Updated; New Perella Weinberg CEO Robert Steel's Securities Fraud and Insider Trading at Wachovia

"As required by the Dodd-Frank Act ...the Federal Reserve disclosed detailed information about (i) entities that received loans or other financial assistance under a Section 13(3) credit facility between December 1, 2007, and July 21, 2010; ...or borrowed through the Term Auction Facility (TAF) during that time frame.

Excel (953 KB)

This information includes:

...The specific terms of any repayment expected, including the repayment time period, interest charges, collateral and other material terms...

http://www.federalreserve.gov/newsevents/reform_taf.htm
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Loan date............Maturity.......Term...Amount.....Rate........Unencumbered collateral

Dec 20 2007....Jan 17 2008.....28....... 25.0......4.650.......65.4556 Billion Unencumbered Collateral
Mar 27 2008...Apr 24 2008.....28.....3,500.0....2.615.......65.8325 Unreported Collateral
Jul 31 2008......Aug 28 2008....28.....5,000.0.....2.350......61,879.7
Aug 14 2008....Sep 11 2008....28.....5,000.0.....2.450......62,518.3
Aug 14 2008....Nov 6 2008.....84.....2,500.0......2.754......62,518.3
Aug 28 2008....Sep 25 2008....28.....5,000.0......2.380......60,062.8
Sep 11 2008....Oct 9 2008......28......2,500.0......2.530......56,838.9
Sep 11 2008....Dec 4 2008......84......2,500.0......2.670......56,838.9
Sep 25 2008....Oct 23 2008.....28......5,000.0......3.750......56,848.4
Oct 9 2008.......Jan 2 2009.......85.....15,000.0.....1.390......29,396.4
Oct 23 2008.....Nov 20 2008...28.....15,000.0......1.110......33,997.8
Nov 6 2008......Jan 29 2009.....84.....15,000.0......0.600......36,562.7
Nov 20 2008....Dec 18 2008....28.....15,000.0......0.510......47,212.7
Dec 22 2008.....Jan 8 2009.......17.....10,000.0......0.528......76,280.0
Feb 26 2009.....May 21 2009...84.......5,000.0.......0.250......67,820.2

Unencumbered Collateral represents assets free and clear of any encumbrances such as creditor claims or liens, which in this case, showed that Wachovia had an unreported Federal Reserve credit line worth tens of billions during the financial crisis very few knew of, which included Robert Steel.

On July 9, 2008, Robert Steel became president and CEO of Wachovia after working for Goldman Sachs from 1976 to 2004 and the US Treasury under former Goldman Sachs CEO Henry Paulson from October 10, 2006 until July 9, 2008. During his tenure at the U.S. Treasury, he revived the President's Working Group, the core group to respond to the global economic crisis of 2008.

The Working Group consists of:

The Secretary of the Treasury, or his/her designee (as Chairperson of the Working Group);
The Chairperson of the Board of Governors of the Federal Reserve System, or his/her designee;
The Chairperson of the Securities and Exchange Commission, or his/her designee; and
The Chairperson of the Commodity Futures Trading Commission, or his/her designee.

On July 22, 2008, Mr. Steel personally purchased 1,000,000 shares of Wachovia’s stock as the company’s undisclosed Federal Reserve Term Auction Facility (TAF) borrowing reached $12.5 billion, terms of which which were not disclosed in Wachovia's securities filings audited by KPMG.

After Perrella Weinberg announced Steel's new CEO post, Richard Craver of the Winston-Salem Journal wrote "Steel received some criticism during Wachovia’s downfall for playing up its health, including spending $16.1 million to buy 1 million shares of stock shortly after he took over as chief executive. ...At the same time, unknown to the public, Wachovia was borrowing heavily from the Federal Reserve."

Steel bought Wachovia’s stock while in possession of material, nonpublic insider information and violated Sarbanes-Oxley, while not informing financial advisers acting as fiduciaries for accounts governed by the Investment Advisors Act of 1940 under his supervision.

Bloomberg detailed Federal Reserve provided transactions on August 22, 2011, including undisclosed loans to Wachovia and Wells Fargo amongst others.

http://www.bloomberg.com/data-visualization/federal-reserve-emergency-lending/#/overview/?sort=nomPeakValue&group=none&view=peak&position=0&comparelist=&search=

The Sarbanes-Oxley Act of 2002, which I have taught in ethics courses for CPAs and others for 10 years, requires financial statements fairly present, in all material respects, a company’s financial condition. Financial information in press releases or other public disclosures must not “contain an untrue statement” or omit a statement of  material fact necessary to make statements not misleading.

In an interview with CNBC's Jim Cramer On Monday, September 15, 2008, Steel said "I think it's really about...transparency. People have to understand the assets and really be able to say, this is what I own... Complete disclosure. ...we can work through this with transparency, liquidity and capital. ...Our strategy was to give you all the data so you could make your own model. We tell you what we're doing... ...we're raising capital ourselves by basically shrinking the balance sheet, cutting the dividend, cutting expenses. We can create more capital ourselves that way... for now, we feel like we can work through this..." After Jim Cramer asked "Should there be any sort of quick regulatory relief from the SEC that would make life easier to be able to make your bank much stronger?", Mr. Steel responded "I don't think it's about my bank."

After not reporting TAF loans, Wachovia's CEO wrote "I, Robert K. Steel, certify that: I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 of Wachovia Corporation; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report...

Mr. Steel was at least aware of Wachovia’s Federal Reserve loans since July, 2012, if not the undisclosed loans to multiples of other financial institutions.

Wachovia stock price on date of first TAF loan: 3/27/2008 - Last Trade: 27.07

Wachovia price on date of completed merger with Wells: 12/31/2008 - Last Trade: 5.54

As of January 31, 2008, there were 1,981,983,990 Wachovia shares outstanding.

27.07 - 5.54 = 21.53 x 1,981,983,990 = $42,672,115,304.70 Wachovia market capitalization lost between the first undisclosed TAF loan and Wells merger.

On June 22, 2010, Robert Steel was appointed Deputy Mayor for Economic Development by New York City Mayor Michael Bloomberg, after which, Steel resigned his seat on the Wells Fargo board. According to Morningstar data, Mr. Steel owned 601,903 shares of Wells Fargo in 2010, which would have been worth about $30,564,634 as of May 30, 2014.

If Wachovia's shareholders knew how much liquidity was available from the Federal Reserve, Wachovia's stock price wouldn't have fallen to the degree it did, and would have most likely survived without being acquired.

That the merger between Wachovia and Wells Fargo was completed without either company disclosing the secret TAF loans indicates the US regulatory system has been compromised.
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On December 21, 2011, Stephanie L. Hunsaker, Senior Assistant Chief Accountant Division of Corporation Finance at the Securities and Exchange Commission asked Wells Fargo & Company; "We have become aware through various news reports that you may have accessed various Federal Reserve ...sponsored funding programs during 2008 and 2009, including the Term Auction Facility (TAF)... We note from your disclosures during these periods that ...you do not appear to have provided any discussion about certain other programs that were in existence at this time, such as the TAF... 

Wells Fargo responded by stating "We did participate in the Term Auction Facility (TAF) during 2008 through August 2009. TAF was established by the Federal Reserve in December 2007, and represented one of several sources of competitive, low-cost short term funding available to us. ...At December 31, 2008, our short-term borrowings under TAF totaled $72.5 billion, which included $40 billion of TAF borrowings by Wachovia Corporation at the time of acquisition [approved by the Federal Reserve Board which issued the loans].

However, the TAF borrowings were classified differently in the legacy Wells Fargo and Wachovia accounting systems (which had not been integrated as of the time the 2008 Form 10-K was prepared), which resulted in our reporting of $32.5 billion of the TAF borrowings in the “Commercial paper and other short-term borrowings” line item, and the $40 billion of Wachovia TAF borrowings reported in the “Federal funds purchased and securities sold under agreements to repurchase” line item...

...our management did not distinguish TAF from other sources of short-term borrowings, such as federal funds purchased, commercial paper or securities sold under repurchase agreements...

...We were a viable entity regardless of whether we participated in the programs. Further, our participation in the programs did not ...provide ...arrangements designed to insulate us from the economic effects of problem assets. ...our participation in the referenced programs did not materially affect, and was not reasonably likely to have a material future effect upon our financial condition or results of operations...

http://www.sec.gov/Archives/edgar/data/72971/000119312511349117/filename1.htm
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By not reporting details of Federal Reserve loans, including interest rates, term, total credit line and collateral, Wachovia's shareholders were harmed.

I believe Mr. Steel is guilty of insider trading and securities fraud.

The Federal Reserve Board led by Ben Bernanke, approved the merger without disclosing the loans to the public.

Wachovia's shareholders were defrauded by Wachovia's Robert Steel and Wells Fargo's John Stumpf, and no one at the federal level did anything about it, including US Attorney General Eric Holder.

SEC TCR Submitted Successfully - Reference Number: TCR1401728014514

http://www.taxpayer.net/user_uploads/file/Bailout/BankBios/WellsFargo/Finance/WACHOVIACORP%2010Q%203rd%20qtr%202008.pdf

Winston Salem Journal; "Robert Steel, Wachovia executive caretaker, lands new job "

"Steel succeeded Ken Thompson at Wachovia in July 2008. Thompson was ousted as chairman by the bank’s board of directors in May 2008 and as chief executive a month later.

Before taking over the Wachovia job, Steel served two years as undersecretary for domestic finance at the U.S. Treasury Department. Steel also worked nearly 30 years at Goldman Sachs Group Inc., becoming head of its global equities division and vice chairman.

...During his 7½-month run as Wachovia's top executive, Steel helped negotiate the sale of Wachovia to Wells Fargo & Co. and participated in the integration of the two banks.

Steel also announced the eliminating of 10,750 jobs, about 9 percent of Wachovia’s overall workforce, after the bank reported losing $8.9 billion in the second quarter of 2008...

Steel received some criticism during Wachovia’s downfall for playing up its health, including spending $16.1 million to buy 1 million shares of stock shortly after he took over as chief executive.

When he announced the job cuts, Steel said “lots of good progress has been made in working through difficult issues. The future for Wachovia as an independent company is an exciting one.”

Steel’s willingness to put his credibility on the line spurred a temporary 27 percent rally of the bank's share price.

At the same time, unknown to the public, Wachovia was borrowing heavily from the Federal Reserve.

It had been given 17 short-term emergency loans worth a combined $72 billion from the Fed’s Term Auction Facility program.

...Steel served on the Wells Fargo board until resigning in July 2010 to take a job as deputy mayor for economic development for New York City, where he worked before being hired by Perella Weinberg."

http://www.journalnow.com/business/business_news/local/robert-steel-wachovia-executive-caretaker-lands-new-job/article_5e518027-2375-5e74-b8a7-e20afd1bffb9.html#.U4iUntZAyx8.twitter

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?

The Fed’s Secret Liquidity Lifelines to Goldman Sachs Group

An open letter to City of Greensboro Police Chief Ken Miller and Guilford County Sherrif BJ Barnes

Gov Shutdown Story; Hartzman v Wells Fargo Subpoena Black Hole

 

On September 30, 2013, I sent a subpoena after receiving authorization to begin discovery to Administrative Law Judge (ALJ) Kenneth A. Krantz, located in Newport News, Virginia;



When I called to follow up on the subpoena after not receiving an expected objection from Wells Fargo, voice recordings from the ALJ phone systems were the only indication that the office existed, as there seems to be no one working because of the shutdown.

On October 1, 2013, at 12:01 a.m. EDT, the federal government's new fiscal year began along with a partial federal shutdown.

My subpoena was received by the ALJ on October 3, 2013, at 14:27

To reduce the risk of having the case lost in this mess, I am posting the subpoena sent and others until the courts catch up.  I assume my stuff is sitting in a big pile along with many other's.



Attachment A

Please provide all documents and communications between January 2012 and the moment the subpoena is presented relating to George Hartzman, including “the independent review” and determinations that “Mr. Hartzman’s allegations regarding both “secret” loans and Envision were meritless” which Wells Fargo and Hank Sanchez refused to provide George Hartzman and the Department of Labor’s William Peterson, Regional Investigator, USDOL-OSHA  - Raleigh Area Office.

From a July 23, 2013 letter from Wells Fargo;

“…the investigator has now completed the independent review and concluded that there is no merit to any of your concerns.”

[GH; Wells Fargo wouldn't provide the report or say why there was no merit.]

From Wells Fargo’s communications with the Department of Labor, submitted by Gregory C. Keating of Littler Mendelson P.C.;

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Background;

Hartzman v Wells Fargo; SEC and FINRA Whistleblower Evidence

http://hartzman.blogspot.com/2013/02/sec-and-finra-whistleblower-evidence.html

Envision

http://hartzman.blogspot.com/2013/01/envision.html
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From the evidence sent to the ALJ on September 30;

If Wells Fargo's contention is my filing has no standing under Sarbanes-Oxley, why did the Securities Division of the North Carolina Department of the Secretary of State investigate and refer the matter to the SEC, and why would Wells hire an "independent" outside investigator?

From a public records request from the North Carolina Department of the Secretary of State Securities Division;

"FINRA & SEC Referral - 2 issues

6/15/12 - Reviewed complaint with Dan Stefek [FINRA] (Atlanta) - Will direct to Dan's attention

6/18/12 - Reviewed issues with Donna Esau [?] (SEC Atlanta) - Recommended to speak directly with Michael Mashburn (SEC Atlanta) Senior Council - understands TARP issues

6/20/12 - [left message for Mashburn] - missed return call

6/21/12 - Reviewed issues with Mashburn

Requested that complaint be sent directly to him."

Steven Butz
Director – Investment Adviser & Broker Dealer Examinations
North Carolina Secretary of State Securities Division

From: George Hartzman to: Joan.Benedetto@finra.org, bcc: whistleblower@finra.org, whistleblower@consumerfinance.gov, ombudsman@ncdoj.gov, ombudsman@fdic.gov, chairmanoffice@sec.gov, Brian Clarey, Amanda Lehmert, Joe Killian, Allen Johnson, Matthew Evans, Jeff Horwitz, Jeff Gauger

Date: Mon, Jul 30, 2012 at 10:57 PM Subject: Re: your inquiry today

I have internal use info that was up on a website that is evidence, that I was told to take down or be fired. I was also told in writing not to give it to anyone. They were fine with illegally firing me because it would have to go civil, and I would be out of the system and out of a job...

Mr. [Brian] Craig [FINRA Office of the Whistleblower] has done nothing.

Mr. Craig talked on the phone with me once, and then did nothing.

Four months and counting I think.

The SOPs of the SEC and FINRA leave those like me helpless and unknowing.

Is Mr. Craig's case still open? Why no follow up?

I found banks that reported the loans, and others who didn't.

For how long has FINRA known that?

How long has FINRA known about Envision and 4front?

How long has FINRA let the financial industry lie to the people your agency is supposed to protect?

I have almost been fired three times, ... I have been trying to do the right thing and the response from FINRA has been 0.

Sorry to unload on you Joan, but this is ridiculous.

I need someone to stand up other than myself.

My understanding is that it is FINRA's job to do so, and FINRA has failed so far.

gh

Why would the Federal Reserve refuse to disclose "internal staff analyses and recomendations"?

Ombudsman for the Federal Reserve System

Margaret McCloskey Shanks
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Previously;

SEC and FINRA Whistleblower Evidence

http://hartzman.blogspot.com/2013/02/sec-and-finra-whistleblower-evidence.html

Envision

http://hartzman.blogspot.com/2013/01/envision.html

Dear Littler Mendelson, OSHA/DOL, Wells Fargo, SEC, FINRA etc...; We Are Not Alone, Current Media Edition

About Current Media

Conclusion; Wells Fargo Advisors LLC / Hartzman / 4-3750-13-010

At a meeting with US Congressman Howard Coble on Monday, I told him I would be putting this up. BB&T included

On Whistleblower Protections and Wells Fargo's violation of George Hartzman's anonymity

"Complaint to a Member of Congress"; ABA..., and Facebook conversations with then US Congressman Brad Miller

George Hartzman v Wells Fargo Linkfest so far, Ordered Oldest to Newest

SEC and FINRA Whistleblower Evidence

If Union Bank and Trust in Oxford, NC disclosed Federal Reserve loans Wells Fargo didn't, how did Wells Fargo not violate Sarbanes Oxley?

Rolling Stone's Matt Taibbi on George Hartzman's Whistleblower Filing

Rolling Stone's Matt Taibbi "Secret and Lies of the Bailout"

Wells Fargo's attorney Gregory C. Keating re; Wells Fargo Advisors LLC / Hartzman / 4-3750-13-010

Hartzman versus Wells Fargo Advisors, Part One, including some emails from Rolling Stone's Matt Taibbi

George v $WFC Part One, Scene Two; Hartzman emails to @MTaibbi on $JPM's #JamieDimon, with some Bloomberg's @bobivry

Wells Fargo v Hartzman DOL/OSHA Evidence, with some SARBOX info from Keating's "Retaliation and Whistleblowing"

On Whistleblower Protections and Wells Fargo's violation of George Hartzman's anonymity

Gregory Keating on Qualified Protected Activity Under SARBOX

I was wondering why Wells Fargo's attorney from Littler Mendelson didn't bring up "the right to confidentiality"

"Complaint to a Member of Congress"; ABA..., and Facebook conversations with then US Congressman Brad Miller

At a meeting with US Congressman Howard Coble on Monday, I told him I would be putting this up. BBT included

On SEC Chair Mary Jo White needing to recuse herself from Hartzman v Wells Fargo

"Mr. Hartzman does not identify any specific reporting practice by Wells Fargo with respect tho these "secret" loans

Sent: Wednesday, February 22, 2012 10:37 AM

from: george.hartzman@wellsfargoadvisors.com to: aaron.l.landry@wellsfargoadvisors.com, danny.ludeman@wellsfargoadvisors.com, john.g.stumpf@wellsfargo.com, d.carroll@wellsfargo.com, stacey.mitchell@wellsfargoadvisors.com, don.geczi@wellsfargoadvisors.com, baconmij@wellsfargo.com, bill.rogers@wellsfargoadvisors.com, doug.lowe@wellsfargoadvisors.com, BoardCommunications@wellsfargo.com, karl.f.riem@wellsfargo.com, Grant.Carlson@wellsfargo.com, Bruce.J.Berrol@wellsfargo.com

Attachments; 10k.doc
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“LIQUIDITY AND FUNDING

Asset liquidity is further enhanced by our ability to sell or securitize loans in secondary markets and to pledge loans to access secured borrowing facilities through the Federal Home Loan Banks, the Federal Reserve Board, or the U.S. Treasury.

[Ability doesn't mean borrowed]

Short-term borrowings averaged $65.8 billion in 2008 and $25.9 billion in 2007, an increase of $39.9 billion due to business funding needs.”

Wells Fargo 2008 10k

[no mention of FED TAF loans or Discount Window borrowing]
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Falsification of any company…information that you provide is prohibited.

Falsification refers to knowingly misstating, altering, adding information to, or omitting or deleting information …which results in something that is untrue, fraudulent, or misleading.

Wells Fargo’s Code of Ethics and Business Conduct
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“Asset liquidity is further enhanced by our ability to sell or securitize loans in secondary markets and to pledge loans to access secured borrowing facilities through the Federal Home Loan Banks, the FRB, or the U.S. Treasury.

Short-term borrowings averaged $52.0 billion in 2009 and $65.8 billion in 2008.

We reduced short-term borrowings due to the continued liquidation of previously identified non-strategic and liquidating loan portfolios, soft loan demand and strong deposit growth.”

2009 10k

[no mention of FED TAF loans or Discount Window borrowing]
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Short-Term Borrowings

2007: 53,255.0

2008: 108,074.0

2009: 38,966.0

2010: 55,401.0

[no mention of FED TAF loans or Discount Window borrowing]
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Sarbanes–Oxley Act

...mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports.

...Section 302 requires that the company's "principal officers" (typically the Chief Executive Officer and Chief Financial Officer) certify and approve the integrity of their company financial reports quarterly.

Title IV ...requires timely reporting of material changes in financial condition...

Sarbanes-Oxley required the disclosure of all material off-balance sheet items.

It ...specifies the responsibility of corporate officers for the accuracy and validity of corporate financial reports.

...The CEO and CFO are now required to unequivocally take ownership for their financial statements under Section 302…

Title IV ...requires timely reporting of material changes in financial condition...

Sarbanes-Oxley required the disclosure of all material off-balance sheet items.

Wikipedia

"SEC Charges City of Harrisburg for Fraudulent Public Statements" and Hartzman v Wells Fargo with a Mash Up

"Washington, D.C., May 6, 2013 — The Securities and Exchange Commission today charged the City of Harrisburg, Pa., with securities fraud for its misleading public statements when its financial condition was deteriorating and financial information available to ...investors was incomplete...

The JP Morgan Jamie Dimon/Matt Taibbi Edition of why SEC Chair Mary Jo White needs to recuse herself from Hartzman v Wells Fargo

I believe Mrs. White has a stake in the outcome of Wells Fargo Advisors LLC / Hartzman / 4-3750-13-010

If I provided Rolling Stone's Matt Taibbi among others information concerning Mrs. White's former JP Morgan client Jamie Dimon about insider trading, and my OSHA/DOL filing, which the SEC can be involved in, and may already be involved in, includes information concerning JP Morgan's Jamie Dimon, which is material and relative to the veracity of my case, I believe Mrs. White should recuse herself from any involvement.

Matt Taibbi Emails; Wells Fargo, KPMG, Don Vaughan, BBT, Kelly King, Nido Qubein and Ally Financial

From: george hartzman To: Matt Taibbi

I am laughing to myself, as my wife who works with teenagers who get pregnant just told me a story about this girl trying to get formula for her newborn, after last week my wife Robin drove this girl to bail the father out of jail as I wait for what may be a national reporter who could change my life prove he's real.

She works for teen parent mentor program at the local YWCA.

Hopefully, if you end up being full shit, you may regret it a little with that, which unfortunately is a very too true anecdote, unless you're not, at which time I will apologize.

gh

At a meeting with US Congressman Howard Coble on Monday, I told him I would be putting this up. BB&T included

On December 8, 2011, I became a participant in an investigation of what looked like fraud on Wachovia's shareholders

From Wells Fargo's attorney's book;

George v $WFC Part One, Scene Two; Hartzman emails to @MTaibbi on $JPM's #JamieDimon, with some Bloomberg's @bobivry

From: George Hartzman... To: Matthew Taibbi, Rolling Stone Magazine

"Insider Trading

Wells Fargo's attorney re; Wells Fargo Advisors LLC / Hartzman / 4-3750-13-010

Perhaps an indication of the importance of a whistleblower filing can be found in the quality of the opponent;
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Gregory Keating
Shareholder
Chair, Whistleblowing and Retaliation Practice Group
The nation’s largest labor and employment law firm; Littler Mendelson
Author of the nationally recognized, authoritative treatise,
Retaliation & Whistleblowing: A Guide for HR Professionals & Counsel

Hartzman’s U.S. Regulatory Filing Information

I believe the American public was and is being misled and harmed as a select few profited from material insider information illegally enabled and consented to by US taxpayer funded regulatory authorities, elected officials and political appointees.

I have worked as a financial advisor since 1993, and have taught financial ethics for CPAs and attorneys in North Carolina for the last 10 years.

I foresaw the worst financial crisis since the Great Depression, as some of the following best un-audited client performance reports illustrate.  The solid black line on the performance report charts show how much more some clients made and\or lost compared to the dotted lines below which represent selected indices.

This is part of the story that should be a concern for U.S. citizens.

On 3/31/2009, I managed $35,595,572.83, including both fiduciary and non fiduciary accounts. I had more than 60 Asset Advisor accounts, where financial advisers are legally obligated to act in the best interest of clients.

Wells Fargo’s advisory accounts were/are governed by the Investment Advisers Act of 1940, which requires financial advisers to act solely in the best interest of their clients. By law, advisers must disclose any conflict of interest or potential conflict to their clients prior to and during a business engagement.

On 3/13/2007, I purchased shares of SDS in my personal account. SDS is a leveraged inverse Exchange Traded Fund (ETF), whose objective is to rise 2% for every 1% the S&P 500 falls. In the fourth quarter of 2008 I sold SDS in two blocks, realizing a total gain of about 51%.

“Shorting” means making an investment that increases in value when other “long” investments fall.

In July, 2007, I shorted Bear Stearns and closed the position with a 97% profit on 3/7/2008.

I shorted Pulte Homes, KB Homes and Lennar, and realized about a 65% gain.

During 2008, I executed short trades in Goldman Sachs, Capital One, MBIA, Merrill Lynch, Moody’s and State Street Corporation, as well as buying and selling ETF’s, shorting financial and real estate indices.

On August 22, 2011, Bloomberg News reported on “21,000 transactions” from 2008 and 2009, ...obtained under the Freedom of Information Act” by the late reporter Mark Pittman, including undisclosed Federal Reserve loans, after congressionally mandated legislation and rejected financial industry appeals by the U.S. Supreme Court.

I managed client accounts while unaware of the Fed’s secret loans as the companies I worked for as well as many others did not disclose material information, even though knowing insiders profited from equity and stock option transactions.

An SEC interpretation states: "Many financial institutions, such as thrifts and banks, are receiving financial assistance in connection with federally assisted acquisitions or restructurings...If these or any other types of federal financial assistance have materially affected, or are reasonably likely to have a material future effect upon, financial condition or results of operations, the [Management Discussion and Analysis] should provide disclosure of the nature, amounts, and effects of such assistance..." http://www.sec.gov/rules/interp/33-6835.htm

After the first half of 2009, my personal and client investment performance suffered as markets went relatively strait back up in defiance of fundamentals and common sense, partly in response to massive undisclosed liquidity provided by the Fed and the U.S. Treasury.

As I did not understand what was happening at the time, I took many accounts to cash.

Not reporting Federal Reserve material borrowings, collateral, credit lines, terms and interest rates is a violation of Sarbanes/Oxley laws, and not informing employees who managed advisory accounts was a violation of fiduciary duties within the Investment Advisers Act of 1940.

The Sarbanes-Oxley Act of 2002, which I have taught in ethics courses for CPAs and others over the last 10 years, requires executive officers and directors to personally attest that SEC securities filings have been personally reviewed and financial statements fairly present, in all material respects, a company’s financial condition. Financial information in press releases or other public disclosures must not “contain an untrue statement” or omit a statement of material fact necessary to make statements not misleading.

I found that some banks which received Federal Reserve loans disclosed details in their securities filings, like Union Bank & Trust and Peoples Bank of North Carolina.

On March 27, 2008, Wachovia borrowed $3.5 billion from the Federal Reserve’s Term Auction Facility (TAF), which was not disclosed to the firm’s shareholders or reported within the company’s legally required securities filings.

The CEOs, CFOs and Boards of the largest banks certified their reports didn’t contain any material misstatements or omissions.

External auditors attested to the assessments.

KPMG was/is the auditor for both Wachovia and Wells Fargo.

Wachovia’s, Wells Fargo’s and many other firm's SEC securities filings did not account for the loans, total credit lines, interest rates, collateral pledged or amounts of loans outstanding while some banks did.

On July 9, 2008, Robert Steel became president and CEO of Wachovia after working for Goldman Sachs from 1976 to 2004 and the Under Secretary for Domestic Finance at the U.S. Treasury under former Goldman Sachs CEO Henry Paulson from October 10, 2006, until July 9, 2008.  Mr. Steel was “the principal adviser to the secretary on matters of domestic finance and led the department's activities regarding the U.S. financial system, fiscal policy and operations, governmental assets and liabilities, and related economic matters.” 

I believe my clients and Wachovia shareholders were misled and harmed as a select few profited from material insider information illegally enabled and consented to by US taxpayer funded regulatory authorities, elected officials and political appointees.

On July 22, 2008, Wachovia’s new CEO Robert Steel purchased 1,000,000 shares of Wachovia’s stock as the company’s Term Auction Facilities (TAF) borrowing reached $12.5 billion, which was not disclosed in securities filings.

If Mr. Steel was “the principal adviser…on matters of domestic finance and led the [U.S. Treasury] department's activities regarding the U.S. financial system, fiscal policy and operations” before becoming Wachovia’s CEO in July, 2008, how could he not have known and acted on undisclosed material information?

After not reporting Federal Reserve loans and purchasing Wachovia’s shares while in possession of undisclosed material inside information, the CEO wrote "I, Robert K. Steel, certify that: I have reviewed this Quarterly Report ...for the quarter ended September 30, 2008 of Wachovia ...this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report..."

Section 206 of the Investment Advisors Act of 1940 states "It shall be unlawful for any investment adviser, …to employ any device, scheme, or artifice to defraud any client or prospective client; to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client; or... to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative."

Wachovia shareholders lost as insiders gained from material undisclosed information.

The Fed approved Wachovia’s merger with Wells Fargo on October 12, knowing of unreported Fed loans to both companies.

Robert Steel was at least aware of Federal Reserve loans since becoming Wachovia’s CEO on July 9, 2012, and likely multitudes of undisclosed loans to multiples of other firms. If Mr. Steel purchased more than $16 million of Wachovia shares on July 22, 2008, the five year statute of limitations for prosecution expires on July 22, 2013.

The Wall Street Journal reported "about $100 billion in wealth disappeared from the Carolinas alone when Wachovia collapsed."

I believe Wachovia, Wells Fargo, accounting firm KPMG, the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the Federal Reserve amongst others, illegally misled Wachovia’s and other firm’s shareholders.

I believe I disseminated inaccurate advice to clients whose accounts were governed by the Investment Advisors Act of 1940, based on information audited by KPMG and withheld by Wachovia and Wells Fargo’s executive management.

I believe my clients and Wachovia shareholders lost money as a select few profited from material insider information, enabled and consented to by US taxpayer funded government regulatory authorities, political appointees and employees.

On December 31, 2009, less than a month after announcing Wells Fargo was to pay off TARP, and stating that “our capital ratios are growing organically …as Wells Fargo’s business model continues to generate capital internally as we historically have, Wells Fargo & Company’s (NYSE: WFC) board of directors approved a grant of retention performance shares for President and CEO John G. Stumpf and three other executive officers.”

After most of Wachovia’s shareholders were locked into losses on completion of the merger, On June 22, 2010, Steel was appointed Deputy Mayor for Economic Development by New York City Mayor Michael Bloomberg.

Mr. Steel appears to have ended up far better off knowing what most didn’t. Mr. Steel owned 601,903 shares of Wells Fargo in 2010, which was worth more than $20 million
on October 26, 2012.

On Nov 28, 2011, Bloomberg published “Secret Fed Loans Gave Banks Undisclosed $13B,” which stated “The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. ...Bankers didn't mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy.”

Bloomberg estimated the profits from the undisclosed Federal Reserve Loans was $878.2 million for Wells Fargo, and $149.4 million for Wachovia.

After reviewing the Bloomberg article, I reported the information through Wells Fargo’s internal anonymous/confidential ethics line in early December, 2011, with an external email address and phone number, after which I was contacted on multiple occasions by investigators on my company email and phone.

On January 4, 2012, an email in response to my ethics line complaint from a Senior Investigative Agent and Vice President from Wells Fargo Corporate Investigations said “Please confer with your manager if you feel the need, but our case is closed.”

Realizing my anonymity was compromised and my family’s safety at risk after the first internal ‘investigation’ was ‘closed’, I took the issues to my local manager, after which Wells Fargo's executive management enlisted an outside ‘independent’ investigator who promptly found no merit to my assertions.

Thinking I could mitigate personal risk by contacting regulatory authorities, I filed with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) DC Office of the Whistleblower amongst others which went nowhere. I then filed with the NC Secretary of State Securities Division, who investigated and referred files to Atlanta's SEC and FINRA offices.

And then nothing.

Regulatory authorities will not say whether a case exists or if a case is opened or closed, even though I contacted the government during and after interactions with Wells Fargo management, leaving myself and loved ones at risk of reprisal.

I was terminated by Wells Fargo on Monday, October 8, 2012 in direct retaliation for disseminating whistleblower information the U.S. government seems unwilling to act upon.

I believe Wachovia and Wells Fargo’s executive management misled taxpayers, shareholders and Congress concerning material information. In doing so, fiduciary duties to the firms financial advisers and their clients were violated while executive compensation was gamed at the expense of shareholders.

On January 4, 2013, I collaborated with Rolling Stone’s Matt Taibbi who published “Secrets and Lies of the Bailout”, which stated “The federal rescue of Wall Street…created a permanent bailout state…and the worst may be yet to come... Money wasn't the only thing the government gave Wall Street – it also conferred the right to hide the truth from the rest of us... There were lies told in the first moments of their inception, and others still being told...  The lies, in fact, were the most important mechanisms of the bailout... Wall Street used the funds to make the economy more dangerous... The broader and more pressing concern is the clear implication that by failing to act, federal regulators have tacitly approved the nondisclosure. ...The bailout has ...made lying on behalf of our biggest and most corrupt banks the official policy of the United States government." And “The stock purchases by America's top bankers raise serious questions of insider trading.”

On January 22, 2013, PBS's Frontline reported on the government's failure to prosecute the big banks for the 2008 financial meltdown, Lanny Breuer, Assistant Attorney General for the Department of Justice’s Criminal Division, admitted to purposefully not pursuing illegality stating "If I bring a case against institution A, and as a result of bringing that case there's some huge economic effect... If it creates a ripple effect...it's a factor we need to know and understand," after choosing not to criminally indict HSBC executives for laundering drug money and enabling terrorist financing.

George Hartzman
Registered Investment Advisor
President and Chief Economist: Think Professional Education
Former Wells Fargo Advisors Vice President/Investments
& Fundamental Choice Portfolio Manager
Greensboro, North Carolina

From an interview with Wlles Fgrao CEO John Stumpf: Tuesday, June 10, 2008, after beginning to take undisclosed Fed loans on January 17, 2008

EDGAR Majority Ownership of - STUMPF JOHN G

"...we shared pretty openly with investors and with regulators
about the things that we would not do.

If Wells Fargo top brass benefited from regulator approved insider trading, who else did the same?

If Wells Fargo & Company’s board of directors
approved a grant of retention performance shares
for President and CEO John G. Stumpf and three other executive officers,
and all of the above were aware of secret Federal Reserve Loans,
how did they not benefit from insider trading?

The Fed’s Secret Liquidity Lifelines for Wells Fargo & Wachovia

NORTH CAROLINA SECURITIES DIVISION COMPLAINT