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CARL MCCALL, COMPTROLLER, HELPS THE NYSE TO STEAL YOUR MONEY

September 13, 2016

CERTIFIED MAIL  7000 0520 0020 5496 3964

RETURN RECEIPT REQUESTED

 

Edward Manfredonia

8337 St. James Avenue

Apt. 4B

Elmhurst, New York 11373

22 February 2001

 

The Honorable H. Carl McCall

Comptroller

State of New York

633 Third Avenue

New York, N Y 10017

 

Dear Comptroller McCall:

 

I have been proclaimed to be a whistle-blower.  I have appeared in several issues of Business Week and have exposed crime on Wall Street.

  1. Scandal On Wall Street, 26 April 1999, which exposed massive and endemic crime at the American Stock Exchange
  2. The AMEX Is Starting To Feel The Heat, 3 May 1999, which displayed part of my missive to Frank Zarb in which I stated that crime was pandemic at the AMEX
  3. A Scandal That May Not Die, 9 August 1999, which exposed massive illegal trading at the New York Stock Exchange- trading which the NYSE continues to cover up.

 

You are a member of the Board of Directors of the New York Stock Exchange.  As such I am requesting that you

  1. present this missive and the accompanying documents to the Board during a meeting of the Board of Directors of the New York Stock Exchange
  2. demand that an impartial investigation be carried out by the NYSE’s public accounting firm of PricewaterhouseCoopers LLP and by an independent law firm, which shall not lie, an oxymoron I am sure
  3. utilize your power as Comptroller of the State of New York, which is responsible for the investment of funds, to expose the extent of illegal trading and the cheating of the public by NYSE floor brokers and the management of the NYSE in the illegal trading known as flipping
  4. request the resignation of William R. Johnston as President of the NYSE
  5. request the resignation of Edward Kwalwasser, Group Vice President of the NYSE

 

The extent of illegal trading by members of the New York Stock Exchange is being covered up.  Approximately three hundred NYSE floor brokers (two dollar brokers) were involved in this illegal trading.  Also, many specialists were involved.  Mary Jo White has declined to indict more members of the NYSE because she wishes the extent of the crime to be covered up.  Oakford alone had more than one hundred NYSE floor brokers in its employ illegally trading securities against customer orders.  After all, America has the most important financial system in the world and the most regulated.  In reality Wall Street is run like a corrupt third world country.  But enough of that.

 

William T. Johnston, when he was Vice Chairman of the NYSE and a partner in LaBranche Securities, illegally traded stocks in which he specialized (AT&T, etc.) for his personal account at Spear Leeds and Kellogg.  Furthermore, Johnston had New York Stock Exchange floor brokers illegally trade for him for his personal account at Spear Leeds and Kellogg.  Last year I was informed that John Ruane, who had illegally traded for Oakford Corp., had illegally traded for an account of William T. Johnston at the clearing firm of Spear Leeds and Kellogg.  It is not proper that an individual who violated federal securities laws should be retained as President of the New York Stock Exchange.

 

In testimony before Judge Jed S. Rakoff, Michael Frayler described an incident involving his illegal trading for Oakford Corp.  Frayler was asked

  1. Did there come a time when you became aware that what you were doing might be wrong?
  2. Yes
  3. How did you become aware of that?
  4. While I was trading in the crowd, AT&T, approximately 1996, I think it was, the specialists, I had bought 5,000 shares. And not long after that, I sold out 5,000 shares and I made like a quick 3/8ths of a dollar, the specialist turned to me and said, Nice trade.

And I said, thanks.  70 Percent of it is mine.  I didn’t think that there was anything wrong with.

A that time there was a gentleman in the crowd named Barry Kaplan, who said, Don’t do that.

I said, My orders are clocked

That specialist at that time was William Johnston, which was the vice chairman of the exchange, and he just turned around and said, I didn’t hear it

  1. Didn’t hear your conversation or
  2. When I said, And I get 70 percent of that, he turned around and said, I didn’t hear that

( I have enclosed copies of the requisite pages from the transcript for your perusal.)

 

Thus, William T. Johnston knew that this trading by NYSE floor brokers was illegal, but not only did Johnston in violation of his position as Vice Chairman of the NYSE refuse to report Frayler for trading illegally, but Johnston engaged in larger illicit acts by engaging in trading which is a direct violation of the Securities and Exchange Act of 1934 by acting as a specialist in stocks and then simultaneously trading in these stocks for his personal illegal account at Spear Leeds and Kellogg.

 

Johnston also had New York Stock Exchange floor brokers, such as John Ruane, illegally trade for his account at Spear Leeds and Kellogg- an act which he knew to be illegal from the damning testimony of Michael Frayler.

 

Recently Johnston was deposed by Dominick Amorosa in John D’Alessio’s lawsuit against the NYSE.  Johnston’s testimony is sealed.  You should demand that Johnston’s testimony be unsealed and that the Board of the New York Stock Exchange be permitted to examine Johnston’s testimony to determine if Johnston traded illegally.  Johnston then must be required to resign immediately from the New York Stock Exchange.  But I know that William T. Johnston illegally traded stocks in which his firm, LaBranche, specialized for his personal illegal account at Spear Leeds and Kellogg.

 

And what is even more important:  Prior to Johnston’s ascension as President of the NYSE, the NYSE had determined that Johnston had violated federal securities laws by trading illegally.  Yes, that is correct.  The NYSE and its Compliance Department knew that Johnston had violated federal securities law and despite Johnston’s violation of federal securities laws, the NYSE permitted Johnston to become President of the NYSE.  That is a major cover up and violation of federal securities laws.

 

Now we must turn our attention to Edward Kwalwasser.  Kwalwasser permitted this illegal trading by NYSE floor brokers and Kwalwasser knew that this trading was illegal.  Kwalwasser and his confederates at the New York Stock Exchange in the legal and regulatory apparatus knew that this trading by NYSE floor brokers was illegal- despite their protestations and lies.

 

You must understand that Kwalwasser’s lies concerning the meaning of an interest is just that blatant lies.  How can someone

1.who receives 70% and even 90% of the profits in the trade of securities of his own

determination;

  1. who, the NYSE floor broker, determines not only the security but the quantity to

be traded;

  1. who, the NYSE floor broker, determines the quantity of the order, and not the order in toto, to be executed;
  2. who, the NYSE floor broker, can contribute money to an account; and most importantly,
  3.  who where the NYSE floor broker can initiate an opening position against public orders for this account, in which the NYSE floor broker receives a large percentage of the profits and shares in the losses,- yes, initiate opening transactions in direct contravention of the Securities and Exchange Act which bars floor traders at an exchange from initiating opening transactions against public customers
  4. how can this NYSE commission broker not be violating federal securities laws?

 

Of course, the NYSE floor broker violated federal securities laws and had an interest in an account.  Kwalwasser committed perjury in federal district court when he denied this.

 

Furthermore Kwalwasser knew that this trading by NYSE floor brokers was illegal.  How?  On 29 July 1997 I, Edward Manfredonia, confronted Kwalwasser at a public hearing on micro cap stock fraud held by Denis Vacco, the New York State Attorney General.  And a public record exists.  I questioned Kwalwasser concerning my missives to him in which letters I reported that Pat Schettino had illegally traded stocks on the New York Stock Exchange for Bullseye Securities while Schettino was a partner in Spear Leeds and Kellogg and was not a registered trader for Bullseye Securities.

 

Now Kwalwasser cannot deny that this was illegal.  In a letter, dated March 5, 1997, Philip Glynn, a Principal Sales Practice Analyst, states that the Enforcement Division was notified of he American Stock Exchange’s investigation into this illegal trading.  Furthermore, Glynn states that the situation had been reviewed by our Market Surveillance Division and a Surveillance Unit of Member Firm Regulation.

 

Follow the logic.  The AMEX notified the NYSE of an investigation into illegal trading.  I wrote to the NYSE concerning this illegal trading.  I was told that the NYSE knew of the AMEX investigation into this illegal trading.

 

Then on 29 July 1997 I confronted Kwalwasser at a public hearing concerning the illegal trading of Schettino, Lewis, Proto (very important), et alia and I describe the illegal trading to Kwalwasser.  I then present Kwalwasser with a copy of the charges against Schettino, Lewis, Proto, Roffler, et alia.  Ergo, Kwalwasser knows that trading against public orders by NYSE floor brokers is illegal because it was illegal on the AMEX.

 

And most important are the charges against Proto because:

  1. Proto was responsible for only one trade- a trade which he recommended
  2. Proto did not even execute the trade himself
  3. Proto received a share of the profits
  4. It was determined that Proto traded illegally by the AMEX and that Proto illegally shared in the profits of the trade- Proto had the check for his profit in the trade made out to his mother.

 

Viola!!  Kwalwasser lied to Judge Jed S. Rakoff in federal district court when he said that the NYSE viewed this trading as legal.

 

And the NYSE, especially William T. Johnston, President of the NYSE, cheated the New York taxpayer and pension fund when he illegally traded stocks in which he was the specialist for his personal account at Spear Leeds and Kellogg.  Furthermore, Johnston had an NYSE floor broker, the name of John Ruane has been linked to him, illegally trade for an account which Johnston illegally maintained at Spear Leeds and Kellogg.

 

Why was this account at Spear Leeds and Kellogg illegal?  Johnston never declared the account to the NYSE as is required by NYSE rules and regulations and SEC law.  Johnston was a partner in LaBranche Securities at this time and Johnston maintained trading accounts at LaBranche.  LaBranche was self clearing and this meant that Johnston, as a partner in LaBranche and member of the NYSE, received more favorable risk (that is that Johnston could trade millions of dollars in securities with minimal capital contributions on his part) than he could receive at Spear Leeds and Kellogg.

 

Thus, Johnston would have received much more favorable risk and would have been subject to a much smaller capital contribution to the account if Johnston had traded exclusively at LaBranche.  So why did Johnston not trade for his account at LaBranche?  Because Johnston’s illegal trading would have been exposed to the other partners, back office staff and clerks as trading for his personal account, stocks in which LaBranche was the specialist.  And he could not have had John Ruane and other brokers trade for him illegally without drawing attention to himself.  At Spear Leeds and Kellogg, which is essentially a racketeering institution and which should be indicted under RICO, every law imaginable was violated.  Spear Leeds and Kellogg partners knew that this trading was illegal, especially because of the trading debacle of Bullseye Securities which had occurred on the AMEX and involved a partner in Spear Leeds and Kellogg, Pat Schettino.  Just look at what happened to Oakford, but Mary Jo White wished to stop the investigation.  Wall Street is too important to abide by the laws of the United States.

 

Yes, I realize that this is traumatic.  You are the Comptroller of the State of New York and the New York Stock Exchange is cheating the pension funds of the State of New York by trading against public orders.  And you are on the Board of the New York Stock Exchange.  Furthermore, you aspire to be Governor of the State of New York and the New York Stock Exchange is cheating the public.  And the NYSE is cheating the taxpayers of the State of New York.  Do not believe that the NYSE provided liquidity, etc.  Just examine the charges by the SEC and the trades from the Department of Justice.  That is sufficient.

 

And precisely what are you, a public official, doing on the Board of Directors of the NYSE?  You are preparing to have Wall Street on your side during your election and damn the taxpayers of the State of New York.  I do not believe that it is a coincidence that after the exposure of a massive illegal trading scheme at the NYSE, you were elected to the Board of Directors.  And please do not tell me that you are a public watchdog.  Because if you are, you most assuredly have not been barking a warning.

 

I have enclosed for your perusal:

  1. the relevant pages from Vacco’s hearing
  2. Glynn’s missive to me
  3. several news articles from The Street.com written by Bob Kowalski
  4. copies of the transcript from Michael Frayler
  5. copies of he trades from the Department of Justice
  6. copies of the trades from the original civil lawsuit initiated by the SEC
  7. the seminal article, Scandal On Wall Street
  8. the article, A Scandal That May Not Die

Sincerely,

 

 

 

Edward Manfredonia

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