Wall St. is More Corrupt & Infiltrated by Organized Crime than I knew!

[Cheesehead]

Had the pleasure to work with this incredible guy, a very interesting internet/entrepreneur/mogul who is a one-man crusade against corruption, especially organized crime and foreign governments scamming Wall Street. He has a PhD in economics.

Patrick Byrne, he was a Golden Boy of Wall Street, one of Buffett’s proteges (that's why he won't talk trash about him), then became a venture capitalist, involved with hedge funds when they started. He is best know as the founder of Overtstock.com. He was approached by the crooks on Wall Street to manipulate stock prices but being a Boy Scout he decided to notify the FBI. Dozens of Wall St crooks went to prison, including SAC. I didn’t know that the Russians, Jihadists and NY Mob were also deeply involved in scamming Wall Street.

Below is a very interesting lecture (1 hour) he gave at a think tank, in the audience are 30 generals and admirals (we only have 400 total), plus many current and former national security officials. He outlines how Wall St is infiltrated by scammers and organized crime but the greatest danger to our defense are governments that are planning to crash our financial system. It’s like something out of a Tom Clancy novel. Thanks to him the FBI set up an organized crime task force that targets just the financial services sector.

If you are impatient you can start at 4:50

When he says OC that means organized crime. The beginning is a little dry and basic but is necessary to understand the danger. I’m now going to have several months of food in my basement!

 

[dallas27]

This is extremely enlightening. Certainly changes my opinion in recent economics events.

Wow.


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[Samething]

If you have Amazon Prime I would recommend the documentary "The Wall Street Conspiracy". It chronicles Mr. Byrnes story along with other companys that were effected by naked shorts in the market at that time. Basically Hedge Funds and Brokerage Houses bought large positions of shorts on company stocks without ever having to take possession of said stock. As a matter of fact these shares only existed electronically. Even better when these (I'll be nice and call them traders) bought these large short positions they would "allegedly" enlist some well known financial journalists to bash the stock send the price down and cash in baby. When I think that our financial future is dependent on Wall Street smucks-well I try not to think about it.

 

[dallas27]

Just the link between our economic collapse and terrorism is earth shattering. I've been hearing for years it was the banks. But this seems to suggest its the banks being in bed with terrorism, mafia, etc..

So eye opening.


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[redduck]

... Dozens of Wall St crooks went to prison, including SAC. I didn’t know that the Russians, Jihadists and NY Mob were also deeply involved in scamming Wall Street.

How long was SAC's prison sentence?

 

[Gumby]

How long was SAC's prison sentence?

It is my understanding that he got a fine and was banned from managing money (other than his own), but I didn't think he got a prison sentence. Maybe he did, though. It wouldn't be the first time I've been wrong.

 

[redduck]

It is my understanding that he got a fine and was banned from managing money (other than his own), but I didn't think he got a prison sentence. Maybe he did, though. It wouldn't be the first time I've been wrong.

Could this be the first time you were right? Anyhow, you've earned 1000 points for the correct answer. You might want to get in contact with Meadbh, because she has offered to buy coffee for people who have earned a 1000 points.

 

[Gumby]

Could this be the first time you were right? Anyhow, you've earned 1000 points for the correct answer. You might want to get in contact with Meadbh, because she has offered to buy coffee for people who have earned a 1000 points.

Meabh is very generous that way. I'm just glad that I never wrongly accused someone of doing time in prison. I'd want to be sure about that before I said it.

 

[timo2]

Yikes!!

 

[redduck]

Yikes!!

Oh, a 1000 points may sound like a lot, but they don't take too long to acquire. Just got to name a few statues and their locations and Meadbh buys you coffee.

 

[Cheesehead]

It wasn't Steve A. Cohen who went up the river, it was the underlings as usual. The top guy had plausible deniability and couldn't be touched. See:

Ex-SAC Fund Manager Martoma Sentenced to Nine Years in Prison - Bloomberg

 

[redduck]

... I didn’t know that the Russians, Jihadists and NY Mob were also deeply involved in scamming Wall Street....

OK, so now that you know more than you knew (including the fact the Steven A. Cohen did not go to jail), will you continue to invest in the stock market, and if so, what is your reasoning?

 

[Cheesehead]

Yes but...only in index funds. I know I have to "be in the market" but from all that I've learned over the years, plus this video I posted, plus the whole high speed trading scams, I will never invest in individual companies again.

 

[ls99]

Always knew the stock market was rigged. It is fascinating to find out that it is even worse than in my wildest dreams.

Around 1975 or so did the only direct investmet in MGM stock, and insisted on getting the stock certificates, the broker was aghast. I actually made some money on it when sold it. I suspected something funny, the transaction time was way more than three days.

Then I read the wall street gang book. I was done with the market, except for TIAA.

Byrne's revalations and explanations present a truly scary and corrupt system. Especially coupled with some recent audio of regulators groveling to and fawning over large trading firms. I watched another link to the same Byrne presentation as well, better audio, without the inserts.

 

[Cheesehead]

Bernie Madoff complained that the young regulators sent in to audit him would drop their resumes off at his receptionist's desk on their way out. That's called "Regulatory Capture", that's when the government oversight department/agency that is tasked to oversee and punish becomes the towel boys to that company/industry.

 

[harley]

Yes but...only in index funds. I know I have to "be in the market" but from all that I've learned over the years, plus this video I posted, plus the whole high speed trading scams, I will never invest in individual companies again.

I don't really get it. I understand why you wouldn't be minute trading, you're not competing with these guys on anything resembling a level field. However, if you buy AAPL at $10, hold for 20 years, and sell at split adjusted $600, what does it matter that there was all this skimming going on? It's not that what they do makes it impossible for you to invest/gamble successfully, just that you can't beat them at their game. Avoiding individual stocks but buying index funds just puts the shenanigans at a slight remove.

Personally, I'm an indexer for simplicity's sake, and an individual stock picker for the same reason I play fantasy football. It's fun, as long as you don't get in over your head. I just assume all political and corporate dealings are corrupt, and get on with enjoying my life.

 

[manerac]

I just assume all political and corporate dealings are corrupt, and get on with enjoying my life.

Sounds like life in Russia.

 

[harley]

Sounds like life in Russia.

Well, there are more things to enjoy here, and it's not as cold.

 

[timo2]

OK, so now that you know more than you knew (including the fact the Steven A. Cohen did not go to jail), will you continue to invest in the stock market, and if so, what is your reasoning?

The crooks run their scams to make money, so the market stays up despite all the reasons it should be down. So I'm just tagging along trying to catch whatever they drop after them in my slow little index funds.

 

[Walt34]

So I'm just tagging along trying to catch whatever they drop after them in my slow little index funds.

That's what I do too. I'm not smart enough to outsmart "all those guys", but what I can do is buy the average company's profit.

That's what index funds do. And in the long run I will do better than average because so many think they can so better than average but don't. And they lose.

So in the end, I win. Doggone shame it took me so long to figure that out.

 

[brewer12345]

Bernie Madoff complained that the young regulators sent in to audit him would drop their resumes off at his receptionist's desk on their way out. That's called "Regulatory Capture", that's when the government oversight department/agency that is tasked to oversee and punish becomes the towel boys to that company/industry.

I just spent 5 years as a regulatory footsoldier. I landed in that role because my hedge fund employer blew up 6 weeks before Lehman imploded and the agency was about the only place hiring people like me. I came in at a lowly title compared to the career drones who were there long term, and I made a fraction of my former total comp. I tried hard to do the right thing. If I saw something wrong I was zealous in documenting it and calling out the firm in question. I caught a firm lying to me 3 or 4 times and nailed them for it. I was specifically asked for when something started to smell bad because I was pretty blunt about rooting it out and I am relatively hard to fool.

OTOH, I was very frustrated when the firms that did the right thing, walked away from all the stupid and dangerous loans, got whacked by equity analysts for doing so, and lived to dance n the graves of their more foolish competitors were treated by my agency just like the idiots who made the bad loans, looked the other way when they should have been paying attention, and subsequently failed (or would have without a taxpayer bailout). I got sick of watching the better connected firms get more wiggle room than the careful but not so well connected. I got mortally sick of the requirement to follow stupid, pointless rules regardless of what was going on in the real world/economy. I watched the most clueless, useless human beings get promoted to officer level positions in my agency simply because they were there long enough and bowed and scraped to the right people.

I was very, very happy to get to the 5 year mark, vest in retirement stuff, and get the hell out. If I were not FI, I would have turned around and offered my services to the very type of firms I regulated. Why not? They pay the best. I would be doing nothing illegal, just capitalizing on my accumulated knowledge the same as any other veteran in most fields. As it happens, after 9 months on the beach I am now consulting for a regulated entity that needs help correcting a problem made up by their principal regulator. I was approached rather than the other way around, so I extracted a premium pay rate. I just got called by one of the firms I used to regulate and within 5 minutes they bluntly stated they wanted to hire me as a consultant. Guess what? This otherwise very healthy, well run, well capitalized and highly ethical firm needs help dealing with a problem made up by their regulator.

The system smells just as bad on the inside as it does on the outside. As a veteran/survivor, I just hold my nose and get on with life as best I can.

 

[EastWest Gal]

I'll bet someday you could write a book.


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[lhamo]

I'll bet someday you could write a book.

And several of us would probably buy it -- or at least ask our libraries to!

 

[HFWR]

I'm pretty "free market", but the "system" always has been, is, and always will be, rigged to the advantage of the powerful and connected.

In reading about the financial collapse, I note that more than one author commented that the regulators were often the ones who couldn't get a job on Wall Street, and that they were mostly concerned with getting the right forms filled out, and not so much what was on the forms...

 

[mpeirce]

I'm pretty "free market", but the "system" always has been, is, and always will be, rigged to the advantage of the powerful and connected.

Isn't that true of every single government in the history of the world?

Like Churchill said:

Many forms of government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of government except for all those other forms that have been tried from time to time.…
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