Corruption Culture And Wall Street Meltdown

[Policing Wall Street] 

Trillions of dollars in transactions take place on Wall Street and yet there was never a culture of fighting transgressions and corruption.

In fact- I know through experience- that those who attempted to expose corruption, drug dealing, murder and even rapes of female employees were blacklisted and ostracized.

This will explain how and why Bernard Madoff, later, could get away with his massive multi-billion dollar crimes on Wall Street.  The people who were supposed to police Wall Street were out to lunch- and there were many.

As many readers of my column now know, beginning in early 1991 I had written numerous letters to the Securities and Exchange Commission (SEC) about violations of federal securities laws at the American Stock Exchange.  I also wrote to the SEC about a series of rapes and sexual assaults that had been perpetrated by a member of the Amex Board, who was a senior managing director of Bear Stearns.

Concomitantly I wrote numerous letters to members of the Board of the Amex, including Paul Volcker, Richard Ravitch, Alair Townsend, Burton Malkiel and others about violations of federal securities laws and about a series of rapes and sexual assaults. As I have discussed in previous columns, these serious crimes were never pursued under the SEC Chairmanship of Arthur Levitt.

My letters to the Board and the SEC were quite specific. But the SEC and the Amex refused to investigate my charges of pandemic violations of federal securities laws. I shall provide an example of the specificity of my letters.

Front running is the illegal practice of a specialist or stock broker executing orders for its own account prior to executing orders for the account of its customer.

In one 1991 letter to William Schreyer, then President of Merrill Lynch, I detailed massive front running of the XMI via a Merrill Lynch account in Zurich, Switzerland account.  (I even provided the Zurich office’s code.)  I named the Merrill Lynch broker, Spencer Myers, who executed these orders.

I named the Merrill Lynch floor broker, who approved these front running orders; he was the Merrill Lynch officer in charge of the American Stock Exchange.  I even stated that an arrangement had been made whereby the Merrill Lynch broker telephoned the specialist in the XMI (Spear Leeds and Kellogg by the way) and stated that he was bringing in an order that was front running the XMI. 

This was done so that SLK could front run the order in the futures market.  How did I know this, you might inquire?  Spencer Myers, the broker who executed the orders, provided this information to me.  Schreyer referred my letter to the Amex, which never investigated. 

I provided other instances of manipulation of the XMI by Morgan Stanley; insider trading on the XMI by Edwin Crooks, an Amex Board member; illegal trading in off floor accounts of the XMI by Amex floor brokers; front running of the XMI by SLK; etc.  And all this information had been provided to me by individuals, who had participated in this illegal trading.

At the time the XMI was the premier product at the Amex. The Amex would be destroyed if the American public knew of the enormity of the illegal trading in the XMI.

Without any action being undertaken, I wrote to Representative John Dingell, whose House Commerce Committee had legislative oversight of the Securities and Exchange Commission. Representative Dingell wrote to the SEC in 1991 and wanted to know why no action was taken.

It was then that the members of the Board decided that I had to be stopped. A top board member actually told a senior executive at Wagner Stott, a clearing subsidiary of Merrill Lynch: “Manfredonia knows enough to close down the Amex.” 

An Amex Board member was Paul Volcker; former Chairman of the Federal Reserve System. In the early 1980s, under his watch, Governors of the Federal Reserve leaked information to Bear Stearns and Drexel Burnham in advance of interest rate moves. This is fully discussed in my article, “Wall Street Corruption:  Easy As A-B-C,” which was published in The Black Star News on May 17, 2009.

And Volcker knew that his reputation would be ruined if he were to be linked to another insider trading scandal. Even worse, specialist units at the Amex were losing money and the specialist unit of Miceli-VanCaneghan had been cut off by its benefactor Bear Stearns. In my letter to Alan “Ace” Greenberg, former Chief Executive Officer of Bear Stearns, I recounted Louis Miceli’s anti-Semitic comments.

So Miceli, former Senior Floor Governor, and Robert VanCaneghan, a member of the Amex Board, were now forced to find a way to earn big money- money laundering was not producing sufficient profits yet. And they suspected that I knew of their money laundering enterprise.

They were in the midst of producing a stock fraud, PNF, with the help of Al Avasso, a self-proclaimed front man for the Italian Mafia. This stock fraud, PNF, was to be listed on the Amex where it was hoped that tens of millions would be made.

Miceli and VanCaneghan were desperate for money. As was Edwin Crooks, another specialist and member of the Amex Board, because once Morgan Stanley was no longer the primary mover of the XMI, Crooks could not earn millions by front running the XMI.

So a plan was hatched. Miceli and VanCaneghan would go to the Special Fraud Squad of the New York Police Department and say that I had threatened to kill Miceli. Of course this was a lie.