House committee hearing on new lock-up rules sure was interesting

I listened to the whole thing and a number of things struck me:

  1. Boy, has Carl Fillichio changed his tune since his April 16th conference call with reporters, when he stonewalled and refused to answer reasonable questions. (The transcript to that call is here, but to fully appreciate the extent of his obnoxiousness, listen to the audio.)
  2. Keith Hall, former BLS Commissioner and now a Senior Research Fellow at the Mercatus Center of George Mason University, is one straight shooter. He told the hearings that the Department of  Labor changes were “an effort to get traders out of the lock-ups.” What he didn’t explain, however, is why steps weren’t taken earlier to boot traders out of the lock-ups given that they’ve been there for years, and why the DOL won’t acknowledge this situation. (The only thing I can think of is that someone with influence wants the traders there. Hall said USDA likes traders in the lock-ups.)
  3. Some of the Dems on the committee seemed like they would be happy to just get rid of lock-ups, which they appear to think are designed for Wall Street fat cats. Hall, on the other hand, says he still sees value in lock-ups, but that given all the technological changes, they don’t have to take place under the same rules as in the past.
  4. Committee chairman Issa seemed to get nervous when Democrat Tierney  suggested that Bloomberg and Reuters are out to serve their clients and not the public.

Here’s some relevant background that bears repeating:

  1. It was Carl Fillichio who granted RTTNews access to the lock-ups last year, according to a DOL spokesperson. He did this when it was widely known that trading firms were starting front news agencies to gain admission to lock-ups. RTTNews had all the warning signs including key personnel tied to the Montreal-based prop trading firm, Vigilant Global (formerly Vigilant Futures), which had earlier funded CEP News. RTTNews — along with Bond Buyer and Need to Know News (NTKN) — were not accredited to participate in the revamped lock-ups, but that doesn’t answer the question of why Fillichio let RTTNews in in the first place.
  2. John Harada, the former head of NTKN, has boasted to financial industry insiders that his former news agency, a front for JED Capital, was guaranteed access to lock-ups thanks to his ties to Democratic Illinois senators. This information was given to me by sources who were astounded to hear Harada make such a claim.
  3. Fake news agencies fronting for hedge funds/prop traders continue to access lock-ups around the world.

 

Hedge funds (traders) with DOL lock-up connections

These are the ones that I know about, but there are more:

  • JED Capital of Chicago used to be tied to Need to Know News (NTKN)
  • Vigilant Global (formerly Vigilant Futures) of Montreal started the news agency CEP News which accessed several lock-ups around. CEP News was subsequently folded, but its marketing director went to work for RTTNews

 

 

RTT News, NTKN and Bond Buyer booted out of Department of Labor lock-ups

Here are the news organizations that have been officially credentialed for Department of Labor lock-ups, effective July 6, 2012:

  1. Agence France-Presse
  2. Associated Press
  3. Bloomberg News
  4. Bloomberg Television
  5. CNBC
  6. CNN
  7. Dow Jones Newswires
  8. Fox Business Network
  9. Jiji Press
  10. Kyodo News
  11. Market News International
  12. MarketWatch
  13. The Nikkei
  14. Thomson Reuters
  15. Tribune Company

This is the old Department of Labor lockup list:

  1. Associated Press
  2. Bond Buyer
  3. Bloomberg
  4. Bloomberg TV
  5. CNBC
  6. CNN
  7. Dow Jones
  8. Fox Business
  9. Jiji Press Agency
  10. Kyodo News
  11. Market News
  12. MarketWatch News
  13. Need to Know News
  14. Nikkei News
  15. Reuters
  16. RTT News (replaced Potomac Radio last summer)
  17. Thomson Financial

So who got booted?

  1. Bond Buyer
  2. Bloomberg TV (but presumably it’s rolled into Bloomberg)
  3. Need to Know News
  4. RTT News
It’s no surprise that the strange news agencies, Need to Know News (tied to JED Capital) and RTT News, were kicked out. What’s truly surprising is that  NTKN survived this long and that the DOL granted RTT News access less than a year ago.
I’m not quite sure why the Bond Buyer got kicked out as I’ve never really looked into it.

And who got added?

  1. Agence France Presse
  2. Tribune Company

Makes sense to me.

Shirley v. Jed Capital and John Harada: An Update on the lawsuit

This case promises to offer interesting insights on the relationship between strange news agencies and proprietary trading firms, but, wow!, has it ever been taking a long time to get the information out. So, given that justice seems to be delayed, here are some court documents to tide you all over until next month’s hearing. (Discovery to be completed by 4/13/2012. Status hearing by telephone set for 4/18/2012 at 8:45 a.m.) First off, it seems that since I last posted documents, Jed Capital has countersued Christopher Shirley and his brother, John Shirley. Here’s the Counter-Defendants’ Answer to the Counterclaim and Third-Party Complaint to get things started: Shirley v. Jed Capital and John Harada: An Update More documents to come…

March 10, 2012

Here are the witnesses as named in a document filed on February 4, 2011: The Plaintiff, Christopher Shirley, in the above entitled matter files this document in compliance with the initial disclosure requirements of Local Rule 26.

I. WITNESSES KNOWN TO PLAINTIFF AT THIS TIME: A. Christopher Shirley Mr. Shirley is the Plaintiff in this matter and will provide testimony relevant to allegations of the Complaint, Answer, Affirmative Defenses and Counterclaims. B. David Oosterbaan  Mr. Oosterbaan will testify concerning the finances of Jed Capital; payment of expenses; the financial relationship between Jed and Need to Know News (NTKN). Mr Oosterbaan will also testify concerning the London Stock Exchange and ISO Projects. Mr Oosterbaan will also testify concerning Plaintiff’s ongoing complaints concerning lack of resources and internal charges. C. Michael Pelech Mr. Pelech will testify concerning his authority and responsibility as a manager of JED. Mr. Pelech will testify concerning the management of JED by John Harada and will further provide information concerning the financial aspects of Plaintiff’s investment in JED. Mr. Pelech will also testify concerning the relationship between JED and NTKN. D. Christopher Keating Mr. Keating will testify that Christopher Shirley and John Shirley did not and were unable to sabotage the JED software. He will further testify concerning the relationship between JED and NTKN. E. Madala Rao Mr. Rao was a member of JED and an employee. His employment was terminated. Mr. Rao will testify concerning the relationship between JED and NTKN. F. David Berger Mr. Berger will testify concerning the fact that he was on the JED payroll but never worked for JED. It is anticipated that he will testify that he worked for NTKN. G. Jeff Gomberg Mr. Gomberg was a partner of EV. EV had a business relationship with JED. EV filed suit against JED alleging mismanagement of JED. H. Ben Jackman Mr. Jackman was a partner of EV Financial Systems. EV had a business relationship with JED. EV filed suit against JED alleging mismanagement of JED. I. Paul Horak Mr. Horak will testify concerning the use and management of the LRP Program subsequent to August, 2009. J. Pedro Espinoza Mr. Espinosa was an employee of JED. He was a system operator of the LRP Program and will testify concerning the mechanics of the LRP operation. K. Vlad (Last name is not known at this time.) This witness (Vlad Pasman?) will testify as to the operations of JED and the relationship between JED and NTKN. L. Mark Lupei Mr. Lupei was the accountant for JED. He will testify concerning the finances and financial records of JED Capital. M. John Harada Mr. Harada will testify in his own defense. N. John Shirley Mr. Shirley will testify that the allegations of the Counterclaims are false. O. Kenneth Alpart From Harrison Trading. Mr. Alpart is a previous business partner of Mr. Harada. P. Doug Gerard From Harrison Trading. Mr. Gerard is a previous business partner of Mr. Harada. Q. Elrick Williams From Allston Trading. Mr. Williams is a previous business partner of Mr. Harada. R. Robert Jordan From Allston Trading. Mr. Jordan is a previous business partner of Mr. Harada. S. William DiSomma From Jump Trading. Mr. DiSomma is a previous business partner of Mr. Harada. T. Paul Gurinas From Jump Trading. Mr. Gurinas is a previous business partner of Mr. Harada. U. Eddie Linker From JED Capital. Mr. Linker was a partner when JED was formed. V. Doyle Olsen From Maverick Trading. Mr. Olsen managed Maverick Trading while Plaintiff was employed there. W. Clint Rhea From Maverick Tracing. Mr. Rhea worked at Maverick Trading and later worked with Mr. Harada and NTKN. X. Erik Strom Mr. Strom was my employer at SG Cap Trading. Y. Robert Nawrocki Mr. Nawrocki entered into a business relationship with Mr. Harada that went sour. Mr. Harada continued the project without including Mr. Nawrocki.

More on the Statistics Canada Lock-ups

After learning that NTKN, Econolive and World Business Press are all participants in Statistics Canada lock-ups, where sensitive information is released, I sent a second email to their media representative on Sunday:

I have a follow-up question that I would like to ask to the appropriate people at Statistics Canada:
Do you have concerns about letting Need to Know News, World Business Press and Empire New (Econolive) and, in the past, CEP News into your lock-ups given that none of these companies appear to have subscribers/customers and two have been established to have close relationships with proprietary trading companies. I am referring here to the ties between NTKN and Jed Capital and those between CEP News and Vigilant Futures, the latter of which secretly funded the former.

Here is the reply I received Tuesday:

We have explained the criteria for attending lock-ups in our previous email. We have nothing further to add.

May 6

Read legal documents for Shirley vs. JED Capital, John Harada

I have posted Christopher Shirley’s complaint against JED Capital and John Harada on Scribd. Cutting and pasting is not possible, but there are some juicy bits about how NTKN was funded including on page 6. Read it yourself and feel free to reference the best sections in the comments.

Shirley’s asking for $20 million, but when I was a working journalist, they used to tell us not to report these figures, which are essentially meaningless given that the plaintiff can ask whatever he wants (so long as he’s not worried about pissing off the judge.)