Tuesday, December 13, 2005

Another Proud SEC Moment - Defending the Crooks

Today, a federal appeals court rejected the NASD's challenge to the SEC, in the case of Anthony Elgindy.

Here is the quote from the news piece breaking the story:

"NASD in March 2000 accused Elgindy of manipulative short selling in Saf T Lok shares over several weeks in 1997. In May 2003, an NASD adjudication committee barred Elgindy from the securities business, banished Key West Securities from NASD, and fined him and the firm $51,000 each.

Elgindy and Key West appealed the NASD ruling to the SEC, which oversees the NASD. The SEC is a government agency and the NASD is a self-regulatory organization to which most U.S. brokerages must belong and obey as their regulator.

In March 2004, the SEC questioned the evidence in the Saf T Lok case and overturned most of the NASD's sanctions. The agency lifted both Elgindy's industry bar and Key West's expulsion from NASD, and reduced the fines to $1,000 each ."

So Egyptian national and two time convicted felon Anthony Elgindy is free to go right back to scamming companies and investors, after paying a grand. He is responsible for many many millions of destroyed value and ruined investors' savings, but tut tut, the SEC says, "hey, nobody's perfect...it happens, hmm 'kay?"

You are reading this correctly. The SEC overturned the NASD, which basically understood what a piece of fecal material Elgindy is and barred him from the business, and instead did the equivalent of swatting him with a Nerf bad and saying "you've been very bad, stop it, you bad man."

If anyone is incredulous as to what this says about the SEC, fear not. Apparently you can participate in overt stock manipulation using a network of hedge funds, be a two time convicted felon, have ties to money laundering and middle eastern arms dealers and whatnot, but suffer no ill effects from the SEC.

But there's more:

"In an unprecedented response, the NASD three months later appealed the SEC's actions to the court, arguing in September that its reputation is undermined when its attempts to regulate the Nasdaq Stock Market (NDAQ.O: Quote, Profile, Research) are challenged by the SEC.

The SEC replied that the adjudicatory process for disciplining brokers would be complicated if the NASD could get a court to overturn an SEC change to an NASD sanction."

This is self explanatory - if the NASD could force the SEC to not let bad guys off the hook, then the SEC's power base would be harmed, presumably reducing the number of crooks that would get hall passes from them - and we can't have that.

I would write more, but anything I write would be insufficient to express my disgust.

And meanwhile, OSTK, which really has virtually no legitimate shares trading, is down $2+ on over a half million shares so far today, on no news.

We have a wonderful system, folks. And people wonder why more and more folks are putting their money into Gold and Real Estate. At least when you walk into a casino, you understand that the lights and free drinks are a lie to soften the blow of losing your money. On Wall Street, apparently you can dispense with the niceties of rigging the games, and simply inform patrons that they lost while collecting their money. Much more straightforward, and the cops are there to make sure nobody robs the bad guys on their way out to the getaway car.

I am not making this up.

I wish I was.

16 Comments:

Anonymous Anonymous said...

Any details on the reasons from the SEC overturning the NASD's decisions?

5:34 PM  
Blogger rvac106 said...

I think we need a talking points memo (apologies to J. Marshall,) and start calling in to the talk radio shows. If we can bridge it to something that affects everyone, maybe someone would listen. We can reference the NASAA conference, the OSTK conspiracy suit, and the decimation of the pension funds, which have all invested in the attacked market.

When we call the right wing shows, we can blame the Democrats. When we call the left wing, we can blame the Right. Once you've established that there's no party lines in this debacle, you're just getting the word out.

"I know the topic tonite is the ....., but, have you heard about what's happening on Wall Street........?"

7:49 PM  
Anonymous Anonymous said...

The SEC overturned the NASD's conviction because the SEC is conflicted. While the NASD and US attorney were viewing Elgindy as a "bad guy" the SEC thought of his as this savior out to rid the markets of bad companies. To the general population two wrongs don't make a right yet to the SEC two wrongs make their jobs easier.

To this day the SEC has yet to officially take any actions against Elgindy. The recent conviction for securities fraud and manipulation came via the US attorney and had nothing to do with the SEC. Elgindy even used SEC Attorney's as witnesses for his side.

The SEC is a roque and lazy Government operation that needs to have a special prosecutor look into conflicts of interest charges and aiding and abetting crimes.

3:50 AM  
Anonymous Anonymous said...

The word on the street is that Elgindy knew too many secrets.

Besides vulnerabilities with the DTCC and SEC, he had access to the FBI and other intelligence organizations.

9:12 AM  
Anonymous Anonymous said...

Does the SEC usually stick their nose into NASD enforcement actions? This seems odd.

Could Elgindy be tied in with US covert operations and therefore be getting protection from high levels? If he knows information that could embarrass current officials, they would jump over themselves to protect him.

Also, some months ago Byrne mentioned Elgindy in association with shortselling prior to 9/11. Was that a mistake? It seems he was barred at that time.

(Incidentally, there were unusual short positions taken in Delta, United, Swiss Re, and other directly impacted companies in the week prior to 9/11, which SEC never publicly explained, though they undoubtedly traced the trades. If that doesn't seem unusual, note the puts were not exercised either.)

9:23 AM  
Anonymous Anonymous said...

This is who the SEC is going out of its way to protect!!! If you are a journalist, you could make your career covering this case. If it was a movie, I would say the script is not realistic as it seems so far fetched.

Elgindy had his own stock thread:

http://www.siliconinvestor.com/subject.aspx?subjectid=23993

You could a lot pouring through Anthony's posts in this thread before his arrest.

Remember when those contractors were found hung upside down from that bridge in Iraq? Eldindy posted heavily in this thread about his good friend who was one of the victims. It gave me the impression that he was tight with the mercenary / contractor clique in Iraq. That seems like a heck of a coincidence. Try going back to his thread shortly before the time of his arrest and read as the shorts all mourn the loss of their friend.

It was about that time that he was arrested, fleeing with a fake name. Hs currently in jail for racketeering conspiracy.

http://news.findlaw.com/hdocs/docs/fbi/uselgindy502ind.pdf
http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/elgindy_securit.html

His co defendent, Jeffery R. Royer was an FBI Special Agent who fed him secret information on ongoing investigations.

He shorted through Global Securities in Canada. I'm told that much of the naked shorting today goes through Global Securities in Canada and one run by Ross Marlin in Florida. I tried searching it and couldn't find it, so I may have the name wrong (Rod, Ron...)

As an Egyptian born muslim, he shorted airline stocks before September 11th

http://www.10news.com/news/1479898/detail.html
http://www.cooperativeresearch.org/entity.jsp?id=1521846767-1372
http://911review.org/Sept11Wiki/InsiderTradingFbi.shtml
http://www.cephasministry.com/terror_stock_broker_knew.html

Read his own chat log at RGM: http://www.rgm.com/articles/elgindy.html

Faulking Truth: http://www.faulkingtruth.com/Articles/Investing101/1014.html

11:15 AM  
Anonymous Anonymous said...

I put all of the links from the last post here, broken into 2 or more lines as blogspot seems to truncate them.

Make sure you do some searching in his Silicon Investor thread. There are some real nuggets there.

http://www.siliconinvestor.com/
subject.aspx?subjectid=23993

http://news.findlaw.com/hdocs/
docs/fbi/uselgindy502ind.pdf

http://lawprofessors.typepad
.com/whitecollarcrime_blog/
2005/01/elgindy_securit.html

http://www.10news.com/news/
1479898/detail.html

http://www.cooperativeresearch
.org/entity.jsp?
id=1521846767-1372

http://911review.org/Sept11Wiki/
InsiderTradingFbi.shtml

http://www.cephasministry.com/
terror_stock_broker_knew.html

http://www.rgm.com/articles/
elgindy.html

http://www.faulkingtruth.com/
Articles/Investing101/1014.html

11:28 AM  
Anonymous Anonymous said...

There is some question about Elgindy's ability to "tell tales" that would implicate some agency people. Certainly part of his trial transcripts were sanitized for the public. Question is - what was discussed with the courtroom closed.

2:46 PM  
Blogger bob obrien said...

This comment has been removed by a blog administrator.

9:34 PM  
Blogger bob obrien said...

One has to wonder why the transcripts require sanitation in a stock manipulation scheme trial?

How far upstream does this go?

How bad is it?

9:36 PM  
Anonymous Anonymous said...

Transcripts are usually available for purchase directly from the court reporter as they are public information. (For example, some other lawyer may want to rely on the case as a precedent.)

You just have to find out who the reporter was via the case number.

I bet they make interesting reading.

2:20 PM  
Anonymous Anonymous said...

I'm in Canada and when I tried to pull my stock in an OTC company, my brokerage tried every trick to get me to not pull it. They told me that I would be at risk if it were lost or stolen, that my estate couldn't do anything with it if I died, that it could take a long time for the company to deliver it, etc.

Finally, they told me something that made me pause.

Many Canadian brokerages will no longer let me redeposit the cert. They are banning the deposit of OTC certificates.

For example, call E-trade Canada and ask them if you can deposit a certificate.

What recourse do I have if I pull the cert. and no one let's me redeposit it?

They assure me that if I keep it in electronic form, I can continue to trade OTC.

This issue might make a good bobos revenge blogspot.

Also, if someone gets the Elgindy transcript, I'd love to read it.

10:24 AM  
Anonymous Anonymous said...

I should also mention that a few years ago, my brokerage sold my OTC shares out of my retirement account without my permission.

A lot of OTC companies got hammered hard because all across Canada, there was a new rule that OTC no longer qualified in RRSP's.

The brokerages got to hit the bids with the shares without asking the customer's permission.

Of course, there was no grandfathering to protect against downside volatility.

10:27 AM  
Anonymous Anonymous said...

For those that don't know, an RRSP is the Canadian equivalent of an IRA.

10:30 AM  
Blogger Jer. 9:24 said...

Did anyone notice that Elgingy's wife and her travails were a front page story in the Wall Street Journal a couple weeks ago?

Those who read it know it was an obvious attempt by the WSJ to paint Elgindy as a sympathetic figure. Why, he has a family! His wife is the daughter of a Baptist minister! And he has three children! You may not believe this, but only two of his children at a time could visit him in jail as he awaited trial!

And, this is insane, but his wife may have to sell their $2 million plus home in California! It is a travesty that this Egyptian-born crusader for justice (who wired at least $700,000 to Lebanon after he got busted and tried to skip town on a false passport while out on bail) is being unfairly persecuted by the evil U.S. Attorney.

It may surprise you but the WSJ said nothing about the hundreds of employees and thousands of shareholders of the 40-plus companies Elgindy and his cabal illegally raped and pillaged as the SEC determinedly looked the other way.

The WSJ didn't mention their families, the struggles they went through as Elgindy and his co-conspirators destroyed their livelihoods and investments, or even the value of the homes these people may have lost due to Elgindy's crimes.

Thankfully, Elgindy's friends at the SEC, who did their best to help him at his trial, are doing what they can to make things easy for this innocent victim of "the man." That nasty NASD, who do they think they are?

The SEC, carrying on the great traditions of its first commissioner, that honorable and great man who would NEVER countenance a manipulative short selling scheme were he still around, Joe Kennedy.

And thanks to the WSJ, for helping us ignorant plebes out here in flyover land to see that market manipulating, stock counterfeiting, extortionist thugs and thieves are people too--just like us, only far, far wealthier.

11:16 AM  
Anonymous Anonymous said...

I've just finished reading this and other blogs, and I'm stunned. The Hedge Funds run America. And dump their profits overseas.

And because Ma and Pa have their money in mutual funds run by these large investment houses, there is no way to blow them out of the water.

Very depressing.

9:12 PM  

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