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Jan 10, 2013


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As posted in Ed's last piece;

"Meanwhile, a lot of people -- including most of the broker's own clients -- were making money."


Most of my clients made money in the fall, and gave back/lost in the run up, or were in cash/money market accounts, because I couldn't tell what was actually happening.

"Feds hose small-town broker and his roster of grannies and honest tradespeople."

This is the case Ed.

We did get hosed.

The Fed, the SEC, the OCC and the Auditors lied.

They shoved the markets up with funny money.

"I think the withholding of bailout info was seriously wrong, but it was no secret that the government plan was to prop up the banks and pretend everything was OK until reality caught up to the fiction."


That's not what we were told.

We were told to "pretend"?

"Blaming your losses on a bet against that obvious strategy seems iffy to me"

Obvious strategy in hindsight. I realize you are playing devil's advocate, but as someone who received the benefits of the government's lying...

I am not blaming all my losses on getting lied to repeatedly.

But I sure am blaming some of them on the folks I worked for lying to me, Wachovia Shareholders, my clients, Congress and the markets.

"An article saying that your bets harmed the decent townsfolk of Mayberry, rather than you and a handful of aggressive investors, is false."

The more aggressive got in earlier and lost more than the less aggressive who got in later and lost less.

They still lost Ed.

They lost while the Regulators told the biggest banks in the country they could lie about material insider information and let their executives profit from information very few outside the connected world knew.

If I made you $100,000 in one year and lost $25,000 of it the next,
what happened last year?

You lost $25,000.

You want to meet some of the investors Ed?

You chose not to last summer, so consider this a re-offer.

I'll sit down with whoever wants to and go through the whole thing.



Thank you for putting up the links Ed.



Ed, what part of secret did you not get in Taibbi's article on the bailout? Nobody anticipated the level at which the Feds continued to fund the banks until this very day. And where were you on this issue during this time? You seem to be defending the buy and hold schmucks. It looks like Monday morning quarterbacking.


Of course, it's your standard MO to defend the neoliberals.

Ed Cone

George, you seemed happy with my summary of our conversation last summer. Nothing about short-selling or customers was discussed, it was all about the fraud allegation and the policy on reporting investment costs.

Fec, I thought at the time that the loans were disclosed that our strategy was "based on backdoor bailouts and clapping for Tink," which is what I'd thought for years. Not sure how much clearer I can be that secret loans were bad. Just pointing out that Taibbi's narrative is shaky.


You're full of shit.


Tell us Ed, What are POMOs? Grace us with your erudition on the subject. Putz.


The only thing you know about finance is your trust fund check is deposited the first of the month.


For the record, this is what I sent to Ed on 6/20/2012

Subject: This is what I sent Brad Miller on April 16, 2012


That would be US Congressman Brad Miller, who I went back and forth with a few times on facebook, and then went back and forth with someone in his Raliegh office, to no avail.



It's the pdf entitled "Brad Miller, George Hartzman Wells Fargo Whistleblowing ...t on Facebook.pdf"


For Balance, I was also blown off by Rep. Howard Coble, and Senators Hagan and Burr

At the dropbox link above, I just put up;

Emails with Kirk Bell Sr. Legislative Assistant for Rep Howard Coble.pdf


I just put up in the dropbox link;

BB&T NC Commissioner of Banks and FDIC docs and emails

Don Vaughan got me in touch with the NC Commissioner of Banks.

I sent in an inquiry, and the letters at the end was BB&T's response.

FDIC letter there as well.


George, I followed the link of what you sent to Brad Miller. Do you seriously fault anybody for not understanding you? It is amazing that you foster any expectation of being understood when you go out of your way not to be. It's an aggressive kind of sociopathy that engenders zero sympathy as far as I'm concerned.


Thanks Roch.




Roch has a point, in his demonizing way.

I just put up a Roch friendly left justified version which is part of what I initially sent Taibbi entitled;

"Whistle 1 9 2012.pdf"

I thought of Roch more than a few times as I put this together.

I also credit him for getting me to use my real name online a couple of years ago.



Re: Brad Miller PDF, I was lost almost immediately and stopped reading on the first page, although I scrolled down and saw that it continued in the same vein and there were at least a dozen pages, I think.

May I ask, in all seriousness, about how you happened upon that writing style? It seems to me that writing a straightforward letter or some other kind of organized document would be more helpful to you in capturing a reader's attention and in explaining your case. (It would certainly be helpful to me in reading what you write!) Is there some reason why you prefer not to do that?

Not judging. Seriously curious! Thanks.


George, I just read the Whistle doc. Wow, what a difference! You CAN do it. ;)

Back to my question, why wouldn't you write like that all the time?


Thanks Michele, I started writing like that for CPA and Attorney Financial Ethics textbooks I used to teach with. When it's in a book like that and there are 45 people in the room, I can take everyone to the top of the middle or second to last on the right etc... part of the material.

When I started writing online, I used the same thing.

Yes, I intend to stop doing it.


Thanks for the explanation! :)

Andrew Brod

"Hartzman makes my head hurt."

Vaclav Havel

Ed Cone


What % of the assets you managed were in the portfolio you linked?

What % of your clients were in that portfolio with most or all of the money you managed for them?


Excellent questions Ed.

I think about $10 million of $35 million at the peak.

Lot's of other money in much less risky stuff elsewhere.

Don't have the specifics anymore on the second question.

Ed Cone

So what % of the assets you managed were put into the riskier short strategy?


I don't have an exact %.

The portfolio's I linked to were individually managed.

I did not block trade and distribute shares by discretion at the time.

Every move was a phone call, discussion and then trade or not
for each individual account.

Some got more of riskier positions,
some got less.

Sometimes there is just as much risk or more in going long
as short.

Ed Cone

I'm just looking for a general sense of your clientele's exposure to the doomed shorting strategy, vs the successful portfolio you linked and the other "much less risky stuff" you mention above.

Were a few customers shorting, or most of your customers? And to what degree were those involved invested in the shorting strategy -- was it typically a relatively small amount of their holdings with you, or were they plunging in?


"a general sense of your clientele's exposure to the doomed shorting strategy, vs the successful portfolio you linked"

I wouldn't characterize the strategy at the time as "doomed".

New clients who came in after q2 2009 got hurt without participating in any of the run up as the market fell, when I thought the market was going to go down again.

Keep fishing...

Ed Cone

Sorry if that seems like a pejorative, just meant to be descriptive, in hindsight, as the strategy did not work.

Anyway, are you able to provide a rough answer to my questions?

What was the relative size of you clientele's exposure to the shorting strategy vs the successful portfolio you linked and the other "much less risky stuff" you mention above.

Were a few customers shorting, or most of your customers? And to what degree were those involved invested in the shorting strategy -- was it typically a relatively small amount of their holdings with you, or were they plunging in?


I think I may know what you're looking for Ed.

I wouldn't have gone through all this if my anonymity was not compromised by Wells Fargo's Ethics line. If I had kept my anonymity and they came back and said "case closed", I may very well still be there.

What it came down to was I called out the top brass for securities fraud etc..., the company and the regulators blew it off, which put my family's safety at risk. I feel like I didn't have a choice but to try to self protect.

You work for an investment advisory firm, no?

What would happen if you found fraud at the top, and everyone blew you off after many knew you complained?

Ed Cone

What I'm looking for is a simple answer to my questions about the scope of your clientele's exposure to your shorting strategy at the time it went south.

My understanding, based on your comments and the document you provided, is that, overall, your clients did OK in 2009.


Overall, many of my clients did better than ok in 2009,
if their year end values were above what the markets did.

Others, including myself, did not.

The performance reports I put up are the best ones.

I did not put up the worst, yet they exist.

Again, if a client makes $100,000 and then losses $50,000,
so they are still up $50,000,
but the losses were in part, yes in part,
caused by massive material non-disclosure,
someone who made $50,000 who could have made $100,000 was hurt.

I was/am a fiduciary. I was/am supposed to do what is in the best interests of my clients. If the company I work for violated the law, which in turn "partly" hurt my clients, I am supposed to tell my clients the truth and report the company through the Ethics Line,
which in this case violated my anonymity and put my family at risk.

Having Robert Steel involved made the whole thing even more dangerous, for he was supposed to be a "regulator" that was supposed to be looking out for wrongdoing.

Now Mr. Steel is the Deputy Mayor of New York City.

As clearly documented in "Whistle 1 9 13" at;


I changed the date from 2012 to 2013...,

Mr. Steel appears to have purchased securities knowing undisclosed material insider information.

I believe my family is safer now that Taibbi reported it,
than before.

I believe my family is safer for Ed Cone covering it again
than before.

I do appreciate you covering the story Ed.



Ed Cone

I actually feel like we're on a tangent here, but having encountered some pushback to a post I believe to be accurate (this one, pointing out what I see as flaws in Taibbi's reporting) I felt compelled to tease out that point.

I continue to think the larger point is important: It was unethical for banks to allow advisers to act on incomplete information.


"It was unethical for banks to allow advisers to act on incomplete information."


And the people who are supposed to be standing up for my clients,
did nothing.

They did worse than nothing, they condoned it.

Ben Bernanke

Timothy Giethner

Hank Paulson

George W. Bush

Barack Obama

Eric Holder

Brian Craig at the FINRA Office of the Whistleblower

Michael Mashburn and Justin Jeffries at the SEC


One more story to go.


"I continue to think the larger point is important: It was unethical for banks to allow advisers to act on incomplete information."

Okay so then why do you keep pushing George?

It doesn't matter how much money was lost or how many people lost money. The very simple fact of the matter is that critical information was withheld and as a result, some investment decisions were made that lost money.

That sounds a lot like the same thing that caused the financial crisis in the first place- the failure to disclose information (such as the value of MBS and default levels) and the effect this had inter alia, on investment decisions.

I'm not sure what you're trying to prove here- except maybe to somehow justify/explain/rationalize how YOU missed the story that Taibbi didn't. If that is the case, you can put the spectacle of a bruised ego back in the closet. We've seen that before.


i didn't miss the story Spag, I helped Matt report it.

Now I am trying to rebuild my career.


George, my comment was directed to Ed. Re-read it in that context.


spag, i am trying to get it fixed.

i believe some should be in jail

how do we get it fixed?

Taibbi went on tv the other day

we have both recieved some critiscism

he reported massive wide spread fraud that our government won't procecute

who else picked up the story?

don't u think the wsj would pick it up?

crickets in msm land.

now what?

where is the bar assn?

where r the cpa's?

where r the politicians?

i'll not stop fighting thank u.

Ed Cone

Sam, I made a minor point about an important story, the minor point being that Taibbi overdramatized the local situation.

I thought it was mildly interesting to a local audience that RS exaggerated the facts about what happened here.

I came to that conclusion based on Hartzman's own statements, so I was surprised when Hartzman pushed back, if only in a sorta kinda dodgeball fashion that didn't do much to defend the RS version. So around and around we went, wasting valuable pixels over very little.

Looking back, I would have just posted my post and moved on. Because that larger story really is an interesting one.


We are down to Statute of Limitations.

An immense atrocity is about to occur.

I need more help.


But your summary is "Based on Hartzman's own telling, his story seems to be that of a broker with an aggressive strategy who bet against a rising market and lost money for himself and some similarly aggressive clients."

That's clearly not his story because you leave it incomplete, omitting the essential point that he didn't simply bet aggressively and lose- he bet aggressively based on government and corporate dishonesty. When I read Taibbi's piece, what I got from it was that George was an example of a small fish who played by the rules and was burned badly along with some of his clients because there are two rulebooks. The one that guys like George and the rest of us play by that is informed by the application of sound investment strategy to disclosed facts, and the other one that allows only the truly elite to know the real facts.

What it comes down to is that George wouldn't have made those bets if the true, legally required disclosures were made. They weren't, a lot of people lost money, and those who withheld the information have so far gotten off without a scratch. The number of people who got screwed isn't really the salient point.

The banks lied about MBS and look what happened. Millions of people invested based on those lies, and millions got screwed. Then the public is lied to again about the true nature of the "fix" to that disaster and more people get screwed. NOBODY goes to jail! Amazing considering that what happened on a macro level is no different than what happened on a micro level with companies like Enron cooking their books. But Ken Lay & Co. go to jail while the real power brokers at Goldman Sachs, BOA, Chase, etc. do far more damage and still walk the streets getting rich. Meanwhile the government looks the other way, a "don't ask, don't tell" for the incestuous elite who control the nations financial sector and engineer it with their own self interest first and foremost in mind. We socialize their losses so they don't have any losses.

Ed Cone

George, could you elaborate a bit on the expiring statute of limitations and your call to action?


Mr. Robert Steel bought Wachovia Shares in July 2008.

It's 2013.

"SEC Lawsuits

If the Securities and Exchange Commission (SEC) brings a lawsuit against an alleged violator, two SOL rules are imposed. The SEC has five years from the date of the violation to bring the lawsuit."


They are running out the clock.

Andrew Brod

Spag is channeling Occupy Wall Street, and I agree with him.



2009-02-04 Lewis Kenneth D (Chairman CEO and Pres) Purchase
2009-01-20 Lewis Kenneth D (Chairman CEO and Pres) Purchase
2008-11-04 Lewis Kenneth D (Chairman CEO and Pres) Purchase



From Matt's main article;

"Stephen Friedman, a Goldman director who was also chairman of the New York Fed, bought more than $4 million of Goldman stock over a five-week period in December 2008 and January 2009 – years before the extent of the firm's lifeline from the Fed was made public."
If former New York Fed Chairman and Goldman Sach's alumni Stephen Friedman knew about secret loans to Goldman in 2008 and 2009, how did he not buy GS with unknown information?



George, did you actually recommend your clients short certain issues?


sure did.

a fiduciary should recommend what's in the best interests of his/her clients.

i was

my parents were.

it was the right thing to do.

shorting is involved in how normal markets are supposed to function.

what we have now is distorted.

we don't have an efficient market

we have a banana republic


Andrew, the government is even more culpable than Wall Street on this one. They guaranteed the money, kept it quiet, and now refuse to enforce the law.

It's not capitalism, it's not socialism, it's not fascism- it's a hybrid of all three.


"a fiduciary should recommend what's in the best interests of his/her clients."

What specific circumstances made you think that a short position in certain issues would be in the best interests of your clients?

Andrew Brod

Spag, you can keep talking and I'll continue to agree with you.

As a rule, I dislike the victims-and-villains approach to economic policy. Is Wall Street a villain in this? Maybe, but so what? The way economics generally views policy issues is that individuals and businesses do what they do; profit maximization is in our genes, at least the way economic models see us. The bigger and more important question is how government sets policy. In this case, government did a lot of silly things. I presume you and I disagree about what the government's mistakes were, and I'm less interested than you in putting a label on it, but I very much agree that ultimately, government screwed the pooch.


Thanks for the question Bubba, this is what I told Matt Taibbi about that. Niether he or Jeff Gauger chose to mention I have been teaching financial ethics for 10 years"

"In the mid oughts I was teaching the North Carolina Bar Association Ethics Component. [as well as CPA continuing ed]

I got into the pick a payment mortgage problems and the crap debt mortgage securities being sold and who the lawyer is supposed to represent in real estate closings.

At a re closing, the appraiser, RE agent, the mortgage broker and the lawyer all making money as kind of a team.

The lawyer is supposed to represent the bank, but really represents self interest, which includes doing as much business as possible with as many appraisers, mortgage brokers and real estate agents as possible.

The higher the cost of the house, the more everyone gets paid.

A pick a pay mortgage provides a less than interest only payment, but adds to the principal owed, until it hits about 118%, and then it reverts to the 30 year mortgage payment.

Total rip off, but good for all those sitting at the table and the banks, as long as they could unload the crap debt onto unknowing investors.

In 2006 and 2007 I had a good read from the markets and CPA and attorney class participants about the real estate bubble, which led to the stock market bubble.

I shorted a lot of home builders."

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