Whistleblower exposes insider trading program at JP Morgan

LEGAL INSIDER TRADING IN THREE EASY STEPS, BROUGHT TO YOU BY JP MORGAN AND THE SEC

KEVIN WILSON, MARIA CHRISTINA PADRO, JULIAN ASSANGE & staff
Monday March 17, 2008

A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing ‘how-to’ programs and even client service divisions to help well-heeled clients circumvent insider trading regulations.[citation needed]

In 2000 the SEC promulgated Rule 10b5-1. The new Rule was designed to address the confusion caused by a series of court decisions that had left investors uncertain about what constitutes insider trading. Rule 10b5-1 was designed to clarify what constitutes illegal insider trading.

But top Wall Street houses were not to be deterred from advantaging their big clients at the expense of their small ones.[citation needed] Wall Street firms like JP Morgan found loopholes in Rule 10b5-1 that allowed them to continue trading on inside information “legally.”[citation needed] Indeed, JP Morgan has gone so far as to set up an entire ’selling program’ within its Securities division to help their clients profit from the loophole.

Documents obtained earlier this month by Wikileaks from JP Morgan Private Bank, which subtitles itself as “World class solutions for wealthy individuals and families”, show the firm has a dedicated ‘10b5-1 Selling program,’ along with a ‘dedicated 10b5-1 team’.

Here’s how it works:

1. An insider client transfers all or a portion of their company stock into a JP Morgan Securities Inc. brokerage account.

2. The insider then develops, in conjunction with the 10b5-1 team, a ‘phased, pre-planned sales program to be executed at either market or

specified prices’.

3. Depending on the information available to the insider (but not the public), the insider can decide whether to execute the sale or not.[citation needed]

According to a statistical research paper published by Stanford’s Graduate School of Business in September last year, executive 10b5-1 trades beat gains relative to non 10b5-1 executive trades by more than 500%.http://papers.ssrn.com/sol3/papers.cfm?abstract_id=541502

As reported in BusinessWeek on Nov. 6, Alan D. Jagolinzer, an assistant professor at Stanford University Graduate School of Business, recently completed a study of roughly 117,000 trades in 10b5-1 plans by 3,426 executives at 1,241 companies. He found that trades inside the plans beat the market by 6% over six months. By contrast, executives at the same firms who traded without the benefit of plans beat the market by only 1.9%.http://businessweek.com/magazine/content/06_51/b4014045.htm

Alternative Explanation

It is possible for persons with insider information to abuse these 10b5 plans; however, there are legal and ethical uses of such a plan. In general, JP Morgan is offering a plan which will eliminate price-change risk on an individual’s portfolio by creating a collared position. Indeed, a large percentage of executives around the world legally enter into these sorts of plans. These plans can only be used by “insiders” if they do not possess non-public information at the time of the transaction, and if it could be proven that they did have insider information, then they could be prosecuted.

See

See the full confidential JP Morgan Private Bank insider trading memo:

• JP Morgan Private Bank insider trading how-to

JP Morgan Private Bank was successfully contacted by Wikileaks, but chose not to respond when asked to deny the report.

For more information on this release, please email press@wikileaks.org

Additional contacts:

JP Morgan Private Bank

• http://www.jpmorgan.com/pages/jpmorgan/private_banking

Prof. Alan D. Jagolinzer

• http://www.stanford.edu/~alanj1/

Tax Justice Network

• http://taxjustice.net

Media Blackout On McCain Gaffe Shows Familiar Bias

http://www.opednews.com/articles/opedne_anthony__080319_media_blackout_on_mc.htm

March 19, 2008

As we progress toward the election it is vital that we continue to monitor the corporate media and their blatant attempts to guide voters to maintain the horrific status quo we have seen for the past eight years. Double standards are the norm in the corporate media; as they seek to protect McCain and tear down the democratic candidates. We saw one example just this week as John McCain displayed how little he knows even about the vague cover stories being bantered around about Iran. For the uninformed, one of the accusations being leveled against Iran as a pretext to war is that they are training Shiite extremists to fuel the insurgency in Iraq. I will not discuss the veracity of that claim, as it reminds me of a certain WMD claim I heard a few years back. For the purposes of this discussion we will pretend the story is true.

That said, the republican presidential candidate stated three times in the past few days that “everyone knows” that Iran is training al Qaeda and sending them back into Iraq. In this grand chess game being played there is a substantial difference between al Qaeda and Shiite extremists. I want you to imagine for one minute what the reaction would have been if either Hillary or Obama had uttered such a misstatement. We would have been greeted with non-stop coverage of the gaffe. Their foreign policy experience would have been called into questioned. They would have been deemed “not ready” to be commander in chief. Don’t think so? Remember it was just a short while ago that Obama answered a hypothetical question about re-entering Iraq if he had pulled out and al Qaeda had cropped up again. Obama had answered “if al Qaeda was forming in Iraq I would…” After that, McCain jumped on Obama, playing him off as naïve because al Qaeda is already in Iraq. The missing piece of course was that McCain ignored the fact that Obama was answering a hypothetical. You expect that from a lying politician but the media turned it into questioning Obama’s bonafides when it comes to foreign policy and didn’t call McCain on the subterfuge.

Can you just picture the lead segment stories on every channel about the ignorance of Obama or Hillary if they couldn’t tell the difference between al Qaeda and Shiite extremists? Instead though it was McCain who claimed the gaffe was just a case of mis-speaking. That of course is ridiculous because McCain actually uttered it three different times. He said it twice in the interview and once the day before on a radio show. It was even more embarrassing for McCain because he actually had to be corrected by Joe Lieberman with the cameras rolling. Can you imagine the backlash if someone had to publicly correct Obama or Hillary in the middle of an interview? Yet here is our corporate media granting a free pass to McCain. The double standard is so palpable, it is sickening.

This is what we have to look forward to the next eight months. The media will prop up McCain whenever they have the opportunity and cast as much doubt on the democratic candidate as possible. They did it in 2004 by running the swift boat nonsense, even though it had been debunked. Bush was pummeled by Kerry in the first debate and the coverage was tepid at best. The second debate was another Kerry victory but because Bush “improved” the networks all fawned over his performance. That is what will play out in the coming months. They did it in 2000 as well where the clearly “in over his head” Bush was portrayed as folksy and a man of the people and Gore was cast typed as boorish and aloof (and eventually falsely branded a liar). Bush flat out lied in the 2000 debates claiming he had passed a patients bill of rights in Texas as governor. Bush omitted that the law passed without his signature as he refused to support it. The lie was never covered but Gore was hammered unmercifully about the Internet nonsense. Don’t think for a second that this didn’t play a factor in both elections.

History is beginning to repeat itself. The media is drawing the line around McCain and granting him a free pass on a subject that they would have crushed either Obama or Hillary on. They will play up McCain’s war hero status and ignore the fact that he was part of Keating Five. They will highlight his experience in the senate but ignore the recent flip flop on torture and the Bush tax cuts. Hopefully America will step up and realize that fool me once shame on me… fool me twice… we won’t get fooled again.

Anthony Wade, a contributing writer to opednews.com, is dedicated to educating the populace to the lies and abuses of the government. He is a 40-year-old independent writer from New York with political commentary articles seen on multiple websites. A Christian progressive and professional Rehabilitation Counselor working with the poor and disabled, Mr. Wade believes that you can have faith and hold elected officials accountable for lies and excess.

It’s still the war, stupid

http://mparent7777-1.blogspot.com/2008/03/its-still-war-stupid.html

Race to the Bottom

Forget about the economy, global warming and gay marriage. This election season, there’s only one thing that matters.

By R.V. Scheide

rvscheide@newsreview.com

***

… Even though the economy is collapsing around our ears, it’s still the war, stupid. Yes, we can change the mind-set!

Well, maybe. But the elephant in the living room says it isn’t going to be easy. The elephant, of course, is Israel, which, like it or not, is the key to solving the complex, violent puzzle the Middle East has become. Simply put, America cannot expect Arab nations to behave if it doesn’t insist that Israel do the same. Unfortunately, the powerful Israel lobby, headed by the American Israel Public Affairs Committee, is working diligently to ensure that doesn’t happen, pouring millions into the U.S. political process.

Case in point? Last August, at the urging of AIPAC and a flotilla of pro-Israeli lobbying groups, the California Legislature unanimously passed Assembly Bill 221, the California Public Divest from Iran Act, which required all public-employee pension funds to divest from companies doing business with Iran. Coming as it did on the heels of Cheney’s repeated rants that Iran was on the verge of developing a nuclear weapon (sound familiar?), the Legislature’s declaration of economic war was perhaps understandable. What’s truly perplexing is why the legislation hasn’t been revisited in light of the fact that the National Intelligence Estimate released in December reported that Iran has no discernable nuclear-weapons program.

***

“One former Israeli official told me that the Israeli government feels it can work with Obama, Clinton or McCain, but that the Israeli lobby in the United States is adamantly opposed to Obama, preferring Clinton because ‘they own her.’”

Death by shower, and the folly of five years in Iraq

http://www.attytood.com/2008/03/death_by_shower_and_the_folly.html

Five years and one day into the war in Iraq, the senselessness of the conflict and the way that it is waged continues to write a sad story that could fill 10 volumes worth of “Catch-22.” It takes a special kind of outrage these days to get one’s blood boiling, but here’s one.In January, local papers in western Pennsylvania had some coverage of the mysterious death of a 24-year-old Green Beret from the region, Army Staff Sgt. Ryan Maseth of Shaler, Pa., outside of Pittsburgh:

“He was a true SF (Special Forces) guy. He was a fighter and one of the best soldiers I ever met. He died doing what he loved, and that is beautiful,” Lowden said. A Shaler Area High School graduate and varsity wrestler, Maseth joined the Army in June 2001. He served with Company D, 1st Battalion, 5th Special Forces Group (Airborne). His military education included airborne, air assault, Ranger and Special Forces training. He was on his second tour in Iraq.

But Maseth didn’t exactly die doing what he loved. The cold, hard truth is that he died trying to take a shower. In a shower that was wired by KBR, the recently spun off unit from the formerly-Dick-Cheney-run-Halliburton that has received $22.5 billion to provide services to the U.S. military. That’s a lot of money, but apparently it hasn’t been enough income to prevent Halliburton from making soliders sick with unsafe water, or now electrocuting a few of them.

Give the KBR hometown paper, the Houston Chronicle, some major props for staying on the story:

At least a dozen soldiers and Marines have been electrocuted in Iraq over the five years of the war, and investigators now are trying to learn what role improper grounding of electrical wires played in those deaths. And Houston-based KBR — which builds bases and maintains housing for U.S. troops in Iraq — is at the center of the probe, with questions being raised about its responsibility to repair known wiring problems.

Maseth’s mother, Cheryl Harris, couldn’t get answers from the military — which initially trued to tell her that her son had brought a small appliance into the shower where he died — and she finally had to turn to her congressman, Jason Altmire, for help:

Maseth, according to a memorandum written by Army investigators and obtained by the Chronicle, was living in a building that had been refurbished by local Iraqis. KBR had been contracted to provide maintenance on the building in 2007, the memo said. Maseth was killed, the memo said, when an electrical water pump shorted out after he had stepped into the shower and turned on the water. An electrical current then passed through the water pipes to a metal shower hose in the shower.

Waxman, in his letter to Gates, said investigators blamed Maseth’s death on improper grounding of the water pump.

Look, the war in Iraq is a massive, complicated undertaking. To carry this on for five years, despite spending that’s marching toward the $1 trillion mark, it still means cutting corners to squeeze every dollar — especially through the use of private contractors like KBR — and this is the kind of thing that is the tragic result. No one can seriously think that KBR intentionally wants to poison solidiers or electrocute them, but sustaining this unnecessary war — while sustaining KBR’s profit margin — is more than this nation can bear, economically or morally.

No one should be the last man to die for a mistake, but for a good Pennsylvania man to die 11,000 miles away for a mistake — in a faulty shower — is unbearable to think about.

US economist calls financial crisis worst since 1930s

http://economictimes.indiatimes.com/International_Business/Financial_crisis_worst_since_1930s/articleshow/2881608.cms

WELLINGTON: The current financial crisis is the worst the world has seen since the Great Depression of the 1930s and the US Federal Reserve move to cut interest rates will not make much difference, the Nobel Prize winning economist Joseph Stiglitz said on Wednesday.

“It will have some impact – it will do a little bit to stem the blood – but it’s not addressing the fundamental problems underlying the collapse of the financial sector,” Joseph said.

Stiglitz, who won the Nobel Prize in economics in 2001, is a former chief of the World Bank and chaired former US president Bill Clinton’s council of economic advisers. He is in New Zealand on a lecture tour.

He said the Federal Reserve’s move to cut its funds rate by three-quarters of a percentage point was “just trying to ease the economy down rather than try to address the underlying problems.”

Stiglitz said the main problem was the fact that an estimated 2 million Americans were going to lose their homes because they could not repay mortgages which exceed the value of their property as house prices fell dramatically.

“As people walk away from their mortgages there will be more and more defaults – that undermines the whole financial system,” he said.

Stiglitz said the Bush administration was bailing out banks, but accused it of refusing to do anything to help poor people stay in their homes which would stabilise the housing market.

“It’s very easy to do something about it,” he said, suggesting the administration could give assistance to write down mortgages to about 90 per cent of the value of a house which would enable people to stay in their properties.

However, the Bush administration has unveiled plans designed to help homeowners in danger of losing their homes by allowing holders of sub-prime mortgages to borrowers with poor credit to more easily apply for refinancing. The government will also send out tax rebate cheques in May.

Stiglitz said it was ironic that former Federal Reserve head Alan Greenspan had said it was the world’s worst economic problem in the last 50 years, adding, “He is the source of much of the problem.”

He said mismanagement by the Federal Reserve over the last seven years was one of the major factors underlying the current problem.

“They had the regulatory authority to prevent some of these bad practices that we are now paying for and he chose not to do it.”

Stiglitz said the reason related in part to the war in Iraq and the very negative effect on the economy.

“They didn’t want Americans to know exactly how bad the war was for the economy so they flooded it with liquidity, they looked the other way with regulations and they deliberately, I think, postponed the problem into the future and now we’re paying the price.”

Patrick Cockburn: This is the war that started with lies, and continues with lie after lie after lie

http://www.independent.co.uk/opinion/commentators/patrick-cockburn-this-is-the-war-that-started-with-lies-and-continues-with-lie-after-lie-after-lie-797788.html

It has been a war of lies from the start. All governments lie in wartime but American and British propaganda in Iraq over the past five years has been more untruthful than in any conflict since the First World War.

The outcome has been an official picture of Iraq akin to fantasy and an inability to learn from mistakes because of a refusal to admit that any occurred. Yet the war began with just such a mistake. Five years ago, on the evening of 19 March 2003, President George Bush appeared on American television to say that military action had started against Iraq.

This was a veiled reference to an attempt to kill Saddam Hussein by dropping four 2,000lb bombs and firing 40 cruise missiles at a place called al-Dura farm in south Baghdad, where the Iraqi leader was supposedly hiding in a bunker. There was no bunker. The only casualties were one civilian killed and 14 wounded, including nine women and a child.

On 7 April, the US Ai r Force dropped four more massive bombs on a house where Saddam was said to have been sighted in Baghdad. “I think we did get Saddam Hussein,” said the US Vice President, Dick Cheney. “He was seen being dug out of the rubble and wasn’t able to breathe.”

Saddam was unharmed, probably because he had never been there, but 18 Iraqi civilians were dead. One US military leader defended the attacks, claiming they showed “US resolve and capabilities”.

Mr Cheney was back in Baghdad this week, five years later almost to the day, to announce that there has been “phenomenal” improvements in Iraqi security. Within hours, a woman suicide bomber blew herself up in the Shia holy city of Kerbala, killing at least 40 and wounding 50 people. Often it is difficult to know where the self-deception ends and the deliberate mendacity begins.

The most notorious lie of all was that Iraq possessed weapons of mass destruction. But critics of the war may have focused too much on WMD and not enough on later distortions.

The event which has done most to shape the present Iraqi political landscape was the savage civil war between Sunni and Shia in Baghdad and central Iraq in 2006-07 when 3,000 civilians a month were being butchered and which was won by the Shia.

The White House and Downing Street blithely denied a civil war was happening – and forced Iraq politicians who said so to recant – to pretend the crisis was less serious than it was.

More often, the lies have been small, designed to make a propaganda point for a day even if they are exposed as untrue a few weeks later. One example of this to shows in detail how propaganda distorts day-to-day reporting in Iraq, but, if the propagandist knows his job, is very difficult to disprove.

On 1 February this year, two suicide bombers, said to be female, blew themselves up in two pet markets in predominantly Shia areas of Baghdad, al Ghazil and al-Jadida, and killed 99 people. Iraqi government officials immediately said the bombers had the chromosonal disorder Down’s syndrome, which they could tell this from looking at the severed heads of the bombers. Sadly, horrific bombings in Iraq are so common that they no longer generate much media interest abroad. It was the Down’s syndrome angle which made the story front-page news. It showed al-Qa’ida in Iraq was even more inhumanly evil than one had supposed (if that were possible) and it meant, so Iraqi officials said, that al-Qa’ida was running out of volunteers.

The Times splashed on it under the headline, “Down’s syndrome bombers kill 91″. The story stated firmly that “explosives strapped to two women with Down’s syndrome were detonated by remote control in crowded pet markets”. Other papers, including The Independent, felt the story had a highly suspicious smell to it. How much could really be told about the mental condition of a woman from a human head shattered by a powerful bomb? Reliable eyewitnesses in suicide bombings are difficult to find because anybody standing close to the bomber is likely to be dead or in hospital.

The US military later supported the Iraqi claim that the bombers had Down’s syndrome. On 10 February, they arrested Dr Sahi Aboub, the acting director of the al Rashad mental hospital in east Baghdad, alleging that he had provided mental patients for use by al-Qa’ida. The Iraqi Interior Ministry started rounding up beggars and mentally disturbed people on the grounds that they might be potential bombers.

But on 21 February, an American military spokes-man said there was no evidence the bombers had Down’s. Adel Mohsin, a senior official at the Health Ministry in Baghdad, poured scorn on the idea that Dr Aboub could have done business with the Sunni fanatics of al-Qa’ida because he was a Shia and had only been in the job a few weeks.

A second doctor, who did not want to give his name, pointed out that al Rashad hospital is run by the fundamentalist Shia Mehdi Army and asked: “How would it be possible for al-Qa’ida to get in there?”

Few people in Baghdad now care about the exact circumstances of the bird market bombings apart from Dr Aboub, who is still in jail, and the mentally disturbed beggars who were incarcerated. Unfortunately, it is all too clear that al-Qa’ida is not running out of suicide bombers. But it is pieces of propaganda such as this small example, often swallowed whole by the media and a thousand times repeated, which cumulatively mask the terrible reality of Iraq.