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18. Stocks Fraud Could Weaken US Economy he negligence of government regulatory agencies and the media is becoming worrisome as a major scandal, unknown outside the financial community, is bankrupting small businesses and investors and having a negative effect on the economy. The scandal, coined "Stockgate" by the Financial Wire, involves the abuse of "short selling". As opposed to a traditional approach to investing in which stocks are researched and bought in the hope they will rise over the "long" term, going "short" involves a bet that a stock is about to go down in value. The short sale of stocks is a risky bet, usually not recommended except for speculation or hedging, to protect long-term financial posi- tions with short-term offsets. As short-selling is a sale of stocks not owned but lent it is an example of buying on margin—a category of practices whose abuses stand out clearly in many people's minds as a significant factor in the 1929 Stock Market Crash. "Naked shorting" is an illegal abuse of short selling in which investors short-sell stock that they have no intention or ability ever to cover. When allowed to occur, naked shorting drives the stock value of a company down by creating more stock shares flowing around the market than actual shares of stock that the company can back with its current earnings. Companies, their shareholders and indeed the entire economy are hurt financially by naked shorting, as it reduces the money available to support economic growth. Investors hurt by or concerned about the consequences of naked shorting organised, petitioned and investigated the background sur- rounding the Stockgate scandal. What they found was not merely a series of noteworthy cases of extravagant abuse by individual investors and professionals but a systemic pattern of negligence by regulators that allowed the abuse to go by largely unchecked. ———____——. wyo's Geer cuTiirvé euT Preces tF Topart Paper a_i 20 = NEXUS While investors have lost hundreds of billions of dollars in savings, the Wall Street firms responsible for the abuse saw negligible fines that had no appreciable impact on their stock values. Some execu- tives were even given raises in the midst of their negligence and fraud! (Sources: Financial Wire, "Stockgate Today" Series, September 20, 2004 and April 7, 2005; San Antonio Express-News, March 2, 2005; TheMotleyFool.com, March 30, 2005) 19. Child Wards Used in AIDS & Vaccine Experiments om" as young as three months old were used as test sub- jects in AIDS drug trials in New York's Incarnation Children's Center. The Center, which is run by Catholic Charities, specialises in treating HIV sufferers, and the drug trials were performed on children with HIV or who were born to HIV- positive mothers. The New York City Health Department is look- ing into claims that more than 100 children at Incarnation were used in as many as 36 experiments. Most of these experiments were sponsored by Federal agencies such as the National Institute of Allergy and Infectious Diseases. Documents obtained by the UK Observer have implicated British pharmaceutical giant GlaxoSmithKline's involvement in at least four experiments conducted at Incarnation since 1995 using black and Hispanic children. Several trials were conducted to test the toxicity of AIDS drugs. In one trial, children as young as four received a high-dosage cocktail of seven drugs; another tested the reaction of six-month-olds to a double dosage of a measles vaccine. Other stud- ies conducted on children included testing AZT, which can have dan- gerous side effects, and testing the long-term safety of antibacterial drugs on six-month-old babies. GlaxoSmithKline also used children to "obtain tolerance, safety and pharmacokinetic data" for herpes drugs. The Incarnation trials were conducted by Columbia University Medical Center doctors. A spokesperson for the university said that there have been no trials at Incarnation since 2000, and that the con- sent for using the children as test subjects was provided by the Administration for Children's Services. Consent was based upon decisions by a panel of doctors and lawyers who decided whether or not the benefits of allowing the child to receive the drugs outweighed the risks (it was unclear what recipient "benefits" referred to). Though GlaxoSmithKline has acknowledged its involvement in the trials, it denies any wrongdoing. These trials at New York's Incarnation Children's Center were part of a broader series of HIV and AIDS drug trials that were conducted in at least seven states on foster children. Some children died during the trials. However, government officials have so far found no evidence that their deaths could be directly connected to the experiments. (Sources: The Observer, UK, April 4, 2004; Democracy Now!, December 22, 2004, http:/Awww.democracynow.org) 20. Native Americans Sue for Resources Compensation Nas Americans, after more than two centuries, are still being cheated by the US Government and US corporations. Oil companies operating at Montezuma Creek, Utah, which lies on a Navajo Reservation, have undercompensated the Native Americans for the right to their natural resources since the 1950s. District Court—appointed investigator Alan Balaran discovered that non—Native Americans in the same area received royalties that amounted to more than 20 times the amount received by the Native Americans on the reservation. His findings show that the government owes Native Americans as much as $137.5 billion in back royalties. The issue of the government keeping funds from www.nexusmagazi ne.com DECEMBER 2005 — JANUARY 2006