All Your Homes Are Belong To Us

Reading the attached insider memo from Wells Fargo sent a chill up my spine. It appears they are preparing an aggressive and vicious counter attack against underwater home owners who are challenging the legality and validity of their mortgage contract. While they are certainly legally permitted to challenge challenges to their paperwork, some of the things listed are clearly out of line. An example is the appraisal reevaluation. At the time of the note, the bank trusted and used an outside appraisal company. Now it appears they will be determining the past value based on inside analysts to search for appraisal fraud. Property appraisal is an art not a science--- going down this road will only give the banks the power to twist things anyway they wish. This is simply just one example of the viciousness of the memo against the public. Politicians and banks need to think long and hard before allowing or implementing draconian measures against an already stressed public. "All your homes are belong to us", says Wells Fargo regardless of legality it seems. This is how rebellions and revolutions happen. Don't say you were not warned.


Wells Fargo Funding
Repurchase and Rescission Process Overview
October15, 2010
1
This information is for use by mortgage professionals only and should not be distributed to or used by
consumers or other third-parties. Information is accurate as of date of printing and is subject to change
without notice. © 2010 Wells Fargo Bank, N.A. All Rights Reserved.
A New Reality for Repurchase and Rescission Requests
In today’s mortgage market, repurchase and rescission requests from investors and mortgage insurance companies (MI companies) have become commonplace. This has been driven by the increase in delinquent borrower accounts, as well as the liquidation of foreclosed properties. These macro-economic changes have prompted increased investigation into potential breaches of representations and warranties.
Wells Fargo is committed – just like you are - to honoring contractual obligations with investors and mortgage insurance (MI) companies*. We want to ensure that the resolution process for Repurchase and Rescissions is as smooth and swift as possible.
Some demands can be rectified simply by obtaining missing documents. But more often, as you know, the demand process is more complex. Demands are generally received in connection with misrepresentation of income, occupancy, employment, or regarding undisclosed debt or mortgages, and valuation concerns.
Improvements to the Process
Because of the complexity of each demand, the numerous ways to resolve them, and the seriousness of these issues to both of our businesses, Wells Fargo is taking steps to improve the demand process.
Here are some changes and tools we’re implementing to improve the process:
 Enhancing communication and collaboration with our clients by:
o Engaging you as early as possible.
o Working closely with you to clear deficiencies discovered on the loan during investor audits.
 Repurchase and Rescission Scenarios Exhibit – This document provides insight on how Wells Fargo approaches many of the most common demand issues.
 Improving our demand process (outlined below), effective October 18, 2010
*In this communication, investors and MI companies are collectively referred to as “investors” and reference will be made to both repurchase demands and MI rescissions jointly as “demands”.
Overview of Wells Fargo’s Demand Process – Effective October 18, 2010
Step 1
Wells Fargo receives a deficiency notice or demand from the investor. Typically, Wells Fargo has 60 days to resolve the issue.
Step 2
Wells Fargo notifies the Seller and provides supporting documentation when available. At this time, the Seller is given twenty-one calendar days to provide an explanation, facts or documentation to demonstrate that the mortgage loan complies with the requirements. If the Seller does not respond within 14 days of the initial notice, Wells Fargo will follow up with the Seller.

(Continued on page 2)
Wells Fargo Funding
Repurchase and Rescission Process Overview
October15, 2010
2
This information is for use by mortgage professionals only and should not be distributed to or used by
consumers or other third-parties. Information is accurate as of date of printing and is subject to change
without notice. © 2010 Wells Fargo Bank, N.A. All Rights Reserved.
Overview of Wells Fargo’s Demand Process (Continued)
Step 3
Wells Fargo will begin internal research (concurrently with Step 2) to resolve the loan issues. During this process, Wells Fargo will determine if there is a missing document and if the document can be located.
For all other issues, Wells Fargo will perform research to determine if there is evidence that proves or disproves the validity of the issue. For example, if the investor provided a review appraisal indicating a value deviation, Wells Fargo will order an independent appraisal review of the origination appraisal and the investor’s review appraisal from a third party vendor.
Step 4
The Seller responds to Wells Fargo’s request and either agrees with the investor’s findings or provides an explanation, missing documents or information for Wells Fargo to utilize in drafting an appeal to the demand or MI rescission notification.
If an appeal is not practical, based on all the information collected, Wells Fargo will notify the Seller, allowing them a final opportunity to provide additional documentation.
If an appeal is submitted to an investor, the Seller will be notified of the result of the appeal. If the Seller provided a response that specifically addressed the investor's issues and the investor deems the information to be insufficient to rescind the repurchase demand or MI rescission, the Seller will be given seven (7) calendar days to provide new documentation to support a second appeal. (Please note: Even if documents are provided by the Seller, the appeal may not be successful).
If attempts to refute the demand or MI rescission are unsuccessful, Wells Fargo will be obligated to repurchase the loan from the investor or accept the MI rescission. Likewise, Wells Fargo will issue a demand to the Seller for the repurchase of the mortgage loan pursuant to the provisions of the Loan Purchase Agreement or reimbursement for costs and expenses, if applicable.
Questions?
• Send repurchase letter questions to our mailbox at IRMRepurchaseResponses@wellsfargo.com. The mailbox is monitored daily with replies to inquiries completed within 3 business days, or
• You may contact a member of your regional sales team.

Shared Vision, Shared SuccessSM. Together, we can achieve long-term industry success. Learn more today.
Wells Fargo Funding
Repurchase and Rescission Scenarios Exhibit
Page 1 of 6
When an MI rescission or repurchase demand is received by our Wells Fargo Repurchase Operations team, Wells Fargo will research the issues to determine if there was a breach of a representation or warranty, or non-compliance with a term of the Mortgage Insurance policy.
 If there is no breach, the analyst will appeal the repurchase demand or MI company decision.
 If there is a breach, the analyst will recommend the loan for repurchase. If the loan is recommended for repurchase, the recommendation is escalated for a second level review. The final determination to repurchase or appeal the demand is made in the second level review.
The matrix on the following pages provides insight into how Wells Fargo analysts review each demand to help determine if there is a breach of a representation and warranty. Examples provided in the matrix are not all inclusive, but represent some of the more common and complicated types of MI rescissions or repurchase demands.
Note: This information is provided as general guidance only and does not change, alter or modify any contractual obligations between Wells Fargo and the Correspondent Seller. Individual cases may vary. Information provided below is subject to change at any time and without notice.
Scenario
Action/test performed by Wells Fargo
How you can help
1
Undisclosed Debt
Definition: The borrower has additional debt that was obtained prior to the closing of the subject loan, but it is not reflected on the origination credit report or application. It is not included in the qualifying ratios for the subject loan.
 Was debt included in the original underwriting calculations?
 What date was the debt opened? If it was opened in the same month as the loan closing date, the exact date must be verified to ensure that the debt was opened prior to closing.
 Does the new DTI, including the undisclosed debt, exceed the allowable DTI for the program?
 Provide evidence that the debt was included in the qualifying debt ratio.
 Provide documentation that the debt was opened after the subject loan closing date.
 Provide debt ratio calculations documenting that the debt ratio would have remained at an acceptable level.
 Provide documentation that the debt or a portion of the debt was eligible for exclusion from the debt ratio (e.g. provide lease if the property was a rental).
Wells Fargo Funding
Repurchase and Rescission Scenarios Exhibit
Page 2 of 6
Scenario
Action/test performed by Wells Fargo
How you can help
2
Occupancy Misrepresentation
Definition: The occupancy of the subject property is misrepresented in an effort to obtain more favorable financing options.
The decision to repurchase for this breach is based on an evaluation or weighting of the evidence presented. As a general principle, Wells Fargo considers occupancy misrepresentation documented if the answer is “yes” to at least two of the following:
Closing Documentation
1. Does the appraisal indicate that the property is tenant-occupied?
2. Is the homeowner’s declaration page reflecting a landlord policy?
3. For a refinance - is the documentation provided to verify income and/or assets reflecting a different address for the borrower?
4. Is the distance between the subject property and the borrower’s employment unreasonable for commuting?
Post-closing Documentation
5. Is the property tax statement for the borrower reflecting a different mailing address?
6. Did the borrower change their mailing address for servicing communication?
7. Does a reverse directory search of the borrower’s home phone reflect a different home address?
8. Is there documented verification that the utilities are not and have not been in the borrower’s name?
9. Are there public records (driver’s license, voter registration, homestead exemption) that indicate the borrower never moved into the property?
10. Do the bankruptcy discharge papers indicate a different home address for the borrower for the timeframe following closing?
11. Is there documented communication between the borrower and a third party investigator indicating the borrower never occupied the subject property?
 Provide documentation that proves that the borrower occupied/ occupies the subject property.
 If the borrower intended to occupy the property, but did not, provide an explanation for the extenuating circumstances that prohibited the borrower from moving into the property.
 Offer an explanation and documentation to refute the evidence provided (e.g. the address that the borrower is utilizing for servicing correspondence and property tax records is actually their business address).
Wells Fargo Funding
Repurchase and Rescission Scenarios Exhibit
Page 3 of 6
Scenario
Action/test performed by Wells Fargo
How you can help:
3
Income Misrepresentation
Definition: The income information and/or documentation that were provided at origination were either altered or falsified.
 Does the new income documentation provided reflect the same time period as the 1003 application?
 Is the new income documentation re-verifiable? If re-verification is not possible, is the investor’s documentation clear and complete?
 Was the original documentation altered or falsified?
 Does the DTI utilizing the new income exceed an allowable DTI for the program?
 Provide documentation that the verification provided does not represent the same time period as the 1003 application.
 Provide new documentation (verbal or written) that supports the original income documentation.
4
Employment Misrepresentation
Definition: The employment status (self employed vs. W-2; Full time vs. Part time), dates or job title are misrepresented on the loan application and supporting documentation.
 Does the documentation provided reflect the same time period as the 1003?
 Are the differences in employment substantial? E.g. was the verified profession essentially the same as the stated profession (supervisor vs. manager).
 Is the documentation re-verifiable? If re-verification is not possible, is the investor’s documentation clear and complete?
 Provide documentation that the verification provided does not represent the same time period as the application.
 Provide new documentation that supports the original verification.
Wells Fargo Funding
Repurchase and Rescission Scenarios Exhibit
Page 4 of 6
Scenario
Action/test performed by Wells Fargo
How you can help:
5
Valuation/Appraisal Misrepresentation
Definition: The original appraiser did not follow USPAP or FIRREA standards when developing the origination appraisal.
Wells Fargo will order an independent third party review of the origination appraisal and the review appraisal from a vendor (at Wells Fargo expense).
As part of the review process, the vendor will:
 Obtain a property detail report for the subject property that contains an aerial photo of the subject property and additional sales,
 Verify the sale date, price and history for all sales referenced within any of the appraisal reports provided,
 Verify the appraiser’s licensure,
 Ensure that the appraiser was appropriately licensed as of the effective date of the appraisal and make note if the license had been revoked at any time,
 Analyze market conditions as of the effective date of the appraisal and pull additional market trend data if necessary,
 Summarize all items of note, in the form of an e-mail, to be addressed by the original appraiser. MLS sheets for the sales that have been utilized will also be requested, in addition to any other additional local market support that is available. Items of note will include, but are not limited to:
o Concerns or discrepancies noted by the local market review,
o Concerns noted within the MI Rescission letter or Demand Request,
o Reviewer concerns not noted by the local market review or rescission letter.
After a response is received from the original appraiser, the vendor makes a determination about whether or not the value was supported as of the effective date of the appraisal.
The Wells Fargo analyst will determine the following:
 Does the review support the original value?
 Does the reviewer state that the original appraisal contains USPAP or FIRREA violations?
 Encourage the origination appraiser to provide the Wells Fargo vendor with all requested documentation.
 Provide an independent review appraisal that supports the original appraisal.
Wells Fargo Funding
Repurchase and Rescission Scenarios Exhibit
Page 5 of 6
Scenario
Action/test performed by Wells Fargo
How you can help:
6
Missing Docs
Definition: One or more required documents were not delivered to the investor.
 Was the document applicable or required?
 Can the document be located on the Wells Fargo imaging system?
 Can the document be retrieved by contacting the original provider (e.g. missing title policy)?
 Provide the document that is being requested.
 Provide evidence that the document was not required or applicable.
 Can the document be retrieved by contacting the original provider or a third party vendor (e.g. missing title policy)?
7
Compliance
Definition: Investor determines that the loan did not meet State, Federal or Agency guidelines or regulations.
Wells Fargo’s Compliance Department will conduct a compliance review specific to the compliance issue raised by the investor.
Their review includes:
 A determination as to whether the cited regulation applies to the loan,
 Testing the loan according to the appropriate regulations.
Wells Fargo determines the following:
 Did the loan pass the compliance test?
 If the loan did not pass, do the specified regulations provide for a curing of the issue?
 Provide the original compliance testing calculations and results indicating a pass for the issue identified by the investor.
 Provide evidence that the regulation is not applicable to the loan.
 Provide proof that the issue was cured prior to delivery, if allowable and applicable.
 Provide documentation to prove that

An Insider Chat With World Renowned Option Expert Charles Cottle

Dave: Let's start off by getting a bit of history about yourself. I know you have had tons of experience in and around the option markets. What first got you interested in options?

Charles: I was an accountant. I use to track the transactions of my clients and I got very interested in the workings of options. I then had the opportunity to visit a friend who was trading on the floor. This was an amazing new world that I never even knew existed, even though my office was just down the street for years. I worked at a family accounting firm during the summers. At this point, I was a year out of college and I visited the floor. Several of my friends were starting to trade futures. Futures did not attract me, but options seemed intriguing. It seemed like you really could control the risk. I went to a free seminar and came back to the office and said "I'm giving a years notice to this family business of 65 years." Then I went down to become a trader.

Dave: Wow, that took some nerve leaving the security of the family office. We are talking about Chicago and the CBOE?

Charles: Correct.

Dave: What was your evolution on the floor? Did you start out as a clerk or did you step right into trading?

Charles: I stepped right into trading. I read a few books and figured I didn't have to go that route. The market told me differently, because 6 months later I lost all my money. I just didn't understand things. I thought when the customers were buying I could just take the other side and bet against them. I had no idea on how to take on an inventory of options. The other guys in the pits seemed to be so emotionless about every single trade they made. I was riding on every single contract that I had. I was basically hoping, praying and doing all the wrong things.

Dave: What was the path between being a losing trader and the thinkorswim brokerage launch?

Charles: There was a lot of in between. I went back to trading and I was a clerk for a while. I latched onto a fellow who was leaving his job. He was a Spread Hunter for some market makers on the floor. He wanted to become a market maker and needed to replace himself. I got the nod that he would train me. This is about the time that I was offered a job by someone who would eventually back the owners of thinkorswim. I turned that down because I was on a mission to learn everything that there was to know about options. I let Tom Sosnoff get the job, he now runs thinkorswim. We have had a very long friendship. At that point I went down to the Board of Trade to trade. I traded for many years and then Tony Saliba started The International Trading Institute and I wanted to take a breather in the late 80s, I decided to gallivant around Europe and when the new electronic exchanges were sprouting up, I started teaching market making in Europe. I wrote all the course material for The International Trading Institute and delivered all the content to the banks in Germany, Spain, Austria, and Denmark. That was about a five year tour of duty for me. Two of the years were in Europe, then I was in Madrid for four or five months, spent four or five months in Sweden and just had wonderful time. I learned a lot about electronic trading.

Dave: Is that the impetus for your book, Options---Perception and Deception and Coulda Woulda, Shoulda? Which by the way, I consider the best options book ever written.

Charles: Thank you. Yes, and for thinkorswim. I dreamt up the concept of thinkorswim after that whole journey, Tom came up with the name. I called Tom with the idea after waiting to hear from companies like E*Trade concerning my concept. Tom said, "Hey we can do that." But he was not anxious to build spreading into the platform. I insisted to build the spreading technology if he wanted me to come on board. I still have the email from 1999,about a year before we even started the business, saying "Though I am inclined to believe and agree with you that spreading is the way to go, the CBOE is going to have their one-year anniversary for the last time they had a spread. They are going to have that party next week."

Dave: I hope he was joking. Tom can be a character!

Charles: Yes, It was a funny joke. However, I insisted and he said that we would build it. When we built it, we had built it before even I could accept an order. So the day they opened their doors electronically, we were firing spreads into the exchange! Today about 90% of thinkorswim business is spread orders.

Dave: Earlier you mentioned the term, Spread Hunter, can you explain to our members what this is?

Charles: Well, before all these computers that had software that scans the market to hunt down certain spread criteria, we had to manually pull them up to see if there were any good spreads in the market.

Dave: So you were actually looking for spreads to put on, not searching for existing spreads to knock out.

Charles: Exactly.

Dave: Many traders are scared of options, do you have any words of advice to someone just starting in options and learning the options language?

Charles: I agree with you. It is a scary thing, especially if someone doesn't learn it properly. That is why in the first paragraph of both of my books it says, "Stay away from options." Then in the second paragraph it says, "Oh, you are still here? You better educate yourself because there are a lot of things that can blindside you." In my book there is more about losing money than there is about making money. The way that I go about teaching it is by a market makers standpoint. I found through revamping Options: Perception and Deception was a book for market makers into a retail product that we gave as the Think or Swim guide to options which is now available for download atwww.riskdoctor.com at no cost. If you jump right into the last chapter of it, which in the new version is the first chapter, you will see an email dialogue for two months with somebody. A lot of the jargon and nomenclature addressed there in the normal conversation of email back and forth as I help this fellow manage his first electronic trade. To support that, the first chapter is called "Picking Up Where The Rest Leave Off: Synthetics." It dives right into using synTools and boxTools. These synthetics are where the market makers can turn around the way they look at the position and understand it a whole lot better. For example, one of the first examples in the book is the covered write which is a very popular thing. You ask the same person who is excited about doing covered writes, "Would you sell naked puts?" The answer is 'No.' But you can prove to them, using these market-maker tools that I have assembled that have been used on the floor for decades, they see that it is exactly the same thing as a short put, penny for penny.

Dave: What exactly do you mean when you say 'synthetic?'

Charles: Well, it's something that is equivalent to something else. You have a package of two different items that emulate or impersonate another one. For example, a long stock and a short call behave the same way as a short put. So if you have the long stock and the short call, and I had a short put, you and I would have the same future. We would have the same profit and loss outcome.

Dave: You are creating something by combining two or more things, mirroring the result. Am I understanding?

Charles: Yes, that is exactly right.

Dave: Let's go a little deeper and look at several different market conditions and discuss which option strategy would work best for each condition.

Charles: That is the idea behind thinkorswim. The idea where you had to teach people about spreading because back then in the late 90s and early 2000, in that era, premiums were so high that you can only sell premium if you wanted to make money. But selling naked premium was prohibited from a risk and margin standpoint. The only thing else was to buy the option. Well, buying the option was prohibitive because it was too costly. So what's left, Spreading. Limited risk, short premium is a very good way to consistently make money, but you have to have in your arsenal of tools that are able to take advantage of any market. Buying long premium, one usually has to be really right. It's probably best to use a vertical in most situations.

Dave: Long premium is just betting on the stock going up with a call?

Charles: Well, that is one way, but you can also buy put premium. You can also buy straddle or strangle premium which is buying for both directions. You are buying a call and a put so you can take advantage of a move in either direction.

Dave: Many people reading may not know what you mean by 'vertical.' Please explain what you mean by this term.

Charles: Sure. A vertical is an option position composed of either all calls or all puts with long options and short options at two different strikes. The options are all on the same stock and of the same expiration, with the quantity of long options and quantity of short options netting to zero.

Dave: Would one use a vertical if they are bullish--or bearish on the stock?

Charles: Both. There are long call verticals.

Technical Analysis Killer App?

One often hears the term "killer app" in the high tech world. It refers to any program or application that becomes a necessary part of the platform. In other words, the system just isn't the same with out this application.

Developing the killer app is the goal for most programmers. Everyone now seems focused on the next killer app for Apple's iPhone platform. Traders are also constantly on the search for the next Holy Grail indicator or killer app that will place the odds of success solidly on their side.

In an earlier article, I talked about how the 2-period Relative Strength Index (RSI(2)) is an excellent short term indicator for stock trading (if you missed it, read it here). Our research has taken the basic building blocks of the RSI(2) concept to build a true killer app technical analysis tool.

This tweaked usage of the RSI(2) concept is known as the Cumulative RSIs Strategy. It's a very simple method that has proven itself over extensive testing to be a true killer app in the world of indicators.

Cumulative RSIs are a running daily total of RSI(2) readings. Basically, one adds up the daily RSI(2) figures to get the cumulative reading. The strategy was tested on the SPY from inception to December, 31 2007. The results were impressive. Using a 2-day Cumulative RSI(2) reading of less than 35, 88% of the trading signals proved correct.

In fact, after tweaking the parameters a little, the system nailed almost all of the SPY gains over these 15 years but was only exposed to the market less than 20 % of the time.

You can find further details of these tests in Larry Connors' book "Short Term Trading Strategies That Work".

Does this system work for stocks or is it simply an index based method? We discovered that if you would lower the Cumulative RSI(2) to 10, 69% of the stocks tested showed profits.

Stock Market Breadth: Another Bogus TA Theory??

One of the most popular and widely quoted technical analysis tools is called Market Breadth. Barely a day goes by without the financial media mentioning this indicator. Market Breadth measures the number of stocks advancing over the number of stocks declining during each session. The Market Breadth theory states that the market is believed to be healthy if advancers outnumber decliners. The wider this spread becomes, the more likely the market is to continuing advancing per the traditional theory. The opposite is also an accepted tenant of Wall Street. When declining issues outnumber advancing issues, the market is believed to be weak thus due for decline. This Market Breadth theory is well entrenched in the minds of most financial professionals as well as retail investors. A cursory internet search reveals that it is by far the dominant idea regarding Market Breadth.

We decided to take this well accepted theory, that seems to make perfect sense, and put it through vigorous, statistically valid tests. What we discovered is quite surprising. Not only is the accepted idea wrong, the opposite proved to be true. An 8 year period was tested revealing that the traditional wisdom could not be more wrong. We tested advancing issues being greater than declining issues for multiple days in a row, as well as, sessions that advancing issues outnumbered declining issues by a 2 to 1 and 3 to 1 margin. The results of the tests left no ambiguity, traditional wisdom is completely wrong. Here is what was found out.

Consecutive days of declining issues greater than advancing issues on the NYSE has led to higher prices short term. We considered one week to be short term for purposes of the testing. The testing also discovered that significant underperformance occurs when advancing issues outnumber declining issues when the market is trading under its 200 day Simple Moving Average. Another finding that flies in the face of conventional wisdom is that weak breadth days outperform strong breadth days over the short term.

It makes so much more sense to trade on the side of statistics and solid testing than to merely accept Wall Street’s often wrong wisdom.

Hedge Fund: Do It Yourself

Inspired by Vanity Fair's recent piece on how to be a hedge fund honcho, thought I would republish my interview with hedge fund lawyer, Hannah Terhune


Traders and money managers often dream about one day running their own hedge fund, managing large sums of money, and competing head to head with the world’s top traders.  For many, this dream remains an unfulfilled desire since they really don’t know where to begin.  My guest this week will answer your questions, simplify this often complex subject, and point you in the right direction. 

Hannah Terhune is chief attorney and member manager of Capital Management Services Group.com, Inc.  Get ready for a tours de force education!

Dave: Greetings Hannah, Thank you for joining me today. Let’s start right at the beginning.  Exactly what is a hedge fund?

Hannah: Although there is no universally accepted definition of the term hedge fund,” the term generally is used to refer to an entity that holds a pool of securities and perhaps other assets, whose interests are not sold in a registered public offering and which are not registered as an investment company under the Investment Company Act. Alfred Winslow Jones is credited with establishing one of the first hedge funds as a private partnership in 1949. That hedge fund invested in equities and used leverage and short selling to “hedge” the portfolio’s exposure to movements of the corporate equity markets. Over time, hedge funds began to diversify their investment portfolios to include other financial instruments and engage in a wider variety of investment strategies. Today, in addition to trading equities, hedge funds may trade fixed income securities, convertible securities, currencies, exchange-traded futures, over-the-counter derivatives, futures contracts, commodity options and other non-securities investments. Furthermore, hedge funds today may or may not utilize the hedging and arbitrage strategies that hedge funds historically employed, and many engage in relatively traditional, long-only equity strategies. In short, the term generally identifies an entity that holds a pool of securities and perhaps other assets that does not register its securities offerings under the Securities Act and which is not registered as an investment company under the Investment Company Act. Hedge funds are also characterized by their fee structure, which compensates the adviser based upon a percentage of the hedge fund’s capital gains and capital appreciation. Hedge fund advisory personnel often invest significant amounts of their own money into the hedge funds that they manage. As discussed in the Report, although similar to hedge funds, there are other unregistered pools of investments, including venture capital funds, private equity funds and commodity pools that generally are not categorized as hedge funds. Hedge funds are often compared to registered investment companies. In addition, unregistered investment pools, such as venture capital funds, private equity funds and commodity pools, are sometimes referred to as hedge funds. Although all of these investment vehicles are similar in that they accept investors’ money and generally invest it on a collective basis, they also have characteristics that distinguish them from hedge funds.

Dave: When did this concept originate? Briefly, what’s the history?
Hannah: Hedge funds, while representing a relatively small portion of the U.S. financial markets, have grown significantly in size and influence in recent years. The SEC recognized over 30 years ago that hedge fund trading raises special concerns with respect to their impact on the securities markets. The growth in hedge funds has been fueled primarily by the increased interest of institutional investors such as pension plans, endowments and foundations seeking to diversify their portfolios with investments in vehicles that feature absolute return strategies – flexible investment strategies which hedge fund advisers use to pursue positive returns in both declining and rising securities markets, while generally attempting to protect investment principal. In addition, funds of hedge funds (“FOHF”), which invest substantially all of their assets in other hedge funds, have also fueled this growth.

Dave: What are the parts of a hedge fund?
Hannah: The parts of a hedge fund include the private placement memorandum, the subscription agreement, and the operating agreement for the fund. Hedge fund advisers typically provide information to investors during an investor’s initial due diligence review of the fund, although some, more proprietary, information may not be provided until after the investor has made a capital commitment to the fund, if at all. Most hedge funds provide written information to their investors in the form of a private offering memorandum or private placement memorandum (“PPM”). This reflects market practice and the expectations of the sophisticated investors who typically invest in hedge funds. It also reflects the realization of the sponsors and their attorneys that the exemptions from the registration and prospectus delivery provisions of Section 5 of the Securities Act available under Section 4(2) of the Securities Act and Rule 506 there under do not extend to the antifraud provisions of the federal securities laws. The disclosures furnished to investors serve as protection to the principals against liability under the antifraud provisions. Some of the information may be disclosed less formally in one-on-one conversations between investors and the hedge fund adviser. Hedge fund advisers may also provide information to hedge fund investors in the form of letters, conference calls and financial statements. In addition, some hedge fund advisers may provide prospective investors with access to their prime brokers and other service providers, such as administrators, both during the investor’s initial due diligence of the hedge fund and subsequently.

Hedge fund investors must often spend significant resources, frequently hiring a consultant or a private investigation firm, to discover or verify information about the background and reputation of a hedge fund adviser. In practice, even very large and sophisticated investors often have little leverage in setting terms of their investment and accessing information about hedge funds and their advisers. As a matter of practice, hedge funds generally provide investors with a PPM before an investment is made. As with any other offering solely to accredited investors, there are no specific disclosure requirements that pertain to the PPM under Section 4(2) or Rule 506. While we are not passing on the adequacy and content of PPM disclosure generally, we note that certain basic information about the hedge fund’s adviser and the hedge fund is typically disclosed. The information disclosed in PPMs varies from adviser to adviser, however, and often is general in scope. PPMs generally discuss in broad terms the fund’s investment strategies and practices. They also typically disclose that the hedge fund’s investment adviser may invest fund assets in illiquid, difficult-to-value securities and that the adviser reserves the discretion to value such securities as it believes appropriate under the circumstances. The PPM also may disclose that the adviser may exercise its discretion to invest fund assets outside the stated strategy or strategies.  PPMs also generally discuss qualifications and procedures for a prospective investor to become a limited partner, as well as provide information about the hedge fund’s operations. For example, PPMs generally discuss fund expenses, allocations of gains and losses, tax aspects of investing in the fund and may incorporate the hedge fund’s financial statements. PPMs disclose any lock-up period that new investors must observe, as well as laying out the specifics for when investors will be able to redeem some or all of their investments out of the hedge fund. PPMs also may name frequently used service providers to the fund.  PPMs may generally disclose potential conflicts of interest to investors, frequently under the heading of “risk factors.” A hedge fund’s PPM may note that the fund’s valuation practices give rise to an inherent conflict of interest because the level of fees that the investment adviser earns is based on the value of the fund’s portfolio holdings as determined by the fund’s adviser. PPMs also may discuss potential conflicts arising from the adviser’s “side-by-side management” of multiple accounts, including the hedge fund, private accounts, proprietary accounts and registered investment companies. A hedge fund’s PPM may also disclose the investment adviser’s conflicts in allocating its time and certain investment opportunities among its clients. Some PPMs spell out allocation policies with respect to limited investment opportunities in great detail, while others may list, and only briefly discuss, the factors on which such allocations will be decided.  PPMs also often provide information concerning the use of affiliated services providers, including affiliated broker-dealers. Some PPMs also may note that the hedge fund may direct brokerage business to, and use other services of, firms that introduce investors to the fund. PPMs may disclose that the adviser may use soft dollars to pay for research and other services used by the adviser to benefit other accounts that it manages, and may further disclose that soft dollars.

Dave: Are these documents boiler plate or created individually for each fund?

Hannah: They are created individually for each client.

Dave: Does this paperwork need to be filed with the SEC or anyone?
Hannah: Form D is filed with the SEC and other forms may be required to be filed with each state where investors are located.

Dave: What is the definition of “accredited investor”?
Hannah: The safe harbor protection most often relied upon by hedge funds under Rule 506 exempts offerings that are made exclusively to “accredited investors.” Issuers are permitted under these provisions to sell securities to an unlimited number of “accredited investors.” In addition, if the offering is made only to accredited investors, no specific information is required to be provided to prospective investors. The term “accredited investors” is defined to include:  Individuals who have a net worth, or joint worth with their spouse, above $1,000,000, or have income above $200,000 in the last two years (or joint income with their spouse above $300,000) and a reasonable expectation of reaching the same income level in the year of investment; or are directors, officers or general partners of the hedge fund or its general partner; and  Certain institutional investors, including: banks; savings and loan associations; registered brokers, dealers and investment companies; licensed small business investment companies; corporations, partnerships, limited liability companies and business trusts with more than $5,000,000 in assets; and many, if not most, employee benefit plans and trusts with more than $5,000,000 in assets.

Dave: Does everyone who invests in a hedge fund need to be an “accredited investor” or high net worth individual?
Hannah: No.

Dave: I have several friends who would love to invest in a hedge fund, but don’t meet the above criteria.  Is there anyway around the regulation?
Hannah: Yes, non accredited investors can invest in a hedge fund.  It depends on the fund manager’s discretion.

Dave: Does the manager need to have a Series 7 or other licenses?
Hannah: No, a Series 7 is not relevant to this discussion.

Dave: How about registration? Does the manager need to register with the SEC?
Hannah: Yes, in certain cases, given recent law changes.

Dave: Does the manager need to register in the state the fund is domiciled in?
Hannah: Form D needs to filed with the SEC.

Dave: What about the funds trader (s).  Do they need to register with anyone?
Hannah: Yes, in certain cases.  This requires a state-by-state determination. A fund manager must sign up with their state as the investment adviser if they have less than $25 million under management.  Between $25 million and under $30 million under management, the fund manager may choose the regulator—either the state or the SEC.  If the fund manager has more than $30 million under management, the fund manager would need to register with the SEC as an investment adviser.

Dave: What if the investors are from different states? Does the manager need to register in every state an investor is from?

Hannah: Yes, usually a notice filing is required as long as they are registered in another state or with the SEC.

Dave: Is this in all cases?  What about very small start up funds?
Hannah: It depends on the state and the structure the fund manager opts to use.

Dave: Is there anyway to legally avoid registration?
Hannah: You either have to register or you fall within an exemption.

Dave: If the manager is a CTA does he still need to register as a fund manager?
Hannah: The difference between a CPO and a CTA is that a CTA manages individual accounts, while a CPO manages only the hedge fund, or Pool.  Few of our clients remain interested in the CTA option once they realize the administrative hassle associated with managing the separate accounts. No sponsor is needed to take the Series 3 exam.  The Series 3 exam is given under the auspices of the NASD’s testing program.  Two different testing services provide their services to the NASD. 
Unlike a traditional hedge fund (where the SEC may end up being a regulator if enough money is under management), the government regulator that may associated with CPOs is the CFTC—the Commodity Futures Trading Commission.

The CFTC has allowed the National Futures Association (NFA) to become the primary regulator of futures and commodity products (as a Self-Regulatory Organization, similar to the NASD’s status with the SEC).  It is my opinion that the NFA is a very effective and competent regulator.

Dave: How about if the manager has a series 7.  Is registration still required?
Hannah: A Series 7 is of no particular value to either an RIA or a CPO. If someone has a current Series 7 (they’ve been registered within the past two years with a broker/dealer), they can choose to take the Series 66 instead of the Series 65.  The Series 7 plus the Series 66 is always (in all states) equivalent to the Series 65. After two years of not being with a broker/dealer, all prior registrations (such as a Series 7) expire and are no longer valid. Similarly, if someone previously passed the Series 65 but has not had it registered with either a broker/dealer or an investment advisory firm, the exam has expired and will need to be taken again. Some states will not consider someone for investment advisory status unless they were previously registered as a Series 7 with a broker/dealer.

Dave: Ok, now that we have the basics out of the way.  What’s the first step someone should take before launching a fund?

Dave: Is there a minimum capital amount that you feel is needed before launch?
Hannah: No.

Dave: What about someone who does not have any investors yet, who just wants to set up the fund structure for the future?

Set up an incubator fund? I know your firm runs some type of “hedge fund incubator”  Can you explain what this is?
Hannah: It’s a start up process for a prospective fund manager to develop and document a track record that could be legally marketed to prospective investors when he or she is ready to open the fund to outside investors.

Dave: Do you actually do capital introductions?
Hannah: Yes, often, as a professional courtesy to our clients.  We do not accept referral fees from non lawyers, as we are prohibited from accepting such fees by the rules governing the practice of law.  We have an extensive network of contacts worldwide.  We endeavor to set up our clients for success and look toward a long term relationship as well as build global relationships.

Dave: How about hooking a fledging manager up with a prime broker?

Hannah: Yes, as a professional courtesy to our clients.  We do not accept referral fees from non lawyers, as we are prohibited from accepting such fees by the rules governing the practice of law. We have an extensive network of contacts worldwide. We endeavor to set up our clients for success and look toward a long term relationship.

Dave:  I see, your firm is really a “one stop shop”.  Do you do the back office stuff too?
Hannah: Yes, of course.

Dave:  While we are on this topic, what is a “back office”?
Hannah: Many clients are accustomed to being one-person businesses, trading from their home office. They are interested in trading for others to leverage their knowledge and make more money, but they don't want to change how they work. They don't want to have to hire accountants and secretaries, or rent an office or gain tons of paperwork. They don't want to spend their days with attorneys, accountants, consultants and business operation hassles. We provide a full service, virtual Web-based and e-commerce solution takes all the hassle out of entering the hedge fund business. Clients can continue working from home, without any of the above mentioned hassles. We handle all of the charges to your investors for the management fees and the performance allocations as well as prepares the statements for investors.  Most of clients use our hedge fund accounting services on a monthly basis; others on a weekly, quarterly, annually basis, or whenever they like. The work product includes NAV, performance records, brokerage statement reconciliation, advisory fee billing, performance allocation, investor changes, and other related reports generated from the software programs.

Dave: When the fund grows, are there capital levels or partner numbers that need to be watched?  What I mean is, is there additional regulation, registration, et al on a 100 million dollar fund than there is on a 250k startup?
Hannah: No.

Dave: Recently, I have noticed a proliferation of off shore funds. What exactly is an off shore fund? What reasons would a manager want to set up an off shore fund?

Hannah: The word “offshore” has a certain mystique to many.  Offshore hedge funds are investment vehicles organized in offshore financial centers (“OFC”). OFCs are countries that cater to the establishment and administration of mutual and hedge funds (“funds”).  Offshore funds offer securities primarily to non-U.S. investors and to U.S. tax-exempt investors (e.g., retirement plans, pension plans, universities, hospitals, etc.). U.S. money managers who have significant potential investors outside the United States and tax-exempt investors typically create offshore funds. In many OFCs, the low costs setting up a company along with a kind tax environment make them attractive to establishing funds.  Offshore hedge funds are typically organized as corporations in countries such as the Cayman Islands, British Virgin Islands, the Bahamas, Panama, the Netherlands Antilles or Bermuda. Offshore funds generally attract investment of U.S. tax-exempt entities, such as pension funds, charitable trusts, foundations and endowments, as well as non-U.S. residents. U.S. tax-exempt investors favor investments in offshore hedge funds because they may be subject to taxation if they invest in domestic limited partnership hedge funds. Offshore hedge funds may be organized by foreign financial institutions or by U.S. financial institutions or their affiliates. Sales of interests in the United States in offshore hedge funds are subject to the registration and antifraud provisions of the federal securities laws.  Offshore hedge funds typically contract with an investment adviser, which may employ a U.S. entity to serve as sub adviser. An offshore hedge fund often has an independent fund administrator, also located offshore, that may assist the hedge fund’s adviser to value securities and calculate the fund’s net asset value, maintain fund records, process investor transactions, handle fund accounting and perform other services. An offshore hedge fund sponsor typically appoints a board of directors to provide oversight activities for the fund. These funds, especially those formed more recently, may have directors who are independent of the investment adviser.

Dave: Sounds like a good way to avoid taxes.  Does the manager of a fund domiciled off shore still need to pay capital gain taxes, etc?
Hannah:  The Do’s and Don’t of offshore funds are can be summed up as follows:

Do:  Consider setting up an offshore fund is you manage money for either foreign and/or U.S. tax-exempt individuals and businesses.  Under U.S. income tax laws, a tax-exempt organization (such as an ERISA plan, a foundation or an endowment) engaging in an investment strategy that involves borrowing money is liable for a tax on “unrelated business taxable income” (“UBTI”), notwithstanding its tax-exempt status. The UBTI tax can be avoided by the tax-exempt entity by investing in non-U.S. corporate structures (i.e., offshore hedge funds).

Don’t:  Go offshore to avoid U.S. taxation.  This is the wrong reason to consider an offshore fund.   In short, setting up an offshore fund is not a tax minimization strategy as U.S. citizens, resident aliens (e.g., green card holders) are taxable on their worldwide income.  The U.S. tax results depend on the nationality and domicile of the fund manager and his or her management company.

Dave:  Am I able to set up an off shore fund without ever even visiting the country?
Hannah: Yes, of course.  Our firm liaisons with foreign legal counsel.  Everything is handled on a turnkey basis.  You don’t need to stop trading or take a break from the markets. Just call us as we will work around your trading schedule.

Dave: What countries are most hospitable to off shore funds?

Hannah: Investment fund managers typically create offshore funds in Caribbean OFCs, although a European offshore entity may be more appropriate if a significant number of European investors are involved.  Funds legally domiciled in OFCs hold around half of the hedge fund assets reported by the TASS hedge fund data base, with the British Virgin Island and the Cayman Islands being the most popular location. It has been estimated that over half of the world’s funds are incorporated in the British Virgin Islands However, management of funds is often conducted in or near major international financial centers such as London and New York although the actual fund is registered in an OFC. Ask where a hedge fund is domiciled and you are likely to hear the name of a handful of places worldwide. In the United States, domestic hedge fund businesses tend to cluster in a few states, in particular California, Delaware, Connecticut, Illinois, New Jersey, New York and Texas. Each state has different tax and regulatory laws. Outside the United States, several centers in the Caribbean and Europe present different benefits and costs to fund managers. Regulatory burdens and expenses can be worth bearing, depending on the nature of the investment vehicle and its clients.

Dave: Is there anywhere you would avoid and why?
Hannah: Any country lacking monetary or political stability.

Dave: Moving onto the next structure. Master-Feeder funds. What are they?
Hannah: The corporate structure of a hedge fund depends primarily on whether the fund is organized under U.S. law (“domestic hedge fund”) or under foreign law and located outside of the United States (“offshore hedge fund”). The investment adviser of a domestic hedge fund often operates a related offshore hedge fund, either as a separate hedge fund or often by employing a “master-feeder” structure that allows for the unified management of multiple pools of assets for investors in different taxable categories. The master/feeder fund structure allows the investment manager to collectively manage money for varying types of investors in different investment vehicles without having to allocate trades and while producing similar performance returns for the same strategies. Feeder funds invest fund assets in a master fund that has the same investment strategy as the feeder fund. The master fund, structured as a partnership, engages in all trading activity. In today's trading environment, a master/feeder structure will includes a US limited partnership or limited liability company for US investors and a foreign corporation for foreign investors and US tax-exempt organizations. The typical investors in an offshore hedge fund structured as a corporation will be foreign investors, US tax-exempt entities, and offshore funds of funds. Although certain organizations, such as qualified retirement plans, generally are exempt from federal income tax, unrelated business taxable income (UBTI) passed through partnerships to tax-exempt partners is subject to that tax. UBTI is income from regularly carrying on a trade or business that is not substantially related to the organization's exempt purpose. UBTI excludes various types of income such as dividends, interest, royalties, rents from real property (and incidental rent from personal property), and gains from the disposition of capital assets, unless the income is from "debt-financed property," which is any property that is held to produce income with respect to which there is acquisition indebtedness (such as margin debt). As a fund's income attributable to debt-financed property allocable to tax-exempt partners may constitute UBTI to them, tax-exempt investors generally refrain from investing in offshore hedge funds classified as partnerships that expect to engage in leveraged trading strategies. As a result, fund sponsors organize separate offshore hedge funds for tax-exempt investors and have such corporate funds participate in the master-feeder fund structure. If US individual investors participate in an offshore hedge fund structured as a corporation, they may be exposed to onerous tax rules applicable to controlled foreign corporations, foreign personal holding companies, or a passive foreign investment companies (PFIC).  To attract US individual investors, fund sponsors organize separate hedge funds that elect to be treated as partnerships for US tax purposes so that these investors receive favorable tax treatment. These funds participate in the master/feeder structure. Under the US entity classification (i.e., check-the-box) rules, an offshore hedge fund can elect to be treated as a partnership for US tax purposes by filing Form 8832, "Entity Classification Election," so long as the fund is not one of several enumerated entities that are required to be treated as corporations.

Arch Crawford: Monster Bear On The Way!?

The following is an interview I did in 2005 with Arch Crawford. A colorful and fascinating character in the market's lexicon. Read the full interview prior to casting judgement. He just called for the mother of all bear markets to start on July 26th, 2010. What he calls the "Cardinal Climax". His DJIA stops are at 11466. time will tell, Enjoy!



I fully realize that this is a highly controversial and unusual subject, however, Arch has one of the best
documented historic records for correct market calls of any market analyst. In fact, over the last 3 and 6
month time frames,Timer Digest, has ranked him #3 of all market letter writers. Jump on board for a
journey into this esoteric subject!

Dave: How are you today, Arch?

Arch: Very well, thank you.

Dave: Let's start at the beginning. What first got you interested in the financial markets?

Arch: I always loved numbers as a child and used to extract square roots for fun and I saw my Father
looking in the paper and there's this whole page of numbers. I loved the numbers so I started watching the
stock market, pulling out stocks under $10 through the A's, B's and halfway through through the C's--and
there were a lot of them in 1954. The methods I studied were basically technical. In 1960, I kept a chart of
US Steel --there was a big steel strike--and I kept the headlines on the chart. And it made no sense
whatsoever.

Dave: There was no correlation between the headline and the stock movement?

Arch: Exactly. One of the first books I read was Darvas' How I Made $2 Million In The Stock Market. He
was a dancer and he used a simple trend-following method. A couple of years later I went to work for
Merrill Lynch in Raleigh N.C., putting up prices on a chalkboard and 2-3 months after that they got an
electronic board and I became an assistant in the cage.
Dave: This is the early '60s?
Arch: Yes, this is 1961. I had been studying math and physics at the University of North Carolina and I
started off with really great grades and they were beginning to drift lower and lower and I figured I would
go do what I wanted to do before I got thrown out, so I left while I still had decent grades. I told Merrill
Lynch "This is what I want to do with my life, send me to New York" and they said,"don't be ridiculous."
So later, after I'd been there a while I said I quit, I'm going to New York and look for a job. They said
"Don't do that, we'll transfer you." They said "What department would you like?" and I told them technical
research. They sent me right up to the research department but the technical things I was doing at that time
was I was actually drawing the weekly charts of Merrill Lynch's industry specialists and that took me three
days to do 45 charts. While I was in Raleigh the commodity guy there got me Edwards & McGee and they
were getting the trendline charts from Commodity Research Bureau and it had 600 charts every week. I
use to draw all the lines and supports and resistance and trendlines and look at the moving averages and
make a projection as to what was going to happen and go back and look at last week's while I'm doing this
week's and see what worked out and what didn't. I'm self-taught from that standpoint, using Edwards &
McGee. I was spending every night in the library. I made friends with the librarian--an elderly Irish lady--
and I bought lottery tickets from her, so she let me stay in the library at night and lock it up at 12:00. I was
looking at the chart of the market and it was beginning to form a multiple head and shoulder top pattern.

Dave: When you say the market, you mean the Dow?

Arch: The Dow Jones, yes. I said if this pattern remains symmetrical, the market will top in the middle of
December and it will crash next year in 1962. It topped in the middle of December. It finished the head
and shoulder top and broke down on April 13, the day Kennedy made the steel companies roll back the
price increases. That broke the neckline and it started down and then it drifted down and rallied a bit and
drifted down and rallied a bit and then started turning very nasty and we went into the crash of '62. And I
was going around saying "it's going to crash" and I got the nickname "Crash Crawford." And then it
actually did it--the worst crash since 1929.
Dave: That was your first major accurate prediction?
Arch: Yes. I also turned 21 in the meantime on April 17th and inherited $1000 from a sweet aunt who had
died and I put it all in puts and made seven times my money, so that was my beginning.

Dave: How did you go from being a technical analyst to a financial astrologer?

Arch: On the day before my birthday, in 1963, the Wall Street Journal had a front-page article about three
guys who were predicting the market using astrology. The credible one was Lt. Cmdr. David Williams
who had been head of the purchasing department for Con Ed for 40 years and a Lt Cmdr in the Navy in
the Big War and he was a fine gentleman. Williams had written a pamphlet called Astro-economics in
1955. I went out and bought it. Next to that pamphlet in this metaphysical bookstore was Donald Bradley's
Stock Market Prediction and he had developed a model using all two-planet pairs. I started keeping his
model by hand and--thank God for computers! It was a lot of calculation but it was worth it. The market
would follow that line for several months and then if would go off and do something else and for several
months it would be off of that line and then it would come back onto it sometime later.

Dave: What particular planets?

Arch: All of them. Ten counting the Sun and moon. The Moon didn't count in them because it was too
quick. What I found in following that for a while was that when there is a large configuration involving
several planets it becomes what the Mandelbrot set, the chaos people, call a "strange attractor" which
would take the market up or down to the date of this large configuration was most exact or to the last
aspect between whatever planets were involved and then the market would turn and go the other way.

Dave: When you say configuration, what do you mean?

Arch: A number of planets in harmonic relationship. A harmonic relationship of one means two planets
have the same longitude in space.

Dave: They're in line with each other

Arch: Yes. Looking out from Earth, they're in the same place. A harmonic of two is like a full Moon
where one is opposite the other separating the sky into two different parts, the left half and the right half.
The second harmonic is 180 degrees, which is one-half of the 360 degree circle, and the third harmonic is
120 degrees which is one-third of the 260 degree circle. So a trine is 120 degrees and a square is 90
degrees. These are the ones most traditional astrologers use.

Dave: You noticed that these configurations would affect the market,am I following you?

Arch: Oh absolutely. When several planets are involved instead of just these two-planet pairs, it becomes
a unique event and that's what makes it a strange attractor and the market will pull up to that day and then
down or down to that day and then up.

Dave: How many times a month do these strange attractors occur?

Arch: Two to three times a year on a good year. Other than that they follow the Bradley somewhat.

Dave: You found David Williams' pamphlet and the Bradley book...

Arch: First I got a book of planetary positions and I noticed when they were in the one-third and one-sixth
harmonic harmonic the market tended to go up and when they were in the second and fourth harmonic it
tended to go down. That's what I entered into my notes and that's what Williams said in his book. In terms
of statistics there are so many factors involved that a lot of scientists can look at this and they will say
"Ahh, there are not statistically meaningful" but you can combine them in two or three or four cycles
together and they become extremely meaningful.

Dave: These strange attractors that occur two to three times per year... is it something that changes the
trend of the market?

Arch: Yes. It'll either take them up to that day and drop it or down to that day and rally it.

Dave: This really sounds crazy. What's the theory behind the concept? Why does it seem to work?

Arch: You got me. The closest I know about was from another guy named John Nelson, who was a radio
propagation specialist for RCA Corporation, and they put him on the top of a building with a telescope
and said "figure out when the darn sunspots are going to blow up" because before the days of the satellites
they were sending dataflow across the North Atlantic. When the sunspots hit they had to switch to sending
to South America and then over to Africa and then back up to Europe and it was time consuming and
costly so they wanted to know when these things were going to happen. Nelson by regular cyclical means
got up to a 65% accuracy rate which was not satisfactory at all and someone said "why dont you look at
the planetary alignment around the sun at the times of these sunspots because that may give you a handle
on what you want to look at." So he took the 13 worst magnetic storms on the Earth that were on record
with RCA and drew the horoscope heliocentric chart--heliocentric meaning the Sun in the middle. He was
totally blown away by all the harmonic ratios in the days that these sunspots popped off in a big way.
Dave: So it's basically somehow affecting the magnetic field which in turn is affecting people's behavior?
Arch: Yes. Nelson and I figured that if there is a powerful alignment heliocentrically they'll blow the
sunspots out and if it happens to be a high tidal force--a new Moon or full Moon--then the ionized layer of
the Earth's atmosphere will be brought down close to the Earth and make people crazy.

Dave: Let me see if I follow you. It affects people's emotions--making them feel elated--therefore they
will buy stocks, and when they're depressed hit they will sell stocks?

Arch:When the electrons hit it tends to be depressive and when the protons hit hit it tends to be elating and
so if you get a major solar flare it tends to throw a lot of heavy protons but the electrons get there first so
the first couple of days the market drops and then when the protons get there it goes screaming the heck
up. But there are a lot of complications with that. In the 1987 crash, there were the largest number of
electrons hitting the atmosphere that I had ever seen for the longest period of time. When the electrons got
over 1 to the third per cubic centimeter, that's when the market started coming apart. It proceeded on down
on Friday--of course that was options expiration--and crashed on more Monday. The strategy at that time
was if the market went down a certain amount you sell S&P futures are you are protected to whatever
level. The system they had would protect you down to five standard deviations from normal. Monday, it
was a seven standard deviation event and the whole system was threatening to come down.

Dave: What happened the day after that?

Arch: The next morning it was down like another 200 points in 15 minutes with hardly any stocks open.
The Fed said "anybody comes in from Wall Street that wants money, give it to them" and the market came
roaring back and was positive by 10:00.

Dave: Let's talk about another astrological event--the eclipse. Are there any correlations between market
movements and eclipses?

Arch: Yes. They are the most powerful events, taken individually. W.D. Gann wrote seven books about
the market and he was an astrologer but he rarely said anything specifically about astrology in all of those
books.

Dave: He was very vague in everything he wrote.

Arch: Well he was very secretive about it and swore the people around him to secrecy relative to
astrology. David Williams actually introduced me to a friend of his who had worked for Gann and he said
"Yeah he swore us to secrecy but we didn't know anything anyway." (laughs)

Dave: What happens during a solar eclipse?

Arch: The solar eclipse tends to have a longer-term effect, not necessarily so much on the day it happens--
in other words it will be a more important event, but the lunar eclipse tends to be more dramatic for one
day or two days.


Dave: How many eclipses are there per year?

Arch: There are 3-5 eclipses per year. Around the time of the 1987 crash, The Wall Street Journal ran an
article about a guy who had come up with a Mayan calendar date that was very important, and that was
supposed to be August 17 and all the new new age people were going to sacred sites and dancing and
drumming and praying and meditating and doing what they do. It was called the "Harmonic
Convergence." It was supposed to be this Mayan date. Well I looked at this date and I didn't see anything.
I looked forward and here seven days later was the tightest 5-body conjunction in at least 800 years and
they were all visible bodies. And I said "that is what the Mayans were talking about." I said "this market
will peak on August 24, give or take three days, after which we will have a horrendous crash." The market
peaked at Noon on August 25 and it dropped and dropped and it stopped and turned violently on the day
of the solar eclipse on the Fall equinox and it had the biggest up-day in history, to that date, in points. It
broke down in the morning, scared the heck out of traders, turned around and had the biggest up-day in
history. Then it rallied for two weeks; at the top of that rally we had the biggest earthquake in Southern
California in at least seven years and two days later we had the lunar eclipse, which was the biggest down
day in history to date. So the lunar eclipse touched off the earthquake.

Dave: Does astro work the same across all markets?

Arch: These are things that act on emotion and it depends on what markets are moving emotionally at the
time. Another thing I discovered in calculating these cycles was the Mars/Uranus cycle and it's just about
a two year cycle. The market does not crash every two years but every crash that's taken place in the last
100 years took place in the same 40% of that cycle...every one. So I watch those periods whether we are
technically weak or strong, whether we are set up for a possible bad time or not. I said on September 4,
2001 "this market may crash by October 5." The week after the towers fell we had the worst percentage
decline since the fall of France in 1940. I also said that there was an event--I think it was Mercury
changing direction on the Fall equinox which was September 21--and I said that may make that timeframe
more important than normal, and that was the low actually, the 21st--within one day I think Friday was the
low and the equinox was Saturday morning. Also, in that September 4, 2001 letter I said the United States
will be at war around the weekend of the 7th or 8th of September
Dave: Impressive. What do you see for the near future?
Arch: There was nobody else--astrologer or psychic or card reader or anybody else--that had anything
close to that. We are not in that crash period now but the Bradley model shows a high around the middle
of July and goes down all the rest of this year. I think it looks pretty bad right now and it could turn down
right now. We may have a hard hit for 2-3 days next week and then a rally into July, which may or may
not make a higher high and then down the rest of the year. The next crash cycle takes place from August
'06 to March '07.

Dave: When you say crash cycle, you mean a major 1987 style event?

Arch: Yes, The Mars/Uranus cycle, where every crash has taken place.

Dave: What do you see for gold?

Arch: I believe gold will hit a high maybe Monday and will then drop into the summer and after that we
will have a super up-move in it beginning around Labor Day and going for close to a year. Gold, oil,
silver, metals, CRB Index generally. Inflation hedges are ruled by Neptune for whatever reason. I've never
paid any attention to rulership they were telling me that when Saturn came up to 0 degrees Leo the price
of gold would drop because Saturn is contractive and I said that's horsepuckey. Well, the day that Saturn
hit Leo the IMF announced it would sell tons and tons of gold over months and months of time and it was
the only limit move that year. But, it was the day Saturn hit in apparent right ascension, which is the way
astronomers look at the sky, not ecliptic longitude, which is the way astrologers look at the sky. So I
learned a little about rulership stuff and I said "Oh my God." Why should some rulership thing work? I
don't know...

Dave: Is the rulership something astrologers learned from the ancients?

Arch: The ancients had it pretty much locked up in terms of what was supposed to happen theoretically in
those times, yes.

Dave: Arch, we're almost out of time. I look forward to speaking with you again soon.

Arch: It's been fun and I always enjoy talking about this work; it's meant a lot to me for many many years.

Schonfeld's Warning Shot: Death of Day Trading??

Steven Schonfeld, of the hugely succesful day trading firm, Schonfeld Securities, has just laid off a substantial portion of his traders. Citing an inability to compete with HFT firms and succesful black box type operations. Is this a warning shot making it clear that day trading as we know it is over? Is it simply one old line firm admitting they can't compete any longer? Is it just a strategic move by Schonfeld to up profits? Time will tell, but one thing is for sure-- when Steven Schonfeld speaks I strongly suggest listening....

Here is the letter sent out to Schonfeld's traders:


‘On December 5, 1988 we started Schonfeld Securities. Very soon after, we started hiring prop traders, and many years later formed “Opus Trading Fund”.

Prop trading has always been and will always be an extremely important part of our business and certainly the one that is closest to our hearts. The best Schonfeld traders will always have a place to trade and the capital to maximize their earnings potential. We are committed to them and will always strive to provide an environment for them to succeed. Sadly, however, we are re-thinking the notion that less skilled and less successful traders can be here forever without producing sufficiently for themselves and the firm.

For over 21 years we have always done everything we could, with the traders' best interests in mind, to provide careers and opportunities for our traders.

We have always cared more than you could imagine for your careers, happiness, well being and future.

We truly admired many of your passions for trading and for the markets. Over the years we have stood by you and you have stood by us as well. There has been real loyalty on both ends and don’t ever think we took your loyalty for granted for one second.

Bull and bear markets come and go. Good trading markets come and go. But unfortunately, our vision of the future of trading has changed. It is getting much tougher for traders to make a living or get by. The direct competition from black boxes, stat arb and high frequency trading which continues to grow at exponential rates is here to stay and has caused us to change our outlook for lesser skilled traders.

Based on the above competitive changes to the trading arena, we feel we are doing an injustice to both our lesser skilled traders and the firm by keeping them around. At best, they will barely get by and that’s not why we are in his business or what they should be here for.

Unfortunately the career of trading is not a good option for lesser skilled traders going forward. We will be letting go many of these traders over the next 6-12 months. It is with deep regret and the hardest thing we have had to do since the inception of the firm in 1988. It truly saddens us to do this, but we are doing the traders who will not be making a living going forward a favor, so they can venture into different careers.

It is even more painful since many of you have been so loyal and really good guys.

To those of you that we ultimately let go, we deeply apologize but whether you understand it immediately or not, it truly is best for you.

After discussions with the managers and exhaustive quantitative research our objective will be to reduce the number of traders we have down to those that we believe will make a great or very good living trading for years and years to come with the necessary skills needed.

The traders who are newer to trading will be given some extra time to potentially have their skills stand out. The days of a trader making a living by generating $50k to $75k of adjusted gross annually are over. There is room for only highly motivated, skilled and developing traders that can add value to each other and the firm.

Once again, we wish it was different and are extremely sorry for those that don’t make it.

Goldman SEC Witch Hunt?

Is Goldman innocent of the SEC accusations in the ABACUS 2007-ACI CDO transaction? I would argue that the SEC may have over stepped its bounds in filing the suit. Both sides of the deal are extremely sophisticated investors. We are not dealing with mom and pop dabblers here. Goldman hired a firm to review and approve the legality of the deal prior to execution. Needless to say, it passed the test. Since when does Wall Street ever disclose the otherside of a transaction's information? Never, in fact, it would be totally wrong. Goldman claims to have lost money on the transaction to the tune of up to $90 million. The question is was there fraud in putting together the transaction? If housing maintained its value, the CDO would have been profitable. Could have anyone been able to predict when the market would collapse?

It appears to me that the the SEC may be using this case to TEST their regulatory ability for the coming changes in financial regulation against the biggest fish in the pond. It will be interesting to see how this plays out. My bets are on Goldman.






From Bloomberg:





By Christine Harper
April 17 (Bloomberg) -- Goldman Sachs Group Inc.’s efforts
to burnish its reputation just got a lot tougher.
Chairman and Chief Executive Officer Lloyd Blankfein, 55,
spent the last year defending the firm against criticism from
politicians and pundits, who decried Goldman Sachs’s profit in
the aftermath of the financial crisis and its sale of mortgage
securities that went sour. Now the U.S. Securities and Exchange
Commission is charging the company with fraud.
On Goldman Sachs’s list of business principles, “clients’
interests always come first” ranks highest. The SEC paints a
different picture. The firm failed to tell investors when
selling them a so-called collateralized debt obligation tied to
mortgages that the package had been designed to fail by hedge
fund Paulson & Co., which profited from the losses, the agency
alleged. Goldman Sachs said it will contest the case, calling it
“completely unfounded in law and fact.” Shareholders weren’t
comforted: The stock plunged the most in more than a year.
“The risk is long-term reputational,” said Benjamin
Wallace, an analyst at Grimes & Co. in Westborough,
Massachusetts, which manages $900 million and doesn’t own
Goldman Sachs stock. “People are going to be more inclined to
look at Goldman Sachs and think, ‘Who’s on the other side of
this trade?’”
Goldman Sachs sank 13 percent to $160.70 in New York Stock
Exchange composite trading, the biggest one-day percentage
decline since January 2009. The cost to buy insurance against a
default on Goldman Sachs debt jumped 35 basis points, or 0.35
percentage point, to 130.5 basis points in the biggest increase
in a year.

‘Worst-Case Liability’

The suit’s financial cost to Goldman Sachs, whose $13.4
billion profit last year set a record for a Wall Street
securities firm, is likely to be manageable and a settlement is
unlikely before 2011, according to Brad Hintz, an analyst at
Sanford C. Bernstein & Co. in New York.
The “worst-case liability” if the SEC case succeeds would
be $706.5 million hit to net income, or $1.20 in earnings per
share, Hintz estimated in a note to investors yesterday. Follow-
on claims from investors will “face a challenging hurdle”
because the securities were sold in a private placement only
available to sophisticated investors, Hintz said.
Some analysts said that a more important problem is that
the SEC’s focus on Goldman Sachs shows the firm is under a
harsher political and regulatory spotlight than competitors.

Goldman Agenda

Although the SEC warned Goldman Sachs last year that it was
investigating this transaction and might eventually file
charges, the regulator didn’t notify the firm that it planned to
file the suit yesterday, according to a person close to the
firm. People within the company interpreted it as a sign the SEC
has become unusually adversarial, the person said.
“At the moment, it looks as if the SEC is pursuing an
agenda aimed specifically at Goldman,” Chris Kotowski, a
managing director at Oppenheimer & Co. in New York, wrote in a
note to clients. “We believe that GS is probably vulnerable to
more charges and outsized fines, and we are for now downgrading
the stock to perform from outperform.”
Reactions to the SEC suit on Capitol Hill underscored
Goldman Sachs’s role as a lightning rod for political outrage.
Senate Banking Committee Chairman Christopher Dodd, a
Connecticut Democrat, said the case demonstrates the need for
Wall Street reform. House Minority Leader John Boehner, an Ohio
Republican, said the SEC suit provides further reason to oppose
the Democrats’ legislation.

Blankfein’s Prospects

“These are very serious charges against a key supporter of
President Obama’s bill to create a permanent Wall Street bailout
fund,” Boehner said in a statement after the SEC case was
announced. The bill “gives Goldman Sachs and other big Wall
Street banks a perpetual, taxpayer-funded safety net by
designating them ‘too big to fail.’”
Corporate customers and institutional investors will
continue to rely on Goldman Sachs and the company’s business is
likely to survive and thrive, said Richard Bove, an analyst at
Rochdale Securities in Lutz, Florida. Still, he said Blankfein
and Chief Financial Officer David Viniar, 54, may need to step
down “for the devastating decline in this company’s persona.”
“These men are brilliant and capable but this situation is
now out of hand,” Bove, who recommends buying Goldman Sachs
shares, said in a note to investors. “There is a deep bench at
Goldman and these executives, despite their capabilities, can be
replaced.”
Lucas van Praag, a spokesman for Goldman Sachs in New York,
declined to comment.

Questions for Viniar

Blankfein, who has worked at Goldman Sachs since joining
its commodities division, J. Aron & Co., in 1982, succeeded
Henry Paulson as chairman and CEO in 2006 when Paulson left to
become Treasury Secretary in the Bush administration. The next
year, Goldman Sachs set a Wall Street profit record helped by
bearish bets on subprime mortgage investments. Blankfein
received a $67.9 million bonus, an all-time high for the CEO of
a securities firm.
Viniar, the firm’s chief financial officer since 1999, is
one of the most public faces of Goldman Sachs. He fields
questions from analysts and investors on the firm’s results
every quarter. He’s slated to face their questions again next
week, when Goldman reports first-quarter figures.
In their annual letter to shareholders last week, Blankfein
and Goldman Sachs President Gary Cohn said most of the firm’s
business is aimed at serving sophisticated clients capable of
making their own decisions.

Tourre and Paulson

“The investors who transacted with Goldman Sachs in CDOs
in 2007, as in prior years, were primarily large, global
financial institutions, insurance companies and hedge funds,”
the letter said. The firm “did not know whether the value of
the instruments we sold would increase or decrease.”
That contrasts with the SEC’s allegations. The suit says
Fabrice Tourre, a 31-year-old vice president at Goldman Sachs,
knew that the Paulson hedge fund firm had helped select the
assets backing a collateralized debt obligation called Abacus
2007-AC1, even as Paulson planned to bet on it failing. The SEC
says Tourre misled a collateral manager, ACA Management LLC, and
an investor, IKB Deutsche Industriebank AG, about Paulson’s
role.
“Marketing materials for Abacus 2007-AC1 were false and
misleading because they represented that ACA selected the
reference portfolio while omitting any mention that Paulson, a
party with economic interests adverse to CDO investors, played a
significant role in the selection of the reference portfolio,”
the SEC argues.

‘Cynical, Savage’

Tourre, reached yesterday at his office in London, where he
is now an executive director, declined to comment. Annette
Littmann, a spokeswoman for Duesseldorf-based IKB, said “IKB is
aware of the SEC’s lawsuit and supported the SEC upon request.”
The SEC’s accusations may fuel critics’ claims that the
firm put its own interests ahead of clients’ and profited from
practices that led to the financial crisis.
“Goldman Sachs said they sold only to sophisticated
investors, but the damage they did was so pervasive that
unsophisticated investors got snared in their web too,” said
Janet Tavakoli, president of Tavakoli Structured Finance Inc. in
Chicago.
Christopher Whalen, a bank analyst at Torrance, California-
based Institutional Risk Analytics, told investors yesterday
that “this litigation exposes the cynical, savage culture of
Wall Street that allows a dealer to commit fraud on one customer
to benefit another.”

‘Out of Character’

William Cohan, a former investment banker who is writing a
book about Goldman Sachs, said the accusations are surprising
because the firm generally is diligent when it comes to legal
disclosures. That the suit names none of Tourre’s superiors may
signal that senior management can escape blame, he said.
“It just strikes me as being entirely out of the firm’s
character, as much as people like to hate them, because they are
much too careful on the whole legal front and disclosure
front,” Cohan said in an interview.
The SEC has “only named a VP, it’s not going up the chain
here at the moment, so I think that’s an important distinction
to make,” Cohan said. “There are bad apples in any firm.”
In a statement, Goldman Sachs made what it called “four
critical points” in its defense against the SEC’s accusations.
The first was that Goldman Sachs itself lost more than $90
million because it had an investment in the deal that
overwhelmed the $15 million it made in fees.

Paulson Statement

The firm said it provided “extensive disclosure” to IKB
and ACA about the risk of the underlying mortgage securities. It
said that ACA, whose $951 million investment made it the most
exposed to risk, selected the portfolio. And the firm disputed
the SEC’s accusation that Goldman Sachs told ACA that Paulson &
Co. was going to be an investor in the CDO.
Paulson’s firm, which hasn’t been charged with any
wrongdoing, said in a statement that “ACA as collateral manager
had sole authority over the selection of all collateral in the
CDO” and that Paulson didn’t “sponsor or initiate” Goldman’s
Abacus program. The fund says that while it did purchase credit
protection from Goldman Sachs on some Abacus securities, it
wasn’t involved in the marketing.
Goldman Sachs’s loyalty to clients has been questioned
before. E-mails released by congressional investigators earlier
this week show that Washington Mutual Inc.’s former CEO, Kerry
Killinger, didn’t want to hire a Goldman Sachs banker in 2007 to
help with the bank’s credit problems before it collapsed.

Best Models, Brightest Minds

“They are smart, but this is swimming with sharks,”
Killinger wrote in an Oct. 12, 2007, e-mail to a deputy. “They
were shorting mortgages big time while they were giving CfC
advice,” he added, referring to Countrywide Financial Corp.,
the home lender that ran short of cash the same year.
One investor said that perception hasn’t prevented Goldman
Sachs from winning client business before and he doesn’t think
it will now.
“There’s that cachet that they’ve had that not only are
they the smartest guys in the room, but they might be playing
you,” said Peter Sorrentino, a senior portfolio manager at
Huntington Asset Advisors in Cincinnati, which manages about $13
billion, including Goldman Sachs stock. Still, “the people at
Goldman really do have the best models, they do have the
brightest minds” and they will keep winning clients.
He said the market reaction to the SEC’s suit probably
reflects fear that wider criminal charges could follow, and
represents a good opportunity to buy the stock.
“I’m just happy that it wasn’t the FBI kicking in the
door,” Sorrentino said.

*T
For Related News and Information:
On Goldman and legal issues: GS US TCNI LAW
On Goldman and CDOs: GS US TCNI CDO
Top finance news: FTOP
*T

--With assistance from Shannon Harrington, Bob Ivry, Bradley
Keoun, Dawn Kopecki, Matthew Leising and Michael Moore in New
York, Joshua Gallu in Washington, and Jann Bettinga in
Frankfurt. Editors: Robert Friedman, Otis Bilodeau.

To contact the reporter on this story:
Christine Harper in New York at +1-212-617-5983 or
charper@bloomberg.net

To contact the editor responsible for this story:
Alec McCabe at +1-212-617-4175 or
amccabe@bloomberg.net.

Companies:
GS US
573991Z US

Categories:
NI BNK
NI SCR
NI FIN
NI US
NI NY
NI LAW
NI GOV
NI SEC
NI ABS
NI BON
NI CRIME
NI CRUNCH
NI COS
NI MARKETS
NI GEN

7 Critical Stocks For Monday

Investors can expect another full plate of important earnings on Monday. Leading indicators and several T-bill auctions complete the economic release picture. Stocks plunged today after the SEC accused Wall Street heavyweight, Goldman Sachs of fraud in the Abacus CDO transaction. The allegations focused on supposed misstatement of facts. Financial shares led today's sharp sell off. Even Mother Nature roared with the bears as a volcanic ash cloud disrupted airline transportation worldwide. The U.S. dollar was the beneficiary of the selling as capital sought the safety of the Greenback. The DJIA plunged 125.91, the tech heavy Nasdaq fell 34.43, and the S&P 500 gave back 19.54.


Here Are 7 Stocks You Need To Know For Monday.

Citigroup (NYSE:C - News) is expecting to break even at an EPS of zero prior to the opening bell. The Stock PowerRating for C is 3.

Controversial defense contractor, Halliburton Company (NYSE:HAL - News), has analysts awaiting a, before the bell, EPS of 25 cents. The Stock PowerRating for HAL is 5.

Drug kingpin, Eli Lilly and Company (NYSE:LLY - News), is looking at an EPS of $1.10 prior the 9:30 AM EST market opening. The Stock PowerRating for LLY is 5.

Computer stalwart, International Business Machines (NYSE:IBM - News), reports after the close with a forecast EPS of $1.93. The Stock PowerRating for IBM is 5.

A 95 cent loss awaits investors in Zions Bancorp (NasdaqGS:ZION - News) after the closing bell. The Stock PowerRating for ZION is 2.

Goldman Sachs (NYSE:GS - News) is vigorously defending itself from SEC CDO trade fraud allegations. The Stock PowerRating for GS is 4.

Bank of America (NYSE:BAC - News) posted its first gains in three quarters on loan loss declines and investment banking. The Stock PowerRating for BAC is 3.

The Mother Of All Bulls!!!

The mother of all bull markets is upon us! As you know, we went LONG on April 6th and have continued to hold the positions. We believe that JPM's earnings this morning are a precursor to a monster upmove in stocks. We are fully expecting the DJIA highs to be taken out by April 15th, 2012,on the outside. It may be much sooner!

Staying Long DJIA

All Out Longs Triggered! Long DJIA

Today's pull back in the DJIA triggered our system to go ALL IN longs with the YM contract. We are aggressively long from 10903 YM. To the MOON, ALICE !!

Emergency Fed Meeting: Bull Killer Or April Fools?

On Friday, April 1st, I was advised that the Federal Reserve Board will be holding a previously unannounced meeting to review and determine advance and discount interest rates on Monday, April 5th at 11:30 AM. I was first notified of the meeting by the notorious and very controversial economic and hedge fund blog, Zero Hedge. Without hesitation, I instantly thought this was some kind of April Fools joke by a prankster embedded inside Zero Hedge. I know these guys are dialed into some fairly high levels of information flow but being April Fool’s day it had to be a joke, right? The FOMC minutes are on Tuesday, why on earth would a meeting be needed on Monday unless some kind of major change is underway? Checking the major news outlets over the weekend, I have found nothing about this meeting. However, multiple blogs and trading sites have picked up on the news. Feeling very concerned, I went directly to the Federal Reserve’s website to confirm or deny this troubling rumor. Lo and behold, I discovered that the meeting is actually taking place! The following is directly from the Feds site: http://www.federalreserve.gov/boarddocs/meetings/2010/20100405/advancedexp.htm


Advance Notice of a Meeting
under Expedited Procedures
It is anticipated that a closed meeting of the Board of Governors of the Federal Reserve System at 11:30 a.m. on Monday, April 5, 2010, will be held under expedited procedures, as set forth in section 26lb.7 of the Board's Rules Regarding Public Observation of Meetings, at the Board's offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting.
Meeting date: April 5, 2010
Matters to be Considered:
1. Review and determination by the Board of Governors of the advance and discount rates to be charged by Federal Reserve Banks.
A final announcement of matters considered under expedited procedures will be available in the Board's Freedom of Information and Public Affairs Offices and on the Board's Web site following the closed meeting.
For more information please contact: Michelle Smith, Director, or Dave Skidmore, Assistant to the Board, Office of Board Members at 202-452-2955.
Supplementary Information: You may call 202-452-3206 beginning at approximately 5 p.m. two business days before this meeting for a recorded announcement of any bank and bank holding company applications scheduled for the meeting; or you may contact the Board's Web site at http://www.federalreserve.gov for an electronic announcement about applications and other expedited items, as well as procedural and other information about the meeting.
Dated: April 1, 2010


Unless Ben Bernanke and the boys are playing some kind of prank, it looks like this meeting is actually going to be happening. Traders need to be extremely vigilant Monday morning until the results of the meeting are known. A rate change sending the markets into chaos may be the short term fruit. Be extremely cautious!!