilometers) south from the border, North Korea has escalated its provocations against the South and its U.S. ally, according to Kenneth Quinones, former U.S. State Department director of North Korean affairs, and now a professor at Akita International University in Japan.

‘‘This is one of the most serious North Korean provocations in at least two decades,’’ he said. The latest attack ‘‘was on a civilian-occupied island, unlike the Cheonan, which was a naval warship. This is very serious.’’

Reasons Why?

North Korea may be trying to force a change in U.S. policy that, under Obama, has shunned talks with Kim’s regime until it ends provocations and lives up to commitments on ending its nuclear weapons program, Lankov said. The attack may also signal domestic instability as the ailing Kim seeks to cement the handover of power to his youngest son, Kim Jong Un.

‘‘My gut feeling is that Kim Jong Il is having a very hard time controlling his generals,’’ Quinones said. ‘‘The North Korean military is asserting itself at a time when Kim is weak both physically and militarily. Kim Jong Un means nothing; he’s a puppet.’’

Kim Jong Un made his public debut in September, when he was named a general and vice commissioner of the Central Military Commission, the nation’s most powerful body. Those were his first public appointments and were followed by a succession of appearances alongside his father.

The power transition comes as North Korea labors under United Nations sanctions over its two previous nuclear tests. Attempts to force Kim’s regime back to disarmament talks have foundered after North Korea quit the six-party forum last year. The talks include the U.S., Russia, Japan, South Korea and China, the North’s main political ally and source of financial aid.

China Concerns

China expressed ‘‘concern” over the North Korean shelling.

“We hope the parties do more to contribute to peace and stability on the Korean Peninsula,” Foreign Ministry Spokesman Hong Lei told reporters in Beijing today. Reports on North Korea’s new uranium-enrichment plant underscore the need for disarmament talks, Hong said.

“What is important is to restart six-party nuclear talks at an early date,” he said.

The U.S. condemned the North’s shelling and said it was “firmly committed” to defending South Korea, according to a statement released by the White House.

The South Korean military was undertaking military exercises on Yeonpyeong, close to the site of two deadly naval skirmishes between the two nations in 1999 and 2002. North Korea last fired artillery near the island in August.

North History

North Korea has a history of attacks on the South since the two sides fought to a standstill in their 1950-1953 civil war. China backed the North and the United States led an international force fighting on the side of the South, laying out a Cold War relationship that endures to this day.

The U.S. has about 25,000 troops in the South and Obama said during a Nov. 10 Veterans Day speech in Seoul that America’s resolve to stand alongside its ally will never waver.

The U.S. has called on China to do more to influence the North’s behavior, which has proved a source of friction amid growing trade ties in the region.

Previous incidents have included the bombing of a civilian airliner, two assassination attempts on the president and incursions by mini-submarines carrying commandoes.

South Korean President Lee Myung Bak called an emergency meeting, his office said.

High Alert

The military has been put on high alert and will “respond strongly” to further provocation, the defense official said, speaking on condition of anonymity because of departmental rules.

“What can South Korea do apart from a bit of chest beating?” Lankov said. “They are not going to start a war. I think they will try to play it down.”

While the uranium program is “another in a series of provocative moves,” it doesn’t pose a crisis, Bosworth said yesterday in Seoul. The envoy is in China, after visiting Japan.

North Korea’s reported progress in developing its nuclear energy industry casts doubt on the effectiveness of tougher United Nations sanctions imposed for its second nuclear test in May 2009. The U.S. is pushing for a global effort to choke off funds to the regime in a bid to squeeze military-related industries and force Kim back to six-party talks.



www.bloomberg.com/news/2010-11-21/u-s-envoy-bosworth-visits-asia-amid-signs-north-korea-chases-nuclear-goal.html

[sandi66]

Frank Defends Bernanke, `Appalled' By Republican Criticism of Fed Chairman
By Steve Matthews and Margaret Brennan - Nov 22, 2010 7:43 PM ET

Barney Frank, chairman of the House Financial Services Committee, said he’s “appalled” by Republicans who he said have sided with some foreign central banks in criticizing Federal Reserve Chairman Ben S. Bernanke.

“I was appalled to see a group of Republican economists from the Bush and Reagan administration” arguing against the Fed’s asset-purchase program. “Republicans are joining the central bank of China in attacking Bernanke. This is really distressing to me.”

Frank, who spoke in an interview today on Bloomberg Television’s “In Business with Margaret Brennan,” called the Fed program to purchase $600 billion in assets through June “a very reasonable thing” that isn’t fueling inflation, as Republican critics contend.

A group of 23, including former Republican government officials and economists, published a letter to Bernanke urging him to halt the expansion of monetary stimulus because it risks an inflation surge. Separately, John Boehner, nominated to be the next House speaker, and three other Republicans leaders last week sent Bernanke a letter expressing “deep concerns” about a policy they said risked weakening the dollar and fueling asset bubbles.

Experience Talks

The view of the 23, none of whom have run a central bank, contrasted with the support Bernanke’s efforts have received from those who have helped manage monetary policy. Bank of Israel Governor Stanley Fischer, former Bank of England policy maker David Blanchflower and former Fed Vice Chairman Alan Blinder have all voiced support.

The Fed on Nov. 3 said it was expanding record stimulus to try to reduce 9.6 percent unemployment and keep the inflation rate from dropping further. China, Brazil, South Africa and Germany have said the injection of cash into the system may weaken the U.S. dollar.

People’s Bank of China Governor Zhou Xiaochuan said Nov. 5 that while quantitative easing in the U.S. is understandable because of domestic economic conditions, the policy may not be good for the world. Conflicts between the dollar’s role at home and abroad could raise challenges to the viability of the international monetary system, Zhou said at a forum in Beijing.

Frank said that in the absence of additional fiscal measures, the Fed’s asset purchases are an appropriate response.

“I wish we had some more fiscal stimulus,” said Frank, a Massachusetts Democrat. “In the absence of that, given unemployment, given the complete absence of inflation, he is doing a very reasonable thing.”



www.bloomberg.com/news/2010-11-22/frank-defends-bernanke-appalled-by-republican-criticism-of-fed-chairman.html

[sandi66]

Nightmare On Wall Street


23 November 2010



It's one of Wall Street's biggest nightmares - speculation that a huge insider trading scandal is about to hit hedge funds, brokers, investment banks, and US mutual funds.
The Federal Bureau of Investigation raided the offices of three hedge funds Monday - Connecticut-based Diamondback Capital Management and Level Global Investors, and Boston-based Loch Capital Management (none of the three firms have yet been accused of any wrongdoing).

But that's likely to be just the start, as investigators near the end of a 3-year probe which is said to have uncovered the biggest insider trading scandal ever seen on Wall Street.

Over $15bn was wiped off the collective value of Bank of America, Citi, Goldman Sachs, JPMorgan and Morgan Stanley Monday, as investors worry that staff at those firms could somehow be implicated in the probe and headed for the exits. Goldman's stock closed 3.37% down, after a media report quoted sources that indicated that several low-level Goldman employees may be under investigation.

The probe itself is thought to have come out of the Galleon Group hedge fund insider trading investigation, in which 23 people have already been criminally charged.

One banker told Here Is The City: 'This is the worst time possible time for an insider trading scandal to hit Wall Street. Things have just started to settle down and banker-bashing has at last taken a back seat as lawmakers try to short out the economic mess rather than just point the finger of blame in other directions.

'Right on cue, investment bankers and hedge fund professionals are going to be hitting the limelight again, and all the unpleasant stuff about greed and unethical behaviour will resurface. And, as usual, all those who work on Wall Street will get tarred with the same brush, when in truth it may be just a few rotten apples that have stepped over the line'.

One senior Wall Street media relations staffer told us: 'It will be the unsubstantiated rumors that will do the most damage. We can put a spin on most things, but it's impossible to prove a negative. Most firms will just have to sit tight and await the outcome of the investigations - and just pray that none of their own staff have been involved'.



news.hereisthecity.com/news/business_news/11899.cntns

[sandi66]

Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed

Posted on: Tue, 23 Nov 2010 06:47:09 EST

Nov 23, 2010 (FIND, Inc. via COMTEX) --
November 17, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act"), *1 and Rule 19b-4 thereunder, *2 notice is hereby given that on November 4, 2010, the International Securities Exchange, LLC (the "Exchange" or the " ISE | PowerRating") filed with the Securities and Exchange Commission ("Commission" or "SEC") the proposed rule change as described in Items I, II, and III below, which items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
*1 15 U.S.C. 78s(b)(1).
*2 17 CFR 240.19b-4.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange is proposing to amend its fees for its real-time depth of market data offering. The text of the proposed rule change is available on the Exchange's Web site www.ise.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE currently creates market data that consists of options quotes and orders and all trades that are executed on the Exchange. ISE also produces a Best Bid/Offer, or BBO, with the aggregate size from all outstanding quotes and orders at the top price level, or the "top of book." This "core" *3 data is formatted according to Options Price Reporting Authority ("OPRA") specification and sent to OPRA for redistribution to the public.
*3 "Core" data refers to the best-priced quotations and comprehensive last sale reports of all markets that the Commission requires a central processor to consolidate and distribute to the public pursuant to joint-SRO plans. "Non- core" data refers to products other than the consolidated products that markets offer collectively under joint industry plans.
Pursuant to Securities and Exchange Commission ("SEC") approval, the Exchange also offers a "non-core" data feed on a subscription basis called the ISE Depth of Market Data Feed ("Depth Feed"). The Depth Feed offering aggregates all quotes and orders at the top five price levels on the Exchange, on both the bid and offer side of the market. The Depth Feed offering consists of non-marketable orders and quotes that a prospective buyer or seller has chosen to display. Depth Feed, which is distributed in real time, provides subscribers with a consolidated view of tradable prices beyond the BBO. Depth Feed also shows additional liquidity and enhances transparency for ISE traded options that are not currently available through the OPRA feed. The offering is available to members and non-members, and to both professional and non- professional subscribers.
The Exchange currently charges distributors *4 of Depth Feed $5,000 per month. In addition, the Exchange charges the distributor a monthly fee per controlled device *5 of (i) $50 per controlled device for Professionals at a distributor where the data is for internal use only, (ii) $50 per controlled device for Professionals who receive the data from a distributor where the data is further redistributed externally, and (iii) $5 per controlled device for Non-Professionals who receive the date from a distributor. The Exchange also has a fee cap currently in place where for any one month the combined maximum amount of fees payable by a distributor is as follows: (i) $7,500 for Professionals at a distributor where the data is for internal use only, (ii) $12,500 for
[Page Number 71476]
Professionals where the data is further redistributed externally in a controlled device, and (iii) $10,000 for Non-Professionals who receive the data in a controlled device from a distributor. Additionally, in an effort to accommodate a distributor's development effort to integrate the Depth Feed offering, the Exchange charges distributors a flat fee of $1,000 for the first month after connectivity has been established between ISE and the distributor; the Exchange also waives all user fees during this one month period.
*4 A "distributor" of a Depth Feed is defined on the ISE Schedule of Fees as any firm that receives the Depth of Market data feed directly from ISE or indirectly through a redistributor and then distributes it either internally or externally. A redistributor includes market data vendors and connectivity providers such as extranets and private network providers.
*5 A "controlled device" is defined on the ISE Schedule of Fees as any device that a distributor of the Depth of Market data feed permits to access the information in the Depth of Market Raw Data Feed.
In differentiating between Professional and Non-Professional subscribers, the Exchange proposes to apply the same criteria for qualification as a Non- Professional subscriber as the Consolidated Tape Association ("CTA") Plan and Consolidated Quotation System Plan Participants use. Accordingly, a "Non- Professional Subscriber" is an authorized end-user of Depth of Market data who is a natural person and who is neither: (a) Registered or qualified with the Securities and Exchange Commission (the "Commission"), the Commodities Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association; (b) engaged as an "investment advisor" as that term is defined in Section 202(a)(11) of the Investment Advisers Act of 1940 (whether or not registered or qualified under that act); nor (c) employed by a bank or other organization exempt from registration under Federal and/or state securities laws to perform functions that would require him/her to be so registered or qualified if he/she were to perform such functions for an organization not so exempt. A "Professional Subscriber" is an authorized end-user of Depth of Market data that has not qualified as a Non-Professional Subscriber.
The purpose of this filing is to lower the fee cap currently in place for Professionals who redistribute the data externally in a controlled device. Based on conversations ISE has had with prospective subscribers, the Exchange believes lowering the fee cap for this offering will lead to increased subscriptions. ISE therefore proposes to lower the cap for these professional subscribers from $12,500 to $10,000 per month. The Exchange is not proposing to make any other changes to the Depth Feed offering.
2. Statutory Basis
ISE believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, *6 in general, and with Section 6(b)(4) of the Act, *7 in particular, in that it provides an equitable allocation of reasonable fees among users and recipients of ISE data. In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to consumers, and also spur innovation and competition for the provision of market data.
*6 15 U.S.C. 78f.
*7 15 U.S.C. 78f(b)(4).
The Commission concluded that Regulation NMS--by deregulating the market in proprietary data--would itself further the Act's goals of facilitating efficiency and competition:
[E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data. The Commission also believes that efficiency is promoted when broker-dealers may choose to receive (and pay for) additional market data based on heir own internal analysis of the need for such data. *8
*8 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).
By removing "unnecessary regulatory restrictions" on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. If the free market should determine whether proprietary data is sold to broker-dealers at all, it follows that the price at which such data is sold should be set by the market as well.
On July 21, 2010, President Barak Obama signed into law H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank Act"), which amended Section 19 of the Act. Among other things, Section 916 of the Dodd-Frank Act amended paragraph (A) of Section 19(b)(3) of the Act by inserting the phrase "on any person, whether or not the person is a member of the self-regulatory organization" after "due, fee or other charge imposed by the self-regulatory organization." As a result, all SRO rule proposals establishing or changing dues, fees, or other charges are immediately effective upon filing regardless of whether such dues, fees, or other charges are imposed on members of the SRO, non-members, or both. Section 916 further amended paragraph (C) of Section 19(b)(3) of the Exchange Act to read, in pertinent part, "At any time within the 60-day period beginning on the date of filing of such a proposed rule change in accordance with the provisions of paragraph (1) [of Section 19(b)], the Commission summarily may temporarily suspend the change in the rules of the self-regulatory organization made thereby, if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title. If the Commission takes such action, the Commission shall institute proceedings under paragraph (2)(B) [of Section 19(b)] to determine whether the proposed rule should be approved or disapproved."
ISE believes that these amendments to Section 19 of the Act reflect Congress's intent to allow the Commission to rely upon the forces of competition to ensure that fees for market data are reasonable and equitably allocated. Although Section 19(b) had formerly authorized immediate effectiveness for a "due, fee or other charge imposed by the self-regulatory organization," the Commission adopted a policy and subsequently a rule stipulating that fees for data and other products available to persons that are not members of the self-regulatory organization must be approved by the Commission after first being published for comment. At the time, the Commission supported the adoption of the policy and the rule by pointing out that unlike members, whose representation in self-regulatory organization governance was mandated by the Act, non-members should be given the opportunity to comment on fees before being required to pay them, and that the Commission should specifically approve all such fees. ISE believes that the amendment to Section 19 reflects Congress's conclusion that the evolution of self-regulatory organization governance and competitive market structure have rendered the Commission's prior policy on non-member fees obsolete. Specifically, many exchanges have evolved from member-owned not-for-profit corporations into for-profit investor-owned corporations (or subsidiaries of investor-owned corporations). Accordingly, exchanges no longer have narrow incentives to manage their affairs for the exclusive benefit of their members, but rather have incentives to maximize the appeal of their products to all customers, whether members or nonmembers, so as to broaden distribution and grow revenues. Moreover, we believe that the change also reflects an endorsement of the Commission's determinations that
[Page Number 71477]
reliance on competitive markets is an appropriate means to ensure equitable and reasonable prices. Simply put, the change reflects a presumption that all fee changes should be permitted to take effect immediately, since the level of all fees are constrained by competitive forces.
The recent decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC, No. 09-1042 (DC Cir. 2010), although reviewing a Commission decision made prior to the effective date of the Dodd-Frank Act, upheld the Commission's reliance upon competitive markets to set reasonable and equitably allocated fees for market data. "In fact, the legislative history indicates that the Congress intended that the market system `evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed' and that the SEC wield its regulatory power `in those situations where competition may not be sufficient,' such as in the creation of a `consolidated transactional reporting system.' " *9
*9 NetCoalition, at 15 (quoting H.R. Rep. No. 94-229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323).
The court's conclusions about Congressional intent are therefore reinforced by the Dodd-Frank Act amendments, which create a presumption that exchange fees, including market data fees, may take effect immediately, without prior Commission approval, and that the Commission should take action to suspend a fee change and institute a proceeding to determine whether the fee change should be approved or disapproved only where the Commission has concerns that the change may not be consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
ISE does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. Notwithstanding its determination that the Commission may rely upon competition to establish fair and equitably allocated fees for market data, the NetCoaltion court found that the Commission had not, in that case, compiled a record that adequately supported its conclusion that the market for the data at issue in the case was competitive.
For the reasons discussed above, ISE believes that the Dodd-Frank Act amendments to Section 19 materially alter the scope of the Commission's review of future market data filings, by creating a presumption that all fees may take effect immediately, without prior analysis by the Commission of the competitive environment. Even in the absence of this important statutory change, however, ISE believes that a record may readily be established to demonstrate the competitive nature of the market in question.
As recently noted by a number of exchanges, *10 there is intense competition between trading platforms that provide transaction execution and routing services and proprietary data products. Transaction execution and proprietary data products are complementary in that market data is both an input and a byproduct of the execution service. In fact, market data and trade execution are a paradigmatic example of joint products with joint costs. The decision whether and on which platform to post an order will depend on the attributes of the platform where the order can be posted, including the execution fees, data quality and price and distribution of its data products. Without the prospect of a taking order seeing and reacting to a posted order on a particular platform, the posting of the order would accomplish little. Without trade executions, exchange data products cannot exist. Data products are valuable to many end users only insofar as they provide information that end users expect will assist them or their customers in making trading decisions.
*10 See Securities Exchange Act Release Nos. 63084 (October 13, 2010), 75 FR 64379 (October 19, 2010) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise an Optional Depth Data Enterprise License Fee for Broker-Dealer Distribution of Depth-of-Book Data) (SR-NASDAQ-2010-125); and 62887 (September 10, 2010), 75 FR 57092 (September 17, 2010) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Market Data Feeds) (SR-PHLX-2010-121).
The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's transaction execution platform and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence. The total return that a trading platform earns reflects the revenues it receives from both products and the joint costs it incurs. Moreover, an exchange's customers view the costs of transaction executions and of data as a unified cost of doing business with the exchange. A broker-dealer will direct orders to a particular exchange only if the expected revenues from executing trades on the exchange exceed net transaction execution costs and the cost of data that the broker-dealer chooses to buy to support its trading decisions (or those of its customers). The choice of data products is, in turn, a product of the value of the products in making profitable trading decisions. If the cost of the product exceeds its expected value, the broker- dealer will choose not to buy it.
Moreover, as a broker-dealer chooses to direct fewer orders to a particular exchange, the value of the product to that broker-dealer decrease, for two reasons. First, the product will contain less information, because executions of the broker-dealer's orders will not be reflected in it. Second, and perhaps more important, the product will be less valuable to that broker-dealer because it does not provide information about the venue to which it is directing its orders. Data from the competing venue to which the broker-dealer is directing orders will become correspondingly more valuable. Thus, a super- competitive increase in the fees charged for either transactions or data has the potential to impair revenues from both products. "No one disputes that competition for order flow is `fierce'." *11 However, the existence of fierce competition for order flow implies a high degree of price sensitivity on the part of broker-dealers with order flow, since they may readily reduce costs by directing orders toward the lowest-cost trading venues. A broker-dealer that shifted its order flow from one platform to another in response to order execution price differentials would both reduce the value of that platform's market data and reduce its own need to consume data from the disfavored platform. Similarly, if a platform increases its market data fees, the change will affect the overall cost of doing business with the platform, and affected broker-dealers will assess whether they can lower their trading costs by directing orders elsewhere and thereby lessening the need for the more expensive data.
*11 NetCoalition, at 24.
Analyzing the cost of market data distribution in isolation from the cost of all of the inputs supporting the creation of market data will inevitably underestimate the cost of the data. Thus, because it is impossible to create data without a fast, technologically robust, and well-regulated execution system, system costs and regulatory costs affect the price of market data. It would be equally misleading, however, to attribute all of the exchange's costs to the market data portion of an exchange's
[Page Number 71478]
joint product. Rather, all of the exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products.
Competition among trading platforms can be expected to constrain the aggregate return each platform earns from the sale of its joint products, but different platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. For example, some platform may choose to pay rebates to attract orders, charge relatively low prices for market information (or provide information free of charge) and charge relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower rebates (or no rebates) to attract orders, setting relatively high prices for market information, and setting relatively low prices for accessing posted liquidity. In this environment, there is no economic basis for regulating maximum prices for one of the joint products in an industry in which suppliers face competitive constraints with regard to the joint offering.
The market for market data products is competitive and inherently contestable because there is fierce competition for the inputs necessary to the creation of proprietary data and strict pricing discipline for the proprietary products themselves. Numerous exchanges compete with each other for listings, trades, and market data itself, providing virtually limitless opportunities for entrepreneurs who wish to produce and distribute their own market data. This proprietary data is produced by each individual exchange, as well as other entities, in a vigorously competitive market.
Broker-dealers currently have numerous alternative venues for their order flow, including numerous self-regulatory organization ("SRO") markets, as well as internalizing broker-dealers ("BDs") and various forms of alternative trading systems ("ATSs"), including dark pools and electronic communication networks ("ECNs"). Each SRO market competes to produce transaction reports via trade executions, and two FINRA-regulated Trade Reporting Facilities ("TRFs") compete to attract internalized transaction reports. Competitive markets for order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products. The large number of SROs, TRFs, BDs, and ATSs that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO, TRF, ATS, and BD is currently permitted to produce proprietary data products, and many currently do or have announced plans to do so, including NASDAQ, NYSE, NYSE Amex, NYSEArca, and BATS.
Any ATS or BD can combine with any other ATS, BD, or multiple ATSs or BDs to produce joint proprietary data products. Additionally, order routers and market data vendors can facilitate single or multiple broker-dealers' production of proprietary data products. The potential sources of proprietary products are virtually limitless. The fact that proprietary data from ATSs, BDs, and vendors can by-pass SROs is significant in two respects. First, non- SROs can compete directly with SROs for the production and sale of proprietary data products, as BATS and Arca did before registering as exchanges by publishing proprietary book data on the Internet. Second, because a single order or transaction report can appear in an SRO proprietary product, a non- SRO proprietary product, or both, the data available in proprietary products is exponentially greater than the actual number of orders and transaction reports that exist in the marketplace. Market data vendors provide another form of price discipline for proprietary data products because they control the primary means of access to end users. Vendors impose price restraints based upon their business models. For example, vendors such as Bloomberg and Reuters that assess a surcharge on data they sell may refuse to offer proprietary products that end users will not purchase in sufficient numbers. Internet portals, such as Google, impose a discipline by providing only data that will enable them to attract "eyeballs" that contribute to their advertising revenue. Retail broker-dealers, such as Schwab and Fidelity, offer their customers proprietary data only if it promotes trading and generates sufficient commission revenue. Although the business models may differ, these vendors' pricing discipline is the same: They can simply refuse to purchase any proprietary data product that fails to provide sufficient value. NASDAQ and other producers of proprietary data products must understand and respond to these varying business models and pricing disciplines in order to market proprietary data products successfully.
Competition among platforms has driven ISE continually to improve its platform data offerings and to cater to customers' data needs. For example, ISE has developed and maintained multiple delivery mechanisms that enable customers to receive data in the form and manner they prefer and at the lowest cost to them. ISE offers front end applications such as its PrecISE Trade application which helps customers utilize data. ISE offers data via multiple extranet providers, thereby helping to reduce network and total cost for its data products. ISE also offers an enterprise license option to help reduce the administrative burden and costs to firms that purchase market data. Despite these enhancements and a dramatic increase in message traffic, ISE's fees for market data have, for the most part, remained flat or, as is the case with this proposal, decreased.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act *12 and Rule 19b-4(f)(2) *13 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
*12 15 U.S.C. 78s(b)(3)(A)(ii).
*13 17 CFR 240.19b-4(f)(2).
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
[Page Number 71479]
Electronic Comments
. Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
. Send an E-mail to [e-mail]. Please include File No. SR-ISE- 2010-103 on the subject line.
Paper Comments
. Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549- 1090.
All submissions should refer to File Number SR-ISE-2010-103. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2010-103 and should be submitted by December 14, 2010.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. *14
*14 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-29402 Filed 11-22-10; 8:45 am]
BILLING CODE 8011-01-P
Vol. 75, No. 225
[Release No. 34-63324; File No. SR-ISE-2010-103]
Notices
For full details on (ISE) ISE. (ISE) has Short Term PowerRatings at TradingMarkets. Details on (ISE) Short Term PowerRatings is available at This Link.

www.tradingmarkets.com/news/stock-alert/ise_self-regulatory-organizations-international-securities-exchange-llc-notice-of-filing-and-immediat-1326009.html

[sandi66]

North Korean artillery strike alarms world
Olivia Hampton
November 23, 2010 - 10:59PM

AFP

The United States has vowed to defend its ally South Korea after North Korea rained artillery shells on its neighbour on Tuesday, killing two people and touching off widespread alarm in world capitals.

In a powerfully worded statement, the White House said the United States "strongly condemns this attack and calls on North Korea to halt its belligerent action".

It also urged nuclear-armed North Korea to "fully abide by the terms of the Armistice Agreement" that ended the Korean War of 1950-53.

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"The United States is firmly committed to the defence of our ally, the Republic of (South) Korea, and to the maintenance of regional peace and stability," it said.

Condemnation of Pyongyang's action also came from Russia, Japan and Western Europe.

China - North Korea's sole major ally and economic prop - while expressing concern over the cross-border firing, appealed for stalled six-party nuclear talks to resume.

In one of the most serious border incidents since the Korean War, South Korean troops fired back with cannon, the Seoul government convened in an underground war room and "multiple" air force jets were scrambled.

Pyongyang, however, said South Korea fired first in Tuesday's cross-border artillery duel, which killed two marines and injured 18 soldiers and civilians on a South Korean border island.

Japanese Prime Minister Naoto Kan, whose country has long had difficult relations with the reclusive communist state, ordered his government to prepare for any eventuality.

"I ordered (ministers) to make preparations so that we can react firmly, should any unexpected event occur," Kan told reporters after an emergency meeting of cabinet members and senior officials.

"I ordered them to do their utmost to gather information."

Russian Foreign Minister Sergei Lavrov condemned the shelling, warning of "colossal danger" from Korean tensions and calling for an end to any hostilities.

"This could degenerate into military actions. This is a colossal danger which we need to avoid with all possible means," he said.

British Foreign Secretary William Hague slammed what he called Pyongyang's "unprovoked attack", saying it would lead to further tensions on the peninsula.

"The UK strongly condemns North Korea's unprovoked attack on the South Korean island of Yeonpyeong Island. Such unprovoked attacks will only lead to further tensions on the Korean peninsula," Hague said.

German Foreign Minister Guido Westerwelle warned the incident threatened peace in the region.

"I am very worried by the North Korean artillery fire on South Korea. This new military provocation threatens peace in the region," he said.

The European Union's chief diplomat, Catherine Ashton, joined in the condemnation, urging the communist regime to refrain from actions that could escalate tensions.

"I am deeply concerned by today's events on the Korean Peninsula, which have reportedly led to casualties among South Korean military and civilians," Ashton said in a statement.

"I call on the North Korean authorities to refrain from any action that risks further escalation and to fully respect the Korean Armistice Agreement."

Tuesday's incident came after nuclear-armed North Korea disclosed an apparently operational uranium enrichment program - a second potential way of building an atomic bomb - causing serious alarm among the US and its allies.

A long-running, but currently stalled, six-nation negotiation process hosted by China and including both Koreas, the United States, Japan and Russia, is seeking to shut down the North's nuclear weapons program.

China also expressed concern over the artillery incident.

"We have taken note of the relevant report and we express concern over the situation," foreign ministry spokesman Hong Lei told reporters.

"We hope the relevant parties do more to contribute to peace and stability on the Korean peninsula."

Hong said it was "imperative" the six-nation talks were restarted "as soon as possible".

"It is China's consistent and firm position to realise de-nuclearisation on the (Korean) peninsula through dialogue and consultation," Hong said.

North Korea abandoned the forum in April 2009, a month before its second nuclear test, and announced in September last year it had reached the final stage of enriching uranium.



news.smh.com.au/breaking-news-world/north-korean-artillery-strike-alarms-world-20101123-185hs.html

[sandi66]

Obama To Promote Auto Rebirth in One of `America`s Fastest Dying Towns'
By Hans Nichols and Julianna Goldman - Nov 23, 2010 12:01 AM ET


President Barack Obama heads into the second half of his term still trying to convince the public that his $814 billion stimulus and the bailouts of General Motors Co. and Chrysler Group LLC are paying economic dividends.

By going today to Kokomo, Indiana, a once-thriving manufacturing center, Obama is seeking make his argument in an area that’s benefited from both.

The president “needs to show where there have been successes, and Kokomo has been one of those places,” Greg Goodnight, the city’s mayor, said. “He has to show people that we’re heading in the right direction.”

The visit to Indiana is Obama’s first domestic trip since the Nov. 2 midterm elections, in which Democrats lost their majority in the House of Representatives to Republicans, largely on voter concern about the economy. Obama has described the outcome as a “shellacking” for his party and said many Americans viewed the bailouts and the stimulus as an “overreach” by the government.

In Indiana, Democrats lost a Senate seat and two of the five congressional districts that they held. Statewide, the Democrat’s Senate candidate, Brad Ellsworth, took 40 percent of the vote, compared with the 49.9 that Obama captured when he became the first Democratic presidential candidate to win the state in 44 years.

Job Losses

Indiana has been hit by shifts in the U.S. economy and the recession. The state has lost 231,000 manufacturing jobs over the last decade and 31,000 since Obama took office, according to Bureau of Labor Statistics data. The unemployment rate was 10.1 percent in September, compared with the national average of 9.6 percent.

The Bloomberg Indiana Index of the economy, a measure of the performance of 54 companies including Indianapolis-based insurer WellPoint Inc. and Columbus, Indiana-based diesel-engine maker Cummins Inc., has gained 46 percent since Obama took office, compared with 49 percent for the Standard & Poor’s 500 Index.

Kokomo was labeled one of “America’s Fastest Dying Towns” by Forbes magazine in 2008 because of declines in auto and manufacturing jobs. By June 2009, the unemployment rate in the Kokomo metropolitan area, where Chrysler and auto parts supplier Delphi Automotive LLP are among the biggest employers, hit 19.6 percent. In September it was 11 percent.

‘Big Burden’

Before the auto bailout and passage of the stimulus package, Chrysler and Delphi were shutting down production facilities and shedding workers.

“That was a pretty big burden on the city,” said Gary Cameron, Delphi’s director of engineering for power electronics in Kokomo.

Chrysler announced in June that the transmission plant Obama and Vice President Joe Biden will visit today is getting an investment of more than $300 million for retooling and modernization. The White House says the money meant Chrysler would retain more than 1,000 workers.

Delphi matched an $89 million in federal stimulus grant to establish a new hybrid vehicle component manufacturing plant that supports 119 jobs, Cameron said.

“It definitely improved our competitive position,” he said. “Kokomo is obviously a manufacturing site today because of the stimulus-partnership money.”

Delphi’s emergence from Chapter 11 has allowed the company to provide specialized manufacturing capability in hybrid and electric vehicles, Cameron said.

“I don’t know if Obama is getting the credit for the drop in unemployment,” Goodnight, a Democrat, said. “It still has to get much better.”

Highlighting Autos

Obama is likely to repeat arguments he made during trips to auto plants in July and August and again Nov. 18 after GM’s return to the stock market: that the auto industry, and the economy, has turned the corner. That view hasn’t been embraced by the public.

In an Oct. 7-10 Bloomberg National Poll, 34 percent of adults said they believed the automaker bailouts would lead to a stronger economy, while 41 percent said it would weaken the economy.

“The initial public reaction to the government rescue of the American auto industry was surprisingly negative and it hasn’t yet turned positive,” said Bill Galston, a former domestic policy adviser to President Bill Clinton who is now an analyst at the Brookings Institution in Washington.

Goodnight said Obama’s battle is against “that unknown of what would have happened had he not made those decision.”

“Sometimes long-term decisions take a little longer to come to fruition,” he said.



www.bloomberg.com/news/2010-11-23/obama-to-promote-auto-rebirth-in-one-of-fastest-dying-towns-.html

[sandi66]

Barclays Transfers From Lehman May Have Broken Law, SEC Says

Nov 23, 2010 12:01 AM ET

Barclays Plc got two transfers totaling about $1.3 billion from Lehman Brothers Holdings Inc. in September 2008 that may have violated securities laws, the U.S. Securities and Exchange Commission said.

The U.K. bank got $769 million in securities held in the Lehman brokerage’s reserve bank account, and $507 million in assets listed as a debit item in the brokerage’s customer reserve, when it bought defunct Lehman’s brokerage, Lehman Brothers Inc., the SEC said in a filing yesterday in U.S. Bankruptcy Court in Manhattan.

The transfers would violate securities law if they increased the deficiency in the accounts, “and LBI would not have sufficient funds to satisfy all claims of the remaining customers,” the SEC said.

The SEC’s filing comes amid a bankruptcy court trial of Barclays, which is accused by Lehman of making an $11 billion “windfall” on its purchase of the brokerage.

“The sale transaction that was disclosed to the court was based upon false premises from the very outset,” Lehman’s lawyer, Robert Gaffey, told U.S. Bankruptcy Judge James in a court filing yesterday that is his last chance to sway the judge.

Peck may rule on Lehman’s yearlong lawsuit against Barclays in January or February, said lawyers in the case.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

www.bloomberg.com/news/2010-11-22/sec-says-two-transfers-to-barclays-in-lehman-deal-violate-law.html

[sandi66]

Obama's Economy Team Will Lose Farrell, Treasury's Barr as Turnover Widens

Nov 23, 2010 12:00 AM ET

Diana Farrell, deputy director of President Barack Obama’s National Economic Council, and Assistant Treasury Secretary Michael Barr are leaving the administration, adding to the turnover in the ranks of the White House economic team that worked on the government’s response to the worst financial crisis in more than 70 years.

Farrell will leave by the end of the year and Barr’s last day at Treasury will be Dec. 3. Both played key roles in shaping Obama’s financial regulatory overhaul plan, which was signed into law in July.

“I am deeply grateful for the opportunity to serve President Obama and the country,” Farrell said in a statement yesterday. “It was a privilege to work with such a fine group of people at the White House and across the administration.”

Farrell’s boss at the NEC, Lawrence Summers, announced in September that he would return at the end of the year to Harvard University.

Summers said Farrell “played a central role” in the administration’s efforts to respond to the housing crisis, restructure the auto industry and encourage economic growth.

“Her natural talent as a policy maker and her good judgment made her invaluable in setting a course for economic recovery,” Summers said in a statement.

‘Key Architect’

Treasury Secretary Timothy F. Geithner described Barr as “a key architect” of the financial regulatory overhaul legislation. “Our country is stronger, our financial system more stable, and our families better protected because of his work,” Geithner said.

Farrell did not indicate in her statement what she planned to do. Treasury spokesman Steve Adamske said Barr would continue his academic career at the University of Michigan in Ann Arbor.

Adamske also said yesterday that Matthew Kabaker, who heads the Office of Capital Markets and Housing Finance, is leaving as well. Kabaker, who helped devise the Treasury’s plan to spur banks to sell their toxic assets, is a former executive at Blackstone Group LP. He will be returning to New York, where his family lives, Adamske said.

Obama and his economic team have been battered by the slow economic recovery and an unemployment rate that has been at 9.5 percent or higher for more than a year. The economy was a top issue in the Nov. 2 midterm congressional elections in which Republicans won control of the House of Representatives and narrowed the Democratic majority in the Senate.

A New Team

Obama is remaking his economic team following other departures including Peter Orszag, director of the Office of Management and Budget, and Christina Romer, head of the Council of Economic Advisers.

Austan Goolsbee, Romer’s deputy, took over at the Council of Economic Advisers, and Jacob Lew, who headed the White House budget office during the Clinton administration, has been confirmed as Orszag’s successor.

Roger Altman, founder of Evercore Partners Inc. and a former deputy treasury secretary, is a leading candidate to succeed Summers.

Farrell, 45, is a former director of the McKinsey Global Institute, the economics research arm of McKinsey & Company. In naming her to the administration last year, Obama said she would focus on programs to “jump-start economic growth,” while promoting “the long-term investments in our economy necessary to save and create jobs, rebuild our infrastructure, and assure energy independence.”

She received her undergraduate degree from Wesleyan University in Middletown, Connecticut, and a master’s degree from Harvard Business School in Cambridge, Massachusetts.

Barr, also 45 and a former law professor, pushed the administration’s case for the Dodd-Frank financial overhaul in the months before it was signed into law in July. He had been a candidate to lead the Consumer Financial Protection Bureau created by the law.

Before joining the administration, he was a senior fellow at the Center for American Progress and at the Brookings Institution in Washington. A former Rhodes Scholar, Barr received both his undergraduate degree and his law degree from Yale University in New Haven, Connecticut.

www.bloomberg.com/news/2010-11-23/economic-advisers-farrell-barr-set-to-leave-administration.html

[sandi66]

More Problems For Banks?!
11/23/2010
By John Lounsbury
Jonathan R. Laing reports in Barron’s that the exposure of U.S. bank,s to liability for putbacks of defective MBS (mortgage backed securities), is greater than the $52 billion reported last week from the findings of the COP (Congressional Oversight Panel). The Laing article has a total potential liability of $86 billion for U.S. banks.

What is curious about these two reports, even more than the fact that the data reported in Barron’s (see graphic below) is 65% greater than the total from the COP report, is that the two data sets do not even cover the same banks.



There is overlap in the two sets of banks included in the separate reports, but one bank (WFC – Wells Fargo) is not in the Barron’s report and Goldman Sachs (GS) and Morgan Stanley (MS) are not mentioned in the COP report. The table below summarizes:



The Barron’s article data for the three banks that overlap the COP set of banks is $66.9 billion. That is ~$15 billion greater than the COP report and the Barron’s data doesn’t even include one of the four COP report banks (WFC).

To confuse things further, Barry Ritholtz at The Big Picture reports that Chris Whalen has an even bigger exposure estimate.

Sorting out this putback situation is getting more and more complicated as time goes by. At this point, I throw up my hands and call for arbitration.

To add another level of angina to the situation, Reuters is reporting that Barclays Plc (BCS) estimates that U.S. banks will have to increase capital by $100 billion to $150 billion to meet Basel III rules requirements. Reportedly 90% of this capital will be required by the top six U.S. banks. When you add this amount of exposure to other potential losses with insufficient provisions, plus the MBS putback overhang, the earnings outlooks for banks in the coming years is quite bleak.

Beyond the question of earnings one still has to question solvency. The following graph shows that loss provisions for banks are quite insufficient.



The situation for the largest banks is better, but still far below historic normal levels.



To aid those not familiar with the terminology, here is a quote from the St. Louis Fed Fred data base:

“Each bank is classified by whether the ratio of its allowance for loan and lease losses to nonperforming loans is greater than one. The allowance for loan and lease losses is the sum of call report items rcfd3123 and rcfd3128. Total nonperforming loans equals the sum of call report items rcfd1403 and rcfd1407. For each size category, the sum of all assets held by banks where this ratio is greater than one is divided by the sum all assets held by banks in the class.”

Thus the above graphs indicate that less that 20% of the assets in all banks have sufficient loss provisions and about 33% of large bank assets are covered by sufficient loss provisions. These loss provisions apply only to currently nonperforming loans (and leases) and therein lies another problem. The current extend and pretend policies of the Fed, the Treasury and the banks themselves are delaying identification of nonperforming assets as long as possible. They are waiting for the recovery fairy to make things all better again.

Well, indications are that the fairy is not waving the wand yet and things could get worse if housing prices continue further into their current dip



satwavespro.com/2010/11/23/more-problems-for-banks/

[sandi66]

Top Political Consultant Pleads Guilty to Pay-to-Play Scheme

Former Car Czar Continues to Maintain Innocence

Tuesday, November 23, 2010


Hank Morris, once one of New York's most powerful political consultants, pled guilty to a felony in connection with New York State pension fund scandal. Morris, the top political advisor to former State Comptroller Alan Hevesi, admitted in court that he "intentionally engaged in fraud and deception" when he helped shape the scheme to sell access to the state's multi-billion dollar public pension fund.

As part of his plea deal, Morris will forfeit $19 million — the sum prosecutors say he pocketed from promoting $5 billion dollars in state pension investments. Morris could face four years in jail and will be sentenced on February 1. Had he gone to trial on the multiple criminal counts he faced initially, he could have been sentenced to up to 25 years.

In 1998, Morris was the mastermind behind then-Congressman Charles Schumer's upset win over Senator Al D'amato. The plea deal covers Morris' actions from January 2003 through December 2006.

During his appearance in court, Morris layed out how he brought in Ray Harding, the former leader of the Liberal Party, to pockets fees from a pair of pension fund investments. Morris also admitted soliciting campaign cash for Hevesi's reelection bid from people who then got access to investment funds from the multi-billion dollar public employee pension fund.

Initially, Morris had vowed to fight the charges and some legal observers thought he could prevail.

Morris' guilty plea brings the number of convictions in the scandal to eight. So far, Attorney General Andrew Cuomo has collected close to $160 million in fines for the state pension fund. Last year, Cuomo rolled out his Public Pension Fund Reform Code of Conduct that was endorsed by investment firms like The Carlyle Group that were caught up in the scandal.

Last week, Cuomo sued former auto czar Steven Rattner for $26 million for his alleged involvement in the scheme. Cuomo is seeking to ban Rattner for life from New York state's securities industry. On the same day Cuomo filed his suit, Rattner settled with the Securities and Exchange Commission without admitting any wrongdoing. That settlement required Rattner pay more than $6 million and submit to a two year ban from the securities business. At the end of that suspension, he will have to reapply to the SEC.

On Tuesday, Rattner attacked Cuomo on MSNBC for pursuing a "political" prosecution of him. “Andrew Cuomo seized on this as a political issue during he campaign, and before his campaign," charged Rattner. "He has taken it to great extremes.”

Rattner complained that he felt "bullied," and if "forced to fight," he would take Cuomo on. Rattner has consistently said that he is innocent of the charges drawn up by Cuomo. Rattner, a former New York Times reporter, is also a major Democratic fundraiser.

Last year, Rattner's old firm Quadrangle, which was also charged in the probe, settled with Cuomo for $12 million and issued a public letter highly critical of what it said was Rattner's role in the pay to play scheme. (Rattner is now suing Quadrangle.)

In more halycon times, Mayor Michael Bloomberg selected Rattner and Quadrangle to manage his personal fortune. Bloomberg has consistently stood by his wealth manager, defending his innocence from the first day Rattner's name surfaced after leaks to the Wall Street Journal and The New York Times identified him as the Quadrangle official at the center of the alleged wheeling and dealing to get ahold of $150 million of public pension money to invest.

For months, Rattner has traveled the country on a high profile book tour touting his brief stint of high profile public service. Often interviewers make no reference to Rattner's proximity to the pay-to-play pension scandal. In his book, Overhaul, he does address the scandal and says that before he did any business with Hank Morris, he touched based with Senator Charles Schumer to vouch for Morris's character.

Rattner, who started his day on Monday on Morning Joe before dawn, also showed up on Charlie Rose. Rose, who was well-acquainted with the ins and outs of the pay to play pension scandal, put Rattner through the most rigorous questioning yet on the scandal.

Rattner continued to defend himself as the victim of an overzealous prosecutor in Attorney General Cuomo who he says has resorted to "near extortion" tactics to get Rattner to settle.

www.wnyc.org/articles/wnyc-news/2010/nov/23/top-political-consultant-pleads-guilty-pay-play-scheme/

[sandi66]

Canadian Stock Manipulator Sentenced to 25 Years, $55.8M in Restitution

Posted November 22, 2010 10:16AM PST

George Georgiou of Toronto was sentenced to 25 years in prison and ordered to pay $55.8 million in restitution for a securities fraud involving four thinly-traded stocks of companies he controlled, including two that issued PIPEs.

The sentence was handed down on last Thursday by Judge Robert Kelly of the U.S. District Court in Philadelphia, the Securities and Exchange Commission said in a statement today. Georgiou was convicted in February.

From 2004 through September 2008, Georgiou orchestrated a scheme to manipulate the market in the shares of Avicena Group, a Palo Alto, Calif.-based pharmaceutical company that issued four PIPEs totaling $10.6 million from 2006 through 2008, and Neutron Enterprises, a Las Vegas-based Internet commerce company that issued at least four PIPEs worth $13.6 million from 2004 through 2008. The other two stocks that Georgiou was convicted of manipulating were Hydrogen Hybrid Technologies and Northern Ethanol.

Georgiou used many nominee accounts that he either directly or indirectly controlled at offshore broker-deals and banks, and used a variety of manipulative techniques including matched orders and wash sales. The SEC said he realized at least $20.9 million in ill-gotten gains by falsely increasing the value of the stocks and then dumping his shares.

He also was convicted of defrauding two offshore broker-dealers by obtaining $17.1 million in margin loans, using the manipulated stocks as collateral.

pipes.dealflowmedia.com/wires/article.cfm?title=Canadian-Stock-Manipulator-Sentenced-25-Years-558M-Restitution&id=vjlsfpfkjzzwcib

[sandi66]

Hedge Funds and Insider Trading: A Bad Deal Just Got Worse

November 23, 2010

The secret of grand fortunes without apparent cause is a crime forgotten.

-- Honoré de Balzac (1835)

Unfortunately, illegal insider trading is rampant and may even be on the rise.

-- Preet Bharara, U.S. Attorney (Oct. 22, 2010)


The news over the weekend that federal prosecutors, after a three-year investigation, were on the verge of filing criminal charges against a large number of people for insider trading has shaken Wall Street. On Monday (Nov. 22), the Dow Jones Industrial Average fell more than 140 points midday before recovering most of that loss by the close. The Dow is down another 160 points Tuesday as I write this. One stock that didn’t recover much on Monday is Goldman Sachs (NYSE: GS), which fell $5.62 per share, or 3.4%, on reports that some of its investment bankers tipped off clients about healthcare takeovers.

It’s depressing to hear that the investment game is rigged, but it’s not a surprise. As I wrote in It's Time to Regulate the Investment Banking Psychopaths, successful investment bankers have a special type of DNA that allows them to violate the law without any pangs of conscience if those laws interrupt their pursuit of a large year-end bonus. Goldman’s alleged involvement is also par for the course as its recent settlement with the SEC for fraud demonstrated.

Hedge Funds and Insider Trading
What may be more surprising are the non-investment bankers implicated in the criminal investigation: “expert network” consultants, lawyers, mutual funds, and hedge funds are also involved. Apparently, these consultants were providing fund managers with more than simple “insights” into industry dynamics. The involvement of hedge funds is consistent with last year’s salacious insider trading case against the Galleon Group hedge fund, which also ensnared executives at the New Castle Partners hedge fund in a “sex for information” scheme. New Castle employee Danielle Chiesi was quoted as saying that insider trading felt “like an orgasm.” Fourteen people have already pled guilty in the Galleon case. SEC Enforcement Chief Robert Khuzami (who also led the Goldman fraud investigation) has characterized Galleon founder Raj Rajaratnam as a thief, not the prescient investment analyst he claimed to be:

He is not the astute student of company fundamentals or marketplace trends that he is widely thought to be. He is not a master of the universe but rather a master of the Rolodex.

On Monday, the FBI raided three hedge funds, two of which (Level Global Investors and Diamondback Capital Management) are run by former managers of Steven Cohen’s SAC Advisors hedge fund. Steven Cohen is a legendary trader and billionaire. Although SAC Advisors itself is not currently implicated, rumors of insider trading have dogged the firm for years. An amazing 30 percent average annual return for 18 years has a tendency to raise such questions. Call it the Lance Armstrong effect.

In fact, Steven Cohen’s former wife is suing him for $2.75 million, alleging that he fraudulently withheld all of his wealth during their divorce proceedings. Supposedly, part of the wealth he hid was ill-gotten gains from insider trading. Her allegations must be taken with a grain of salt, however, since in a prior complaint she had demanded $100 million and a substantial stake in his hedge fund. It doesn’t make sense to reduce your demands by such a large margin if the original claim was made in good faith. But I digress.

Hedge Funds and Greed
Why do hedge funds feel a need to cheat through insider trading? U.S. Attorney Preet Bharara, who is leading the current investigation, answered the question this way back in October:

Disturbingly, many of the people who are going to such lengths to obtain inside information for a trading advantage are already among the most advantaged and privileged and wealthy insiders in modern finance.

In another word: greed. I don’t care if you call it greed or the need to feel “like an orgasm” as Danielle Chiesi put it in the Galleon case; these reasons for engaging in criminal behavior remain completely unjustified. To quote U.S. Attorney Bharara one more time, material and non-public:

inside information is a form of financial steroid. It is unfair: it is offensive; it is unlawful; and it puts a black mark on the entire enterprise.

It just goes to show you that rich traders on Wall Street aren’t necessarily rich because they are smarter than the rest of us; they could just be better cheaters than we are. I’ve never thought that hedge-fund investing made much sense for most people, and these insider trading allegations just confirm my opinion.

Hedge Funds Underperform Index Funds
Consider this: even with their cheating, hedge funds haven’t beaten passive index investing! Hard to believe, but an Ibbotson Associates study found that between 1996 and 2005, hedge funds returned only 8.98% annually compared to the 11.58% annual return of the S&P 500 index. Although the study found that hedge funds do generate alpha of about 3 percent annually, the high management and performance fees charged to investors more than ate up this alpha. In fact, a 2009 study concluded that when you include the higher trading costs and tax liabilities hedge fund investors are exposed to, hedge funds would need to outperform index funds by 10 percent annually just to break even!

Furthermore, hedge funds don’t provide much diversification to equity portfolios. Strange, given that their name implies a “hedge,” but a 2008 study found a very high 70% correlation between hedge fund performance and the S&P 500 index. Diversification is a critical component of proper asset allocation (see our free report), and the study concluded that investing in real estate investment trusts (REITs) and commodities is a much better way to achieve portfolio diversification than investing in hedge funds.

Warren Buffett's Anti-Hedge Fund Bet
As some wise sage once put it, hedge funds aren’t an asset class but a compensation structure aimed at fleecing investors. A 2% asset management fee plus a 20% performance fee is just plain obscene. On pages 18-19 of Berkshire Hathaway’s 2005 letter to shareholders, Warren Buffett wrote that investing in hedge funds is a very effective way to “minimize investment returns.” I urge you to read his story about the fictional “Gotrocks” family that becomes the “Hadrocks” family; it is an investing classic.

Buffett has put his money where his mouth is. In 2007 he bet Protege Partners, a hedge fund manager, $1 million that between 2008 and 2017 the S&P 500 index will beat a fund of hedge funds.

www.investingdaily.com/id/18024/hedge-funds-and-insider-trading-a-bad-deal-just-got-worse.html#

[sandi66]

Convergence at the FOMC

Nov 23 18:41.

Just a bit of idle musing ahead of today’s release of the latest FOMC minutes. If we had to summarise the recent evolution of thinking on the FOMC, we would note three trends:

1) Qualified support for the latest round of QE2 even from some FOMC members who are skeptical that monetary policy can further boost the economy at this point.

You’ll find this in the recent speeches of Kevin Warsh and Naranya Kocherlakota. And even Jeffrey Lacker of the Richmond Fed, a committed inflation hawk, said he believed the FOMC at least understood the risks it was taking and that it was the pace of reducing unemployment (rather than the unemployment rate itself) that guided its decision.

Each put his own spin on things, but all of them emphasized that inflation remains below the Fed’s implicit target, and so there is room to use the Fed’s balance sheet to stoke it.

2) A recognition among the supporters that quantitative easing, though a useful step, is limited in what it can accomplish.

This is a point made not just by Bernanke, but also by the NY Fed’s William Dudley and vice chair Janet Yellen, who are among the most dove-ish members on the committee.

3) The FOMC members have become overtly political. This is the most visible and obvious of the three trends, and also the most startling. Bernanke himself stood before the world last week both to hit back at criticism from the surplus countries and also (though it was less noticed) to argue for additional fiscal stimulus.

This seems like a dangerous game Bernanke is playing but clearly one he feels is necessary, either out of frustration or to hit back at politicians who are now meddling in the affairs of the Fed — or, most likely, both.

We would add two quick observations to this. First, the harmony probably won’t last once (if) inflation returns, even with a labour market still in the dumps. The support for these m now mostly because the Fed isn’t satisfying either mandate, but if it later comes down to choosing between Of course, generating inflationary expectations is one of the goals of QE2, so this is to be expected.

Second, we’ll reiterate the point we made in our earlier post about the upcoming change in the FOMC’s voting membership next year. We speculated that perhaps the shift towards hawkishness would make it harder for the FOMC to do anything bold in the future. This seems especially true if the committee really is converging on a view that further monetary policy measures would only be of limited help at best, and if the political environment in which it operates becomes even more heated.

ftalphaville.ft.com/blog/2010/11/23/413126/convergence-at-the-fomc/

[sandi66]

Russia, China to Settle Trade in Ruble and Yuan, Kommersant Says

By Emma O’Brien

Nov. 23 (Bloomberg) -- Russian Prime Minister Vladimir Putin and Chinese Premier Wen Jiabao will amend an existing agreement to allow trade between the two countries to be calculated and settled in yuan and ruble, Kommersant reported. The amendment will be signed when the two leaders meet this week in St. Petersburg, the newspaper reported, citing Bank Rossii Deputy Chairman Viktor Melnikov.


To contact the editor responsible for this story: Emma O’Brien at [e-mail]

Last Updated: November 23, 2010 00:59 EST

noir.bloomberg.com/apps/news?pid=newsarchive&sid=aNvDY2qM5.WA



ty joye

[sandi66]

08:22, November 24, 2010 english.peopledaily.com.cn/90001/90778/90859/7208907.html

China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday in St. Petersburg.


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

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China, Russia quit dollar on bilateral trade
08:22, November 24, 2010
China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday in St. Petersburg.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.

Putin has called for boosting sales of natural resources - Russia's main export - to China, but price has proven to be a sticking point.

Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia's energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.

Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.

Wen's trip follows Russian President Dmitry Medvedev's three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the largest energy consumer.

Wen said at the press conference that the partnership between Beijing and Moscow has "reached an unprecedented level" and pledged the two countries will "never become each other's enemy".

Over the past year, "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level," Wen said, adding the two nations are now more confident and determined to defend their mutual interests.

"China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power," he said.

"The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries."

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.
english.peopledaily.com.cn/90001/90778/90859/7208907.html


ty nalmann

[sandi66]

MERS / Securitization

www.msnbc.msn.com/id/3096434/vp/40342863%2340342863#40342863

we studied this for years, and now it's in the main stream media.



ty nalmann