What do Chris Rock and Warren Buffett have in common, besides that they both guest-edited that special issue of Vanity Fair?

They both want lawmakers to raise taxes on the rich.

The comedian of Nurse Betty and Dogma fame told the Associated Press Wednesday that he could stand to pay higher taxes.

“I can pay higher taxes and people can have jobs or I can pay lower taxes and I have my kids’ teacher asking me for a loan because she’s going to lose her house, which is true,” said Rock, who is worth an estimated $70 million, according to celebertynetworth.com. “Stuff like that happens, so I’m going to lose the money no matter what.”

Rock joins Buffett and other super-wealthy celebrities in calling to raise taxes on himself. Buffett brought the issue into the spotlight when he penned an op-ed in The New York Times in August, arguing that the super-rich should pay taxes at a rate that is the same or higher than that of the middle class. Obama’s “Buffett Rule,” inspired by the billionaire investor, became a major selling point of the American Jobs Act and State of the Union address.

Buffett’s fellow billionaire and Microsoft co-founder Bill Gates has also recently spoken out in favor of raising taxes on the rich. In October he told ABC News that he’s “generally in favor of the idea that the rich should pay somewhat more” than everyone else in taxes.

Along with them, Def Jam co-founder Russell Simmons has also come out in support of leveling the playing field between the rich and the poor — he went as far as offering to pay to clean up Zuccotti Park late last year in order to prevent a confrontation between Occupy protesters and police. In addition, Russell’s friend Jay-Z visited the park and even tried to market Occupy-themed t-shirts.

The notion of raising taxes on the rich also has some more surprising supporters. Alan Greenspan, the former Federal Reserve Chairman and a registered Republican, said in October that he favors letting those tax cuts for the wealthy passed under George W. Bush expire.

It seems most Americans agree the tax code should be reformed to benefit the middle class. More than half of Americans say they think that capital gains — or profits from investments and property — should be taxed at the same rate as work, according to a recent CBS/NYT poll. Capital gains typically account for a larger percentage of the wealthy’s income.

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NEW YORK — A former London-based Credit Suisse managing director pleaded guilty Wednesday and agreed to cooperate in a federal probe of trading of sub-prime mortgage securities, admitting that he falsified the books to enhance his standing in his company and his year-end bonus as the housing market collapsed.

David Higgs pleaded guilty in Manhattan to a charge of conspiracy to falsify books and records and commit wire fraud, which carries a potential maximum sentence of five years in prison.

“Today is a terribly difficult day for me and my family. I am truly sorry for what I’ve done,” Higgs said. The defendant said he falsified records to enhance his job performance, which resulted in higher bonuses.

Others expected to be charged in the probe – which focuses on activities in 2007 and 2008 – have not been identified publicly. Authorities said another person was in custody Wednesday, facing the same charge.

The probe centers on exaggerations brokers made about the value of subprime mortgage securities. Authorities say brokers enticed investors to pour money into the securities market for sub-prime mortgages by making the market sound healthy.

Higgs said his crime began in 2007, when the real estate market began to deteriorate in the United States and the valuations of mortgage-backed securities faced significant reductions.

The ensuing sub-prime mortgage crisis fueled the financial meltdown in the fall of 2008 that pushed the U.S. into the most severe recession since the Great Depression of the 1930s.

Higgs said a rising rate of mortgage delinquencies meant that the value of the securities backed by the mortgages decreased.

“Rather than mark these securities down to market as we were required to do,” he said, Higgs and others manipulated and inflated the cash bond position markings of a trading book to hide losses in the book and meet monthly profit-and-loss objectives. He said the manipulations led senior management at Credit Suisse to get the false impression that the securities were profitable and caused the investment firm to report false year-end numbers for 2007 in their books and records.

“I did this because I wanted to remain in good favor with my boss … and enhance my job performance,” Higgs said.

Questioned by Judge Alison Nathan, Higgs said enhanced job performance would result in higher year-end bonuses.

Higgs will remain free on $500,000 bail and will be permitted to remain in England while he cooperates with prosecutors.

His lawyer, John L. Brownlee, declined to comment.

Federal regulators have brought civil charges against several big Wall Street firms accused of misleading investors about securities linked to risky mortgages in the years leading up to the financial crisis. The biggest settlement of the Securities and Exchange Commission’s charges was with Goldman Sachs in July 2010. The firm agreed to pay $550 million.

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On the three month bankruptcy anniversary of the company whose rehypothecation gimmicks will one day be seen as a harbinger of everything that is  broken with the multi-trillion ponzi system, but not just yet despite loud warnings otherwise, we are getting close to a final verdict of where the $1.2 billion (and possibly more as originally predicted by Zero Hedge – see below) in commingled client money may have gone. Note the use of the passive voice because using the active, as in money that MF Global executives stole from clients, is prohibited in a legal system in which nobody goes to jail for something as modest as $1.2 billion in theft. That verdict? "Vaporized.” No really (and yes, in the passive voice of course). From the WSJ: “As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.” Uh huh… Because money simply vaporizes. Which means one of two things: i) the “vaporization” is merely the phrase that so called investigators use to avoid the far more troubling sounding “stolen” as it would imply guilt, something which the former NJ governor and Goldman CEO (and not to mention JP Morgan which most likely was on the receiving end of the $1.2 billion + transaction) will, under guidance from counsel, sternly disagree with, or ii) the capital markets are such an unprecedented and manipulated fraud, that nobody has any clue at any moment, where any client money is, and that any residual capital still “invested” in mythical representations of “assets”, which are likely rehypothecated so many times, that not even Bank of America’s robosigning division would have a clue where to start unraveling, will promptly be converted into tangible manifestations of capital. So when someone asks what happened to stock market volume, and to investor confidence in the “stock market” feel free to use just that phrase: “it vaporized.”

WSJ “explains” how $1.2 billion “vaporized”

Many officials now believe certain employees at MF Global dipped into the “customer segregated account” that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.

 

Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money. Officials investigating the case have looked into whether such investments were appropriate under rules at the time.

 

As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase & Co. and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing Corp. and LCH.Clearnet Group Ltd., people familiar with the matter said.

 

Those companies have denied being knowingly in possession of any missing MF Global money, and any efforts to make them fill the hole would face daunting hurdles. And because the firms usually were middlemen between MF Global and other counterparties, the funds they touched were then scattered widely, complicating the search.

So one hand, nobody at MF Global was responsible because every member of lower, to middle to upper management was responsible (and certainly not Jon Corzine), secondly, not one regulator was responsible, because every regulator was equally oblivious of the grand theft occurring right under their noses. Finally nobody on the receiving end of this fund flow was responsible, as the money could have ratably gone to one of an infinite number of destinations. And here we were thinking that dilution is only applicable to what the central banks do to their currency. Little did we know that it is the de facto global modus operandi for the systemic fraud endemic in modern finance, whereby not one person is held accountable, as otherwise everyone would be held accountable.

Brilliant.

Finally, it is becoming once again apparent that the final tally will be at least $1.2 billion. To wit:

But hundreds of millions of customer dollars are potentially snarled in litigation with other parts of MF Global, including its U.K. arm, and U.S. officials might never be able to recover those funds. As a result, Mr. Giddens believes the shortfall is at least $1.2 billion, though regulators at the Commodity Futures Trading Commission and CME Group Inc., parent of the Chicago Mercantile Exchange and New York Mercantile Exchange, have estimated the total is smaller than that.

Visually:

And from Zero Hedge November 1:

Doing some quick inverse addition and we get a (w)hole of $5.45 less $2.5 less $1.5 or $1.45 billion. In other words, the theft by MF Global was not stealing hunderds of millions form its customers: it has stolen a whopping $1.5 billion! For those confused, this is not a rogue loss of $1.5 billion, something which was enough to send UBS’ Kweku to prison. This is outright theft resulting from illegally commingled accounts. Our only question is will $1.5 billion in theft be enough for the first real perp walk of an Obama-friendly Wall Street executive?

It is becoming increasingly difficult to even care anymore; it is also becoming increasingly certain that any client capital in the “markets” will sooner or later disappear in one of many comparable bankruptcies, and there just like here, nobody will be held accountable, as holding someone accountable will actually expose to everyone the whole scam that is modern ponzinomics, in which binary representations of money in the forms of ones and zeros, not only don’t exist in the real world, but is in effect collateralized by the same ever smaller pool of dwindling hard assets. Not only that, but someone may actually, gasp, go to jail.

And that is not allowed under a legal system which is in bed with the very financial system that preserves it and funds it.

Ironically, it is the conspiracy theory movie, “The International” that captures precisely the interplay between the terminally broken and beyond corrupt legal system and modern financial markets:

WEXLER
Justice is not possible.

 

SALINGER
Why not?

 

WEXLER
Because, Agent Salinger, your idea of justice is an illusion. Understand the very system that you serve and protect will never allow anything to happen to Skarssen [i.e., Jon Corzine] or the bank [i.e., insert any current bank]. On the contrary. The system guarantees the IBBC’s [i.e., insert any current bank] safety because everyone is involved.

And that should answer all questions about how $1.2 billion can simply “vaporize.”

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What do the Occupy movement and IRS have in common? They’re both taking an interest in the one percent.

Tax audits for millionaires jumped in fiscal 2011 by roughly a third, with the Internal Revenue Service examining income tax returns for 12.48 percent of people who earn $1 million or more, according to Bloomberg. In other words, about one in every eight millionaires got an audit this year. By comparison, in fiscal 2010 the IRS only audited 8.36 percent of millionaires.

A comparison of the audit rates for millionaires and less wealthy taxpayers suggests the IRS is giving special care to the upper tax brackets. While the IRS audited one in eight millionaires in 2011, the same thing happened to just one in 100 people earning less than $200,000, according to the Associated Press.

By paying closer attention to the finances of the well-off, the IRS is putting itself in good company. Critics ranging from billionaire investor Warren Buffett to protesters in the coast-to-coast Occupy movement have said in recent months that U.S. tax law unfairly favors the rich.

At a time when millions of Americans are struggling to make ends meet — and when the federal government faces revenue shortfalls that could bring about a wave of layoffs next year — the country’s high earners have drawn increasing scorn for paying what critics call comparatively low tax rates.

And such complaints have data backing them up. In 2009, more than 1,400 millionaires paid no federal income taxes at all, according to an August Tax Policy Center report cited by the Los Angeles Times. By 2010, that number had risen to about 4,000, and by 2011 it was up to about 7,000. Then there are the tens of thousands of millionaires who pay taxes at a rate lower than many middle-class households.

Whether increased audits will translate into more criminal investigations is not yet known. But in 2010, the IRS ramped up probes by 14 percent, according to Businessweek.

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Bank Fraud

American Home Mortgage Servicing
Sand Canyon Corporation
Kathy Smith
Soundview Home Loan Trust, 2007-OPT2
Wells Fargo Bank, N.A.

Action Date: January 1, 2012
Location: Maui, HI

On
January 2, 2012, Wells Fargo Bank and American Home Mortgage Servicing,
Inc. (“AHMSI”) will attempt to force the Tehiva/Phillips family from
their family home on 5305 Hana Highway in Maui, Hawaii. This has been
the family home for over 100 years.

Wells Fargo is acting as the
Trustee for an RMBS Trust, Soundview Home Loan Trust 2007-OPT2. AHMSI is
acting as the servicer for the trust.

Wells Fargo and AHMSI have relied on a fraudulent Mortgage Assignment in this foreclosure eviction.

The
Assignment is dated June 24, 2010 and was signed by Kathy Smith in
Duval County, Florida. Smith purports to be a corporate officer
(Assistant Secretary) of Sand Canyon Corporation.

Kathy Smith is
not and has never been employed by Sand Canyon Corporation; she is
actually employed by AHMSI in its Jacksonville, FL (Duval County)
office.

On Hillsborough County, FL, document 2010350478, Kathy Smith swore she was an employee of AHMSI on October 1, 2010.

On Hillsborough County, FL document 20100057228, Kathy Smith swore she was Assistant Secretary of AHMSI on February 8, 2010.

In
the Memorandum Decision of the Bankruptcy Court for the District of
Arizona in the matter of the bankruptcy of Anthony Tarantola, Case No.
4:09-bk-09703-EWH, Kathy Smith is referred to on Page 5, lines 8-9, as
the Assistant Secretary of AHMSI.

To aid in foreclosures, Kathy Smith has used all of the following different job titles:

• Assistant Secretary and Vice President, Ameriquest Mortgage Company (February 3, 2010);

•
Assistant Secretary and Vice President, Citi Residential, Inc.,
Attorney-in-Fact for Ameriquest Mortgage Company (April 12, 2010);

• Attorney-in-Fact, Argent Mortgage Corporation (January 13, 2010);

•
Assistant Secretary, Citibank, N.A., as Trustee for American Home
Mortgage Asset Trust 2006-3 Mortgage-Backed Pass-Through Certificates,
Series 2006-3; (January 13, 2010);

• Assistant Secretary, Deutsche
Bank National Trust Company as Indenture Trustee for American Home
Mortgage Investment Trust 2006-3, Mortgage-Backed Notes, Series 2006-3
(January 13, 2010);

• Attorney-in-Fact, New Century Mortgage Corporation (January 19, 2010);

• Assistant Secretary, Sand Canyon Corporation f/k/a Option One Mortgage Corporation (April 12, 2010)

•
Assistant Secretary, Mortgage Electronic Registration Systems, Inc., as
Nominee for American Brokers Conduit (February 25, 2010);

•
Assistant Secretary, Mortgage Electronic Registration Systems, Inc., as
Nominee for American Home Mortgage (February 18, 2010);

•
Assistant Secretary, Mortgage Electronic Registration Systems, Inc., as
Nominee for American Home Mortgage Acceptance (January 25, 2010);

•
Assistant Secretary, Mortgage Electronic Registration Systems, Inc., as
Nominee for Beazer Mortgage Corporation (January 13, 2010);

•
Assistant Secretary, Mortgage Electronic Registration Systems, Inc., as
Nominee for HomeBanc Mortgage Corporation (January 11, 2010); and

•
Assistant Secretary, Mortgage Electronic Registration Systems, Inc., as
Nominee for Taylor, Bean & Whitaker Mortgage Corporation (May 7,
2010).

The President of Sand Canyon Corporation, Dale M. Sugimoto,
submitted a sworn Declaration signed on March 18, 2009, stating that
Sand Canyon Corporation did not own or service any residential real
estate mortgages. Despite this sworn statement of the company president,
the Assignment in the Tehiva/Phillips foreclosure has Kathy Smith,
purporting to act as an officer of Sand Canyon, to transfer the
Tehiva/Phillips mortgage to the Soundview Trust. The Sugimoto
Declaration was submitted in bankruptcy court for the Eastern District
of Louisiana, New Orleans Division, as document 52-3, in the case of Ron
Wilson, Case No. 10-51328.

Kathy Smith is also not listed as an
officer of Sand Canyon Corporation in the Florida corporate records, nor
did Sand Canyon have offices in Florida, where the Assignment was
notarized.

The closing date of the Soundview Trust 2007-OPT2 was
July 10, 2007. The trust was not authorized to acquire mortgages after
this date; and certainly was not authorized to ever acquire any
non-performing mortgages.

For all of the reasons set forth above,
Wells Fargo and AHMSI should immediately cease their attempts to seize
the Tehiva/Phillips home. Wells Fargo should be required to produce
Kathy Smith in court in Hawaii and to produce the records of the trust
showing that the trust acquired the Tehiva/Phillips mortgage in 2010 as
represented by Smith.

Original post on this action here Hawaii Action Alert | Stop a Wells Fargo Eviction at the Tehiva/Phillips’ Home 5305 Hana Hwy Monday Jan 2…

More docs below…

Oh, and by the way…

Here’s the securities administrator…

Contact:   Customer Service – CTSLink
Wells Fargo Bank, N.A.
Securities Administration Services
Frederick, MD 21701-4747
8480 Stagecoach Circle

Telephone: 1-866-846-4526
Fax:            240-586-8675

Just in case you wanted to call…

Hint, hint…

www.4closureFraud.org

Tehiva Foreclosure Forensics & Exhibits (Mtm), 12.26.2011

Declaration of Dale M SUGIMOTO, President of Sand Canyon Corporation

Full Deposition of Jose Colon of AHMSI

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Submitted by Teri Buhl

A criminal complaint has been filed against Barclays in Geneva, Switzerland this week for its role in a $1.4 billion structured investment vehicle (SIV) called Golden Key. The Barclays arranged and structured SIV blew up in spectacular fashion in 2007 and a French asset management firm, Oddo, tried to sue the British bank for fraud in a New York court but got the motion tossed, in 2009, on a technicality. So now one independent investor from Geneva has foregone the US court system and filed his own criminal complaint against the bank and the collateral manager they hand picked — Avendis Capital a Swiss asset management company.

Golden Key was considered a SIV-lite, meaning it would raise an amount of capital, borrow money in the short-term commercial paper debt market, and then invest all of this money in higher interest rate bearing instruments such as, mortgage-backed securities, in its strategy for high returns. Investors in Golden Key originally sued, in 2008, because they believed BarCap was sitting on a bucket of rmbs they needed to off-load and the bank arranged for the SIV-Lites to expand their size by increasing their borrowings and use these borrowing to take the toxic securities off Barclays’ hands. The idea was collateral managers like, Avendis, were buddy-buddy with BarCap executives who were in charge of selling and creating the SIV, and would basically let BarCap pick the collateral for the SIV.

This is a method we’ve seen before in CDO fraud cases brought against Goldman and Merrill Lynch. But in the Barclays suit they didn’t have any hard evidence like emails from Avendis and Barclays’ executive, Kelsey Burr, detailing their cozy relationship or plan to screw investors in the name of saving Barclays’ balance sheet. Well now they do.

The Geneva investor, Philippe Rebourg of Coficap, just happen to get a hold of some damaging internal Barclays comunication, which are now evidence in his criminal complaint. You see in some European countries citizens can file their own criminal complaints when the local D.A. or prosecutor doesn’t do it first. Then a judge will decide if the criminal complaint goes forward. While the complaint is filed if any of these BarCap executives named in the claim show up in town they can be arrested. Rebourg told me he expects it will take two to three weeks for the judge to rule and the suit is currently sealed. Luckily there is also a changing of the guards in the Geneva A.G. office and incoming Attorney General Michael Lauber has told local papers he is gun hoe to file claims against the banks for financial crimes.

I’ve seen emails between Barclays and Rebourg for months now and he’s warned them he is going to file a criminal complaint and expose the damaging emails if they don’t settle with him. Well he clearly got sick of their cat and mouse litigation game and apparently called their bluff by filing the criminal complaint. The veteran Barclay’s executive who worked out of the Chicago office for years, Kelsey Burr, suddenly resigned or took a buyout package this summer. BarCap’s Chicago office confirmed for me in August he was no longer with the firm and Burr has not responded to emails for a request for comment.

Another alleged bad actor from BarCap was John Parker. I’ve seen an email chain from April 2007 between Parker and Avendis executive Katy Huang explaining that Avendis as the collateral manager was worried about owning the riskiest shares (capital notes) in Golden Key and their plan was to sell off the risky capital notes to investors (high yield chasers) Parker and team had lined up. Avendis also had a hedge fund that bought a ton of Golden Key notes but there were restrictions in the fund’s offering memorandum regarding how much they could buy. BarCap allegedly solved that little problem for them by simply …

Read the rest of the article here.

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Did bankers use the MF Global to suppress gold and silver prices and create the panicked appearance of collapsing precious metals to give themselves additional precious time to delay the crash of the Euro and the US Dollar? As crazy as this sounds, a closer investigation of some key data seems to imply this possibility. Though bankers claim that they created futures markets to provide a mechanism for commodity producers to hedge against volatile market prices, I have never bought the kool-aid the bankers were selling in this explanation for the rationale behind their creation of futures markets. Given that today, futures and spot prices for gold and silver in the short-term are entirely set by banker manipulation of the supply and demand for paper derivatives that often have no backing of any physical metal, I believe that bankers created futures markets for the explicit intent of allowing themselves to manipulate the prices of commodities and to enrich themselves, and themselves only, through the process of alternately and artificially inflating and deflating prices as would not be allowed in any type of free market. In other words, bankers invented futures markets to allow themselves to siphon off and steal money from other parties that wanted to invest in commodities with a mechanism, risk-free to them, that required deception and zero honest work and zero integrity.

The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world’s largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air. Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that literally have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper derivative gold and silver markets to allow themselves to literally defy and suspend every single sound economic principle that exists.

This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks such as Deutsche Bank, Citibank, JP Morgan, Goldman Sachs et al that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver. However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper. Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.

Collapsing OI of Gold/Silver Futures Markets Directly Related to MF Global Collapse?

And here’s where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices. Today we literally have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.

As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool’s gold and fool’s silver. When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool’s gold and fool’s silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.

Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.

Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader (COT) reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global. In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below). Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.

After Phase I of the collapse in OI in the gold and silver futures markets, Phase II followed. When the story about MF Global’s legalized client theft hit the presses, an enormous public distrust of the entire futures markets started to build. If clients lost millions of dollars in gold and silver futures accounts due to forced liquidation or freezing of contracts that they were holding for delivery, anyone that had considered using the futures markets to take delivery of real gold and real silver following the MF Global debacle obviously reconsidered their options. Thus, due to the massive fraud of the futures markets that was revealed by the MF Global collapse, another huge drop in the OI of gold and silver longs in the Managed Money category occurred during Phase II (as labeled in the above chart) that respectively amounted to an additional respective 11.79% and 7.48% plunge. In essence, it appears that the MF Global collapse served up the exact same price suppression effect as a CME issued initial or maintenance margin hike in gold and silver futures, which forces a tidal wave of unwanted and involuntary liquidation of gold and silver longs that consequently violate technical support lines and trigger technical sells.

Of course, we also have to factor in the temporary OI-increasing effect of the risk-on CME event when they lowered initial margins to a 1:1 ratio with maintenance margins at the onset of November. Still, given the figures presented in the chart above, it seems that bankers used the MF Global collapse to force liquidation of gold and silver longs in the futures market quite rapidly and drastically. Why is this important? This is important because typically strong hands ride out any temporary banker manipulations of gold and silver prices downward. In this case, strong hands, if they existed at MF Global, were not given this opportunity and were forced to liquidate or had their accounts frozen whether or not they desired such an outcome. Furthermore, if primarily strong hands were forced out of the futures market, this would leave the majority of volume in the gold and silver futures markets primarily in the hands of the criminal banking cartel. We’ve seen repeatedly, this past year in the US S&P 500 index, when low trading volume primarily controlled by the banking cartel has translated into curious and inexplicable market bounces of 2% in a single day. In other words, low trading volume allows bankers excessive and easy manipulation over markets. If this was indeed the scenario bankers deliberately created with the MF Global collapse, then the MF Global collapse and simultaneous collapse of open interest in gold and silvers futures certainly would have paved the way for the banking cartel to easily manipulate gold and silver prices.

There was also further circumstantial evidence that bankers used the MF Global collapse to collapse gold and silver futures markets at the end of 2011. For example, in an article posted on the SilverDoctors blog by Jim Willie in which he gathered data regarding the amount of physical gold and silver ounces represented by the longs at MF Global that were standing for delivery in the futures markets before these contracts imploded, he stated: “JP Morgan increased the amount of registered silver and gold by precisely the amount that was suppose to be delivered [by MF Global]…JP Morgan effectively averted both a Comex default and a European Sovereign Debt implosion.”

Silver Lining in the MF Global Debacle?

Can there be a silver lining in the MF Global debacle? I believe that in the long-term, this extremely unethical, negative event could transform into a positive game-changer in the way people buy large amounts of gold and silver. Obviously, the futures market is not a safe market for anyone seeking to take delivery of millions of dollars of physical gold and silver as many MF Global clients learned. The GLD and SLV ETFs, of course, are no safer than any gold or silver futures contract for the same reasons. So in the future, and I mean the immediate future starting now, I believe that large buyers of physical gold and silver will now opt to bypass the bullion bank’s middle men in the futures market and go directly to the gold and silver mining companies to buy large quantities of bullion. This should eventually help usher in the death of futures markets as a mechanism for buying physical gold and physical silver and be a step towards establishing a free market for gold and silver prices for the first time in our lives. Mark Cutifani, CEO of AngloGold Ashanti, recently echoed the same: “Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold.”

People that want to own physical gold and physical silver never should have been buying the GLD, SLV, or gold and silver futures. Now, in light of the MF Global debacle, scores of people will stay away from these fraudulent vehicles for good.

About the author: JS Kim is the Chief Investment Strategist and founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm with a mission to help re-establish the monetary freedom that bankers have stolen from us. Despite believing that gold and silver will remain highly volatile in 2012, JS believes that long-term holders of physical gold and silver will be richly rewarded as bogus paper gold and silver derivatives start collapsing and reach their intrinsic value in coming years. Follow JS on Twitter and Facebook.

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SHANGHAI (Reuters) – China has arrested former executives at two brokerages on charges of insider trading, the securities watchdog said, as part of a crackdown on market malpractice that the new head of the agency has said will be one of his top priorities.

The China Securities Regulatory Commission (CSRC) detailed on its website four cases of market manipulation and insider trading that it has investigated, including two that led to the arrests of former executives at Southwest Securities Co Ltd <600369.SS> and Northeast Securities Co Ltd <000686.SZ>.

The cases are the latest in an increasingly high-profile campaign by CSRC chief Guo Shuqing to stamp out rampant wrongdoing in the country’s stock market, which has languished despite the country’s nearly double-digit economic growth.

In one case, Qin Xuan, a Northeast Securities manager who advised on the restructuring of a Shenzhen-listed pharmaceutical firm, used the information he obtained in that process to trade the company’s stock, and also leaked the information to a friend.

In another case, Ji Minbo, former vice president at Southwest Securities, gained 20 million yuan ($3.2 million) by using information that was not publicly disclosed to trade more than 40 stocks from 2009 to 2011, the CSRC said.

“No matter how concealed illegal practices are, inside traders will eventually be punished by law,” the CSRC said in the statement that detailed Qin’s case.

The other two cases on which the agency published details involved securities consultants using commentators, research reports and media to talk up stocks they own before selling the securities to make a profit.

China has been stepping up its crackdown against illegal trading activities and tightening supervision against fund managers, brokerages, consultants and executives of listed companies in a bid to build confidence in a stock market where illegal trading activities have been rampant.

In August, former stock analyst Wang Jianzhong was sentenced to seven years in prison and fined 125 million yuan, on top of having illicit earnings of the same amount confiscated, becoming China’s first convicted stock market manipulator.

Guo, the former China Construction Bank chairman who became CSRC chief in late October, said in a speech in early December that the regulator would adamantly crack down on accounting fraud, insider trading and other illegal activities.

Earlier this month, the agency exposed the country’s biggest-ever case of stock market manipulation that involved an investment company, Guangdong Zhonghengxin, orchestrating “pump-and-dump” schemes related to 552 stocks, out of which it made 426 million yuan.

The CSRC has also recently published rules that would require listed companies to keep records on anyone who may have access to price-sensitive information.

($1 = 6.3364 Chinese yuan)

(Reporting by Samuel Shen and Jason Subler; Editing by Kazunori Takada)

Copyright 2011 Thomson Reuters. Click for Restrictions.

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By ANDREW DALTON, Associated Press

LOS ANGELES — Despite a fast-approaching deadline set by the mayor and police chief, very few of the anti-Wall Street protesters from Occupy Los Angeles had begun breaking down their tents Saturday on the City Hall lawn – and most said they didn’t intend to.

The Occupy LA encampment was abuzz with activity, but nearly all of it was aimed at how to deal with authorities come Monday’s 12:01 a.m. deadline.

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Some handed out signs mocked up to look like the city’s notices to vacate, advertising a Monday morning “eviction block party.”

Dozens attended a teach-in on resistance tactics, including how stay safe in the face of rubber bullets, tear gas canisters and pepper spray.

Mayor Antonio Villaraigosa announced Friday that despite his sympathy for the protesters’ cause, it was time for the camp of nearly 500 tents to leave for the sake of public health and safety.

The mayor said the movement is at a “crossroads,” and it must “move from holding a particular patch of park to spreading the message of economic justice.”

But occupiers did not intend to give up their patch of park too easily.

Will Picard, who sat Saturday in a tent amid his artwork with a “notice of eviction” sign posted outside, said the main organizers and most occupiers he knows intend to stay.

“Their plan is to resist the closure of this encampment and if that means getting arrested so be it,” Picard said. “I think they just want to make the police tear it down rather than tear it down themselves.”

But some agreed with the mayor that the protest had run its course.

“I’m going,” said Luke Hagerman, who sat looking sad and resigned in the tent he’s stayed in for a month. “I wish we could have got more done.”

Villaraigosa expressed pride that Los Angeles has lacked the tension, confrontation and violence seen at similar protests in other cities. But that peace was likely to get its biggest test on Monday.

Police gave few specifics about what tactics they would use for those who had no intention of leaving.

Chief Charlie Beck said at Friday’s news conference that officers would definitely not be sweeping through the camp and arresting everyone just after midnight.

But in an interview with the Los Angeles Times on Sunday, Beck said that despite the lack of confrontations in the camp’s two-month run, he was realistic about what must happen.

“I have no illusions that everybody is going to leave,” Beck said in an interview with the Times. “We anticipate that we will have to make arrests.”

But he added, “We certainly will not be the first ones to apply force.”

Ue Daniels, 21, said as an artist he’s “as nonviolent as they come” but he planned on resisting removal any way he could.

“I think we’ll comply as far as putting our tents on the sidewalk maybe, that’s something that’s been going around.”

But as far as leaving altogether?

“They would probably have to drag me away,” he said.

He also suspected that though the general consensus among campers is to stay, he expects many will change their mind once police arrive. “I don’t know who’s going to stay, you can say something, but you never know until you’re in the situation how you’re going to react.”

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