Raiffeisen Bank Pulls Exchange Offer

It was only a week ago that we were conjecturing about the prospects for Austrian mega-bank Raiffeisen. This being Zero Hedge of course, we came to the conclusion that the prospects were not that hot. Some readers vehemently disagreed. Maybe news today out of RZB will make them a tad less skeptical: the bank announced that it was scrapping the exchange offer without providing much of a reason.

Among some percolating speculations as to the reason why are:

1. Complete lack of investor interest
2. Concerns about what would happen once the lack of interest is made public
3. Trouble with accountants
4. rating agency getting back to the bank that this would be treated as a distressed exchange (as Zero Hedge speculated), putting the company into an Event of Default.

Then again, the real reason is probably much more innocuous, and has to do with the bank discovering a buried gold treasure in its back yard which will be used to satisfy the several hundred billion in toxic assets as a result of chicken coups built in Transylvania at a 180% LTV (in a JV possibly with GE Capital).

And in order to bring even more seriousness to this grave situation, I present Google's erudite translation of the German text provided by RZB to explain the exchange offer pull (about as legible as the 2930 line, non-broken sentence from the latest MGM Grand indenture).

RZB Finance (Jersey) IV Limited announces the withdrawal of the exchange offer the EUR 500,000,000 Non-cumulative Subordinated Perpetual Callable Step-up Fixed to Capital Floating Rate Notes (ISIN / Common Code XS0253262025/025326202) to RZB Finance (Jersey) Limited IV invited on 18 June 2009 to holders of the above.

Debt, the existing debt into new "Non-cumulative Subordinated Perpetual Callable Fixed to Floating Rate Capital Notes "to the issuer exchange offer (the" Exchange Offer "). The Exchange offer was based on the conditions of the Exchange Offer Memorandum of 18. June 2009. The new bonds were, as the existing Bonds, with a supporting statement of the Raiffeisen Zentralbank Österreich AG (RZB) equipped.

RZB Finance (Jersey) IV Ltd., the offerings of the investors who Debt exchange, which in the course of the exchange offer who has not accepted and the offer was withdrawn. This publication is in conjunction with the Exchange Offer Memorandum on read. The holders of the bonds is recommended that further details and information about the Exchange Offer Exchange Offer Memorandum on note.

In connection with the exchange offer were BNP Paribas and UBS Limited as Dealer Managers and Lucid Issuer Services as mandated Exchange Agent, RZB acted as co-dealer managers and Lucid Issuer Services Limited as Exchange Agent.

Any further questions please contact the Dealer Manager.

NOT FOR PUBLICATION OR DISTRIBUTION TO U.S. PERSONS OR IN THE UNITED STATES OF AMERICA OR IN ITALY.

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NYSE "Volume" - Lowest Since January 5

Today is EOQ, yet the NYSE traded with the lowest volume since January 5. The correlation continues: low volume - market up; high volume - market plunge. Rinse. Repeat.



Also, in a complete failure for VWAP reversions, the early am shakeout on moderate volume was followed by a laughable lack of action at the day's highs untli the end of the the day, when, surprise, all the trading picked up in earnest in the last 10 seconds. What do you get when you cross Atlantic City with E-Bay? That's right - U.S. equity capital markets.



h/t Johnny "Knock Out Puts" Bravo Sphere: Related Content

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Norway Swapping Government Debt For Mortgages

Long perceived as a bastion of stability due to their oil-extraction based economy, and socialist system that the US can only dream to emulate, today the Norwegian Central Bank conducted a Dutch auction in which it exchanged NOK10 billion of government securities for residential and commercial mortgage loans. And not just any loans, but including those denominated in SEK, DKK, EUR, USD, GBP and CHF (well, in retrospect, looks like pretty much any loans). Exchange swaps will cover maturities between December 2012 and 2014. But aside from the specifics, it seems that even the Vikings are starting to monetize MBS: a process demonstrated to work phenomenally well at propping up a hollow economy by the likes of economic alchemists such as Bernanke and Geithner.

What is scarier is that the global "game theory" is starting to unravel: first it was the SNB that defected with regard to the US Fed's dollar devaluation policies, next China's constant posturing about USTs, Russia and OPEC's posturing about the dollar, and now Scandinavia. While we do live in a world where nobody trades with anyone else anymore, and every capital market and every asset class is merely an intraday casino operator's dream, this practice can last a while, but as the foundation at this point is rotten beyond measure, the eventual drop once capital markets catch up with asset fair values, will be enough to permanently and completely discredit the likes of such planted "optimists" as Kudlow and Kneale.

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Afternoon News

• Danish officials confirm swine flu victim resisting Tamiflu
• VIX drops to 25.65, below closing level before Lehman collapse
• Qatar has made offer for Porsche: Qatar’s offer includes for Porsche’s VW options.
• Germany's Vice Chancellor Steinmeier says no room for further tax cuts
• Bank of America (BAC) 2009 estimate cut to USD 0.65 from USD 0.71 by Rochdale's Bove
• Government to stop outright purchases of stock, State Street to stop rolling buy ins (relax, i am kidding of course)

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Dennis Kneale: "The Great Recession Is Over"

And I thought the Sanford letters were going to be the funniest thing posted here this afternoon. Oops...

hat tip David Sphere: Related Content

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FDIC Releases State Loan-To-Deposit Ratios

The FDIC today made public for the first time host state loan-to-deposit ratios. Alas, the data is quite dated, as it represents the June 30, 2008 snapshot. Since then one can imagine things have changed quite a bit. The data are being released in order to calculate compliance with "section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994."

Here is what the FDIC has to say about section 109:

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 106 of the Gramm-Leach-Bliley Act of 1999 amended coverage of section 109 of the Interstate Act to include any branch of a bank controlled by an out-of-state bank holding company.
To determine compliance with section 109, the appropriate agency first compares a bank's statewide loan-to-deposit ratio2 to the host state loan-to-deposit ratio for a particular state. If the bank's statewide loan-to-deposit ratio is at least one-half of the published host state loan-to-deposit ratio, the bank has complied with section 109. A second step is conducted if a bank's statewide loan-to-deposit ratio is less than one-half of the published ratio for that state or if data are not available at the bank to conduct the first step. The second step requires the appropriate banking agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank's interstate branches. A bank that fails both steps is in violation of section 109 and subject to sanctions by the appropriate agency.

Going forward, the FDIC will release this data on an annual basis, so readers will have to wait until June 2010, to realize that loan-to-deposits for the current period is likely over 200% or below 50%. One could easily make arguments for both.

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San Francisco Fed On Employer-Sponsored Insurance

In keeping up with relevant current topics, the San Francisco Fed has issued a new paper analyzing how proposed new changes to health insurance planning may impact the broad economy by comparing to the example of the Prepaid Health Care Act (PHCA) adopted by Hawaii in the 1970's. Presumably, the administration has done its empirical homework as it pushes for various expensive adjustments to insurance plans, however it bears to read this piece for the conclusions, which essentially notes that not only are business likely to suffer higher incremental costs, the marginal employment of full time workers will likely suffer as more and more shift to find loopholes in proposed legislation, putting further stress on the already broken (un)employment landscape.

(Spoiler alert - stop reading here unless you want the conclusion).

Since we are well aware that our average reader has acute, recurring ADD, and it has been about 4 minutes since the last Adderall/triple espresso break, we present the SF Fed's conclusion below for the attentionally challenged:

Implications

We find that Hawaii’s ESI mandate has substantially increased health insurance coverage in the state. Our evidence also suggests that employers’ primary response to the mandate was increased reliance on the exempt class of workers who are employed for fewer than 20 hours per week. We did not find reliable statistical evidence for corresponding reductions in wages or overall employment probabilities. This may indicate that the shift to low-hour employment was the mandate’s primary labor market effect, although it may simply be that any adverse effects on wages and employment are too small to detect using our data and methodology. In addition to such labor market distortions, the results of our research imply that an employer mandate is not an effective means for achieving universal coverage. Although overall insurance coverage rates are unusually high in Hawaii, a substantial number of people remain uninsured, suggesting a need for alternative approaches if universal coverage is the ultimate goal.

In other words: much ado about not only nothing, but an increased "normal" full unemployment rate. But, hey, the President needs to keep the public distracted from the real problem, which is the nearly $3 trillion spent and $10 trillion guaranteed to purchase crutches of all sorts to prevent total economic collapse. Well, it worked for Houdini for a long while.

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My Immoral Beluved (Sic)

Some afternoon levity: now that Madoff is set to spend the remainder of his life behind bars, the public's attention is shifting to whatever other scandal will fill the pages of the yellow press. And as this summer has progressed very slowly, with the SEC cowering in its cave, afraid to do anything about the unprecedented market manipulation evident to anyone but the market regulator, the general public likely will have to make do with the tryst of Gov. Mark Sanford and his Argentinian beau as the topic de jour.

To throw some perspective on the mind of Mark, The State recently uncovered a trove of e-mails that had been exchanged between the governor and his Buenos Aires flame. The emails are represented below to quell readers' boredom in the absence of any actual news: after all staring at an intraday SPY Bloomberg screen lately is about as exciting as watching the market paint drying, compliments of whatever SPARC stations are still in commission in Stony Brook.

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Another No Volume Day, With Quants Lurking In The Shadows Ready To Pounce

As Larry Levin pointed out earlier, there is no volume as usual, a perfect opportunity for the SPARCs and the (In)visible hands to wreak havoc with all the shorts, as per the running script. Volume run rated to end silly low.



In the meantime, VIX is collapsing: just what your friendly next door quant, who has never heard of arcane concepts like EBITDA, leverage or gross margin, but knows all about charts and the only factor that works, to gun the market into the stratosphere. After all, he know he has so many helping hands to prop him up.

hat tip crazy, energetic scotsman

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Six Flags Ad Hoc Bondholders Preparing For Big Valuation Fight

Even as Six Flags' OCC (Official Credit Committee) was being formed in Delaware last Friday, with naive participants such as BoNY, HSBC, Esopus Creek Capital, Schottenfeld Associates, John Gorman, Whirley Drink Works and Coca-Cola (the last two must be royally pissed as all their advance profits on $9.95 small cups of soda have just become General Unsecured Claims) all hoping for some meager recoveries, and financial advisors (Broadpoint, Chanin, Moelis, Mesirow, BDO and Peter J Solomon, all of which are now overnight specialists in the amusement park business) trying to bedazzle the committee with their pretty charts and glass beads (and in the case of some, expansive dinners at Tao, where engagement letters were hoped to be signed on the naked backs of blonde, barely legal, Ukranian imports), the ad hocs were preparing for war according to Debtwire.

As Zero Hedge noted previously, the Six Flags prepackaged plan envisioned a massive cram down of virtually everyone who was not a secured lender. This ended up pissing off one Marc Lasry and his Avenue Capital to no end. Alas, Clinton-clan scion Chelsea is no longer around to have some heated discussions (presumably with the ever-convincing wingman Steve Rattner on the line) with Mark Shapiro over what is best for the economy and for the Avenue Credit Fund. As a result, Avenue, which holds approximately 40-50% of the Six Flags 12.25% OpCo notes, and 10% of the bank debt, has hired Akin Gump and Barclays as legal and financial advisors, and basically instructed them to go to town on the Six Flags valuation. As existing lenders are currently envisioned receiving 92% of the pro forma equity, pretty much everyone below them is rightfully pissed.

However, Avenue and straggler Fidelity will likely have their work cut out for them: good luck proving to a judge that in the biggest depression ever (sorry 1930's, you were just demoted), a bankrupt amusement park can fetch anything even remotely close to a 7x valuation, especially when you nearest comp Cedar Fair is already trading inside of that.

Then again, if the government is really set on determining a FMV for the S&P of a Abby Joseph Cohen orgasm inducing 2,000, then by all means Avenue has a definite chance of succeeding in not only getting uncrammed, but getting awarded huge warrants in addition to 100% of the equity, and free Medusa rides for life. We wish them all the best. Sphere: Related Content

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Guest Post: The Future - Deflation

Submitted by James Perry.

Everyone speaking about inflation these days. Many seeing it mostly in commodity prices and the insane printing of money. Yet with oil heading steadily back to the range from last summer, there is no bottom anywhere for home prices. Also, banks can hoard up all the cash they want: nobody wants it. Consumer are firmly retrenching into thrift mode, and cutting up credit cards or simply maxing out and not paying them. To say inflation is guaranteed in light of trillions and trillions of consumer wealth destroyed, is very shortsighted.

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Loans Versus Bonds Relative Value: Week of June 25

As expected last week, the tide in credit is turning. The average loan was 5 bps wider, while toxic bonds, just like that scene in Indiana Jones and the Temple of Doom, are starting their descent back into hell, wider by 78 bps on average, and just 23 bps away from the critical 1,000 bps threshold (after being at 895 bps last week).

Also, to see what a schizophrenic yoyo game even credits have become compare the Neiman Marcus and TRW bond spreads (wider by about 500 and 850 bps, respectively). Compare the TRW action from the current week with that from May 28. Lunacy.

While everyone now knows that the equity market is a manipulated, East Setauket fat-fingered joke (Dow going vertical on more bad news today? enough already), seeing credits act as irrationally should bring many a tear to the eyes of any seasoned credit trader.



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Russia Sees 8.5% Contraction In 2009, 0.1% Growth In 2010

Just a tad aggressive there on the ramp up, but if it works for Templeton, why should Russia be any different. Also:

- Sees 2009 average oil price at USD 54 a barrel (current based on USD 41).
- Gradual global weakening vs. USD through 2012. Sphere: Related Content

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CNBC: "This Market Continues To Be Propped Up By Government Intervention And Manipulation"

Amusing to see the biggest propaganda voice for the administration and General Electric let this one slip. At 2:22 in the video below, Larry Levin discloses the truth about ongoing flagrant market manipulation.
hat tip JR Sphere: Related Content

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Frontrunning: June 29

• State Street receives Wells Notice, may be sued by SEC over securities-law violations (Bloomberg and Reuters)
• GE's Immelt claims crisis over, see only growth from now on, sweeps tens of billions of failed GECC "investments" under the rug (Bloomberg)
• And another permabull talks his book, sees more procyclicality, has no factual justification (Bloomberg)
• Central banks: the visible hand at work (Brown Brothers Harriman)
• As we announced, Porsche rejects Volkswagen offer (WSJ)
• As government chimes in: the two need to agree soon (Reuters)
• Why stagflation is coming (Reuters)
• Sears to let jobless customers stop payments, keep the fridge (Bloomberg)
• Weekly economic report (Hudson Institute)
• Does USA 2009 = Argentina 2001 Part I: falling economy reaches terminal velocity (ITulip)
  
• Oil rises to $70 on more Nigeria attacks, of course it is all inflation-related, no June 2008 deja vu yet (Reuters)
• Bernanke breaks means reappointment is assured (Bloomberg)
• Why we need a second stimulus (New Republic)
• Looking ahead into the economic dark (National Post)

And now over 400 different points of view with regard to the SEC Sphere: Related Content

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Daily Highlights: 6.29.09

• Commodity rally may end as supply rises, speculators sell bets.
• Dollar up against euro, yen after China central banker says exchange policy 'stable'.
• House passes Cap-and-Trade pollution measure, first to curb US emissions.
• International Energy Agency sees oil demand up 0.6 percent a year over '08-'14 period.
• Japan auto production falls in May for 8th straight month of declines.
• Japan industrial output up 5.9 percent in May, rises for third month.
• Japan stocks fall as share dilution fears send financials tumbling.
• Unemployment probably climbed at slower pace, factory slump eased: Bloomberg.
• Japan's Factory output rises 5.9%, third monthly gain.
• Amazon.com closed accounts with its North Carolina affiliates to avoid paying a proposed sales tax.
• British financials plan to cut 13,000 jobs.
• Cathay, Singapore Air get ‘silver lining’ from fuel.
• Daiwa Securities tumbles on share offering news, fanning worries that value will be diluted.
• GE to a $100M R&D facility near Detroit to employ about 1,200 scientists.
• Hartford Fincl Srvcs gets $3.4B in funds from the US. Treasury's TARP.
• KB Home reported a narrower qtrly loss of $78.4M; revs came in at $384.5M.
• Mizuho Financial may start 600 billion yen share sale this week.
• Nokia Siemens Networks gets euro250 milllion loan from European Investment Bank.
• Novartis in talks to buy parts of Elan, incl. flagship multiple sclerosis products.
• Oracle, Sun merger gets closer antitrust scrutiny.
• Swiss banks shun Americans as U.S. compels disclosure.
• Towers Perrin, Watson Wyatt to merge creating the world's biggest employee benefitsconsultancy.
• Vodafone may bid for Deutsche Telekom’s U.K. Unit.
• Markets will get no independence from data in a short week as gauges of employment, factory-sector health are on tap.

Earnings Calendar: API, APOL, BNHNA, HRB, UDW.

Companies to watch: Amazon.com, Apollo Group, GE, H&R Block, KB Home.

Recent Egan-Jones rating actions:

KIMBERLY-CLARK CORP (KMB)
HJ HEINZ CO (HNZ)
MICRON TECHNOLOGY INC (MU)
MCCORMICK & CO INC/MD (MKC)
LENNAR CORP (LEN)
CONAGRA FOODS INC (CAG)
LEAR CORP (LEA)
QUEST DIAGNOSTICS INC/DE (DGX)
LABORATORY CORP OF AMERICA (LH)
RITE AID CORP (RAD)
ORACLE CORP (ORCL)
MONSANTO CO (MON)
CKE RESTAURANTS INC (CKR)

Data from: Egan-Jones Ratings And Analytics
. Sphere: Related Content

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Transitioning

Dear Reader,

"Blogger was the beginning, now it's moved out of the basement, it's called www.zerohedge.com"

Today we officially launch our new website, www.zerohedge.com (we expect full transition to occur within a few hours), which will serve as the scaffold for much additional expansion in the months ahead. Blogger has been useful, however it has reached its limitations and it is time to move on. This is especially true as daily traffic has grown to a level far beyond what was envisioned possible when Zero Hedge was started.

As part of the transition you will see many changes, and a format much more reminiscent of a "real" website. Due to bandwidth limitations,the index page will be more streamlined and cohesive, at least initially - we hope to give readers the option of designing their layout shortly. More importantly, we have moved our physical servers and domains offshore, partly to be independent and never be held hostage by any major provider, partly to avoid what has become widespread abuse of the Digital Millennium Copyright Act to silence whistleblowers and force the pre-emptive removal of content without due process of any kind. Most importantly, over the next month, once we are comfortable that the website is fully functioning and bug free, we will launch several major expansions that we believe will provide a substantial service to readers and investors and address "unmet market needs" in banker parlance. Last but not least, the new website is now fully open to reader input with numerous forums covering extensive and broad topics, and will also stream real time news content from RAN Squawk: one of the best headline news scraping services available. Over the next few days, a contributors section will also be up and running, providing a venue for a select few of Zero Hedge's closest and most erudite collaborators to engage and syndicate their best ideas. Which brings me to another point - Zero Hedge is going global. To address demands for a broader event focus, and to provide what will be almost constant news coverage, we are close to finalizing exclusive relationships with a European and Asian contributor. The ongoing economic drama is not American, it is worldwide.

In the meantime we will cross post on the old blogger website (http://zerohedge.blogspot.com) as we iron out all kinks. We apologize in advance for dropping Disqus in the new version, however it is with a specific purpose in mind, which will be made evident over the next month. Also, for all beta testers, thanks for your work - unfortunately you will need to reregister once again.

Needless to say, we are very excited at all that it unfolding for Zero Hedge, and it is all geared to providing the best possible independent and informative environment for you, dear reader.

We welcome all constructive input: much more than anything, Zero Hedge is an evolving experiment in author-reader interaction. When you speak, we listen.

Your Zero Hedge team Sphere: Related Content

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FOIAing The Fed: The AIG Bankruptcy Negotiations

Marshall Huebner is a person Zero Hedge has great respect and admiration for. The Davis Polk lawyer, in addition to having an impressive work ethic with many successful bankruptcies under his belt (Delta's 2007 emergence being a case in point: in fact, he will likely be making a repeat appearance there quite soon now that Goldman has envisioned another ramp to $200/barrel of crude), volunteers 13 hours every Sunday night as an Emergency Medical Technician - a noble dedication to his community. Marshall's dedication however is not only to his immediate community, but to American taxpayers in general: a little known fact is that Davis Polk is the official yet still formally unannounced legal advisor for the Federal Reserve. And no other company has tested Marshall's mettle more than AIG, which has been on the verge of complete financial collapse on many occasions over the past year.

AIG's collapse of course has been ruled out as an option by both the current and prior administrations, both of which observed the market's reaction to Lehman's bankruptcy and realized that one more financial failure would be the end of civilization as we know it. Readers will recall that TARP was originally envisioned as a toxic security purchase program (comparable to what the latest version of TALF has become). It took Paulson, and subsequently Geithner, no time to make TARP and the ensuing alphabet soup of programs, merely a backstop for all financial companies whose foundations were shaken as a result of AIG's failure. In essence, the fate (and progression of troubles) of nationalized AIG is the one, most critical question mark, from which all subsequent policy decisions emanate.

What does Huebner and Davis Polk have to do with this? A few days ago, Fox Business published emails it has received as part of a FOIA request to the Federal Reserve. What the email (below) indicates is that not only was an AIG bankruptcy a viable option for the Fed, but that Marshall Huebner was in fact presenting to an extensive audience of Fed members on the merits (or lack thereof) of such.


This coincides perfectly with unconfirmed rumors swirling in late January that AIG had retained TBTF law firm Weil Gotshal to advise it in advance of a bankruptcy filing. Instead, the Fed, for some reason, flipped and decided not only not to file AIG, but to throw several tens of billions of extra dollars at it, which led to the March Barney Frank AIG witch hunts (which by the way have still to lead to even one public questioning of Joe Cassano).

Here is the issue - as the Fed has lately been spinning its transparency with and without the use of recently retained lobbyists, it is critical that all the documentation that was presented at this meeting, and all tangential materials, be made public immediately. And this means not merely Huebner's presentations that had been put together as part of the above meeting (which as the e-mail indicates did take place, and there is undoubtedly information that the Davis Polk lawyer presented), but any discussion materials, memoranda and e-mails, between the Fed and all its legal and financial advisors: in this case, most notably, one Morgan Stanley, which was the financial advisor in the AIG situation. And just so readers recall the incest that is going on between the Fed and its financial advisors, here are some of the firms engaged by the Fed in its ongoing efforts to vacuum any and every available security out there: in the Fed's $500 billion MBS program, retained financial companies are BlackRock Inc., Pimco, Wellington Management Co. and... Goldman Sachs. In another program, it is JP Morgan which is overseeing $540 billion in disbursements to money market mutual funds... and then there are the TALF advisors... and the list goes on and on.

At this point HR 1207 is a reality in Congress, and hopefully it may even pass the Senate, before the President likely vetoes the bill. It did, after all, take many months of demands and ultimately, a subpoena, to reveal the Fed's e-mails regarding Ken Lewis. Yet in the face of a crony government, proactive readers can again take action into their own hands. Pursuing the Fox initiative one step further, now that the parameters of the AIG disclosure needed are available, Zero Hedge believes it is in the public's best interest that the Fed disclose all documents prepared by Marshall Huebner, by Davis Polk and by Morgan Stanley with regard to the discussion that led to the conclusion to bail AIG out instead of letting it fail in early February.

Marshall Huebner advised Zero Hedge that he is "not at libery to chat" on the topic when queried about the issue. Yet it is critical to uncover just who had the most to gain from preventing AIG from failing, and just what were the considerations that were analyzed and resolved by Fed members before deciding to invest a total of over $180 billion in taxpayer capital in bailing out a company which is at this point terminally broken and any cash invested in it will never be recovered.

The link to submit a FOIA request to the Fed is here. With the government unable to safeguard its citizens' interests, it is the duty of citizens to do so (and hopefully vote out all in government who hinder such efforts).

http://www.federalreserve.gov/generalinfo/foia/EFOIA/EFOIAForm.cfm

Update: below is a presentation by Davis Polk from April of 2009 which provides a brief mention of the AIG bankruptcy issue in passing:

Slide 10: "Currently, there is no single uniform Federal law governing the restructuring or liquidation of diversified US financial groups such as AIG"
Slide 44: "AIG would be subject to 20 state solvency regimes -- current process would create systematic risk"

Also look at slide 5... How anyone can say there are green shoots when in reality $2.5 trillion has been spent (not pledged, SPENT) to stabilize the economy from full collapse is simply beyond comprehension.



hat tip Richard Sphere: Related Content

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The SEC Needs Your Feedback

Critical update: Zero Hedge thrives on its proactive readers, yet I never expected a barrage of information such as the one I received since posting this. In the hundreds of emails received over the past several hours, much of it from current industry insiders, a substantial portion is likely actionable, and upon further refinement, enforceable. Going through it all will take time, however I take this opportunity to welcome any and all readers to provide information they believe captures wrongdoing in the financial system - in the absence of objective, unbiased and fair external regulators, it is the responsibility of everyone, but most notably insiders, to cleanse the system.

Zero Hedge will filter the data and forward our work product directly to appropriate Attorney General offices and local FBI branch offices. In retrospect, approaching the SEC and FINRA is futile, as they are both as much an integral part of the system as the perpetrators they are supposed to protect against. We're slowly learning that fact. And we are very, very pissed off.

So...

Dear CDS trader talking on the phone to your sales coverage discussing insider information on a deal while your bored analyst is eavesdropping...

Dear Senior Vice President at the strip club boasting to your subordinates how you misspent tens of thousands of taxpayer and investor dollars on strip clubs and prostitutes currying favor for the client, to catch that elusive multi-million deal so you can buy the third vacation home you will never frequent...

Dear General Counsel receiving sexual favors from the blonde assistant in exchange for promises of advancement that never come...

Dear Chief Executive Officer having an affair with the lady at the cosmetics section in that 5th Avenue store, while your wife and 3 children wait at home...

Dear retail broker guaranteeing your 70 year old client that investing in this particular BBB+ rated CDO will never lose money, just to hurry up and do the trade in the next 5 minutes...

Dear sell-side analyst telling your equity salesmen over shots of Grey Goose at Marquee just how crappy the REIT that you just upgraded is...

(and yes, you all know who you are)

...Please look well around you, and pray that you did not piss off any of the people close to you, who know every move you make, and every word you speak... sleep well tonight, because tomorrow your face just may make the proverbial front page of the Wall Street Journal...or Zero Hedge if the former is just a little conflicted.

And a word of warning - please be prudent in contacting us. A major former investment bank, now bank holding company, has retaliated against an employee for daring to contact Zero Hedge. No more information will be disclosed at this point, out of respect for what will likely be a major whistleblower lawsuit. But please do not let that happen to you - after all the only way to disassemble the machine is from the inside.

***

Since FINRA and the Securities and Exchange Commission believe in going only after $1,000 insider traders with the full weight of their enforcement teams, yet ignore major market manipulation in futures and other markets, Zero Hedge wanted to present readers an opportunity to be heard by the market's regulators.

As to what specific event to reference, frequent readers do not need our prompting, however a good example which if nothing else, needs clarification, is the major odd /ES ramp up on no news two nights ago, ahead of the atrocious claims number, which was covered extensively by Karl Denninger at Market Ticker.



Additionally, the phenomenal spike in call option volume two months ago in insurance companies before it was announced they would all become eligible for TARP was about as fraudulent as one can imagine and yet neither the SEC nor FINRA have done anything to address that obvious market manipulation. And of course the major news leaks and resulting stock moves just ahead of every bank follow-on equity offering are by now watercooler jokes when discussing just which zoo it is that the regional SEC enforcement officer must has escaped from.

Remember, the voice of the masses does not go unnoticed: the amazing grass roots support for HR1207 is the main reason the "Audit The Fed" bill generated not only enough co-sponsors to pass congressional voting, but is now at over 240 supporters - a staggering result for a bill that only had 160 supporters the week before Zero Hedge decided to take the issue public. Also, numerous ZH FOIA requests have proven successful mostly due to material reader support and participation.

Which is why we recommend that all readers who feel like they would like to invest money in a market that is nothing less than a swing-trading casino, manipulated exclusively by several major players, and where cash trading is pointless due to the growing preponderance of program and algo trading, click on this link, and voice your displeasure directly to the SEC about all concerns you may have, both public and private.

http://www.sec.gov/complaint/cf942sec9570.htm Sphere: Related Content

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Weekend Reading

A personal thanks to the over 350 people (and growing... Zero Hedge record) who have taken the time to share their thoughts on the Paging the SEC post.

• Breaking news: Military coup in Honduras, President Manuel Zelaya deposed (Sky News)
• Louis Gerstner criticizes choice of Steve Rattner for auto task force czar (Bloomberg)
• Plunge in Dubai biggest property developer Emaar leads to index collapse (Bloomberg)
• Porsche rejects Volkswagen ultimatum, hope you loaded up on CDS (Marketwatch)
• GM to cover future product-liability claims (WSJ) [Yet the Supreme Court had no qualms overruling an objection in the Chrysler sale based on just this issue.]
  
• The collapse of residential real estate in China (Reuters, h/t Steven)
• Novartis in talks to buy Elan (Reuters)
• Iran arrests British embassy employees over UK protests (Bloomberg)
• Four Seasons: the quandary of ultra luxury caught in a depression (NYT) Delinquencies on US Auto-backed securities jump 22% (Research Recap) 7 habits of highly suspicious hedge funds (Rick Bookstabber)
• Most expensive real estate markets in the world: follow the commodity bubble (Infectious Greed)
• First Nigaz, now Bengaz (Bloomberg)
• Investor Sentiment: Summer Doldrums (Technical Take)
• House members engaged in potential insider trading (The Plain Dealer, h/t E)\
• Very, very wrong and very, very off topic (YouTube)
  
• Chartology:

My sincerest gratitude for the generous donations by Linda, Ronald, Jeff, Brendon, Peter, Joseph, James, and Kristian. Sphere: Related Content

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