So now we have Brokers that have received Fake Certs and had ended up paying who knows how much money. Just like if you accept a fake $10 bill from the store, its too bad for you.
We also have Brokers that who are covering illegally in 2007.

Seems like their AZZ is on the line, either way you put it.

Suppose someone produces perfect counterfeits of Federal Reserve notes and spends them into circulation.
It is virtually impossible to produce perfect counterfeit notes, but some are good enough to circulate for long periods before they are detected. One million dollars worth of counterfeit notes would have an imperceptible effect on the economy. So let's assume an amount large enough to have a measurable effect, say five billion dollars worth. That's only about 1% of the cash in circulation, but more significantly it is about 20% of the cash that banks hold.

As the counterfeit notes are spent into circulation, the public will find it has more non-interest-earning cash than it wishes to hold. So it will deposit the excess cash in bank accounts where it adds to vault cash, and thereby increase the aggregate reserves of the banking system. Since banks don't earn interest on cash, they will swap the excess cash for deposits at the Fed in order to lend in the Fed funds market or to purchase interest-earning assets like T-bills. The increase in banking system reserves will create an imbalance in supply and demand and apply downward pressure on the Fed funds rate. In order to maintain control of that rate, the Fed will have to soak up the excess reserves by selling some of its own Treasury securities to the public. Thus perfect counterfeit notes spent into circulation will increase the public's holding of Treasury securities, and thereby increase the interest payments due to the public from the Treasury.

Does the Treasury therefore take the hit? No, that implies the Treasury is a profit-seeking enterprise. The Fed is the source of the government money, and Treasury simply recycles what the Fed has previously issued.
The additional interest payments owed to the public by the Treasury resulting from the counterfeit notes must ultimately be covered by increased taxes. That's a wash for the public as a whole, but not for those who pay more in taxes than they receive in interest payments. The net effect is a redistribution of financial wealth within the private sector. It's fair then to conclude that the public takes the hit on counterfeit notes in approximate proportion to the taxes they pay.

This is interesting "The European brokers do not report through the DTCC and therefore their trading would not find it’s way into the OBO/NOBO list either.. WOW, just how many COUNTERFEIT shares are really out there? "

This whole situation is "skewed"

DTC recently managed to put through a rule change (Release No. 34-50758A; File No.S7-24-04) that prohibits a transfer agent from representing any company who seeks to withdraw from the DTC system. This change effectively leaves companies with no voice or choice in the management of their stock and their ability to have any transparency as to what is actually taking place in the market in regard to their stock.

companies seeking information as they watch millions of shares trade in a single day, who watch their share price decrease in value and who have no access to information regarding who is behind the trading of these shares, or if in fact the trades are at all legitimate. As the system now operates, most companies have a large percentage of shares on their books registered to Cede & Co. This position usually represents a majority of the outstanding stock in any given company. Underlying this position is a system at DTC which is reflected in a Position Listing Reportand this report represents the brokers and clearing firms that hold positions in any given security on DTCs books and records for the beneficial owners (Non Objecting Beneficial Owners NOBOs and Objecting Beneficial Owners OBOs) or shareholders. The trades that take place on a daily basis move between these brokers and clearing firms electronically; however, the Issuer (nor their transfer agent) has any access to this data unless they order and pay for the lists. This is not only expensive for the company, but it also does not tell them anything about who actually owns the stock. For that information they must go to yet another party and that is ADP.

ADP is engaged by the brokers to keep track of the NOBOs and OBOs and to send the shareholders in Street Namereports and communications from the Issuer. Their other vital function is to serve as proxy tabulator for the shareholders who hold their shares in broker accounts. This is a critical function for the public company and one which they are required to perform by law. Given the importance of shareholder voting and communication one would assume that the same requirements placed on transfer agents as to accuracy and reporting would be placed on ADP and Cede & Co. as they usually hold or service the majority of the shares owned in any given company. I have found; however, that when presented with the tabulation reports from ADP the share totals they report sometimes exceed the total number of shares outstanding for the company. Let me restate this because it is a very important part of my concern about a system that is more and more headed in the direction of increased control by DTC. The shares presented by ADP, that are the shares voted by the brokers on behalf of the shareholders for whom they hold accounts, EXCEED when added to the shareholders of record the total number of shares outstanding. As the final judge and inspector of elections I would naturally inquire as to how the number of shares could be higher than the total shares that exist for a company and to my surprise I am told by ADP that they only vote what is reported by the brokers. It becomes the responsibility of the company, and further the transfer agent, to reconcile the numbers so that an annual meeting can be conducted that reflects numbers of share voted that makes any sense.

Where are these extra shares coming from? Why are there no controls on the number of shares held in the nominee name Cede & Co. vs. the ownership on the books and records of the brokers and why is the company not privy to any information unless it pays whatever fees it is told it must pay by the organizations that control the data?

The marketplace that does not address what is a far greater problem for issuers shareholders and the integrity of the markets, and that is, who are their shareholders and how are their shares trading?


If the S.E.C. is in place to protect investors then in the end when the market is completely under the control of the brokers and
the organizations that represent them, the market can neither be
transparent nor fair.

Copies should be sent to Congressmen and Senators.

What are your views ?

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