June 22, 2009
Mr. Petillion, said, By the way, if this is an orchestrated short squeeze against the brokerage houses to make the stock price go up, we will come after those who are responsible. And then he said, We would not look kindly on a cert pull because it would cause market manipulation.
Andrew Petillion, Branch Chief of Enforcement at the Pacific Regional Office. SEC. 2005 SEC vs Cmkx
Question for SEC:
How exactly is a company commiting manipulation if they call for cert pull of their stock?
If a company has legal amount of shares issued, and market participants by issuing illegal phantom naked shorted shares.. have brought that count to a count above the legal count that the company has issued then that is illegal activity by market participants.. or brokers, banks etc.
If the stock is not naked shorted by market participants then the stock should have the same count of shares, whether in electronic form or in cert form.
So who was Andrew Petillion, Branch Chief of Enforcement at the Pacific Regional Office exactly protecting here when he was threathening officials of Cmkm diamonds inc about their cert pull?
Why would a stock price go up, just because a company is calling for a cert pull. As far as i know pulling the certificates is not illegal act.
However issuing of illegal naked shorted shares and having unsetlled securities by market participants is illegal, even that it is not enforced by SEC.
Another thing on Agent Leslie Hakala of SEC this time.
And she said, Well if you prove the naked short, we will investigate it.
Why does a company have to prove naked shorting before SEC will take any action in investigating one?
"It started off with Leslie asking What proof do you have of naked shorting? Well, I have a CD and these are 5,050 brokerage statements that represent 350 billion shares. This has just come within the last five days. We also have a December 2004 report from the transfer agent saying that 2,033 people hold certificates representing 326 billion shares. Thats 676 billion shares owned by only 7,083 shareholders. Since there over 50,000 total shareholders total, its obvious that the ones that havent been counted yet will far surpass the 703 billion shares issued.
So, Hakala said, well, how do I know that those brokerage statements havent been altered? Wellthat can be verified through the brokerage house and we can get affidavits if we need to. But were here to tell you that this is our investigation. And she said, Well if you prove the naked short, we will investigate it."
So Mr Petillion of SEC treathens SEC management for pulling certs as possible manipulation of short squeeze, however Agent Leslie Hakala does not want to act on body of presentation by Mr Frizzell about Naked Shorting in Cmkx, but she tells him he has to have a burden of proof before she would even investigate.
In addition this is the stand of Agent Leslie Hakala re Cmkx shareholders:
"Hakala had made every effort to exclude Frizzell and the shareholders from being represented from day one. In Bills words, Hakala and the SEC had the attitude of why do the shareholders need a lawyer? Our job is to represent the investorsthey dont need their own council. But in Frizzells mind it was clear they were simply covering up their own mistakes: Although the naked short position was not a central issue in the hearing, I had the concern that the naked shorting was so bad that the SEC was going to revoke this company in hopes of covering up the massive stock counterfeiting.
I am not concerned about the present shareholders. Im concerned about future investors in this company. Those were her exact words And I said, Leslie, thats 50 or 60 thousand people who have put their money in there. Your action is going to delist this security. All their investments go down the tube if this company goes under, and thats not a concern? I remember having that conversation. She said, Im just worried about future investors. I dont want anybody else investing their lives in this. It was then that I realized that the SEC didnt want to do anything to help the shareholders of CMKX. They just wanted us to just go away."
Leslie Hakala SEC agent, still in charge, did not want Bill Frizzell present as shareholders representative in 2005 proceedings SEC vs Cmkx, saying that it is SEC's job to represent the shareholders,
in the next sentence same Agent Leslie Hakala says:
I am not concerned about the present shareholders"
And this is the SEC and how they act with companies and how much they care about shareholders.
Complete text you can read from Mark Faulk's book, Faulking Truth.
It is about proceedings of SEC vs Cmkx in 2005.
Included is the text from another shareholder that has a larger text from the proceedings in 2008.
CMKM Shareholder Concerns re-visited
Thread Started Yesterday at 11:50am
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CMKM SHAREHOLDERS SUMMARY OF CONCERNS--sent to Director Schapiro today. David Kotz and Brian Bressman were copied. I will update when I receive a response. Many thanks to Showmethemoney who was the primary author of the document. I have included some additional information and tweaked the layout for the Director's viewing purposes.
jf
Under your leadership, The National Association Of Securities Dealers (NASD), previously known as the Financial Industry Regulatory Industry (FINRA), did not bring proceedings against a well-known brokerage firm, Jefferies and Co, even after they sent a letter, on May 6, 2005, to both the NASD (FINRA) and the SEC admitting they had traded 111 billion shares of CMKX outside the system, or "ex-clearing".
o We want to know under what if the SEC has investigated the ex-clearing mistake made by Jeffries.
o We want to know if the SEC and/ or FINRA even investigated this issue.
o Why has the SEC only filed a complaint against one very small broker/ dealer, NevWest, who couldnt even perform their own clearing services for the 259 Billion shares they are accused of selling for John Edwards, but not against the other dozens of broker dealers who actually cleared the 622 Billion CMKX Securities? A recent case by FINRA, against brokers who facilitated the sales of mere millions of unregistered securities, from at least three penny stock companies, seems to support directly what many CMKM Diamonds Shareholders have believed for quite a while. It should have been illegal for the 70 plus broker/ dealers and market makers to have participated in the sales of the 622 Billion Unregistered CMKX Shares, claimed by the SEC. Specifically, it should have been evident to these brokers and market makers that CMKM Diamonds was not compliant in their filings, and that the massive amount of shares that were trading daily, that they were helping sell, could not have been properly issued and registered with the SEC.
As Susan L. Merrill, Executive Vice President and Chief of Enforcement, states in the below copied FINRA Release: "Brokerage firms and their employees must take action to ensure that they are not participating in illegal sales of unregistered securities.
Again, why hasnt the SEC gone after 70+ brokerage firms, and their managers, and their agents, for enabling and benefiting from such a massive fraud – acting as agents and market makers selling the 622 Billion unregistered CMKX Securities?
There is direct evidence that the SEC knew about, and was investigating the illegal Pump and Dump of unregistered shares by company insiders as early as 2003. Yet, the SEC did not bring a case forward until April of last year. The current complaint does not account for 363 Billion of the 662 billion unregistered/restricted company shares that the SEC has highlighted as being inappropriately issued by company insiders from January 2003 through May 2005.
We want to know what became of the original investigations.
We want to know why it took the SEC until April 7, 2008 to file a formal complaint.
We want to know why the Courts have still not ruled on this matter.
We want to know why the SEC has not initiated further action against Urban Casavant and others that will be noted below.
We want to know why federal agent, Timothy Vasquez of the Department of Justice said when it came to dealing with fraud in the penny stock market, they had serious issues with the way that the SEC handled their investigations. F.B.I. agent and CMKM investigator Ryan Randall agreed, saying that the SEC had only supplied them with partial documentation in the case, implying they didnt have access to the thousands of documents Bill Frizzell had at his disposal while representing John Martin and the CMKX Owners Group. Why would the SEC not willingly share all information at their disposal with federal agents working on concurrent investigations?
Besides the 622 Billion Unregistered Shares company insiders inappropriately issued, information discovered by various CMKX Shareholders suggests the stock may have been oversubscribed by much more than that amount. While other evidence suggests that at least 2.4 Trillion shares of company stock were illegally naked shorted by hedge funds, market makers, and brokerage firms who behaved like sharks feeding on chum. Current CMKM Diamonds CEO, Mark Faulk, noted in a recent open letter to President Obama and other key Senators and Congressional Representatives, that there is clear evidence that market makers and brokers "piled-on", deliberately naked short selling the stock once they realized insiders were pumping and dumping shares.
o We want to know why the SEC has failed to address this concern with CMKM Shareholders, nor with CMKM Diamonds Management Teams, both past and present. If you read the transcript of the SECs Administrative Hearing in the Spring of 2005 it is clear that Ms. Leslie Hakala worked long and hard to exclude any information involving naked short selling/fails to deliver in CMKM. I have provided you with an excerpt below from CMKMs CEO Mark Faulk that will detail Ms. Hakalas efforts.
Knight Trading Group, now owned by CitiGroup, traded an average of about 3.36 billion CMKM shares a day, representing more than 40% of Knight's average daily share volume for the month of February 2004. This egregious level of trading by Knight continued over a three month period.
o We want to know how Knight Trading Group supported that level of trading. Was their an inquiry initiated by regulators and/or SARS report initiated by Knight?
o Why has the SEC not pursued civil charges against former SEC Enforcement Division Attorney D. Roger Glenn? It was alleged in Nevada District Court by CMKM attorney David Koch that Mr. Glenn signed off on over 300+billion shares to become free trading in 2004. In addition, Mr. Glenn was a central figure in CMKMs promotional activities during the summer of 2004. The SEC has vehemently refused to allow any of the hundreds of pages of Glenns depositions to be released
o We want to know why the SEC has filed charges against attorney Brian Dvorak when evidence suggests that he did not sign off on the totality of unregistered shares to become free trading.
The same former SEC Enforcement Attorney, Roger Glenn, raised the companys Authorized Shares (AS) from 500 billion shares to 800 billion shares.
o What possible scenario could have justified that amount of shares to be traded on the market?
o Why does the SEC Complaint only cite $53 Million in Shareholder losses from one Defendant (John Edwards), but fails to address the remaining losses presumably caused by countless other defendants?
CMKX Management, under the leadership of Mr. Robert Maheu, and with assistance from Attorneys Bill Frizzell and Donald Stoecklein, conducted the largest shareholder certificate pull in the history of Wall Street. The Cert Pull was undertaken to try to ascertain proper ownership of CMKM shares.
o We want to know why the SEC clearly worked to put a stop to that effort?
Lastly: the excerpt below was written by CMKM CEO Mark Faulk that will provide a sense and perspective of the Enforcement Divisions focus dating back to 2005.
The next day before we were supposed to leave, Don Stoecklein had set up a meeting with the SEC. And we were not excited about staying for this meeting, we wanted to get out of town, but Don felt like we were going to go talk to them about naked shorting. And that was the main reason that we were there in the first place, and I had all this evidence that I was hoping to give to the SEC, so we had to stay
When Bill Frizzell walked into the meeting on the morning of Wednesday, May 11, 2005, he saw every person in the room in a different light. He looked at the faces around him and began to wonder if he had a friend in the entire process. SEC attorneys Leslie Hakala and Gregory Glenn were there with someone else from the SEC, along with CMKX attorney Donald Stoecklein, Bob Maheu, and Mike Williams. Looking back at it later, Frizzell said:
So I have all that knowledge while Im sitting there at this meeting with the SEC. And Ive got the corporate general council for CMKM, Don Stoecklein there, and Bob Maheu who was supposed to be cleaning everything up. I was seriously thinking You know, nobody wants me here. I dont even think the judge wants me here. The SEC dn sure doesnt want me here. The corporation doesnt want me here. And I was thinking Oooo, this is ugly, but Ive got this information here and Im trying to figure out what can I do with it.
Hakala had made every effort to exclude Frizzell and the shareholders from being represented from day one. In Bills words, Hakala and the SEC had the attitude of why do the shareholders need a lawyer? Our job is to represent the investorsthey dont need their own council. But in Frizzells mind it was clear they were simply covering up their own mistakes: Although the naked short position was not a central issue in the hearing, I had the concern that the naked shorting was so bad that the SEC was going to revoke this company in hopes of covering up the massive stock counterfeiting.
Hakala and Glenn introduced the person they had brought with them, Andrew Petillion, Branch Chief of Enforcement at the Pacific Regional Office. Frizzell was a bit taken aback why were they bringing in the head of the entire Pacific region for this little diamond mine company?
Frizzell hoped that Maheu might side with him, especially with theories abounding that he was brought in specifically to deal with the criminals who were selling counterfeit stock into the market.
Stoecklein wanted to buy time for the company to file their delinquent paperwork. Even if he was using Frizzell to drag out the process, at least he was siding with him on the issue of naked short selling. And who was Mike Williams? Frizzell still didnt know where Williams fit into all of this, since he had no official position with the company. Why was he there at all?
Sitting in the meeting with the three SEC officials, Maheu, Stoecklein, and Williams, Bill Frizzell wasnt certain how much of this newfound information he should divulge. He knew the SEC had access to it, and surely they had put two and two together and made the connection between the massive share dumping by Edwards and the other insiders and the money that flowed like water through Urbans bank accounts. But as far as the naked short selling, he knew he would have to lay his cards out on the table:
I had a CD-ROM that had an actual picture of the brokers statements. And we had the database that actually totaled up what those statements were. So if they were inclined to do so, they could check out our numbers by just pulling up the data base, clicking on it, and theres a picture of the brokerage statement to see if it is authentic or not. In other words, this wasnt just a jokester conversation. We had a hard copy printout of every brokerage statement, who the broker was and what the number of shares were, a whole box full of statements with the CD-ROM sitting right there on top of it.
In several conversations with Bill Frizzell, he recalled that Leslie Hakala had voiced her true feeling towards the more than 50,000 CMKX shareholders who had lost hundreds of millions of dollars:
I am not concerned about the present shareholders. Im concerned about future investors in this company. Those were her exact words And I said, Leslie, thats 50 or 60 thousand people who have put their money in there. Your action is going to delist this security. All their investments go down the tube if this company goes under, and thats not a concern? I remember having that conversation. She said, Im just worried about future investors. I dont want anybody else investing their lives in this. It was then that I realized that the SEC didnt want to do anything to help the shareholders of CMKX. They just wanted us to just go away.
It started off with Leslie asking What proof do you have of naked shorting? Well, I have a CD and these are 5,050 brokerage statements that represent 350 billion shares. This has just come within the last five days. We also have a December 2004 report from the transfer agent saying that 2,033 people hold certificates representing 326 billion shares. Thats 676 billion shares owned by only 7,083 shareholders. Since there over 50,000 total shareholders total, its obvious that the ones that havent been counted yet will far surpass the 703 billion shares issued.
So, Hakala said, well, how do I know that those brokerage statements havent been altered? Wellthat can be verified through the brokerage house and we can get affidavits if we need to. But were here to tell you that this is our investigation. And she said, Well if you prove the naked short, we will investigate it.
The end result of all of this was that as I was walking out, we were all getting up, and Mr. Petillion, said, By the way, if this is an orchestrated short squeeze against the brokerage houses to make the stock price go up, we will come after those who are responsible. And then he said, We would not look kindly on a cert pull because it would cause market manipulation.
And this was the regional chief. I meanit was a clear threat in my opinion from the SEC that if we did anythingwell, I said something to the effect that if there are brokers out there with shares in their accounts that they havent delivered, thenit is what it is.