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ensure that trades settle promptly, thereby reducing settlement failures.
    Agent Warden alerted his counterparts at the FBI, MSD, and Andrew Grantland from the New York Regional Office by a Go-to-Meeting electronic conference after a two hour scrutiny of the trades. The trading day had hardly even begun.
    “Amil, you on the line?”
    “I am, John,” answered Amil Sondregger, the SAC of the FBI’s east coast securities fraud division.
    “Erick, are you with us?”
    “I can hear everyone perfectly. The Go-to-Meeting set up is working perfectly. I am reading your highlighted trades as we are talking,” Erick Nielsen, chief at MSD, said.
    “I’m with you guys. This Go-to-Meeting hook-up is working perfectly. I have eight officers here at Brookfield Place on Vesey Street huddled around the screen. We’re all ready,” Andrew Grantland said.
    “All right, then, you guys,” Agent Warden said, “this is what I’m seeing. We have 128 instances of fairly flagrant failures of the ‘close-out requirement’ by evasive options trading. There are more short sales violations coming in even as we are talking on the phone. I am watching my computer screen, and picking out one or two a minute. I am probably missing two or three times that many.
    “The most worrisome ones are truly abusive naked short sales—out-and-out securities fraud in which stocks are being sold without ever being borrowed and without any apparent effort to borrow. We are seeing a blitz of ‘short-and-distort’ false information to drive down stock prices artificially. Losses by companies like AT&T, GM, Chrysler, Delta Airlines, AIG, and Walmart—to name a few—are soaring as a result of a very cleverly arranged misinformation program. The misinformation looks superficially like intra-company communications that hint at a severe bear market for their stocks because of expected failing year-end mandatory reports. If it were true, we would be looking at widespread insider trading. If the advertising whisper campaign is false—as we are all but certain is the case—it is felonious activity designed not only to injure a company and thereby to profit, but the intent appears to be to wreak real havoc on the securities markets as a whole.”
    “How many different traders, and what companies do they represent?” Nielsen asked.
    “Is this coordinated?” Grantland asked.
    “It’s too early to be certain,” Warden answered, “but it smells of fish. That’s my gut feeling but a lot more than a hunch at this point…Hang on, a moment, I’ve got an updated list coming in from my agents…”
    There was a three minute pause.
    “Sorry about that. I have bad news and worse news. The numbers of counts are escalating beyond anything any of us could imagine. We now have a list of crimes as long as your arm: there are fifty new counts of trading exclusively in hard-to-borrow securities and threshold list securities; twenty-two for trading in near-term listed options on that kind of securities; a dozen and a half large short positions in hard-to-borrow securities or threshold list securities; eighty-six more large failures to deliver positions in accounts, most of them in multiple securities; 188 counts of continuous failure to deliver positions; two score counts of using buy-writes, married puts, deep in-the-money buy-writes or married puts, to satisfy the close-out requirement.
    “Most of those buy-writes have little to no open interest aside from that trader’s activity, resulting in all or nearly all of the call options being assigned. There have been at least fifty cases of theft from investors by outright embezzlement by stockbrokers and stock manipulation. Our internet monitors have alerted us to more than 300 internet “pump and dump” schemes.
    “We have twenty-six confirmed counts of trading in customizable FLEX options in hard-to-borrow securities and/ or threshold list securities. Many of those are very shortterm FLEX options. We have identified