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The Dow Jones industrial average closed at its highest level since May 2008, before the worst days of the financial crisis. The index closed at 12862.23, a rise of 156.82 (1.23%).

• Dow Jones Industrial Average (DJI)
• Last: 12862.23 03 Feb 16:30 Change: 156.82 1.23% 

Please find below the Top 20 Largest Consolidated Short Position Report Highlights. The report is produced twice monthly, effective the 15th and the end of each month. The report below covers the 2-week period ending January 31, 2012.

TSX Datalinx collects this information on behalf of the Investment Industry Regulatory Organization of Canada. Participating Organizations are required to file this information pursuant to Universal Market Integrity Rule 10.10.

For further information please call Catherine McGravey at (416) 947-4655, or to subscribe to the complete report, call TSX Datalinx at (514) 871-3517.

Related Documents:
Top 20 Largest Consolidated Short Position Report

Today, the Commission has failed to fulfill its legal obligation. It has appointed a member to the Public Company Accounting Oversight Board (“PCAOB”) who has no demonstrable record of investor advocacy. Thus, the Commission has failed to satisfy its basic statutory mandate to appoint an individual who, among other factors, has “a demonstrated commitment to the interests of investors.”¹ Accordingly, I do not support and must respectfully dissent for the reasons outlined below.

Congress established the PCAOB in response to scandalous audit failures, like Enron and WorldCom, that cost investors billions. In doing so, Congress entrusted this Commission with the significant responsibility of appointing the members of the PCAOB. In exercising this responsibility, the Commission is required to abide by the statutory criteria to appoint individuals “who have a demonstrated commitment to the interests of investors.”²

My objection to this appointment is based on the fact that the Commission must appoint individuals who have “demonstrated commitment to the interests of investors.” This is not the case here. Although the appointee is an experienced government auditor, and I appreciate her years of service, there is nothing in the evidentiary record that reflects a commitment to the interests of investors, or a history of advocacy for investor rights. I believe the Commission is bound to appoint an individual whose actions, public statements, and reputation demonstrate a clear and steadfast advocacy of the rights and interests of investors.

In reaching this decision, I considered many factors in the evidentiary record, including the professional biographies of each of the finalists for this position, my own interviews with the candidates, and the candidates’ published writings and remarks. I also considered the many letters received by the Commission from investors, respected members of the accounting profession and academic community, members of Congress, and others who supported the appointment of an investor advocate.

I also reviewed comment letters previously submitted to the PCAOB by the finalists for this position. In that connection, I was struck that not once in any of the four letters signed by today’s appointee, discussing topics such as the engagement quality review and risk assessment, was there any mention of the interests of investors. In fact, the word “investor” was not mentioned.³

This appointment is being made at a critical time for the PCAOB. There is much at stake. The recent financial crisis exposed an auditing process that continues to be seriously flawed. In response, the Board has embarked on various projects to enhance the relevance, credibility and transparency of audits, including important initiatives on auditor independence, audit transparency, and the auditor reporting model. The success of these projects will require a Board fully committed to investors as the owners of public companies, the providers of capital, and the primary beneficiaries of financial statements.

I believe that the Commission has failed to meet its obligation to appoint an individual with “a demonstrated commitment to the interests of investors.”

Unfortunately, as a result, I am forced to dissent.

¹ Section 101(e)(1) of the Sarbanes-Oxley Act, 15 U.S.C. §7211(e)(1), “The Board shall have 5 members, appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers, brokers, and dealers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.”

² Id.

³ Neither did any of the letters signed by today’s appointee include the terms “owner,” “stockholder,” or “financial statement user.” See, (i) Comment Letters for Docket 025: Auditing Standard No. 7—Engagement Quality Review and Conforming Amendment to the Board’s Interim Quality Control Standards, letter of U.S. Government Accountability Office (April 16, 2009), available at http://pcaobus.org/Rules/Rulemaking/Docket%20025/004_GAO.pdf; (ii) Comment Letters for Docket 026: Auditing Standards Related to the Auditor’s Assessment of and Response to Risk and Related Amendments to PCAOB Standards, letter of U.S. Government Accountability Office (February 18, 2009), available at http://pcaobus.org/Rules/Rulemaking/Docket%20026/032_GAOHQ.pdf, and letter of U.S. Government Accountability Office (March 2, 2010), available at http://pcaobus.org/Rules/Rulemaking/Docket%20026/016b_GAO.pdf, and (iii) Comment Letters for Docket 028: Proposed Auditing Standard Related to Confirmation and Related Amendments to PCAOB Standards; letter of U.S. Government Accountability Office (May 29, 2009), available at http://pcaobus.org/Rules/Rulemaking/Docket%20028/006_GAO.pdf.

The California Public Employees’ Retirement System (CalPERS) is seeking shareowner support for its proposal to have unopposed board candidates of Apple Inc. elected by majority vote.

“Apple needs a governance upgrade. An overwhelming 73 percent of shareowners supported this same proposal a year ago, and we’re once again calling on Apple to listen to its shareowners and adopt a voting standard that is widely considered a basic mark of good governance,” said Anne Simpson, CalPERS Senior Portfolio Manager who leads CalPERS Corporate Governance program. “Nearly 80 percent of the companies in the S&P 500 and 60 percent in the Russell 1000 have some form of majority voting standard, and for good reason. It’s a hallmark of accountability.”

CalPERS non-binding proposal No. 7 at Apple’s February 23 annual meeting calls on the company to require that candidates for uncontested seats receive a majority of votes cast to be elected to the Board of Directors. More than 73 percent of shareowners voting their shares approved a similar CalPERS-backed proposal at Apple’s 2011 annual meeting, but the company’s Board so far has declined to adopt it.

Apple’s current plurality vote rule allows directors to be elected by a single “For” vote, giving shareowners no real ability to oppose a candidate since their “Withheld” votes aren’t counted. In its letter to shareowners seeking support for the proposal, CalPERS notes that a growing number of California-based companies, including Cisco Systems, Edison International, PG&E and Sempra Energy, have adopted some form of majority voting, which shows state law is no barrier to good practice as Apple has claimed.

“Plurality voting disenfranchises shareowners,” Simpson said. “We urge Apple to take the necessary steps to institute a majority vote standard that allows those of us who are owners of the company to have a voice.”

CalPERS owned 2.8 million shares of Apple common stock as of December 27, 2011. For a copy of the shareowner letter, proxy votes and other corporate governance information, visit our Corporate Governance website.

CalPERS is the nation’s largest public pension fund with approximately $231 billion in assets, providing retirement benefits to more than 1.6 million State, public school, and local public agency employees, retirees, and their families, and health benefits to more than 1.3 million members. The average CalPERS pension is $2,220 per month. For more information about CalPERS, visit www.calpers.ca.gov.

Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as "MERS certifying officers," have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners' and the public's ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.” 

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the "nominal" mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a "nominee" (or agent) for most major lenders, it remains the "mortgagee" in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS' conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

• MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
• MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and "robosigned" by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party's inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
• MERS' indiscriminate use of non-employee "certifying officers" to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an "Assistant Secretary," "Vice President," or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer's own employer. Moreover, as a result of the defendants' failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
• MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS' role with respect to their loan by providing inadequate disclosures.
• The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

Attachment:

• Final Summons And Complaint

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