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Investing 101 - Oct 10, 2005 - Printable Version
- Stockgate: The Big Picture
by Mark Faulk
Nineteen months ago, on March 19, 2004, I launched The Faulking Truth with an article about stock counterfeiting, entitled "Financial Terrorism in America." Our little website had 4,854 hits in its first full month in existence, but that article alone was reprinted on dozens of sites across cyberspace, and the emails flooded in. I knew at the time that I was on to something, and thought that I might help educate a few people about what appeared to be a major scandal in the stock market. I was convinced that there were unscrupulous forces at work, but that at most it involved a number of smaller scams targeting mostly small struggling public companies, and that the majority of the crooks were the usual "underworld" types, small time con artists who had hit the motherlode by taking advantage of a stock market system that seemed to be set up to facilitate corruption. Now, nineteen months and almost 60 articles on the stock market later, our little website is getting over 400,000 hits a month, and many of our articles are read by millions from being reposted or linked to other websites. And after thousands of hours of research, and hundreds of hours of interviews, I've come to the realization that I was wrong in my assessment of the scope of the stock counterfeiting scandal. It was a realization that came about gradually as I uncovered everything that I could find on the topic, carefully turning over each stone.....only to expose another quarry filled with hundreds of more stones.
At first, the leads mostly seemed disjointed and unrelated, and the stories seemed to be rocks unto themselves, a series of small islands scattered across the world of investing like random dots on a piece of notebook paper. Then, a few of the details of the scandal began to come together, and a few of the players, who at first appeared to be disorganized and scattered across the globe, began to overlap.
The dots began to connect. I'm not certain that there was an exact moment that "The Big Picture" emerged, but there were several epiphanies along the way. The first articles led me to the Canadian Connection, the offshore lending institutions, the bashers, and......the key to the entire scheme, "naked short selling."
Naked short selling.....that was what this was all about. A system, originally fueled mostly by Canadian brokers and offshore lenders, who "set up" small, struggling companies in their schemes to defraud the companies and small investors utilizing naked short selling and a lending practice that became known as "death spiral financing" because the companies who were suckered into it, the victims, were often forced into bankruptcy. The con artists bet against the company and its shareholders by "short selling" hundreds of millions of shares, and by taking advantage of a trading system that allowed them to "sell" shares that they didn't own, and never even borrowed, they could literally destroy the company, and its shareholders, by creating so much negative pressure that the stock eventually collapsed under the weight of the massive selling. But the key, the thing that made it all work, the actual scandal itself, centered around the ability of the con artists to short sell the companies' stock without having to ever borrow the shares to cover their positions. In other words, to buy and sell stock that didn't exist, shares that were never delivered, an unlimited supply of counterfeit stock.
Then, over the course of the next few months, other pieces of the puzzle began to fall into place. The Berlin Connection, where over a thousand companies were listed on the Berlin-Bremen Stock Exchange without their permission. The DTCC's "share borrow" program, where American brokers are allowed to "borrow" stock to cover their trades, without ever really having to cover those trades at all. The Dateline expose', which seemed at first to be our moment of truth, and turned out instead to be a classic example of the media selling out to big money, to greed. The rest of the Corporate Media, many of whom seemed to not just be ignoring the issue, but to be siding with the criminals themselves. The hedge funds, who suddenly appeared as major players in the scandal, and elevated it to new heights of sophistication. The Securities and Exchange Commission, who seemed to at first be just pawns in the scandal, but who are likely one of the key participants in allowing and even facilitating the massive fraud perpetuated on middle-class Americans. The unexpected resignation of SEC Chairman William Donaldson, who was replaced by (surprise, surprise!) Bush crony Chris Cox. The brokers, who take a cut for every share that changes hands, even if that share doesn't exist except as a notation in an electronic ledger, even if that share is never delivered to its rightful owner. And finally, Congress, who we worked with for months to help set up congressional subcommittee hearings, only to have the entire process shot down by "the powers that be." And all along, the real issue seemed to be naked short selling.
But guess what? I was wrong. The villain here isn't naked short selling, it's simply the tool used to fleece the victims. When a murderer bludgeons his victim to death with a club, it isn't the club that's at fault, it's the murderer. When a psychotic killer goes on a shooting rampage, it's not the gun that goes on trial, it's the killer himself. And so it is with naked short selling. Sure, the trading system is set up to invite corruption, and undoubtedly, there are loopholes big enough to drive a Brinks truck full of investors' money through in our securities laws, but the problem is far bigger than that. This isn't a major scandal perpetuated by small time con artists, and it's not a few isolated individuals taking advantage of the system.
I repeat: I was wrong. Somewhere along the line, a few months ago, the dots all connected, forming a perfect picture of a scandal that is anything but disjointed, a scheme that is anything but haphazard. This is the most elaborate financial scheme that the world has ever seen, and the players are interconnected on every level, from those who set up the schemes and those who perpetuate it in the trenches, to those who have allowed it to flourish by creating a system that invites corruption. Trillions of dollars have been literally ripped off from the middle-class investor, and transferred to the pockets of the ultra-wealthy and their seedy partners in crime. And along the way, at every level, every step, each of the culprits, every one of the "dots" get a cut of the loot by doing their part to perpetuate the crime.
No, this isn't about naked short selling. That's just the murder weapon of choice, the club used to bludgeon the victims to death, the gun used on the shooting rampage that has decimated our stock market, and along with it, our entire economy. The real villains here are those who will do anything to line their own pockets with America's wealth, the real culprit here is greed. It's the movie Wall Street personified......."Greed is Good," at any cost.
Over the next few weeks, I'll paint a picture for you that should chill every American to the bone. If I could, I would spend every day researching this, exposing the web of corruption and lies that has destroyed so many innocent lives, shouting it from the rooftops. As it is, I've already spent much of my "spare" time obsessing over this, just as a few other souls have. This is a passion for me, a cause that seems to have adopted me as one of it's champions, and one that I won't let go of until it's over, until the wrongs have been righted, until the system is safe for future generations.
I'll connect the dots that will reveal a picture of corruption perpetuated by an intricate network that extends from those in the trenches to the very top of our wealth system. Much of what I'll tell you is information that The Faulking Truth and the few others who have covered this scandal, who have championed this cause, have already reported on over the past couple of years. But hopefully, when I'm finished, you'll see the Big Picture as clearly as I do, and you'll come to realize, as I have, just how massive this scandal really is. You'll begin to understand why the efforts of those who have tried for so long, and at great personal sacrifice, to right these wrongs, have been met with resistance, harassment, and denial every step of the way. You'll know why the major media has largely ignored this, why the SEC has allowed it to happen, and why Congress has sat idly by as America has been brutally raped. You'll have a clear picture of what I've come to refer to as "The Circle of Greed."
(Editor's note: I've spent thousands of hours investigating this scandal, mostly at night and on the weekends. I've done so to the detriment of my personal and family life, my business, and given up most of my free time for this cause. I've stayed up late nights, and spend most of my working days sleep deprived. Still, this issue is complicated and involved, and I'd love to be shouting it from the rooftops seven days a week. If you want to help out our efforts, here are a few things that you can do.
First and foremost, keep spreading the word. Distribute and link our articles, and others on the topic, everywhere. Add a link so that they will come to the sources of the articles and read more about it. Educating America is the key to winning this fight.
Second, if you possibly can, go to our homepage and make a donation, large, small, or in between. While many of the reporters who have covered this do it for a living, I've done it solely out of passion.....and financed it entirely out of my own pocketbook. Every dollar that comes in allows me to spend a little more time researching, lobbying, and spreading the word. So far, I've done it for nothing. I'll do it anyway, but I could devote more time with a few contributions.
And finally, we'd like to add a couple of direct ads to our homepage. No popup ads (I hate popups!), but as I said, we received 400,000 hits last moth alone, and for a nominal fee, we would be willing to place a couple of ads on our homepage. Want to support our efforts and benefit your business as well? That's the perfect way to do it. Contact me at info@faulkingtruth.com )
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