just another guy with straw for brains …
Segment #1: This week in free energy
Presenter: Sterling Allan, CEO, founder of New Energy Congress
Estimated Time: 20 minutes
Segment #2: Scarecrow’s News Rant – Congress is exempt from insider trading ? Yup!!!
Presenter: an editorial by SmartScarecrow
Estimated time: 10 minutes
The Congress Insider Trading Scandal Is Outrageous
By Henry Blodget | Daily Ticker – Tue, Nov 15, 2011 7:23 AM EST
You cannot read the description of the personal stock trading allegedly conducted by Rep. Spencer Bachus and other members of Congress during the financial crisis and conclude anything other than the following:
Our government is completely corrupt.
Yes, this behavior may be technically legal, because of an absurd loophole that makes insider-trading rules not apply to Congress.
Yes, this behavior may be widespread on Capitol Hill.
But there is no universe in which a reasonable person would consider this behavior ethical or okay. And for the 300+ million Americans who aren’t members of Congress, it would be just plain illegal
Many members of Congress seem guilty here, including John Kerry, Dick Durbin, and Jim Moran. But Spencer Bachus takes the cake.
According to a new book called Throw Them All Out by Peter Schweizer, as relayed by Dave Weigel at Slate, Rep. Bachus made more than 40 trades in his personal account in the summer and fall of 2008, in the early months of the financial crisis.
The fact that Bachus personally traded on private information he received as a result of his job is bad enough. The fact that he was the ranking member of the House Financial Services Committee at the time is simply outrageous.
In one case, the day after getting a private briefing on the collapsing economy and financial system from Ben Bernanke and Hank Paulson, Rep. Bachus effectively shorted the market (by buying options that would rise if the market tanked.)
A few days later, after the market tanked, Bachus sold his position and nearly doubled his money.
If a corporate executive or Wall Street trader did this–cashed in personally after getting private, non-public information from his work–Rep. Bachus and every other member of Congress would be screaming from the rooftops about how the financial system is deeply corrupt and how the executive should be charged with insider trading.
And they would be right.
Rep. Bachus should return whatever money he made by betting on the direction of the markets (or anything else) in the fall of 2008. He should apologize for his behavior and jaw-dropping lack of judgement. He should urge his fellow members of Congress to immediately enact legislation that defends the fairness of the markets by holding Congress to the same insider trading laws as everyone else. He should then resign in disgrace.
Here’s the passage from Throw Them All Out, as relayed by Slate’s Dave Weigel. According to Weigel, it is only one of many examples of Bachus’s insider trading:
On the evening of September 18, at 7 p.m., Bachus received [a] private briefing for congressional leaders by Hank Paulson and Federal Reserve Bank Chairman Ben Bernanke about the current state of the economy. They sat around a long table in the office of Nancy Pelosi, then the Speaker of the House. These briefings were secretive. Often, cell phones and Blackberrys had to be surrendered outside the room to avoid leaks.
What Bachus and his colleagues heard behind closed doors was stunning. As Paulson recounts, “Ben [Bernanke] emphasized how the financial crisis could spill into the real economy. As stocks dropped perhaps a further 20 percent, General Motors would go bankrupt, and unemployment would rise . . . if we did nothing.” The members of Congress around the table were, in Paulson’s words, “ashen-faced.”
Bernanke continued, “It is a matter of days before there is a meltdown in the global financial system.” Bachus was among those who spoke. According to Paulson, he suggested recapitalizing the banks by buying shares.
The meeting broke up. The next day, September 19, Congressman Bachus bought contract options on Proshares Ultra-Short QQQ, an index fund that seeks results that are 200% of the inverse of the Nasdaq 100 index. In other words, he was shorting the market. It was an inexpensive way to bet that the market would fall. He bought options for $7,846 on a day when the Dow Jones Industrial Average opened at 8,604. A few days later, on September 23, after the market had indeed fallen, he sold the options for over $13,000 and nearly doubled his money.
Stock trading case and conviction
Main article: ImClone stock trading case
According to U.S. Securities and Exchange Commission (SEC), Stewart avoided a loss of $45,673 by selling all 3,928 shares of her ImClone Systems stock on December 27, 2001, after receiving material, nonpublic information from Peter Bacanovic, who was Stewart’s broker at Merrill Lynch. The day following her sale, the stock value fell 16%.
In the months that followed, Stewart drew heavy media scrutiny, including a Newsweek cover headlined “Martha’s Mess”. Notably, on June 25, 2002, CBS anchor Jane Clayson grilled Stewart on the air about ImClone during her regular segment on The Early Show. Stewart continued chopping cabbage and famously quipped, “I just want to focus on my salad”. On October 3, 2002, Stewart resigned her position, held for four months, on the board of directors of the New York Stock Exchange, following a deal prosecutors had made with Douglas Faneuil, an assistant to Bacanovic.
On June 4, 2003, Stewart was indicted by the government on nine counts, including charges of securities fraud and obstruction of justice. Stewart voluntarily stepped down as CEO and Chairwoman of MSLO, but stayed on as chief creative officer. She went on trial in January 2004. Prosecutors showed that Bacanovic had ordered his assistant to tell Stewart that the CEO of ImClone, Samuel D. Waksal, was selling all his shares in advance of an adverse Food and Drug Administration ruling. The FDA action was expected to cause ImClone shares to decline. After a highly publicized five-week jury trial that was the most closely watched of a wave of corporate fraud trials, Stewart was found guilty in March 2004 of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators, and was sentenced in July 2004 to serve a five month term in a federal correctional facility and a two year period of supervised release (to include five months of electronic monitoring).
Bacanovic and Waksal were also convicted of federal charges and sentenced to prison terms. Stewart also paid a fine of $30,000.
In August 2006, the SEC announced that it had agreed to settle the related civil case against Stewart. Under the settlement, Stewart agreed to disgorge $58,062 (including interest from the losses she avoided), as well as a civil penalty of three times the loss avoided, or $137,019. She also agreed to a five-year ban from serving as a director, CEO, CFO, or any other officer role responsible for preparing, auditing, or disclosing financial results of any public company. In June 2008, the UK Border Agency refused to grant her a visa to enter the United Kingdom because of her criminal conviction for obstructing justice. She had been planning to speak at the Royal Academy on fashion and leisure industry matters.
Federal Prison Camp, Alderson, where Martha Stewart was confined
Stewart wanted to go to prison in Connecticut or Florida. She did not want to serve at Federal Prison Camp, Alderson in West Virginia, due to its remote location; in 2004, her lawyer said that the remoteness would make it difficult for Stewart’s then-90 year old mother to visit. Judge Miriam Goldman Cedarbaum recommended to the Federal Bureau of Prisons (BOP) that Stewart be given her first choice, Federal Correctional Institution, Danbury, or her second choice, Federal Correctional Complex, Coleman. However, a spokesperson for the U.S. Department of Justice said that the BOP would not send her to FCI Danbury because the news media could too easily access the facility. The bureau could not send Stewart to FCC Coleman because of complications from Hurricane Ivan; the Coleman complex filled because inmates from Federal Correctional Institution, Marianna were moved to Coleman. Therefore, the Federal Bureau of Prisons assigned Stewart to Alderson. The spokesperson said that he was concerned that the assignment to Alderson could be perceived as being vindictive. Alexis Stewart said that she believed that the BOP “may have made a point of sending her far away”.
Cedarbaum ordered Stewart to report to her prison sentence before 2 pm on October 8, 2004. By September 27, 2004, Stewart received the BOP ID 55170-054. At about 6:15 am on October 8, 2004, she reported to FPC Alderson. Stewart said that her prison nickname was “M. Diddy”. While in confinement, she took a job and became an informal liaison between the administration and her fellow inmates. The People special, Scandals! That Rocked America, stated “Some expected America’s goddess of domestic perfection to fall into terminal despair. Instead, with the drive that would make her a billionaire, Stewart took her lemon of a sentence and made lemonade. Heck, she made a lemon soufflé.” Stewart was released from FPC Alderson at 12:30 am on March 4, 2005. She was then placed in a two year term of supervised release; during five of those months, she was placed in home confinement with electronic monitoring. Stewart served her home confinement at her residence in Bedford, New York. She was allowed to leave her house for 48 hours per week for work-related visits. After her home confinement ended, but while her supervised release continued, she was required to remain employed and required to not associate with people with criminal records. In addition, during the supervised release, she was required to receive permission from federal officials if she was going to leave the jurisdiction of the United States District Court for the Southern District of New York.
Segment #3: Feature Presentation – The projects of YouTube user STIVEP1
Presenter: SmartScarecrow & Wesley (aka: stivep1)
Estimated time: 45 minutes
1:33 to 7:15
Segment #4: Audience Q&A Session
Moderator: SmartScarecrow & Wesley (aka: stivep1)
Estimated time: 10 minutes