Our Financial Oligarchy; Emperors of a Brave New World

“The development of our financial oligarchy followed, in this respect, lines with which the history of political despotism has familiarized us: usurpation, proceeding by gradual encroachment rather than by violent acts; subtle and often long-concealed concentration of distinct functions….

……which are beneficial when separately administered, and dangerous only when combined in the same persons. It was by processes such as these that Caesar Augustus became master of Rome.

The makers of our own Constitution had in mind similar dangers to our political liberty when they provided so carefully for the separation of governmental powers”.

(1914) Other People’s Money and How the Bankers Use It– Chapter I: Our Financial Oligarchy

When you compare the structure of our financial markets to what was revealed in the Pujo Committee and the articles cited in the book, “Other People’s Money and How the Bankers Use It”, you will quickly realize how little of a difference there is between the anti competitive robber barons that existed during the early 20th century, and our capital markets today.

They own the regulators; they own the brokerage houses; they own the clearing houses; they own all of your investments; and it’s even been shown that they can exert complete control over the government.

Through this full spectrum dominance over the nation’s financial infrastructure, not only can these mega-banks exert significant control over the price of publicly traded companies by manipulating supply and demand via the stock loan markets, but they can also change the outcome of corporate elections, which in effect, enables these multinational banking organizations to exert a hidden influence over who sits on the board of American corporations. Many have whispered about this hidden financial element, but few have actually quantified how it works. This report will show you everything.

The Depository Trust and Clearing Corporation

Without this essential service, a stock exchange will struggle to survive because nobody will be sure if the counterparty will deliver, and all it takes is the slightest bit of doubt for the entire system to collapse. The exchange may be able to operate on a small scale, but not at the capacity that you would expect to see on the NASDAQ or NYSE, and if you have competitors, bankruptcy is not only a possibility, but a certainty.

In the United States of America, there is only one central clearinghouse: The Depository Trust and Clearing Corporation, and for almost 50 years they have maintained a virtual monopoly over this essential service.

It is a private corporation that is owned by these mega-banks and brokers.

DTCC 2018 Annual Report

The financial community is known for being extremely litigious and opaque, and if you stick around for long enough, you will eventually notice that people have a tendency to mince their words and beat around the bush, shrouding simplicity in a long maze of complicated phraseology and inventive acronyms. There will be none of that in this report. The average millennial — those born between 1981 and 1996 — only has a net worth of $8000, and the gap between the rich and the poor in the United States is almost double that of every other country in the western world.

Things have even degraded to a point where truth brigades are being granted the right to decide what gets distributed online. The time for mincing words is over..

Stock Loans

Most of the time, retirement funds tend to hold their investments for very long periods of time, and in order to take advantage of these dormant positions, fund managers will often attempt to increase their clients returns by loaning out these shares to short sellers and market makers so they can be used for arbitrage.

But, unfortunately, there is one big problem: still to this day, there is no centralized exchange that exists for the stock loan industry, forcing massive money managers like Blackrock and CalPERS , along with every hedge fund in America, to employ brokers to match borrowers and lenders, siphoning $100’s of billions from our retirement savings.

Today, most of these transactions are still facilitated over-the-counter, meaning lenders and borrowers have no way of accessing live price data. Only the brokers and “TBTF” banks have access to this information, allowing them to charge practically whatever they want without anybody knowing if they received a fair market price.

I think the securities lending market is just like the mob. I think it’s completely rigged...It’s a completely manipulated black hole...

–Marc Cohodes, Copper River Partners

In the stock loan industry, large orders are at times still facilitated via private broker to broker telephone conversations — meaning transactions that would normally only take a few seconds if they were executed on an electronic exchange can end up taking as much as several hours and numerous phones calls before they can be completed.

“The current stock loan market involves high search costs and inefficient pricing.

It can take numerous phone calls over several hours to locate a hot stock and negotiate pricing. The lender has no indicative level of pricing other than the demand information provided by the brokers, which the lender has no way to verify. In other words, the securities lending market requires considerable manual effort to complete transactions that in other markets take seconds or minutes at most. Because of the fragmented nature of the market, identical loans can trade simultaneously through different channels at very different prices. These high search costs preclude arbitrage across liquidity pools”


Following decades of collaboration, and 100’s of millions in start-up capital, four companies — Quadriserv/AQS, SL-x, and Data Explorers — all came very close to modernizing this massive $1.75 trillion market.

They built electronic exchanges similar to what you would see on the Nasdaq and NYSE, with public quotes that would’ve been accessible to everybody. Of course, this would have finally cut out the middle-man (the mega-banks and brokers), putting an end to a backward and opaque system of exchange that for decades had been plaguing pensioners, mutual funds, and endowments with 100’s of billions of dollars in exorbitant fees, and by any reasonable stretch of the imagination, should never have been charged in the first place.

But with so much at stake, it’s just never that easy..

It threatened their cartel

The New York Clearing Association

As we all know, history has a tendency to repeat itself, and the brazen anti competitive behavior showcased in that stock loan lawsuit is certainly not the first time something like this has happened. It almost perfectly emulates the Cartel from the days of the New York Association, when a consortium of the country’s largest financial institutions could shutdown any bank in the nation simply by refusing their services. In fact, it was this very behavior that eventually went on to become the primary focal point of the Pujo Committee in 1912, immediately before the passing of the Federal Reserve Act.

Included below are key excerpts from this Committee that will show you the true power of a clearinghouse. Quotes from the book, “Other People’s Money and How the Bankers Use It” (1914), a collection of essays written by Louis Brandeis during that time period, will also be included, and everything has been broken down so it will only take about 5 minutes to read.

From the Depository Trust and Clearing Corporation’s 2018 Annual Report

(February 28, 1913) “Report of the Committee appointed pursuant to House resolutions 429 and 504 to investigate the concentration of control of money and credit”.

Knickerboker Trust was banned from using the clearing services of National Bank of Commerce of New York, leading to its immediate collapse.

Without the services of the the New York Association, the most dominant Clearing House at the time, it was well known by customers and bank owners alike that they would almost certainly fail within as little as a few days.

Even so much as a rumor would cause a bank run

The New York Clearing House forces Oriental Bank to stop working with two Brooklyn Banks, even though they pose no risk to anybody and represent an important percentage of Oriental Bank’s profits

The men who through their control over the funds of our railroads and industrial companies are able to direct where such funds shall be kept and thus to create these great reservoirs of the people’s money, are the ones who are in position to tap those reservoirs for the ventures in which they are interested and to prevent their being tapped for purposes of which they do not approve. The latter is quite as important a factor as the former. It is the controlling consideration in its effect on competition in the railroad and industrial world.”

–(1914) Other People’s Money and How the Bankers Use It

A sort of gentleman’s agreement decided the fate of the entire country..

“These bankers are, of course, able men possessed of large fortunes; but the most potent factor in their control of business is not the possession of extraordinary ability or huge wealth. The key to their power is Combination….

There is the obvious consolidation of banks and trust companies; the less obvious affiliations–through stockholdings, voting trusts and interlocking directorates–of banking institutions which are not legally connected; and the joint transactions, gentlemen’s agreements, and “banking ethics which eliminate competition among the investment bankers”.

–“Other People’s Money and How the Bankers Use It”, (1914)

All it took was 1/4 of its members to block somebody from joining, regardless of their qualifications, and even if these people were competing with the appellant.

Even if the bank was a member of the club, in the event of a change of control, the bank would be expelled if the members did not approve of the new management.

It’s a clique; a private club; a Cartel.

Do you see how powerful these organizations are? They shutdown two healthy banks for no reason whatsoever. People’s life savings were in those banks, and this was before social security, so you could literally starve back then; you and your family.

What most people fail to recognize is that profits are only secondary to these mega-banks.

Following the repeal of the Glass-Steagall Banking Act and the massive bailouts that followed, these corporations have become empires, and there’s a reason why the color drained out of that bankers face at the mere mention of Quadriserv’s technology, but it has very little to do with profit.

It’s about control.

If the stock loan market were to emerge from the shadows of the “OTC” and on to a public exchange where everything is closely scrutinized, it would be much easier to track who was borrowing stock, and at what price, which could potentially reveal what these mega-banks are up to behind the scenes. People might even start recommending that they include all of these loans into a Consolidated Tape, making it much harder for them to hide their activities.

“Under Graber, I learned that Wall Street was an illusion,”.. “There were different magicians using different tricks in different ways. But everyone cheated. It shocked me so much in the beginning. I admired these people. And they cheated”.

–>Samuel Israel III

Keeping this market in the dark doesn’t just give you control over the spread, like what is seen here.

“And then as time went on and/or a position got bigger, the rate would get jacked up on us…… So our cost of doing business in a particular name would go from not costing us anything to costing us tens of millions of dollars”…

Marc Cohodes, Copper River Partners

A very similar situation occurred before the financial crisis when CDO’s were still popular.

They mega-banks that dominate the industry refused to allow anybody to access live pricing data, so everything had to be traded on the OTC markets with no centralized clearing.

In fact, even when they were offered the opportunity to trade on a public exchange, they still refused, and it would’ve saved them time and money.

..Just to put that into perspective, at its peak in 2007, the CDO market had a notional value $61.2 trillion..

Give me control over a nations equity supply and I care not who makes its laws..

If somebody were to tell you that you do not technically own your shares in a public company, would you believe them?

That seems rather ridiculous, doesn’t it? Many people have their life-savings invested in the stock market, and how could somebody else own something that you paid for with your own money?

Unfortunately, it’s true, and you are not the actual legal owner of your investments. It is the banks and the brokers, and not you, that are the true legal owners, and you are just issued an entitlement, an unusual relationship characterized in the industry as “street name” ownership, and all shares are held in book-entry form (electronically) at the DTCC, with the banks and brokers acting as the registered holders on the company’s books.


By transferring ownership to the DTCC and registering the brokers as the true legal owners of your investments, it solved the problem of constantly having to transfer physical certificates from one location to another — a process that was cumbersome and created liability issues.

Back the in the 70’s, they describe this unusual relationship as a “Jumbo Certificate”

A perfect example of this ownership structure is illustrated in the document snapshot pictured below from a recent Broadridge Financial Services note offering, dated Dec.5th, 2019, only a few months ago.

“Under Article 8, the beneficial owner of the shares held in a custodial account with an intermediary (such as a broker) is considered to be the holder of a “securities entitlement” in a “financial asset” which is ultimately held by a depository”,

Marcel Kahan, The Georgetown Law Journal

The “participants” are the same banks and brokers that are buying the debt securities from Broadridge.

But doesn’t that technically make them the indirect owners of this “Jumbo Certificate ” — or in this case, “Global Note ” — through their ownership of the DTCC?

The answer is yes, it does.

In the age of artificial intelligence, crypto currencies, smart phones and quantum computing, you might be wondering why we still need these brokers and banks to act as the legal owners of our investments. Nobody uses paper certificates anymore, and certainly there should be some kind of SAAS technology out there by now that could solve the liability and book-keeping issues that come with transferring these ownership interests back and forth between accounts.

In reality, this system hasn’t been necessary for practically 20 years, and many experts are equally as perplexed by this unusual “entitlement ” system as they are about the opaque black-hole that governs the stock loan industry today, where retiree’s (“the elderly “) are literally being forced to utilize middlemen that actively collude to separate buyers and sellers so they can charge higher spreads.

They don’t even let companies send “proxy” (voter) materials directly to their shareholders; the company is forced to send the voting materials to the brokers first, and only then will they send them to you.



Pictured below is an illustration of how this process works.

If you had trouble with that first illustration, the image below might be easier for you to understand. The other one is rather dated — from 1976 to be exact.

Yes, the same system that existed back then is still being used today..

Now, take a guess who these brokers contract out to send you these “proxy” materials (voting cards).

Broadridge Financial Services..

They control 80% of the “proxy” (voter) communication industry. Don’t worry, we’re just getting started. It gets much worse.


Did you know that you can borrow shares immediately before a corporate election for the sole purpose of influencing the outcome? Yes, in America if you borrow shares, the voting rights will be transferred to you.


You get to keep the dividend, but not the vote? Seems rather counter intuitive, doesn’t it? Or better yet, rife for exploitation?

..That’s because it is..

“The existing system of shareholder voting is crude, imprecise, and fragile. Gil Sparks, a leading Delaware lawyer, estimates that, in a contest that is closer than 55 to 45%, there is no verifiable answer to the question “who won?”

The Hanging Chads of Corporate Voting

Over and over again, and for multiple decades, it has been shown that votes are constantly being misappropriated, yet the only entity that can reconcile this problem is owned and controlled by them: The Depository Trust and Clearing Corporation.

Broadridge, the company they contract out to send us our proxy (voting) materials, even admits in their corporate filings that their relationship with these brokers constitutes as a “conflict of interest “.

Should we really trust these people to fairly tabulate our votes? You can make $100’s of million’s from being on the right side of a corporate merger, and as recent history has shown, these banks will rig anything so long as they can get away with it. Only 30% of shareholders were shown to have voted in 2014, and as we all know, there is no better industry than Wall Street at finding legal loopholes, so rigging such an opaque and outdated system should be a piece of cake for these mega-banks.

That alone should be enough cause for concern, but combined with the fact that they can borrow shares for the sole purpose of influencing an election, and it’s easy to see how this system could be manipulated. They even have a name for this practice: Vote Buying

Yes, Vote Buying..

From now on, we’re going to try to avoid using the word “Proxy”, as it almost acts to cloak what is actually going on here: a vote, not a “proxy”.

Every country in the western world holds elections, yet for some unusual reason, the only place that seems exhibit such unique complications is on the stock market — the lifeblood of the American economy.

Could there be something else that is driving this problem? Or worse, is this by design?

From: “Double Voting in Proxy Contests Threatens Shareholder Democracy”, Bloomberg, By Bob Drummond

It is an abomination,” says Thomas Montrone, chief executive officer of Cranford, New Jersey-based Registrar & Transfer Co., which oversees shareholder elections. “A lot of the time we have no idea who’s entitled to vote and who isn’t. It’s nothing short of criminal.”

“In a little-known quirk of Wall Street bookkeeping, with the growth of short sales, which involve the resale of borrowed securities, stocks can be lent repeatedly”.

….”The loans allow three or four owners to cast votes based on holdings of the same shares”.

(CARL T. HAGBERG AND ASSOCIATES) “Over-voting is, quite simply, untenable. Allowing it to continue makes a mockery of the idea of corporate democracy. There is ample evidence that people do try to “game” the system, since votes do indeed have value – especially when the voting outcomes have the potential to move the stock price, as often they demonstrably do. (See, for example, “Vote Trading and Information Aggregation” which is easily accessible on the Internet and which documents huge spikes in share purchases near meeting record dates and corresponding sales immediately thereafter). There is also a great deal of evidence that the “gamesters” quite often succeed in gaming the vote, since, (a) as the study pointed out, one can buy votes for about $6 per million votes and (b) vote buyers will vote 100% of the time, while long-term owners tend not to vote at all, which allows the voters with “duplicate voting credentials” not just to go undetected, but to have their way in terms of the election outcomes. It is especially important to note in the context of election “gaming” that the interests of short-term and long-term owners are, almost always, diametrically opposed in election contests”.

The customer doesn’t know this is happening,” says John Wilcox, head of corporate governance at TIAA-CREF, the biggest private U.S. pension plan for teachers. Often, the broker still permits the customer to vote the shares even though they’re out on loan. That policy is not sound. It definitely means that shares can be voted twice.”

But most of the time none of these tactics are necessary, because again, people usually don’t even show up to vote anyways.

“It’s invisible,” says Paul Schulman, executive managing director of Altman Group Inc., a proxy solicitor based in Lyndhurst, New Jersey. Most of the time you don’t get overvotes because so many shareholders don’t vote.”

They’ve certainly shown that they are perfectly capable of rigging everything else. These companies will do anything to buff up those quarterlies; they will even instruct the directors of the DTCC to block new technology that can save pensioners hundreds of billions of dollars.

Pensioners: those people who worked their whole lives and finally want to settle down after decades of toiling at their job 5, maybe even 6 days a week. They took you to school, fed you while you were a child; taught you everything you know about life..

Think about it this way: not only will these banks steal from the future by printing trillions of dollars so they can cover their reckless stock market bets, but they will also steal from the past by siphoning value from your retirement savings..

None of this is a conspiracy. You can click on the image below and it will take you directly to the exact line of text.

“How Broadridge and its customers—the bank and broker custodians—adjust overvotes, revocations, and other problems within its system is entirely opaque”.

The Hanging Chads of Corporate Voting

If you wanted to influence the outcome of an election, what do you think would be the easiest way to accomplish this?

You would probably want to wait until you could see the results first, right?

Guess what? That’s how they can do it! It’s up to them whether they want to count the votes before, or after receiving the tallies. Yes, they can literally wait until they know the results, then tabulate everything knowing what the outcome is going to be.

Just imagine if the American people found out a political election was being handled like that? There would probably be a revolution the very next day..



… “there is no guidance in the rule (NYSE’s Rule 452) itself or from the Exchange in any other form as to how a member firm is to handle a situation where it receives proxy voting instructions for more shares than it holds in record ownership. Thus a member firm apparently enjoys substantial flexibility when it cannot act on all the instructions received, and in particular it presumably may select at its own discretion which voting instructions it will disregard . . . (SEC (1991), p. 28)
Vote Trading and Information Aggregation,

Let’s say there is a voting discrepancy because these TBTF banks and brokers decided to issue more voting entitlements than actually exist; it turns out that the entity that counts the votes doesn’t even have a fixed procedure for dealing with this problem.

Sometimes they will count the votes on a “first-in” basis, and other times they will count the votes on a “last-in” basis, meaning your votes could be completely discounted in favor of somebody who borrowed stock immediately before the record date, or worse, they could include fake votes because one of their better customers had an interest in the outcome.

Again, they own the DTCC, and Broadridge openly admits in their company SEC filings that their relationship with these brokers constitutes as a “Conflict of Interest”

According to the NYSE, this was shown to have occurred in “numerous instances”.

“As set forth more particularly below, during the period from about January 2000 to April 2004, the Firm: voted more shares than it was entitled to vote in corporate elections (“over-voting”) in numerous instances

From, “Economic Warfare – Risks and Responses, by Kevin D. Freeman

….”the day of the vote there were roughly 17.2 million shorted shares of TASER stock. Thus, even if all of the TASER shares that were sold short were able to vote… there were at least 3. 7 million shares that were undoubtedly counterfeit.

…..”When investigated, however, there is substantial evidence that over- votes are increasingly impacting elections, even if participation by traditional shareholders remains low. In 2005, for example, the Securities Transfer Association reviewed 341 shareholder votes finding evidence of over voting in every single case”.

You’re probably thinking that all those citations are kind of old, and that it’s been almost 20 years since that NYSE complaint, so something must have been done about this by now — right?

Unfortunately, no, and still to this day in the year 2020, nothing has changed. Just look online and you will see numerous articles and white papers from reputable sources addressing all of the problems that we just outlined.

Just last year in 2019, one investor advocacy group sent several letters to the SEC addressing this strange phenomenon of “over-voting.

Unfortunately, you can’t visit their website anymore because this is what will happen.

You can still read their letter though..


It also looks like their website was recently shutdown


They’ve published numerous reports on this topic, yet even now as of the time of writing, if you try to read their pdf’s, you still get this message.

Not something you see very often in this day and age. This is what you see when you visit another one of their websites.

What does this all mean?

Who knows..

They’ve been at this for more than a decade now, so it just seems sort of odd that you can’t even visit the website of what appears to be one of the most prominent advocacy groups fighting for change on this matter without risking your computer being infected with a virus.



Does corporate election meddling happen all the time?

Probably not.

Can it happen? Yes, it’s been shown to happen on numerous occasions, and there has been extensive research published on this fact.

The ability to just issue stock loans to investors in the dark and devoid of any public scrutiny is obviously something that creates a multitude of opportunities for misuse; especially when you can fail to deliver — issue fictitious entitlements — which we are about touch on next.

“As a result of these NYSE administrative proceedings, the securities industry adopted written guidelines to address this reconciliation problem.These guidelines permit brokers to select one of two reconciliation methods

The securities industry guidelines that provide two methods of beneficial owner reconciliation should be replaced with an SEC rule that requires pre-mailing reconciliation (finding out which shares entitlements Are Fake and which ones are real before letting everybody vote) as the only method for brokers and other intermediaries.

Street name positions should be reconciled as of the record date (the record date is the last day you are allowed to vote) for each shareholder meeting, in order to avoid discrepancies in tabulating final vote counts and to avoid distributing proxy materials to beneficial owners who are ineligible to vote (Fake Shares).

This happens quite frequently (practically on a daily basis) in the microcap sector, usually before stock offerings. Market makers call this “Gun and Run” in the industry. Once you see the crowd come in, you pump it up, then you sell it on the way down.

Although manipulation of this sort can be extremely hard to prove (almost impossible), sometimes it can be very obvious, even when one lacks anything that could be considered concrete evidence.

They also changed the rules on wash sales a few years ago, and now algorithms from the same firm can buy and sell to each other so long as they are from different trading desks. A wash sale is when somebody buys and sells to themselves, usually with the intention of driving up the price.

Theoretically this is much easier to accomplish in the premarket and afterhours because there is less volume and activity. As far back as the days of the Tontin Coffee House, the afterhours has always been a venue for transactions that would be deemed less than honest.

“The proposed rule change requires FINRA members to have policies and procedures in place that are reasonably designed to review their trading activity for, and prevent, a pattern or practice of self-trades resulting from orders originating from a single algorithm or trading desk, or from related algorithms or trading desks. Additionally, the proposed rule change states that transactions resulting from orders that originate from unrelated algorithms or from separate and distinct trading strategies within the same firm would generally be considered bona fide self-trades.

….Two commenters support FINRA’s amendment to focus the proposed rule change on “self-trades,” rather than “wash sales.” One commenter supports FINRA’s replacement of the term “wash sale” with “self-trade,” explaining that, unlike wash sale transactions, self-trades can be inadvertent and bona fide.”

—>Read more

But, of course, we’re just supposed to trust these people to buy and sell to themselves, right?

You can just leave the rest up to your imagination with that one…

Lest we not forget that these mega-banks own massive alternative trading systems (known as darkpools) that are not open to public scrutiny. These private exchanges account for more than 30% of all trading volume in the United States.

But we’re veering off track, and this is a whole other story in and of itself.

“Trade settlement is what converts market liquidity into actual cash liquidity for firms and capital markets… “You wouldn’t buy a house and show up on closing day, take title, rent out the house and collect the rent, all before paying. Yet that’s what’s happening every day in the financial system.”….

–Fred Sommers, Basis Point Group

Banana Republic


“There were 36,793,758 shares in the class. At the conclusion of the claims process, however, claimants had submitted facially valid claims for 49,164,415 shares.

…..”Despite diligent efforts, the settlement administrator and class counsel could not resolve the discrepancy“.

Dole held a special meeting of stockholders on October 31, 2013. A narrow majority of 50.9% of the disinterested shares voted in favor, 21.2% voted against, 10.5% abstained, and 17.4% did not vote. The transaction closed on November 1, 2013

Vice Chancellor Laster, Memorandum Opinion

This is a very interesting story, and a perfect example of the problems that can arise when you allow a small group of mega-banks and brokers that are virtually exempt from the law to act as the electronic bookkeepers and legal owners of your investments.

Still to this day, nobody seems to know what happened, so in this next section we are going to try to get to the bottom of this, breaking it all down, piece by piece.

During the financial crisis, David Murdock was in deep on debts. After a leveraged buy-out of Dole Foods, years of philanthropic projects, and the recent completion of his Westlake Wellness Center — a 700 000 square foot luxury hotel directly across the road from Dole’s Corporate headquarters — it was beginning to look like he had finally stretched his finances close to the breaking point.

(APRIL 9, 2008, LA Times) “The asset sales may relieve pressure on 84-year-old billionaire Chairman David Murdock to make an emergency cash infusion into the Westlake Village-based company. Credit-default swaps suggest a 74% chance of default in the next five years, according to a JPMorgan Chase & Co. valuation model.

At the time, the high risk bond market had practically frozen, causing many of his loans to go into default.

Fortunately for him, he had formed long term relationships with some of his lenders, so they decided to come to his rescue.

But the terms were far from favorable. Pictured below is a snapshot from one of those agreements.

13.87% interest on $349,903,000 averages out to about $48 000 000 per year…

Over a 5 year period, this would equate to $240 000 000, and this was just one of several notes..

Just to put that into perspective, a Bank of America Travel Rewards Card charges 17.24%

The note was secured by his newly built Westlake Wellbeing hotel.

It was located right across the road from Doles’s corporate headquarters.

(August 30, 2007) “Bond investors may wish Murdock would spend less time on his health crusade and more improving Dole’s bottom line. Last year, the company lost $89 million on $6.2 billion in sales. The assessment of its $2.4 billion in bonds and bank debt by Fitch Ratings ranges from “speculative” to “high default risk.”.


(28 Mar 2005) “Moody’s expects leverage to remain high in support of Mr. Murdock’s strategic initiatives, such as construction of a wellness center and acquisition of other food product lines with perceived health benefits”.


To deal with the crushing debt load, Dole Foods was forced to sell several large assets in 2008/09.

(10-K’ for 1/3/09)
Dole set a goal of selling $200 million in non-core or underperforming assets in 2008, which we have exceeded. During 2008, cash consideration related to our asset sale program totaled approximately $236 million, including sales of land in Hawaii, our fresh-cut flowers headquarters building in Miami, Florida, our citrus and pistachio operations in California, two farms in Chile, a land parcel in Turkey, two older refrigerated ships, a distribution facility in Europe, our JP Fresh and Dole France subsidiaries, and additional acreage located in California. For 2009, we have set a target of $200 million in asset sales. On January 29, 2009, Dole announced progress on our asset sale program. First, Dole closed the first phase of the sale of our flowers division. With the closing of the first phase, Dole completed the sale of our flowers business and retains only certain real estate of the former flowers division to be sold in the subsequent phases of the transaction. Second, Dole closed on the sale of certain banana properties in Latin America. Third, Dole signed a definitive purchase and sale agreement to sell certain property in North America. The sale closed during March 2009. Dole received net cash proceeds of approximately $83 million from these three transactions. When all phases of the transactions are complete, net proceeds to Dole will be approximately $130 million. The cash proceeds will be used to pay down Dole’s debt under its senior secured credit facilities and/or to reinvest in the business. Pending reinvestment, cash proceeds will be used to pay down Dole’s revolving credit facility”.

He was even considering selling the entire company at one point.

But because the economy was so weak at that time, finding buyers wasn’t as easy as it was before the financial crisis, so he was forced to sell equity interests instead, offering 41% of the company to the public at a price of $12.50 per share.

Headstrong, stubborn, but still full of energy at the ripe age of 86, he liked being the boss. He definitely wasn’t the type to be taking orders from other people, and it was even said that he preferred to be addressed simply as “Chairman” at the company board meetings.

He definitely earned that title, though, going from fighting in World War 2 and later homelessness, to becoming one of the richest people in the world.

He was your prototypical example of an American business magnet.

(Bloomberg)“Murdock keeps a close watch on all of his far-flung real estate, racking up some 200,000 miles a year on his Bombardier Global Express corporate jet. Among his staff he is known for his attention to every detail”.

The company’s IPO prospectus was so long that if you had tried to scroll through the entire page, it probably would’ve have taken you 5 minutes straight..

Throughout most of Dole’s existence as a public company, Murdock seemed to be always on the look out for a way to either sell the company, or take it private again, entertaining various deals along the way, but none of them materialized.

Dole Food Co Inc – ‘IPO’ on 10/26/09

Most of the IPO proceeds went towards paying off his personal debts related to the Wellness Center.

Just to give you an idea of how up to his knees he was on that hotel, he only had to give the company an extra 415 000 shares for his 85% ownership interest (as to the value of that “idle parcel of land in Honduras “, we can only speculate).

But he still hadn’t fully paid off the rest of his debts connected to the hotel, and this is where you begin to see the banks come into the picture.

In order for Mr.Murdock to pay off the hotel, he would’ve been forced to sell his controlling interest in the company. But the banks liked Murdock, so they facilitated a transaction that was able to solve this problem.

The transaction allowed him and his partners — the banks — to maintain a controlling interest in this massive 150 year old company.

At the time, Dole Foods represented 1/4 of all banana sales worldwide; 131,000 acres of farms and other land holdings; six modern corrugated box manufacturing plants in Latin America and Asia; the largest dedicated refrigerated containerized fleet in the world representing 14,800 refrigerated containers, and 11 owned and 13 chartered vessels. In short, this was an empire, and you don’t just give something like that up easily.

To keep Murdock in power, they set up an off-balance sheet entity called “MACES Trust“, and the deal was that his creditors would hold on to the stock and use it as collateral for a loan. Now that the company was public, it was easier to sell this ownership interest, whereas before, finding a buyer could be a long and arduous process.

This was Mr. Murdock’s ownership percentage before the leveraged buyout. As you can see, it was only 23%.

10-K for 2002, filed on Wednesday, 3/26/03, at 8:08am ET

In 2007, the interest payment practically doubles, almost touching $200 million.

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In original agreement, Mr. Murdock was obligated to transfer ownership of the stock — again, 27% of the great Dole Food company, founded June 2, 1851, 168 years ago — on November 1st, 2012, which you see happening in the snapshot below.

This is from his first 13-D following the IPO. It again shows the parties to the “Trust” offering — “MACES Trust “.

The creditors transferred the money in exchange for the collateral at one of Sullivan and Cromwell’s offices in Los Angeles.

They even felt the need to specify that delivery of the stock did not constitute as a payment of interest.

And you can see here that he paid down a large portion of that debt with the proceeds of the “Trust” offering.

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This was one the original notes issued in connection with the leveraged buyout; the same note he paid down with the IPO proceeds.

Listed below are the buyers of one these notes, or to put it simply, the banks that loaned Mr. Murdock the money.


It was the same day Mr. Murdock took the company private.

But back to “MACES Trust”.

Why would someone pay $21 million for IOU certificates (“THE MACES “) secured by those pledged shares in the trust? And why does this “Trust” offering provide an option to buy an extra 3 600 000 shares? That’s virtually indistinguishable from an over allotment-option.

Why would they feel the need to offer an over allotment option for shares that are not even going to be registered?

What is going on here?

Let’s take a step back.

Who really owns this company?

Is it Mr. Murdock?

That was his ownership before the merger: only 23%.

So where did the other 3/4’s come from? It didn’t just appear out of nowhere.

You can see in snapshot above that the majority of the shares were purchased with borrowed money.

After careful analysis, you will also realize that the majority of the earnings from this massive fruit empire actually went to the banks, and not Mr. Murdock. In fact, when you add up all the interest payments from 1998-2009, you end up with $1.6 billion — a lot of money.

Wanna take a guess how much net income Dole Food’s and Mr.Murdock generated over that same time period?

Only $640 million..Yes, the banks and note holders were making almost triple the net income that Dole was making.

Are starting to get it? Technically nobody knew who was taking in the majority of the profits from the largest fresh produce manufacturing company in the world — a company representing 1/4th of all banana sales WORLDWIDE.

If you own a company, but you only receive 1/3rd of the profits (after paying for all expenses, INCLUDING taxes), who is the real owner?

Not you..

Mr. Murdock and his banking partners did eventually land that sale they were looking for.

And the proceeds were used to pay off their debts.

But he was forced to give up Asia to the Japanese.

Good timing. You can see in the snapshot pictured below that the record date was only 6 days before he was set to lose his controlling interest. Remember, he was due to transfer ownership of that 27% stake to his “creditors ” on November.1st.

And you can see here that he no longer had a controlling interest in the company.

Then something miraculous occurred: he somehow managed to buy back the company only one year later!

And he only had to pay $1.00 more than the IPO price!

After fighting to remain in control during the worst financial crisis since the great depression; offering to sell the whole company for as low as $700 million; and setting up this unusual trust entity that allowed him and his bankers to initiate a sort of unregistered mini off-balance sheet side-deal — strange IPO beside the real IPO kind of transaction (“MACES Trust “); all the while demanding to be addressed simply as “Chairman” at the company board meetings, he then sold his controlling interest, but miraculously bought back the company one year later, AND he got to keep the Wellness Center??

That’s one heck of a deal, don’t you think?

You might also be wondering how he was able to buy it back so easily. Don’t worry, you’re not alone on that front. Soon after the deal closed, he was quickly sued by a consortium of activist investors. One of them even went so far as to buy 8.3% of Doles outstanding capital stock only a few weeks before the vote for the sole purpose of filing a suit!

It was even claimed that his “creditors” (partners) privately believed the company was worth $23 per share, and after all was said and done, the settlement eventually went on to become one of the largest appraisals in Delaware’s 118 year history as a corporate tax haven.

(Wall Street Journal, Nov. 22, 2013) “In all, holders of nearly 14 million shares, more than 25% of all Dole shares not owned before the buyout by CEO David Murdock, are seeking more money in court. That makes Dole’s one of the largest appraisals ever in Delaware, where most such suits are brought, according to a review of court filings”.

“Dole held a special meeting of stockholders on October 31, 2013. A narrow majority of 50.9% of the disinterested shares voted in favor, 21.2% voted against, 10.5% abstained, and 17.4% did not vote. The transaction closed on November 1, 2013”

During Dole‘s first two years as a public company, they only netted $4.2 million under Generally Accepted Accounting Principles…

Try and guess how much these banks ‘netted’ over that same period of time? (technically they don’t “net” like everybody else since they don’t expend anything — at least not compared to a company like Dole Foods, the largest producer of fresh produce in the world)

$305 million..


“There were 36,793,758 shares in the class. At the conclusion of the claims process, however, claimants had submitted facially valid claims for 49,164,415 shares“.

…..”Despite diligent efforts, the settlement administrator and class counsel could not resolve the discrepancy“.

Technically, only the the banks and brokers can view the list of eligible voters. Remember, they are the real stockholders, and not you. Of course they will let you view the list, but legally they are the only ones that can. The shares are registered in their name, and you are just issued an “entitlement”, meaning you will never know if your vote was actually tallied. They even tell you this in Dole’s articles of incorporation.

That’s the problem: everything goes through them, and these people have shown time and time again, for years on end, that they are not to be trusted.

Don’t forget, they also clear and track everybody’s positions through their ownership of the DTCC.

(Securities and Exchange Commission, Investor Publications)
“Under street name registration, your firm will keep records showing you as the real or “beneficial” owner, but you will not be listed directly on the issuer’s books. Instead, your brokerage firm will appear as the owner on the issuer’s books”,

“Under Article 8, the beneficial owner of the shares held in a custodial account with an intermediary (such as a broker) is considered to be the holder of a “securities entitlement” in a “financial asset” which is ultimately held by a depository”

–Marcel Kahan, The Georgetown Law Journal

The Vote


0.09%; that’s quite the margin of victory.

As the banks and their customers were reaping the majority of the profits from this massive fruit empire, they also took delivery of 24 million shares — 27% of the company — from that “Trust Offering” on November.1st, 2012, exactly 1 year before the vote.

Dole also wasn’t required to register these shares, so they were issued without a “restrictive legend”.

Usually you have to file a prospectus and have it approved by the SEC in order to get that restrictive legend removed, but exceptions are sometimes made for institutional investors if enough time has passed since the date they were purchased.

But back to the vote.

The DTCC says they stopped tracking who owned the shares three days before the vote, and that all 12.3 million extra shares somehow just appeared in peoples accounts during this short period of time, but technically we have no way of knowing that. For all we know, those shares could have been circulating the whole time, because again, they own the clearinghouse, they own the regulators, and they own the banks and brokers that also legally own all the stocks.

There is even a chance that the “institutional investors ” who purchased those “MACES ” decided to hedge their bet by borrowing shares from one of those various pension funds so they could take a short position, then when it came time to return the shares, the brokers just credited their accounts. We have no idea, all we know is that there was $167 million worth of extra stock, and for some very usual reason, their only excuse was to say that they didn’t have the technology or the infrastructure in place to identify who the real owners actually were.

Take a guess what their explanation was.

That it would be too hard.

Seriously, that’s actually what they said. Check this out.

And not only did they refuse to cooperate with the court, but they also weren’t prepared to work with each other to figure it out, if you can believe that.

As some of us might be unfortunate enough to know very, very well, courts will force people to retrieve all kinds of outrageous and redundant (and expensive) pieces of evidence, but when it came to figuring out who owned the largest fresh produce company in the world (founded June 2, 1851, 168 years ago, representing 1/4th of all banana sales worldwide), according to The Court of Delaware, apparently it just …wasn’t humanly possible.

Just to refresh your memories: 70% of the prime brokerage industry is controlled by 6 massive corporations.

(Wall Street Journal) “In addition, Spear claims to run the country’s largest clearing business by number of stock and options trades cleared. Acquiring Spear vaults Goldman into the leading ranks of clearing brokers alongside Bear Stearns Cos ., Merrill Lynch, and Donaldson Lufkin & Jenrette (now being acquired by Credit Suisse First Boston“.

(Bloomberg) “Although trading firms are often shunned by investors because of volatile earnings, Paulson called Spear Leeds a profit machine that would smooth out Goldman’s results. He said the firm has earned money every month for the last nine years, and that clearing–settling trades for other firms for a fee–is its biggest profit center”.

From Morgan Stanley’s Annual Report, 12/31/18

They spent billions on these services..

JPM’s 2018 Annual Report

These massive corporations all have their own clearing departments, obviously..Yet when it came to finding out who the actual owners were, they just said it wasn’t worth their time, and specifically, that it would require a, quote:

Herculean effort, one for which The journey down the rabbit hole would require mapping the entire warren

Interesting choice of words..

Guess who the courts told Dole to pay first?

The banks.

Remember, they are the true record holders. They then distributed the merger consideration to their entitlement holders.

The reason why the courts chose the banks as the ones who would receive the merger consideration was because they had access to all the records, and specifically:

the terms on which shares are borrowed “.

If that’s the case then what was the problem? You really think these mega-banks can’t keep track of who owns what for 3 days?

Sometimes it helps if you simplify things, so let’s do that.

How would reconcile this?

Let’s say there was a merger and somebody bought that one share, but there was two shares in circulation at the time.

How would you reconcile that??

The broker would give the money back to the person who bought the shares from the short seller, then give the shares back to the original owner. That shouldn’t be complicated for these massive corporations.

Think about it this way: from a legal perspective, J.P. Morgan is the very definition of a recidivist repeat offender at this point, and what do repeat offenders usually continue doing? Committing more crimes — at least not unless they are forced to stop. Unfortunately, that’s not what appears to be happening, and they seem to be almost completely exempt from the law, clearly evidenced in the fact that not one high level corporate executive was sent to jail during the Great Recession.

In fact, apparently they don’t even investigate these massive corporations, let alone get them in trouble when they break the law, a terrifying example of selective enforcement that was exposed by Frontline in 2013.

At the end of the day, the New York Fed is technically just another government contractor, and what are government contractors famous for doing?

Ripping off government.


Because politicians tend to lack basic knowledge about the industry, or worse, they can be corrupt.

The image below lists all the biggest players in the tri-party repo market, a Wall Street catch phrase for a short-term collateralized loan. The “tri” is just meant to signify that there is a clearinghouse involved.

As of today, primary dealers are able to borrow from the fed at 1.5%.

Just to put that into perspective, if any of these banks that are receiving these bargain rate loans decided to loan out this money to the public at a rate of, let’s say 6%, their profit margin would increase by a factor 300%..

These are your owners of the Depository Trust and Clearing Corporation..

This is how little respect these people have for your intelligence. He’s one of “them ” by the way, if you haven’t figured that out yet — a sort of apologist for the industry. You can’t prove it, but, follow him for awhile — you’ll understand.

Nevertheless, he still does some excellent reporting; you just better know how to read between the lines sometimes –that’s all..

Complicated“… yeah right..

You see, this whole issue of double-triple-quadruple voting, fake shares, and votes mysteriously changing from “No”, to “Yes”….

You must understand?..


Unfortunately, we will never truly know what happened because they own all the infrastructure that facilitates these transactions. They also claim that it’s not humanly possible to know who the original entitlement holder truly is, even when it’s the largest producer of fresh produce in the entire world, a company that at one point represented literally a full quarter of banana sales worldwide, because figuring this out would require a, quote:

“Herculean effort” ..one for which.. “The journey down the rabbit hole would require mapping the entire warren”.

Since nobody can truly know, and all of this is simply too hard to figure out, all we can really do at this point is speculate, so do you wanna know what probably happened?

Mr. Murdock and his lenders set up the trust so they could maintain a controlling interest in the company long enough for them to sell Asia, then when it came time to take back control from all those pension funds, they just rigged the vote. It’s not a coincidence that the ITOCHU acquisition occurred right around the time that Murdock transferred the shares from that “Trust Offering ” to those “institutional investors”(whoever they are).

If they cared that much about maintaining control over this massive fruit empire (why wouldn’t they), and with 12.3 million extra share entitlements spontaneously appearing in peoples accounts, and when you consider the fact that him and his lenders were shown to have — by all intents and purposes — defrauded their investors, is it really a stretch of the imagination to think that they would also manipulate the shareholder voting process so they could buyback the company from all those pension funds for pennies on the dollar? Remember, the margin was only 0.9%, and many people were already against this merger before it closed. Three hedge funds even bought shares before the vote for the sole purpose of suing the company for an appraisal.

Another possibility is that somebody shorted fictitious shares during the days leading up to shareholder meeting. As you can see in the chart pictured below, the price temporarily spiked above $13.50, (the price Murdock paid to buyback the company). Considering how tight that margin of victory was, this could indicate that somebody knew Murdock was going to win before everybody else — but that’s just speculation of course.

You can also see the trading volume spike significantly in the two days leading up to the vote.

There is also a chance that all these extra entitlements were the product short sales by the “institutional investors” who held those “MACES “, a trading strategy commonly utilized by convertible note holders as a way to hedge their bet. But again, we can only speculate at this point because the DTCC and the Court of Delaware (click that link) say it’s impossible to truly know who the original entitlement holders are, which thus makes it impossible to know why there was 12.3 million extra “facially eligible ” shares in circulation before the merger, even when it’s the largest producer of fresh produce in the world, founded June 2, 1851, 168 years ago, representing 1/4th of all banana sales worldwide; just like it’s impossible to truly know who made the $305 million in interest during the first two years of Doles existence as a public company.

It’s all just so terribly…..complicated…

When they steal money from our grandparents, print fake shares, issue phony voting cards, and manipulate the price of massive multi-national corporations so they can buy them back from pension funds (“the elderly “) for pennies on the dollar…

It’s just …………………………



It’s important to understand that stock trades are just broker to broker transactions, and all these IOU’s are simply credits from one broker to another, with the DTCC acting as their ledger. Just those six corporations pictured above account for 70% of the prime brokerage industry, and as we noted before, they are the true record holders listed on the company’s books.

Are you starting to see how easily this system can be manipulated?

The origins of ledger accounting stem from the middle-ages when merchants were forced to travel long distances with their gold in hand before a transaction could clear. This was not only very risky, but it also slowed down commerce.

Ledger accounting eliminated this problem, allowing for contracts to be quickly enforced with the stroke of a pen. Grain could be purchased in Rome in March, baked into bread in Venice, in July, and then the bread could be sold in Constantinople in October—all recorded on the same day in the books at a home office, without anybody leaving their place of origin.

In the image above, not only is this fraud, but there’s also a risk that over time, too many share entitlements could potentially escalate to a point where it would be impossible to reconcile. If this were to happen, do you think they’d tell us?

Some might argue that new regulations which forced clearing firms to close out failure to delivers after 13 days solved this problem, but as most of us know, there is no industry that is better at finding legal loopholes than Wall Street, and it has already been shown that there exist ways around this forced close out rule.

To put that into laymen’s terms, the seller of the fake shares just gets somebody else to temporarily loan them new shares, thus resetting the 13 day forced buy-in period back to day #1. In theory, this can enable a person to maintain a short position using fictitious shares for as long as they want.

As you can see in the image below, the traders were issued buy-in notifications by their clearing firm via email, giving them time to find someone who is willing to loan them shares long enough so it resets the 13 day forced buy-in date back to day #1.

For the sake of brevity, we are going to refrain from getting into reverse conversions, as it will most likely just leave you confused. But to put it into layman’s terms, it’s basically just an agreement to call the stock back from one another other at a specific time:

“I get to put it to you tomorrow, you get to call it from me tomorrow”.

Again, it’s just a day loan, and it’s easy to understand once you get past all that complicated phraseology.

Sometimes they will even cycle the fake shares back and forth between each other, with one person loaning the other person fake shares until the forced buy-in date is reset back to day #1, then the other person who received the day simply repeating the favor down the road, like a hot potato.

Technology has also made rapid advances since those SEC complaints, so we can only assume that it is much easier for them to complete these transactions.

Back then, the problem was also more concentrated into individual stocks – usually mid/microcaps — but today these IOU’s have started to gravitate towards ETF’s, where dealers — known officially as “Authorized Participants” — will buy stocks in the open market, then exchange these stocks for ETF shares.

For example, let’s say there is an ETF that is supposed to represent the technology sector; the dealers will buy — for instance, Apple, Facebook, and Microsoft — then exchange these stocks for the ETF shares.

ETF’s now represent 78% of all equity related failure to delivers, and anybody who has followed the market long enough probably knows very well that many of histories worst financial scandals have involved structured financial products that represented a basket of goods; mortgage backed securities being the first that should come to mind.

Pictured below is one of the most glaring examples of this problem. This went on for 4 years prior to the publication of this report.

It’s pretty safe to say that this table speaks for itself…

1Response to SEC Questions Regarding Exchange Traded ProductsFile Number S7-11-15

Understand that there is nothing normal about that picture you are seeing. A fictitious loan is probably one of the worst forms of fraud one can imagine. This would be like loaning someone fake gold 100 years ago, charging them interest, then threatening to seize their assets if they didn’t pay you back.

Remember, ETF shares are simply claims to ownership of an underlying asset, so just imagine what would happen if the market were to suddenly collapse while there is potentially as much as 400% more share entitlements circulating at any particular moment in time? A run on these ETF’s could result in the ETF operator — in this case State Street — becoming liable for all these extra ETF shares, or worse, it could result in the institution going bankrupt.

Sounds kinda like a ponzi scheme, doesn’t it?

You might also have noticed that the NSCC (a subsidiary of the Depository Trust and Clearing Corporation) reported fail to deliver tally doesn’t seem to be accounting for all these fake shares for some very strange reason, which suggests that all these extra shares are being laundered through the “ex-clearing” system (industry lingo for trades cleared by the brokers outside of the DTCC).

Now take a look at the largest institutional holders.

Oh look! It’s them: the owners of the Depository Trust and Clearing Corporation..

Another example of this strange dichotomy can be seen in the price of $GLD between March and December of 2013. During this time period, the value of its assets decreased by 52%, while the price of the ETF (Ticker $GLD) only fell by 24%; meaning if you were an investor in the $GLD and you tried redeeming your shares, you technically could’ve lost an extra 27%.

51% of the shares outstanding were short during this period of time.

Just for anybody who doesn’t know, the GLD’s only asset is gold.

You can see that the price of $GLD falls almost at the exact same rate as the price of Gold, yet oddly, the amount of gold held in the fund decreases by 40%, from 39.6 million troy ounces, to 21.8 million troy ounces.

Yet as the price goes up, you barely see any new shares being created..

So they’ll redeem the ETF certificates when the price is dropping, but they won’t create them on the way up?

If there was ever a more blatant example of counterfeiting in our capital markets, it would be this. Even the author of this report acknowledges that it’s probably due to all the fake shares in circulation.

The ETF market has a combined market cap of $6.18 trillion, so you can only imagine the chaos that would erupt in the event of a financial crisis when everybody tries redeeming their shares all at once..

Remember, an ETF is essentially just a mutual fund.

“ETFs offer investors an undivided interest in a pool of securities and other assets.”“Apart from the fact that ETFs trade intraday, most ETFs are similar to mutual funds in that they both translate investor purchases and sales in the fund into purchases and sales of underlying holdings.

–Eileen Rominger, director of the SEC’s Division of Investment Management

Think MF Global

(Financial Times) “However, in the past two years (at the end of 2017 and 2018), the amount of pledged collateral received by the major banks that could be repledged onwards was $8.1tn, up 33 per cent from 2016’s end…. there has been an increase in pledged collateral to almost all global banks (adjusting for conversion to US $). The source of primary collateral was $3.7tn of underlying securities, implying a velocity of about 2.2*”.

Manmohan Singh, Senior Economist with the International Monetary Fund

5 banks….2 owners…

As you can see, this is just par for the course on Wall Street.

“William Paterson, however, on obtaining the charter of the Bank of England in 1694, to use the moneys he had won in privateering, said, The Bank hath benefit of interest on all moneys which it creates out of nothing.This was repeated by Sir Edward Holden, founder of the Midland Bank, on December 18, 1907″

Dr. Carroll Quigley, 1966

It almost seems like the combination of these banks and brokers that came with the elimination of the Glass Steagall Act has resulted in some kind of cultural run-off between the two divisions, where the idea of fractional reserve banking has somehow made its way into the board rooms of these brokerages houses, and they’ve managed to find a way to convince themselves that extending the existing supply of a corporations outstanding capital stock somehow benefits society.

There is obviously no pressing need to issue more share entitlements than actually exist in the secondary markets because technically you are not facilitating any kind of tangible business activity.

Short to medium term price fluctuations have very little impact on the actual business operations because by that point the company has already raised the capital, and thus everything that happens after the IPO or secondary offering is simply people passing around their certificates.

Sometimes it might help to issue extra shares when the price has diverged excessively from its intrinsic value, or to facilitate bidding and selling, but it’s nowhere near as important as it is in banking, where you can exponentially increase the amount of productively you can get out of every dollar that is in circulation at any particular moment in time.

Through broker to broker transactions, and combined with their complete control over the only centralized clearing mechanism in the country, the current settlement system as it exists today also creates terrifying conflicts of interest. There is nothing normal about Exchange Traded Funds reporting 8 institutional owners per outstanding share in circulation over a period of 4 years, or assets under management that fall in value by almost twice the rate of gold — that is the very definition of a Ponzi scheme.

There is also a risk that all these fake share entitlements could be loaned out — which again, is probably one of the most egregious forms of financial frauds you could possibly imagine.

By Butch Krieger – E-mail to photosubmission@wikimedia.org by Butch Krieger, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=11309289

The Marc Cohodes Leaked Testimony

Back in 2008 in the middle of the financial crisis, Marc Cohodes ran one of the most sophisticated short selling hedge funds in America, and he looked poised to make massive profits from his short positions.

Unfortunately, due to an unusual turn of events, his fund ended up doing the complete opposite of what he and his partners expected, and they were quickly forced into liquidation after 24 years in business.

He claims that as the entire market was in freefall, several of his short positions were spontaneously closed out by his broker under what he describes as “mathematically impossible” circumstances, and according to Cohodes, if not for these strange close outs by his broker, his fund would have made upwards of $1 billion.

In this leaked testimony, Mr. Cohodes reveals something stunning. He says that even after informing his broker of news that he had secured a guarantor who was willing to take ownership of his short positions — thus transferring liability away from his broker to a third party — they still closed him out anyways, even going so far as to take full control of his accounts against his will.

“And then as time went on and/or a position got bigger, the rate would get jacked up on us…. So our cost of doing business in a particular name would go from not costing us anything to costing us tens of millions of dollars…

Marc Cohodes, Copper River Partners

It is important for you to understand that there is a reason why you will not find anybody writing about this online. In fact, other than archive.org and the original place it was leaked, this article is probably the only place you will see this deposition. Most of the names have been redacted or replaced with the word “they”, or “them”, and some of the dubious objections and irrelevant questions have been removed for the sake of brevity.

Nobody else will show you this so candidly — for reasons that should be obvious. It has been broken down and filtered so you will quickly be able to digest all of the key testimony in one short excerpt.

BNP was prepared to take all our positions and they wouldn’t release them. So I scrambled to find, you know, someone to back us since they wouldn’t, and I arranged for BNP to take them and they refused to release them”.

(continued) ……”the deal was you could have made a cash deposit to ease house call, BNP was prepared to come in and take all our positions and they wouldn’t let it happen“.

Q. All of your positions in every account?

A. Yes.

Q. And do you have any understanding as to why that was?

A. Never got an answer.

(continued)…..”I don’t know the prop desk. I know that Bill Duhamel and a guy named Lee Hicks were meeting with us to go over our positions because they were going to take them, take the positions or give us money to solve the thing“.

….”That was described in this book where the guy went to the bathroom and threw up somewhere in there. Duhamel went to the bathroom and threw up because he was so disgusted by what was going on, because he saw markets falling apart, and the names we’re talking about were going straight up. And Duhamel suggested to me that I talk to them and tell them someone’s frontrunning the thing, which I did, and then that didn’t work out so well either”

I think the securities lending market is just like the mob. I think it’s completely rigged. It’s a completely manipulated black hole, non- transparent market .
Q. Now, when you say you think they’re just like the mob, are you referring to them?

A. Yes. I think they are like the mob .

Q. And are you referring to them in particular or them and the rest of the market altogether?

A. I think they are a racketeering entity that does whatever they can to make a dime without conscience, thought, foresight or care about ramifications. I think they are cold-blooded and could care less about the law. That’s my opinion. I think I can back it up.

Q. And that became your opinion when?

A. When they put us out of business.

Q. In 2008?

A. Yes

And the thing that just gets me to no end was this guy **** was leaving in two weeks . He was retiring in two weeks, and he’s the guy who made the call to do us in. And he was two weeks away from retiring. So why wouldn’t he just say, “You’ve been a customer for 24 years. You pay us $100 million in stock loan fees a year, right? You clearly have it right .
“Why did they have to do us in? And this guy was leaving in two weeks. And I begged him — oh, it’s troubling for me but I begged him to leave it alone, but they didn’t, so —

Q. I understand it’s upsetting. I’m going to just going to ask you a few more questions about it . I move to strike your last answer —

A. Okay.

Q. Is it accurate that if they had not made that house call, looking back on it, or had just waited until couple of weeks and not forced your firm to cover its positions, essentially your investment strategy would have proved right and you would have made even more profits from what you already made for the year.

A. We probably would have maybe another billion dollars, with a B. We would have made fifty percent more at least .

Q. Now, you said you had to close out the positions because they made you close out, correct?

A. Yeah. And on those subsequent days, they actually took over the accounts. They actually took over them.

Q. And started buying back the short positions?

A. Uh-huh.

Q. Is it accurate that it was also possible to meet the house call by bringing in new capital such as making a cash deposit into the fund?

A . Possible, yes .

Why would anybody do something like that? Someone comes along and says they will act as the guarantor for a customer they’ve had for 24 years — take all that baggage off their hands — and not only do they say no, but they immediately proceed to take full control of the customers’ account and close out all of their positions. You are no longer liable, so what could you possibly have to gain?

In this next section, Cohodes goes on to say that he believes there was a chance that his broker had issued his firm fictitious share entitlements, using an old industry term, “naked short selling”, to describe this practice.

Well, we knew — we knew that we were paying large sums of money for borrowed stock, so we knew we didn’t have naked positions, Copper River, but we also wondered what would force them to act so aggressively and heavy-handed over such a short period of time in a stock market that was basically in free-fall and not give us rationale. So we assumed — assumed, didn’t know — that this could have been an issue with them.

Q. By “this,” you mean that there were naked short positions?

A . Yeah, yes .

Q. And were you trying to — when you said you tried calling ***** fifty times, is that one of the things you wanted to ask him?

A. I wanted to ask him, what the fuck is going on, that’s what I wanted to ask him, and “What are you doing?”

Q. Did you want to ask him if they had a naked short position?

A. Yes, among many things, yes. . I mean, basically the theory was by them putting us out of business, if — and that’s a big “if” because I don’t know — I’m not privy to what they do — by a putting us out of business and forcing us to cover, would that have solved their issue, their naked issue because they had no economic reason to do what they did, and they caused us an awful lot of harm. That’s for sure . BY MR. SOMMER:

Q. Did you try discussing that with ***********?

A. Yeah, yes, we did.

Q. And did he ever give you any concrete information in response?

A. Yeah. The quote he told me, and I’ll never forget it, is — he said, “Sometimes when there’s a house fire, you end up burning down the block.” You know, and what I implied from that was that we were an unintended consequence of what was

He then goes on to describe margin calls and how they influenced his brokers unusual decision to suddenly close out all of his short positions (in the middle of a financial cataclysm not seen since the crash of 1929) putting him and fund out of business.

What is a margin call, to your understanding?

A. Well, there’s different well, in general terms, there’s a Fed margin call and then there’s a house margin call. The house margin call is subject to the house and Fed margin calls, that’s nonnegotiable. That’s subject to the government. So if you have a Fed margin call, that’s the government, and you have to meet it. If you have a house margin call, it tends to be negotiable, and if the house says, you know, there’s no negotiation on it, then you got to meet it.

Q. Well, when you’re referring to a house margin call, the house that you’re referring to is whoever is extending credit, right

A. Right, the brokerage firm

Q. So in the case of the margin calls that faced your firm in September ’08, the house was ****** & Co., right?

A. Yes

Q. What were the what’s your understanding of the circumstances that were occurring in the stock market that led to the point where your firm received a margin call, a house margin call from ****** & Co.?

A. Well, that weekend before, Lehman went bankrupt . I think Lehman went bankrupt or Lehman went bankrupt on a Monday. We had collateral securities and cash at Lehman Brothers International

Q. Was that in London?

A. That was in London, LBIE — that was locked up, confiscated, whatever — lost access to that. That wasn’t a problem. I mean, it was a problem, but it wasn’t that big a problem. So I think the markets went down Monday or Tuesday or maybe Wednesday, and then the government, without warning on Wednesday or Thursday, put through a must-cover, that Reg SHO deal must-cover in three days .

Q. There was an amendment to Reg SHO?

A. Yes. There was an amendment that was basically put through Wednesday at night, in the middle of the night, and immediately hit the next day. No, you had three days. So then the stocks we were involved in that had that went up. That still wasn’t a problem. The next day, the government banned short selling in financials or financial- related, and then the market really went up. And that was the day that they called us and said “We have a problem.” We said, “Okay. How do we fix this?” —

A. Yeah, Lehman went bankrupt and the government put through two emergency rules back to back .

Q. And would it refresh your recollection if I told you that the second one of those, the banning of short selling of approximately 800 stocks, went through late on a Thursday night and was announced or disclosed very early on a Friday morning of the same week that Lehman Brothers failed?

A. That’s probably right, yes.

Q. So that problem started all in that week?

A. Yes.

Q. And was it over like that week and the next — so the Friday of that week is when you first had a problem with ***** & Co. telling you

A. Sort of that Thursday

Q. — that you got a house margin call?

A. Sort of that Thursday, that Friday. And one of the problems was because the stocks they said were acting erratic, they changed the haircuts on our loans, meaning if our multiplier was .15, they’d change it to . 5 . So not only did we have a house call, they said instead of putting up .15, you now have to put up .5. So what should have been a small issue was a huge issue because they changed two things on us — two things they didn’t change, two things changed on it. One, we lost a shitpot full of money; and two, they said because we lost a shitpot full of money, we need to have a whole lot more collateral. So it wasn’t a Fed call; it was a house call .

Q. It started with you losing a bunch of money because the stocks that you were short went way up in value; is that right?

A. Yes.

Q. And were some of those stocks among those that the government banned short selling in, some of the stocks you were short in?

A. Not — some, but not really.

It was more other shorts were getting killed in the finance stocks, so they were covering anything that they could. The government tried to basically orchestrate a short squeeze, which they did for two days .

Q. Is it accurate to say, I mean, just hypothetically on that Friday and not knowing what the future holds, if the stocks that your firm was short had continued to increase at the same rate for the next couple of weeks that your firm could have lost everything on those investments?

A. That’s a stretch, but hypothetically, you could say that.

Q. And is it also accurate hypothetically to say that if that situation had continued and the stocks that your firm was short continued to go up, that eventually ****** & Co. could be left essentially in a money-losing position where it was losing the money because your firm no longer had any cash?

THE WITNESS: Well, to frame it, frame the argument, by then, we were $2 billion of a fund; we had 2 billion. And coming into that Monday, we were up 30 percent for the year. So we had a pretty big cushion and we were doing well before let’s just say the shenanigans went on. Hypothetically everything the same, okay, when people say they short stocks they have unlimited risk, I totally get that. The problem began that Monday of that next week when the market completely and utterly fell apart, and as the market was literally going down the drain, our shorts were going through the roof.

BY MR. FLOREN: Q. The stocks that your firm was shorting?

A. Yes.

Q. And you thought that was just really bizarre and should not have been happening, correct?

A. Mathematically it’s impossible for that — I mean, I can remember them closing us out of American Capital Strategies at $33 on that Monday, and when they stopped doing whatever they had to do, when the smoke cleared, we finished covering the thing four weeks later at 2, something like that. We finished covering it at 2 but they took us out of eighty percent of our position in the thirties, and when they were done, we covered at 2. They took us out of Tempur-Pedic at 16, covered that, the rest of it four weeks later, at 3 . mean, it was insane. So it’s kind of like I played the entire thing for a complete collapse, got the collapse and was closed out, closed out right before and during. And then after they completely did me in, said, “Oh, you know, we’ll let you go.”

Q. If **** & Co. had not made these house calls and had extended you more credit during this time period —

A. We didn’t need more credit. All they had to do was not make the house calls.

Q. But wasn’t the credit at issue is the margin requirement of a short position, correct?

A. There’s a Fed call which we were in compliance of — that’s the government and then there’s a house call. The house call is at the discretion of the house. And the thing that just gets me to no end was this guy **** was leaving in two weeks . He was retiring in two weeks, and he’s the guy who made the call to do us in. And he was two weeks away from retiring. So why wouldn’t he just say, “You’ve been a customer for 24 years. You pay us $100 million in stock loan fees a year, right? You clearly have it right . ” Why did they have to do us in? And this guy was leaving in two weeks. And I begged him — oh, it’s troubling for me but I begged him to leave it alone, but they didn’t, so —

Q. I understand it’s upsetting. I’m going to just going to ask you a few more questions about it . I move to strike your last answer —

A. Okay.

Q. Is it accurate that if ****** & Co. had not made that house call, looking back on it, or had just waited until couple of weeks and not forced your firm to cover its positions, essentially your investment strategy would have proved right and you would have made even more profits from what you already made for the year.

A. We probably would have maybe another billion dollars, with a B. We would have made fifty percent more at least .

Q. Now, you said you had to close out the positions because ****** made you close out, correct?

A. Yeah. And on those subsequent days, they actually took over the accounts. They actually took over them.

Q. And started buying back the short positions?

A. Uh-huh. (answering yes, “uh huh”)

Q. Is it accurate that it was also possible to meet the house call by bringing in new capital such as making a cash deposit into the fund?

A . Possible, yes .

Q. Now, you said that you were upset that **** wouldn’t return your phone calls during this time period, right?

A. Upset, that’s not even the word I’d use.

Q. You were very upset? Okay. Do you know whether Mr. **** or his securities lending department had anything whatsoever to do with the house call decision?

A. I knew the house call was at the discretion of somebody.

Q. Somebody at ***** & Co., correct ?

A. Exactly. And I knew that since it was generated by a machine, that if it’s generated by somebody, I was hoping someone with reason would have talked to somebody to calm someone down to come up with a plan.

Q. You don’t have any understanding that ****** and the other folks in the securities lending department, are the ones who made this decision about the house call, do you?

A. I don’t think they did it, no. The one that did it was *****. That was the one that did it. It was his call.

Q. And the way the markets were acting in the stocks that you were investing in, in this week of the Lehman Brothers bankruptcy and then the following week, had you in your life, either before or since, ever seen a market that acted the way the stock market acted during those weeks?

A. I was actually working part-time at Merrill Lynch in college and that was when you had the Bunker Hunt silver margin fiacso where they almost bankrupted Bache and a whole bunch of other guys. That was the closest thing I ever saw to it. But basically the world was coming to an end. I mean, totally it was coming to an end. But we were short so much, it was exactly what I had been waiting for. It’s exactly what I thought was going to happen.

Q. So was that the most severe such volatile and — you described it as “world coming to an end” market that you had ever seen?

A. Yes.

Q. And how many days really was it from the beginning of this problem to the end of it with the problem with the margin call from ****** & Co. was your firm — did your firm and its funds lose most of their money?

A. Eight days, something like that. But the problem was we were off the house call and we were still salvageable. Sure, we had one fund which was up eighty percent and even with all the damage that was done still closed it up 35, so they couldn’t kill that one as hard as they tried. But it’s when we got off the house call, they wouldn’t let us go. And as I recall, to answer your other thing about infusing money, BNP was prepared to take all our positions and they wouldn’t release them. So I scrambled to find, you know, someone to back us since they wouldn’t, and I arranged for BNP to take them and they refused to release them

Allegedly his broker even went so far as to call one of the people who planned to take over his accounts so they could try and talk them out of it, saying Cohodes would be out of business in a few days anyways.

His broker turned out to be right, but it wasn’t because of his poor stock selection. Remember, the entire market was in freefall, and these short positions all crashed soon after, and should have led to, at least according to Cohodes, $1 billion in profits.

Q. Did he stop taking your calls at some point?

A. Yes, yeah.

Q. Did you try leaving messages with him?

A. Oh, sure.

Q. Could you estimate how many messages you left with him?

A. Maybe fifty.

Q. He never called you back after that when you left those fifty messages?

A. No. We had another conversation with him because I had the Farallon guys in the office because they were going to take our positions, and ***** made an outgoing call to Farallon saying that they shouldn’t take our positions.

Q. That’s what Farallon told you?

A. Uh-huh, that’s what the CFO of Farallon told Bill Duhamel when they were in the office, that they made an outgoing call to them and said they shouldn’t take Copper River positions because we’ll be out of business in a couple days anyway.

Q. Who is — Bill Duhamel?

A. Bill Duhamel.

Q. Who is that?

A. He used to be a money manager at Farallon in the city.

Q. Is that someone you knew at the time?

A. Yes.

Q. And he’s the one who told you that?

A. Uh-huh, yes. He’s the guy who — Acme Capital was considered as Farallon for the book sake .

Q. And if they had taken some of your positions, would Copper River have been able to survive, in your estimation?

A. Absolutely.

Q. And was it your understanding that it was someone on the the prop trading desk who had said what you just described to Farallon?

A. Yes.

Q. And did you know, was it told to you who it was on the ***** prop trading desk who said that?

A. No, because that person wouldn’t be around today.

Q. Did it surprise you that Farallon told you it was someone on the ***** prop trading desk?

A. Well, again, life-changing events you never forget, which this was. And the market, the stock market, was literally falling apart, going straight down. And our short positions would have benefited hugely by the market falling apart and melting down. But the stocks that we had to cover were all going straight up in violent fashions in a straight down market . So someone was running in front of these trades, someone was. So the fact that the ***** prop desk knew about this is not a surprise to me because I think the guys at **** are common criminals, just common criminals.

Q. Do you recall mentioning that you — your firm had paid hundreds of millions of dollars to ***** a few minutes ago?

A. Yes.

Q. And by paying hundreds of millions of

Q. Do you recall mentioning that you — your firm had paid hundreds of millions of dollars to **** a few minutes ago?

A. Yes.

Q. And by paying hundreds of millions of dollars, did you mean paying hundreds of millions of dollars in borrow fees for short stock?

A. Yes.

Q. I want to show you one other sentence on page 300 of “Selling America Short, ” which was Exhibit 6. This is in the next paragraph in the middle. There’s a sentence that says, “Also, we have noticed that they — ” do you see where I’m looking now?

A. Yes.

Q. “Also, we have noticed that ****** & Co. has sometimes been able to provide locates not available elsewhere.” Do you see where I read that?

A. Yes.

Q. Was it your regular practice in shorting a stock to contact ****** to try to locate the stock first?

(continued) Q. Well, did you have personal — strike that . Was it your understanding that the firm would contact — your firm would contact ***** to ask for a locate before shorting a stock?

A. Absolutely.

Q. And what’s your understanding based on?

A. That was protocol at the firm. Before we could short any stock, we had to get a locate because naked shorting is illegal. And although we were accused many times by your customer Overstock, or specifically Byrne, of naked shorting, we never, ever, ever, ever shorted a stock we couldn’t borrow.

Q. Okay. And did you find, you, Mr. Cohodes, find that sometimes locates were available at ****** that weren’t available at some other clearing firm?

A big argument breaks out; various verbal exchanges and objections — probably more so than any other time during the deposition

Q. You have spent most of your working life involved in short sales of stocks; is that fair to say?

A. Yes.

Q. And you were a managing partner of Copper River Partners in 2006, correct?

A. Yes.

Q. Okay. And as part of shorting a stock, it was standard practice in your firm to call up ****** and ask for a locate before shorting the stock; isn’t that true?

A. Call or email, yes.

Q. And did you find that sometimes ***** was able to provide locates that these other clearing firms couldn’t get for you?

MR. FLOREN: Objection, vague and ambiguous .


Q. And can you explain to me what your experience was in that regard? A. You know, at the time, you know, I thought that the stock loan department at ****** was the best in the business by far, that they were always able to find borrows when others either couldn’t or the borrows were too expensive. And ***** to that end was very good. They always would you know, find borrows. And that ‘ s what we cared about . We didn’t — it wasn’t our business to find out who, what, where, where do you get it from or this, that and the other. If they’d say it’s okay to short the stock, we’d short it.

Q. And is that one of the reasons why you wanted to have them as your clearing firm?

A. Yes. That was the only reason. That was the only reason.

Why would a broker close out one of their best customers after being told that someone was willing to take over ownership and act as a guarantor for positions that seemed poised to deliver up to $1 billion in gains? The market was in collapse, and transferring these short positions to someone else would have — at least apparently — relieved them of liability. What could they possibly have to gain from doing something like that? It simply doesn’t make any sense.

They must have been well aware of how bad this story would look because they tried very hard to seal that testimony. Luckily, an unnamed individual that was close to the case ended up leaking the transcript to the New York Times.

You know, it’s funny. After all these shenanigans — the double voting, switched votes, fake shares, and the Court of Delaware saying it’s not humanly possible to know for sure who actually owns a public company (even if it’s the largest producer of fresh produce in the world, representing a full quarter of banana production worldwide) — the DTCC actually tried lobbying the SEC into blocking Michael Bloomberg’s planned alternative to this archaic Centralized Clearing Cartel that every American has been forced to use for so many years.

Their reasoning?

They claim that 1 point of access is less risky than 2 (as if that makes any sense). As we all know, people will do, and say, practically anything for money sometimes — some more than others — so you cant blame them for trying.


As you can see, this is just another one of their old boys clubs, and if they don’t want you in, irregardless of your capabilities, you are simply not allowed to participate. Just like Quadriserv/AQS, SL-x, and Data Explorers, even if their technology could save people — elderly people — $100’s of billions, if you threaten their hegemony, they don’t care how much benefit you offer to society, they will simply block you anyways.

You see, it’s never been about the money, and it never will be about the money. Those are just the certificates that they give everybody so society can function.

If you control the issuance of credit, the supply and demand of equities, the price of commodities, and if you can decide who sits on the board of all these corporations, why should you need money? When you can just borrow other peoples money at will, set your own interest rates, then simply print more when things go south with the central bank that you own, and on top of all of this, manipulate the price of all the basic necessities of life..

…you control the world..

Dr. Carroll Quigley, Georgetown University

“In addition to these pragmatic goals, the powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent and private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank, in the hands of men like Montague Norman of the the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the bank of France, and Hjalmar Schact of the Reichsbank, sought to dominate its government by its ability to control Treasure loans, to manipulate foreign exchanges, to influence to the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world. In each country the power of the central bank rested largely on its control of credit and money supply. In the world as a whole the power of the central bankers rested very largely on their control of loans and of gold flows”.

“It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down —Read more

Like all emperors throughout history, irregardless of their self-proclaimed benevolence, in the end, they will always be judged by their actions, and not by their words or their intentions, and over the past 10 years, these mega-banks have clearly shown for all the world to see, beyond any shadow of a doubt, what they are truly made of.

Actions speak louder than words, and anybody who would knowingly collude to steal 100’s of billions of dollars from the elderly neither cares about you, the law, and most importantly, certainly doesn’t care about how you feel. To the Financial Oligarchs who rule this world, you are simply a means to an end; one where freedom speech is no longer a right, but a privilege bestowed upon us by them, and where human workers are slowly phased out, and replaced by machines. To them, there is too many people on the planet anyways, so why should they care if they take your money..

It is said that when you ask Mr. Murdock to reveal his secret to longevity, his response will be surprisingly simple: “To Live Well”; and coming from a man of his accolades, there is a certain amount of irony that comes with the brevity of that statement. Any man or woman should have the right to pursue such a noble endeavor, but on the rare occasion, every once in awhile, it can sometimes come to a point where one is forced to ask themselves a very tough question: ..”But at what expense”..

(1914) Other People’s Money and How the Bankers Use It– Chapter I: Our Financial Oligarchy

“The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people’s own money. If the bankers’ power were commensurate only with their wealth, they would have relatively little influence on American business. Vast fortunes like those of the Astors are no doubt regrettable. They are inconsistent with democracy. They are unsocial. And they seem peculiarly unjust when they represent largely unearned increment. But the wealth of the Astors does not endanger political or industrial liberty. It is insignificant in amount as compared with the aggregate wealth of America, or even of New York City. It lacks significance largely because its owners have only the income from their own wealth. The Astor wealth is static. The wealth of the Morgan associates is dynamic. The power and the growth of power of our financial oligarchs comes from wielding the savings and quick capital of others. In two of the three great life insurance companies the influence of J. P. Morgan & Co. and their associates is exerted without any individual investment by them whatsoever. Even in the Equitable, where Mr. Morgan bought an actual majority of all the outstanding stock, his investment amounts to little more than one-half of one per cent. of the assets of the company. The fetters which bind the people are forged from the people’s own gold”.

“But the reservoir of other people’s money, from which the investment bankers now draw their greatest power, is not the life insurance companies, but the banks and the trust companies. Bank deposits represent the really quick capital of the nation. They are the life blood of businesses. Their effective force is much greater than that of an equal amount of wealth permanently invested. The 34 banks and trust companies, which the Pujo Committee declared to be directly controlled by the Morgan associates, held $1,983,000,000 in deposits. Control of these institutions means the ability to lend a large part of these funds, directly and indirectly, to themselves; and what is often even more important, the power to prevent the funds being lent to any rival interests. These huge deposits can, in the discretion of those in control, be used to meet the temporary needs of their subject corporations. When bonds and stocks are issued to finance permanently these corporations, the bank deposits can, in large part, be loaned by the investment bankers in control to themselves and their associates; so that securities bought may be carried by them, until sold to investors. Or these bank deposits may be loaned to allied bankers, or jobbers in securities, or to speculators, to enable them to carry the bonds or stocks. Easy money tends to make securities rise in the market. Tight money nearly always makes them fall. The control by the leading investment bankers over the banks and trust companies is so great, that they can often determine, for a time, the market for money by lending or refusing to lend on the Stock Exchange. In this way, among others, they have power to affect the general trend of prices in bonds and stocks. Their power over a particular security is even greater. Its sale on the market may depend upon whether the security is favored or discriminated against when offered to the banks and trust companies, as collateral for loans”.

“Furthermore, it is the investment banker’s access to other people’s money in controlled banks and trust companies which alone enables any individual banking concern to take so large part of the annual output of bonds and stocks. The banker’s own capital, however large, would soon be exhausted. And even the loanable funds of the banks would often be exhausted, but for the large deposits made in those banks by the life insurance, railroad, public service, and industrial corporations which the bankers also control. On December 31, 1912, the three leading life insurance companies had deposits in banks and trust companies aggregating $13,839,189.08. As the Pujo Committee finds:”The men who through their control over the funds of our railroads and industrial companies are able to direct where such funds shall be kept and thus to create these great reservoirs of the people’s money, are the ones who are in position to tap those reservoirs for the ventures in which they are interested and to prevent their being tapped for purposes of which they do not approve. The latter is quite as important a factor as the former. It is the controlling consideration in its effect on competition in the railroad and industrial world”.

“But the power of the investment banker over other people’s money is often more direct and effective than that exerted through controlled banks and trust companies. J. P. Morgan & Co. achieve the supposedly impossible feat of having their cake and eating it too. They buy the bonds and stocks of controlled railroads and industrial concerns, and pay the purchase price; and still do not part with their money. This is accomplished by the simple device of becoming the bank of deposit of the controlled corporations, instead of having the company deposit in some merely controlled bank in whose operation others have at least some share. When J. P. Morgan & Co. buy an issue of securities the purchase money, instead of being paid over to the corporation, is retained by the banker for the corporation, to be drawn upon only as the funds are needed by the corporation. And as the securities are issued in large blocks, and the money raised is often not all spent until long thereafter, the aggregate of the balances remaining in the bankers’ hands are huge. Thus J. P. Morgan & Co. (including their Philadelphia house, called Drexel & Co.) held on November 1, 1912, deposits aggregating $162,491,819.65”.

December 23, 2010,

DEF 14A 5/19/11

December 30, 2011

March 30, 2012

September 17, 2012
(Date of Event Which Requires Filing of this Statement)
On: Monday, 9/24/12, at 6:12am ET

PREM14A’ for 11/27/12

Filed on Monday, 9/24/12, at 1:19pm ET

Tuesday, 10/2/12, at 9:26pm ET

October 1, 2012
(Date of Event Which Requires Filing of this Statement)
In relation to a previously described term loan, certain shares pledged to secure the loan were released. The number of pledged shares is now 18,935,086.

October 16, 2012.
Mr. Murdock also pledged 18,935,086 shares to DB Private Clients Corp. as collateral to secure his obligations under a term loan

– ‘PRER14A’ on 10/19/12

‘PRER14A’ on 10/19/12

Friday, 10/19/12, at 5:26pm ET

Wednesday, 10/31/12, at 5:25pm ET

October 29, 2012, 13-D

‘PRER14A’ on 11/15/12
Thursday, 11/15/12, at 5:06pm ET

‘PRER14A’ on 11/15/12

Thursday, 11/15/12, at 5:06pm ET

‘DEFM14A’ on 11/16/12

Friday, 11/16/12, at 2:11pm ET

‘DEF 14A’ for 5/23/13

Friday, 4/12/13, at 4:04pm ET

6/3/13 13/d

‘PREM14A’ for 8/21/13

‘PRER14A’ on 9/20/13

‘PRER14A’ on 10/1/13

‘PRER14A’ on 10/3/13

‘DEFM14A’ on 10/3/13

bibliography (backup)



control the government

the middleman that sits between a trade
“Central clearing virtually eliminates counterparty risk by interposing a “clearinghouse”between the two counterparties to the loan. The clearinghouse becomes the borrower to every lender and the lender to every borrower. In the event one party fails to meet its obligations, the clearinghouse steps in and assumes the obligation. The clearinghouse maintains sufficient capital to stand behind every trade it clears. By doing so, the clearinghouse creates a more efficient market and mitigates systemic risk, allowing borrowers and lenders to trade without concern of counterparty default”

mandatory arbitration process


stranglehold over our capital markets
“In September 2009, Quadriserv/AQS executives learned that, during a conversation with the Head of the Stock Loan Desk at Defendant Bank of America/MerrillLynch) that took place weeks earlier, Goldman Sachs’ Conley “got so angry at the mention of[Quadriserv/AQS’s] name that spit was coming out of his mouth.” Conley told the Bank of America executive that he was “opposed to transparency in any form,” and that his opposition was driven by the above-market spread Goldman Sachs secretly made on stock loan transactions.Conley pressured Bank of America to reverse course and to join the opposition to Quadriserv/AQS or risk being ostracized by the other Prime Broker Defendants”

Stifle competition
“In one such meeting on October 12, 2012, Andrew Clayton, Global Head of Securities Lending at Northern Trust, explained that Northern Trust would like to support SL-x,but could not do so without the approval of Goldman Sachs. In another instance, BNY Mellon(then Bank of New York) agreed to extend a $50 million line of credit and to participate actively

instruct the directors of the DTCC
“DTCC’s clearing business—admitted to SL-x that the DTCC could not offer SL-x central stock loan clearing without the approval of Goldman Sachs and other Prime Broker Defendants”

their hegemony
“During a meeting with the DTCC on April 8, 2008, for example, AQS executives were originally told by DTCC’s Managing Director and General Manager Fixed Income Clearanc eand Settlement Group, Thomas Costa, that “this sounds great, but who’s going to start your car in the morning?”

Pension funds are being forced
“Defendants’ market power and willingness to abuse it to silence, punish, and exclude those who dared to cross them is one important reason why their conspiracy was able to operate under the radar until recently. As noted above, Defendants wielded their considerable clout to bully and threaten even large, established entities in the stock loan market. This clout meant that even their more aggressive tactics could remained unspeakable by those who feared retaliation. Defendants’ threats—and the power behind them—kept those to whom they were directed quiet about the conspiracy they furthered. Those who were targeted feared incurring the wrath of those Defendants on whose services and relationship they depended if they did anything that would inform the market (including Plaintiffs and the class) about the strategies to quash emerging market innovation

every hedge fund in America

$100’s of billions
“Specifically, Quadriserv’s analysis predicted a 32% reduction in the total fees paid by stock borrowers as a result of credit and pricing efficiencies on AQS, effectively saving borrowers approximately $4.5 billion per year in fees paid on stock loan transactions. This analysis also predicted that fees paid to stock lenders would also increase from an approximate 26% of gross annual stock loan revenue paid to beneficial owners in the current inefficient OTC market to an approximate 52% of gross annual revenue under the efficient, AQS model, netting beneficial owners approximately $1.44 billion more in gross revenues each year”

Still facilitated over the counter
“The stock loan market is an “over-the-counter” (“OTC”) market, meaning that there is no central marketplace or exchange through which market participants can send their bids and offers to the entire market or obtain real-time trading data such as price and volume information. Instead, stock loan transactions go through a broker-dealer intermediary that provides the prospective borrower with a single price for the transaction in an opaque market with very limited information”.

the mother of all darkpools
As managing director and global head of sales for Credit Suisse’s Advanced Execution Services, Santayana saw the evolution of FIX connectivity, as well as advances in smart order routing, algorithmic trading and high-frequency trading. “This environment– securities finance–is the ‘mother of all dark pools’,” he said.

backward and opaque
To paraphrase Tolstoy, all efficient markets resemble one another, but each inefficient market is inefficient in its own way. This case concerns the “stock loan” or “stock lending” market, which is an inefficient, antiquated, and opaque over-the-counter (“OTC”) trading market artificially dominated by a handful of large prime broker banks. As set forth herein, these banks (the “Prime Broker Defendants”) conspired to keep the stock loan market frozen in this inefficient state to preserve their collective market control and dominance

$100’s of millions
“Tellingly, shortly after the deal between OCC and AQS collapsed, EquiLend itself offered to buy AQS. After years of being boycotted and having spent nearly $100 million in investor money with very little volume or profit to show for it, AQS’s owners accepted EquiLend’s offer of less than $5 million to purchase the assets of AQS”

Banded together
Led by Goldman Sachs and Morgan Stanley, the Prime Broker Defendants were motivated to conspire to prevent new entrants in the stock loan market from successfully offering electronic trading and clearing platforms and additional pricing transparency that would threaten the Prime Broker Defendants’ collective dominance of this lucrative market. The threats they faced were so credible that the Prime Broker Defendants did not dare act unilaterally, and so they agreed to act as a cartel

refused to provide key services
In mid- to late-2013, the Prime Broker Defendants renewed their commitment to standing against SL-x. They agreed to boycott SL-x, collectively refused to use its platform, and took steps to ensure that other market participants turned their back on SL-x as well

threatened their top hedge fund clients
Similarly, Morgan Stanley’s European Prime Brokerage Desk threatened its hedge fund clients with the loss of critical prime brokerage services if they were to “trade away”their stock lending business to venues such as SL-x. Hedge funds including Renaissance Technologies, D.E. Shaw, Millennium Management, and SAC Capital were all threatened by Prime Broker Defendants with retaliation if they moved their stock lending business to AQS“.

two decades now


electronic exchange
“Quadriserv/AQS and SL-x both developed electronic trading platforms on which stock loan trades could be executed and centrally cleared at transparent prices.3 These companies strongly believed that such platforms were a natural step in the evolution of the stock loan market, and many in the industry (including some within the Prime Broker Defendants’ own banks) agreed. It is well-established in the academic and empirical literature that trading and clearing on electronic platforms improves the efficiency of financial markets and improves price terms for investors. In both cases, however, the Prime Broker Defendants met this threat by organizing a group boycott of the platforms to starve them of liquidity. They also took parallel steps to pressure others in the market not to use the platforms and to penalize those who did”

net worth of only $8000

66% reduction to your retirement savings.

color drained out of that bankers face
“It was this trade data transparency that, in the words of SL-x executives, the Prime Broker Defendants found “most controversial” and caused the “color to drain out of their face”when explained at in-person sales meetings. As explained by Deutsche Bank’s Head of Supply Trading, Kevin Soobadoo, in one such meeting that took place with SL-x executives in October 2012, among the prime brokers’ concerns about SL-x was that it provided “too much transparency,” or at least “too much immediate transparency,” for comfort. JP Morgan requested the ability to turn off the real-time ticker, or block certain trades from being included, a request that SL-x declined”.

20 years https://web.archive.org/web/20070106082943/http://www.vodiagroup.com/pdfs/FourMyths.pdf



Beneficial interest

Street name

they still refused
“The dealer community is not really supporting this,’ said Joe Levin, the CBOE’s vice president of research and product development in Chicago.
Credit-default swaps, conceived more than a decade ago by bankers in New York and London as a way to protect lenders against default, now are used by hedge funds and investors as a less expensive way of betting on the creditworthiness of companies than purchasing bonds”.

these banks will rig anything

30% of shareholders

vote buying

“Double Voting in Proxy Contests Threatens Shareholder Democracy”, Bloomberg

typical Bloomberg fashion

wolf packs


“Economic Warfare – Risks and Responses, by Kevin D. Freeman”

key infrastructure

don’t actually exist

artificially inflated price levels
(search https://thefinancialoligarchs.com/2019/12/23/hmny/ or https://thefinancialoligarchs.com/2019/12/23/hmny/

selling fake shares
Kerrigone and his superiors at Wilson-Davis knew that Regulation SHO generally required a seller to borrow a security before selling the security short. But the Firm made no effort to do so before Kerrigone’s short selling. Instead, the Firm assumed that its trading fell within an exemption to the borrow requirement provided to Firms who engage in “bona-fidemarket making”

market maker exception

your imagination

afterhours has always been a venue

fictitious loan

this topic

victims of this fraudulant activity

50% of the prime brokerage industry


$450 000 000

700 000 square feet

Wellpoint Inc.

court documents

Toiling his fields
In Costa Rica, banana workers usually earn $200 to $300 a month, or about half of the national average, and the struggle for decent wages has become intertwined with the DBCP issue“.

mysterious ways

great responsibility

35% of which are owned by foreign investors

$6.5 billion

(Wall Street Journal, Nov. 22, 2013)

the corporation

two-time felon

exposed by Frontline


not a depository institution

loan money to themselves

Voting switching

14 times

Venetician Banking

13 day forced buy-in rule

rapid advances

the worst forms of fraud

cleared by the brokers
“Ex–clearing counterfeiting — The second tier of counterfeiting occurs at the broker dealer level. This is called ex–clearing. Multiple tricks are utilized for the purpose of disguising naked shorts that are fails–to–deliver as disclosed shorts, which means that a share has been borrowed. They also make naked shorts “invisible” to the system so they don’t become fails–to–deliver,

which is the only thing the SEC tracks”.

MF Global

Timothy Geithner

Robert Rubin

Merger of Travelers and Citicorp

Salomon Brothers

Smith Barney


formerly Philbro


basis necessities of life


it’s a big club

the status quo


too many people on the planet anyways


Mark Pittman

The Court of Delaware


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