Genesis Of Financial Meltdown

[Policing Wall Street]

Many individuals have inquired:  “How could Madoff include stock trades at prices that never occurred?”
My reply:  “It is so simple.”

Madoff merely printed the made-up prices of various stocks.

But to demonstrate how easy it was to falsify trades- even at a regulated brokerage firm, I shall quote several examples from the disciplinary decision of Ron Russo.

Not only were the trades and prices fictitious, but Spear Leeds and Kellogg Clearing treated the trades as bona fide trades. 

These fraudulent trades were made by Pat Schettino, a managing director of Spear Leeds and Kellogg, who illegally traded for the account of Bullseye Securities, a firm that cleared through Spear Leeds and Kellogg.

The American Stock Exchange, and the Securities and Exchange Commission under the aegis of Arthur Levitt, never disciplined Spear Leeds and Kellogg for having a clearing system that aided and abetted fraudulent trades.

Furthermore, fraudulent trades were cleared by Spear Leeds and Kellogg until Goldman Sachs purchased Spear Leeds and Kellogg.  And Goldman Sachs purposely let the clearing system process illegal short sales as bona fide long sales. This was done by Goldman until approximately 2007.

“On July 17, 1995, an entry was made in Russo’s account at SLK without his knowledge or consent to reflect the purchase of 9,500 shares of CDT at 25, notwithstanding the fact that CDT never traded lower than 26 ½ on that day.”

And again:  “On or shortly after July 17, 1995, Russo became aware of the fact that Schettino had signed up Russo’s account at SLK as the seller of 1,500 shares of CDT at 22 1/8 on July 17, 1995.  CDT never traded below 26 ½ on July 17, 1995.”

The complete disciplinary decision of Ron Russo can be found on my personal website, www.wallstreetscandals.com.

Arthur Levitt, former Chairman of the American Stock Exchange and at the time of this criminal activity was Chairman of the Securities and Exchange Commission.

Levitt personally ordered the Securities and Exchange Commission not to discipline Schettino and not to investigate Spear Leeds and Kellogg for permitting falsified trades to be cleared without any verification with the actual price at which the stock was trading.

Even worse Levitt knew that I was being sued by Schettino for libel in an attempt by Schettino and the American Stock Exchange to prevent me from exposing pandemic violations of the Securities Exchange Act of 1934 at the American Stock Exchange by Schettino. 

How did Levitt know?  I wrote to Levitt and to the Commissioners of the SEC and informed them that Schettino had personally engaged in the largest illegal trading scheme by an individual on the floor of a stock exchange.  I provided trading sheets, which showed the illegal trades of Schettino.

At the American Stock Exchange Steven Lister, Senior Vice President of Compliance, and Philip Axelrod, Vice President of Compliance, who were charged with investigating Schettino, told me that Levitt had ordered the SEC to take no action against Schettino and Spear Leeds and Kellogg.

Schettino boasted to me:  “Levitt wanted to shut you up.”

Joel Lovett, Vice Chairman of the Amex, stated that Lovett would take no action against the American Stock Exchange.

Yet major news outlets, including The New York Times and The Wall Street Journal never reported these major stories.
Were the newspapers protecting Arthur Levitt?

Again Levitt before country; when these major media outlets ignore such illegal activity how can we be surprised when the economy tanks?

Only in America.