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Aguirre Addresses Likely Cause of Next Market Crisis: Selling Counterfeit Stock

Posted by Larry Doyle on November 1, 2013 10:53 AM |

“The message is simple: Wall Street crime pays and there is no downside.”

Will there be another market crisis and if so what will precipitate it?

In what is an instant Sense on Cents classic, noted attorney and former SEC whistleblower Gary Aguirre takes us on a walk down the path that seems self-evident to me will cause our next market crisis.

Can you imagine if you discovered a businessman went about selling a product, collecting revenues on those sales, but never actually delivered the product sold?

Think that sort of fraud might attract the interest of the authorities? But what if the authorities, in this case our financial regulators, turned a blind eye to the practice?

Welcome to the world of naked short selling, aka selling counterfeit stock.

Gary Aguirre is like no other attorney in exposing fraud on Wall Street and the complicit behaviors of regulators charged with protecting investors. The 10-page commentary highlighted below runs in the October edition of Wall Street Lawyer and is an absolute MUST READ.

If you have 10 cents in the market, then take the 10 minutes to read Aguirre’s work. I can assure you the value of his insights will last a lot longer than that. Aguirre concludes:

It is hard to conceive how the Department of Justice, the USAO (US Attorney’s Office) or the SEC could have done more to encourage Wall Street executives — this generation and the next one — to concoct an even bigger fraud. The crisis brought the nation to its knees. No Wall Street executive has been prosecuted civilly or criminally. All were allowed to keep the billions in cash they received for delivering the crisis.

The message is simple: Wall Street crime pays and there is no downside. Sadly, the country may not be able to borrow its way out of the next crisis while still paying for the last one.


Tale of Two Frauds


So do you think Dodd-Frank has reformed Wall Street? Really?

Navigate accordingly.

Larry Doyle

Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.

For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit the blog to comment on this piece of ‘sense on cents.’

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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Peter Scannell

    Fidelity Puts Securities lending Programme Under Review

    To suggest that lending (wink, wink) stock within mom and pop’s mutual fund to short sellers, and for a fee that is not shared with mom and pop, is on the up and up is outrageous. Mom and pop are sold and told to hold the stock. They’re not told that the share of stock they own is also being lent (wink, wink) to a second party trying to devalue the very stock share mom and pop are hoping will fund their retirement.

    To Gary’s point – how can two parties hold the same share of stock, let alone for polar objectives?

    End naked short selling and bring back the up-tick rule that was established in 1938 and removed in 2007.

    Do you think abolishing the up-tick in 2007 added fuel to the financial meltdown in 2008?


    • yankinwaoz

      Those are two very different securities abuses. The invisible securities lending industry is a problem. In fact, that is what brought me to this blog.

      I was following up on a lawsuit filed against a 401K servicing company in Chicago that was attempting to pass on losses from their lending business on to 401K account holders. It turned out that rather than eat the loss they incurred, they decided to ding the 401K account holders instead. This violated ERSIA rules, and went undetected for a long time. A sharp retiree from Houston, who was good at math, noticed the loss (albet small when distributed across a large number of accounts) when his own models didn’t match the provider’s number.

      The DOL got involved. The bank had to return the money. But once again, it was the mom and pop who had to police it. The regulators do no prohibit it. Nor to the proactively prevent losses.

  • There are so many games afoot nowadays, it is hard for the most knowledgeable and ardent activist to keep abreast of the schemes & artifices to defraud.

    As for me, the DOJ would be more true to form if it wasnamed the Dept. of [IN]Justice. The SEC should be called the Selective Enforcement Commission.

    Those agencies and such exist – NOT to protect U.S. from their skullduggery shark frenzies – but to protect “them” from U.S. getting axes and pitchforks.

    With the most recent carnage of the new millennium mortgage crisis causing a bunch of hoopla and the Gangs basically getting away totally ‘Scot Free’; they nefarious think tanks are encouraged to reach higher with more proficient killer forms.

    Our eToys case is several hundreds of millions in fraud;
    and Goldman Sachs is about to settle that for $7 million.

    Meanwhile, I’m seeking to be a RICO “Private Attorney General” in the federal court case “HAAS v ROMNEY” (with Goldman Sachs, Bain Capital and a plethora of cohorts as co-Defendants).

    Even though we have confessions already and evidence overwhelming, profuse and irrefutable; the odds are less than slim.

    25% settle

    25% corrupt continues

    50% – yours truly is made moot!

    It is the reality of America;
    until we Unite once more!

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