Federal Reserve Money Trust Investigation

 

https://pdf.yt/d/5d_HdEi0RIKrOsGE

<a href=”

“>http://openfreepress.com/2009/11/03/jonathan-may-a-true-story/

http://geraldcelentechannel.blogspot.com/2012/09/money-banking-federal-reserve-fraud.html?

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The Power Elites mission was to integrate central banking into the system, eliminate the gold standard, gain cheap credit and thereby earn money from the inflation. Although they were adversaries (JPMorgan, and John P. Rockefeller) they had a common mission (ultimate power) therefore they created a merger.
In 1896 J.P. Morgan and John P. Rockefeller merged (eventually to become JPMorgan Chase & Co) to expand their empires with the aid of government (they knew that through the government enforcing their cartels best interest would be of the greatest advantage) ;( Rothbard, 1984). They had a marketing campaign to sell the idea to the public, seeing the inflation from loans would finance their businesses. Their idea was to position the Federal Reserve System, because with the gold standard there was no way that they could manipulate the interest rate; ergo no interest rate, meaning no money for their initiatives.

Their promotional efforts received a development in 1907, due to the fractional reserve banks were ruined when people found out about their methods which created a bank run. Fractional reserve: a finance method where only a small percentage of bank deposits is supported by tangible available cash and are attainable for withdrawal) ;( Investopedia, 2011). Note: A business running via fractional reserves would be deemed fraudulent, because it is loaning out something that one does not have.
Working on the peoples fear Wall Street promoted a central banking system, otherwise deemed as credit available anytime in case a bank would have a run. Hans Hoppe the economist asks whether it would be desirable to have credit available anytime, without the banking institution being responsible for its own debts. Otherwise if a bank is irresponsible they should be able to pay the piper and the idea of a bank going bankrupt would keep it in line(Rothbard,1984).
By 1908 Nelson D. Rockefeller Jr. father-in-law Senator Aldrich (monetary commission) was positioned to promote a central bank. By 1910 6 of the most powerful CEOs gathered together on Jekyll Island:
(1) JP Morgan (railroads and banks), and two of his people.
(2) William Vanderbilt(railroads),
(3) George F. Baker(Bankers Trust Company),
(4) William Rockefeller & two family members(Standard Oil),
(5) Henry Hyde (Equity Life Assurance),
(6) Senator Aldrich, to brainstorm the Aldrich Act later to be known as The Federal Reserve (McDonnell, 2010);(Rothbard,1984). It took 3 years to finally go into action.
Not only was the Federal Reserve Act to take place in 1913, but also this was the very first year that taxes had to be paid through the 16th Amendment, of course the money going automatically to the Federal Reserve(Bailich,2011);(Charters of Freedom,2011);(Rothbard,1984);(Nimmo,2009).Only the rich would have tax loopholes through owning corporations.

The Federal Reserve that is a privately owned company controlled/controls the United States Economy the people that run it are 7 president appointed board of governors. Although there are 12 specific appointed banks Wall Street began to take control of the FED and the president of the New York Fed Morgan’s Benjamin Strong apprehended jurisdiction of the open market commission (Rothbard, 1984).

In order to inflate the economy it buys government securities and to bottom hyperinflation it sells the securities, all of this is done without government approval. When they create more money it is another preference to not raising taxes. However, the repercussions take from about six months to a year to affect our economy negatively (through an increase in prices) (Rothbard, 1984). It controls the interest rates loaned out to banks, of course the lower the interest the more loans they give to the financial institutions (like a sale) (Congressman Ron Paul 2007).

The Federal Reserve has monopolized our money, through creating so much it eroded the Gold Standard and erased our backing. Hans Hoppe the economist explains that there is only 10% real cash to back up a demand, and the other 90% is money created out of thin air. Example the FED has one hundred dollars it loans $1000 out to the financial institutions. Those same banks will loan out $10,000 creating an upside-down pyramid out of one hundred real dollars (Rothbard, 1984). These extra funds created inflate the prices of things (Mises Institute, 2008). During the 1920’s the FED pushed so much cash into the economy lulling the people into believing they were living the good life, until the repercussions took effect in 1929 crashing the market (Rothbard, 1984). During this period the only people who did not lose were the ones who had savings in gold. Roosevelt borrowed until turning blue, John F. Kennedy tried to strip the Federal Reserve of its Power via the Executive Order No. 1110, was killed right after(Cedric,2011). And the original merger still stands today stronger than ever.

Grizwold is right, the only money moving in ameri ka is illegal drug money that the grubbers are sponsoring and involved in

http://deanhenderson.wordpress.com/2012/07/01/the-illumination-merchants/

http://deanhenderson.wordpress.com/2012/08/05/rothschilds-bcci-shake-down-of-arabs/

OCC Officials Testify on HSBC Bank Secrecy and Money Laundering Issues

McFadden May 25 1919 Newspaper

ModernMoneyMechanics

civpro

Secret_Banker’s_Manual

 The Money Trust Investigation AKA THE Pujo Committee:  was held in the early 1900’s, and was an Investigation of Financial and Monetary Conditions in the United States Under House Resolutions Nos. 429 and 504 &lt; and included the Morgan’s then, & Now 100 years later!  See the files

Money Trust Investigation:  Investigation of Financial and Monetary Conditionsin the United States Under House Resolutions Nos. 429 and 504

Description:
In 1912, a special subcommittee was convened by the Chairman of the House Banking and Currency Committee, Arsene P. Pujo. Its purpose was to investigate the “money trust,” a small group of Wall Street bankers that exerted powerful control over the nation’s finances. The committee’s majority report concluded that a group of financial leaders had abused the public trust to consolidate control over many industries. The Pujo Committee report created a climate of public opinion that lead to the passage of the Federal Reserve Act of 1913 and the Clayton Antitrust Act of 1914.

The hearings were conducted between May 16, 1912 and February 26, 1913. The transcript of the hearings was published in three volumes. It is presented in the original 29 parts with the index, a table of interlocking directorates of 18 financial institutions, and the majority/minority report of the committee.

Availability:
1912

FRASER » Publications » Money Trust InvestigationInvestigation 

Table of contents and files available for download for Money Trust Investigation:
Investigation of Financial and Monetary Conditions in the United States Under 

fraser.stlouisfed.org/publications/montru/

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF  RW FONTENOT, Clerk. AM MCDEBMOTT,
Assistant Clerk. Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt01.pdf

Money Trust InvestigationInvestigation of Financial and Monetary 

 Money Trust InvestigationInvestigation of Financial and Monetary Conditions in
the United States Under House Resolutions Nos. 429 and 504. Go to Publication. 

fraser.stlouisfed.org/publication-series/?id=80

Money Trust (Pujo Committee) Investigation – FRASER

 Money Trust (Pujo Committee) Investigation. Download File. Collection: Brookings
Institution: Papers from the Committee on the History of the Federal Reserve. 

fraser.stlouisfed.org/specialcollection-document/?id=6146

Money Trust (Pujo Committee) Investigation – Brookings Institution 

 Brookings Institution: Papers from the Committee on the History of the Federal Reserve
System. Money Trust (Pujo Committee) Investigation. Download File. 

fraser.stlouisfed.org/chfrs/record.php?id=6146

Money Trust InvestigationInvestigation of Financial and Monetary 

 Money Trust InvestigationInvestigation of Financial and Monetary Conditions
in the United States Under House Resolutions Nos. 429 and 504. 

fraser.stlouisfed.org/publication/?pid=80&tid=0

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS 
Page 5. MONEY TRUST INVESTIGATION. 271 Mr. UNTEBMYER. Yes. Mr. LEVY. 

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt04.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OP FINANCIAL AND MONETARY CONDITIONS 
AM MCDEKMOTT, Attbumt Clerk. II Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt05.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS 
AM MCDEBMOTT, Assistant Clerk. n Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt06.pdf

Money Trust (Pujo Committee) Investigation

Bibliography. Banking Reform 1906-1912

Authors:Committee on the History of the Federal Reserve System
Special Collection:Brookings Institution: Papers from the Committee on the History of the Federal Reserve System
Date:1956

fraser.stlouisfed.org/docs/historical/brookings/17611_02_0010.pdf

Money Trust InvestigationInvestigation of Financial and Monetary 

 Money Trust InvestigationInvestigation of Financial and Monetary Conditions
in the United States Under House Resolutions Nos. 429 and 504. 

fraser.stlouisfed.org/publication/?pid=80&tid=

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS
IN THE UNITED STATES UNDER HOUSE RESOLUTIONS NOS. 429 AND 504 BEFORE A 

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_index.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS 
AM MCDERMOTT, Assistant Clerk. II Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt07.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF  Delaware. RW FONTENOT, Clerk.
AM MCDERMOTT, Assistant Clerk. Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt02.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF  RW FONTBNOT, Clerk. AM MCDHRMOTT,
Assistant Clerk. Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt03.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST I INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS
IN THE UNITED STATES UNDER HOUSE RESOLUTIONS NOS. 439 AND 504 BEFORE THE 

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt27.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS 
AM MCDERMOTT, Assistant Clak. II Page 3. MONEYTRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt08.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF  RW FONTENOT, Clerk. AM MCDEEMOTT,
Assistant Clerk II Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt20.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS
IN THE UNITED STATES UNDER HOUSE RESOLUTIONS NOS. 4’29 AND 504 BEFORE A 

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt18.pdf

Money Trust Investigations. 1912-1913

Page 1. MONEY TRUST INVESTIGATION INVESTIGATION OF FINANCIAL AND MONETARY CONDITIONS 
AM MCDBBMOTT, Assistant Clerk. XX Page 3. MONEY TRUST INVESTIGATION

fraser.stlouisfed.org/docs/historical/house/money_trust/montru_pt19.pdf

91qs9v-upWI

Money Trust Investigation: Investigation of Financial and Monetary Conditions in the United States Under House Resolutions Nos. 429 and 504

Description:
In 1912, a special subcommittee was convened by the Chairman of the House Banking and Currency Committee, Arsene P. Pujo. Its purpose was to investigate the “money trust,” a small group of Wall Street bankers that exerted powerful control over the nation’s finances. The committee’s majority report concluded that a group of financial leaders had abused the public trust to consolidate control over many industries. The Pujo Committee report created a climate of public opinion that lead to the passage of the Federal Reserve Act of 1913 and the Clayton Antitrust Act of 1914.

The hearings were conducted between May 16, 1912 and February 26, 1913. The transcript of the hearings was published in three volumes. It is presented in the original 29 parts with the index, a table of interlocking directorates of 18 financial institutions, and the majority/minority report of the committee.

Availability:
1912

1912-1913

http://www.wolfspiritradio.com/archive/download.php?id=Topic_Numerology

http://www.wolfspiritradio.com/archive/Topic_Numerology/2012-02-07_JWR_GaryTheNumbersGuy.mp3

http://www.rense.com/general63/spoke.htm

http://www.group30.org/members.shtml

and

http://www.brettonwoods.org/members/

http://www.brettonwoods.org/members/index.php/3/International_Council_Forum

http://www.zerohedge.com/contributed/2012-06-07/criminal-banking-cartels-end-game-100-digital-monetary-system

Coinage Act of 1792 April 2

http://www.scribd.com/doc/29833275/Coinage-Act-of-1792-April-2

start around 15 min on Federal Reserve

Court Rules Federal Reserve is Privately Owned

Case Reveals Fed’s Status as a Private Institution


Below are excerpts from a court case proving the Federal Reserve system’s status. As you will see, the court ruled that the Federal Reserve Banks are “independent, privately owned and locally controlled corporations”, and there is not sufficient “federal government control over ‘detailed physical performance’ and ‘day to day operation'” of the Federal Reserve Bank for it to be considered a federal agency:

 

Lewis v. United States, 680 F.2d 1239 (1982)

John L. Lewis, Plaintiff/Appellant,
v.
United States of America, Defendant/Appellee.No. 80-5905
United States Court of Appeals, Ninth Circuit.
Submitted March 2, 1982.
Decided April 19, 1982.
As Amended June 24, 1982.

Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, J., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.

Affirmed.

1. United States

There are no sharp criteria for determining whether an entity is a federal agency within meaning of the Federal Tort Claims Act, but critical factor is existence of federal government control over “detailed physical performance” and “day to day operation” of an entity. . . .

2. United States

Federal reserve banks are not federal instrumentalities for purposes of a Federal Tort Claims Act, but are independent, privately owned and locally controlled corporations in light of fact that direct supervision and control of each bank is exercised by board of directors, federal reserve banks, though heavily regulated, are locally controlled by their member banks, banks are listed neither as “wholly owned” government corporations nor as “mixed ownership” corporations; federal reserve banks receive no appropriated funds from Congress and the banks are empowered to sue and be sued in their own names. . . .

3. United States

Under the Federal Tort Claims Act, federal liability is narrowly based on traditional agency principles and does not necessarily lie when a tortfeasor simply works for an entity, like the Reserve Bank, which performs important activities for the government. . . .

4. Taxation

The Reserve Banks are deemed to be federal instrumentalities for purposes of immunity from state taxation.

5. States Taxation

Tests for determining whether an entity is federal instrumentality for purposes of protection from state or local action or taxation, is very broad: whether entity performs important governmental function.

 

————–Lafayette L. Blair, Compton, Cal., for plaintiff/appellant.

James R. Sullivan, Asst. U.S. Atty., Los Angeles, Cal., argued, for defendant/appellee; Andrea Sheridan Ordin, U.S. Atty., Los Angeles, Cal., on brief.

Appeal from the United States District Court for the Central District of California.

Before Poole and Boochever, Circuit Judges, and Soloman, District Judge. (The Honorable Gus J. Solomon, Senior District Judge for the District of Oregon, sitting by designation)

Poole, Circuit Judge:

On July 27, 1979, appellant John Lewis was injured by a vehicle owned and operated by the Los Angeles branch of the Federal Reserve Bank of San Francisco. Lewis brought this action in district court alleging jurisdiction under the Federal Tort Clains Act (the Act), 28 U.S.C. Sect. 1346(b). The United States moved to dismiss for lack of subject matter jurisdiction. The district court dismissed, holding that the Federal Reserve Bank is not a federal agency within the meaning of the Act and that the court therefore lacked subject matter jurisdiction. We affirm.

In enacting the Federal Tort Claims Act, Congress provided a limited waiver of the sovereign immunity of the United States for certain torts of federal employees. . . . Specifically, the Act creates liability for injuries “caused by the negligent or wrongful act or omission” of an employee of any federal agency acting within the scope of his office or employment. . . . “Federal agency” is defined as:

 

 the executive departments, the military departments, independent establishments of the United States, and corporations acting primarily as instrumentalities of the United States, but does not include any contractors with the United States. 

28 U.S.C. Sect. 2671. The liability of the United States for the negligence of a Federal Reserve Bank employee depends, therefore, on whether the Bank is a federal agency under Sect. 2671.

[1,2] There are no sharp criteria for determining whether an entity is a federal agency within the meaning of the Act, but the critical factor is the existence of federal government control over the “detailed physical performance” and “day to day operation” of that entity. . . . Other factors courts have considered include whether the entity is an independent corporation . . ., whether the government is involved in the entity’s finances. . . ., and whether the mission of the entity furthers the policy of the United States, . . . Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities for purpose of the FTCA, but are independent, privately owned and locally controlled corporations.

Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. The stockholding commercial banks elect two thirds of each Bank’s nine member board of directors. The remaining three directors are appointed by the Federal Reserve Board. The Federal Reserve Board regulates the Reserve Banks, but direct supervision and control of each Bank is exercised by its board of directors. 12 U.S.C. Sect. 301. The directors enact by-laws regulating the manner of conducting general Bank business, 12 U.S.C. Sect. 341, and appoint officers to implement and supervise daily Bank activities. These activites include collecting and clearing checks, making advances to private and commercial entities, holding reserves for member banks, discounting the notes of member banks, and buying and selling securities on the open market. See 12 U.S.C. Sub-Sect. 341-361.

Each Bank is statutorily empowered to conduct these activites without day to day direction from the federal government. Thus, for example, the interest rates on advances to member banks, individuals, partnerships, and corporations are set by each Reserve Bank and their decisions regarding the purchase and sale of securities are likewise independently made.

It is evident from the legislative history of the Federal Reserve Act that Congress did not intend to give the federal government direction over the daily operation of the Reserve Banks:

 

 It is proposed that the Government shall retain sufficient power over the reserve banks to enable it to exercise a direct authority when necessary to do so, but that it shall in no way attempt to carry on through its own mechanism the routine operations and banking which require detailed knowledge of local and individual credit and which determine the funds of the community in any given instance. In other words, the reserve-bank plan retains to the Government power over the exercise of the broader banking functions, while it leaves to individuals and privately owned institutions the actual direction of routine. 

H.R. Report No. 69 Cong. 1st Sess. 18-19 (1913).

The fact that the Federal Reserve Board regulates the Reserve Banks does not make them federal agencies under the Act. In United States v. Orleans, 425 U.S. 807, 96 S.Ct. 1971, 48 L.Ed.2d 390 (1976), the Supreme Court held that a community action agency was not a federal agency or instrumentality for purposes of the Act, even though the agency was organized under federal regulations and heavily funded by the federal government. Because the agency’s day to day operation was not supervised by the federal government, but by local officials, the Court refused to extend federal tort liability for the negligence of the agency’s employees. Similarly, the Federal Reserve Banks, though heavily regulated, are locally controlled by their member banks. Unlike typical federal agencies, each bank is empowered to hire and fire employees at will. Bank employees do not participate in the Civil Service Retirement System. They are covered by worker’s compensation insurance, purchased by the Bank, rather than the Federal Employees Compensation Act. Employees travelling on Bank business are not subject to federal travel regulations and do not receive government employee discounts on lodging and services.

The Banks are listed neither as “wholly owned” government corporations under 31 U.S.C. Sect. 846 nor as “mixed ownership” corporations under 31 U.S.C. Sect. 856, a factor considered is Pearl v. United States, 230 F.2d 243 (10th Cir. 1956), which held that the Civil Air Patrol is not a federal agency under the Act. Closely resembling the status of the Federal Reserve Bank, the Civil Air Patrol is a non-profit, federally chartered corporation organized to serve the public welfare. But because Congress’ control over the Civil Air Patrol is limited and the corporation is not designated as a wholly owned or mixed ownership government corporation under 31 U.S.C. Sub-Sect. 846 and 856, the court concluded that the corporation is a non-governmental, independent entity, not covered under the Act.

Additionally, Reserve Banks, as privately owned entities, receive no appropriated funds from Congress. . . .

Finally, the Banks are empowered to sue and be sued in their own name. 12 U.S.C. Sect. 341. They carry their own liability insurance and typically process and handle their own claims. In the past, the Banks have defended against tort claims directly, through private counsel, not government attorneys . . ., and they have never been required to settle tort claims under the administrative procedure of 28 U.S.C. Sect. 2672. The waiver of sovereign immunity contained in the Act would therefore appear to be inapposite to the Banks who have not historically claimed or received general immunity from judicial process.

[3] The Reserve Banks have properly been held to be federal instrumentalities for some purposes. In United States v. Hollingshead, 672 F.2d 751 (9th Cir. 1982), this court held that a Federal Reserve Bank employee who was responsible for recommending expenditure of federal funds was a “public official” under the Federal Bribery Statute. That statute broadly defines public official to include any person acting “for or on behalf of the Government.” . . . The test for determining status as a public official turns on whether there is “substantial federal involvement” in the defendant’s activities. United States v. Hollingshead, 672 F.2d at 754. In contrast, under the FTCA, federal liability is narrowly based on traditional agency principles and does not necessarily lie when the tortfeasor simply works for an entity, like the Reserve Banks, which perform important activities for the government.

[4, 5] The Reserve Banks are deemed to be federal instrumentalities for purposes of immunity from state taxation. . . . The test for determining whether an entity is a federal instrumentality for purposes of protection from state or local action or taxation, however, is very broad: whether the entity performs an important governmental function. . . . The Reserve Banks, which further the nation’s fiscal policy, clearly perform an important governmental function.

Performance of an important governmental function, however, is but a single factor and not determinative in tort claims actions. . . . State taxation has traditionally been viewed as a greater obstacle to an entity’s ability to perform federal functions than exposure to judicial process; therefore tax immunity is liberally applied. . . . Federal tort liability, however, is based on traditional agency principles and thus depends upon the principal’s ability to control the actions of his agent, and not simply upon whether the entity performs an important governmental function. . . .

Brinks Inc. v. Board of Governors of the Federal Reserve System, 466 F.Supp. 116 (D.D.C.1979), held that a Federal Reserve Bank is a federal instrumentality for purposes of the Service Contract Act, 41 U.S.C. Sect. 351. Citing Federal Reserve Bank of Boston and Federal Reserve Bank of Minneapolis, the court applied the “important governmental function” test and concluded that the term “Federal Government” in the Service Contract Act must be “liberally construed to effectuate the Act’s humanitarian purpose of providing minimum wage and fringe benefit protection to individuals performing contracts with the federal government.” Id. 288 Mich. at 120, 284 N.W.2d 667.

Such a liberal construction of the term “federal agency” for purposes of the Act is unwarranted. Unlike in Brinks, plaintiffs are not without a forum in which to seek a remedy, for they may bring an appropriate state tort claim directly against the Bank; and if successful, their prospects of recovery are bright since the institutions are both highly solvent and amply insured.

For these reasons we hold that the Reserve Banks are not federal agencies for purposes of the Federal Tort Claims Act and we affirm the judgement of the district court.

AFFIRMED.

 


It is clear from this that in some circumstances, the Federal Reserve Bank can be considered a government “instrumentality”, but cannot be considered a “federal agency”, because the term carries with it the assumption that the federal government has direct oversight over what the Fed does. Of course it does not, because most people who know about this subject know that the Fed is “politically independent.”

The only area where one might disagree with the judge’s decision is where he states that the Fed furthers the federal government’s fiscal policy, and therefore performs an important governmental function. While we would like to think that the federal government and the Fed work cooperatively with each other, and they may on occasion, the Fed is by no means required to do so. One example is where Rep. Wright Patman, Chairman of the House Banking Committee, said in the Congressional Record back in the ’60s, that depending on the temperament of the Fed’s Chairman, sometimes the Fed worked with the government’s fiscal policy, and other times either went in the complete opposite direction, or threatens to do so in order to influence policy.

The common claim that the Fed is accountable to the government, because it is required to report to Congress on its activities annually, is incorrect. The reports to Congress mean little unless what the Chairman reports can be verified by complete records. From its founding to this day, the Fed has never undergone a complete independent audit. Congress time after time has requested that the Fed voluntarily submit to a complete audit, and every time, it refuses.

Those in the know about the Fed, realize that it does keep certain records secret. The soon-to-be-former Chairman of the House Banking Committee, Henry Gonzales, has spoken on record repeatedly about how the Fed at one point says it does not have certain requested records, and then it is found through investigation that it in fact does have those records, or at least used to. It would appear that the Fed Chairman can say anything he wants to to Congress, and they’ll have to accept what he says, because verification of what he says is not always possible.

[END]

http://www.save-a-patriot.org/files/view/frcourt.html

Amicus_Whistler_Brief dtcc

Case No. 06-16088
In the United States Court of Appeals
For the Ninth Circuit
Whistler Investments, Inc., a Nevada Corporation;
Salim S. Rana Investments Corp., a Corporation; and
American Dreams Holdings, Inc., a Corporation,
Plaintiffs-Appellants,
v.
The Depository Trust and Clearing Corporation;
The Depository Trust Company; and
The National Securities Clearing Corporation,
Defendants-Appellees.
On Appeal from an Order of Dismissal
Issued by the United States District Court
for the District of Nevada
Brief of the North American Securities
Administrators Association, Inc., as Amicus Curiae,
in Support of Appellants and in Support of Reversal
Dennis L. Kennedy, Esq. Rex A. Staples, Esq., General Counsel
Bar No. 1462 Stephen W. Hall, Esq., Deputy GC
Sarah E. Harmon, Esq. Joseph V. Brady, Esq., Associate GC
Bar No. 8106 Lesley M. Walker, Esq., Assoc. Counsel
Bailey™Merrill North American Securities
8691 West Sahara Avenue, Suite 200 Administrators Association, Inc.
Las Vegas, NV 89117 750 First Street, N.E., Suite 1140
(702) 562-8820 Washington, D.C. 20002
Counsel of Record for NASAA (202) 737- 0900
Counsel for NASAA CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1, Amicus Curiae North
American Securities Administrators Association, Inc. (“NASAA”) states that it has
no parent corporation and that there is no publicly held corporation that owns 10%
or more of NASAA’s stock.
iiTABLE OF CONTENTS
IDENTITY AND INTEREST OF THE AMICUS CURIAE………………………..1
ARGUMENT………………………………………………………………………. 5
I. The Investors’ Claims Are Not Barred Under
the Doctrine of Field Preemption, Because the
Federal Government Has Not Occupied the
Field of Securities Regulation, Either
Generally or With Respect to the Clearance
and Settlement of Securities Transactions …………………………………….5
A. Field Preemption Is Disfavored Where
States Have Traditionally Exercised
Jurisdiction and It Is Impossible to
Establish Where Congress Has
Expressly Preserved the States’ Role …………………………………..5
B. State Law Has Occupied a Central Role
in Securities Regulation Since the
Inception of Such Regulation 150
Years Ago ……………………………………………………………………….7
C. Far From Occupying the Field,
Congress Has Expressly and
Repeatedly Preserved State Law in the
Area of Securities Regulation …………………………………………..12
D. A Finding of Field Preemption Also Is
Unwarranted in the Specific Area of
Clearing and Settlement …………………………………………………..15

II. The Investors’ Claims Are Not Barred Under
the Doctrine of Conflict Preemption, Because
Actions for Fraud and Related Misconduct
Under State Law Do Not Interfere with the
Federal Regulation of Clearing and Settlement
and Actually Advance Some Goals of Federal
Law ………………………………………………………………………………………..19

iiiA. It Is Not Impossible for the Clearing
Agencies to Comply Simultaneously
with the State Laws Underlying the
Complaint and with Federal Laws and
Regulations……………………………………………………………………..20
B. Allowing the Investors’ Claims to
Proceed Will Not Interfere with the
Attainment of Congressional
Objectives, and Will Actually Advance
the Goals of Federal Securities Law…………………………………..24
CONCLUSION.……….………………………………………………………….29
CERTIFICATE OF COMPLIANCE………………………………………………30
CERTIFICATE OF SERVICE…………………………………………………….31
ivTABLE OF AUTHORITIES
Cases
Basic Inc. v. Levinson, 485 U.S. 224 (1988)……………………………….….…12
Capital Research and Management Co. v. Brown,
No. B189249, 2007 WL 195785, *4 (Cal. Ct. App. Jan. 26, 2007)….………..…25
Carapico v. Philadelphia Stock Exch., Inc., 791 A.2d 787 (Del. Ch. 2000)……..18
Dean Witter Reynolds, Inc. v. Selectronics, Inc., 594 N.Y.S. 2d 174
(N.Y. 1993)………………………………………………………………………..17
Delaware v. New York, 507 U.S. 490 (1992)…………………………………….. 17
Goldstein v. Depository Trust Co., 717 A.2d 1063 (Pa. Sup. Ct. 1998)……….…11
Guice v. Charles Schwab & Co., 674 N.E.2d 282 (N.Y. 1996)………………23, 24
In re NYSE Specialist Sec. Litig., 405 F. Supp. 2d 281 (S.D.N.Y. 2005)………..24
International Paper Co. v. Ouellette, 479 U.S. 481 (1987)…………………….…6
Jevne v. Superior Court, 111 P.3d 954 (Cal. 2005)………………………………. 6
Lucas v. Lucas, 946 F.2d 1318 (8
th
Cir. 1991)………………………………….. 17
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (1987)…………………………….… 6
New York v. Grasso, 350 F. Supp. 2d 498, 507 (S.D.N.Y. 2004)….……………. 26
People v. Ruskay, 152 N.E. 464 (N.Y. 1926)……………………………….……15
Raul v. Am. Stock Exch., Nos. 95 Civ. 3154 (SAS) & 95 Civ. 8361 (SAS),
1996 WL 381781 (S.D.N.Y. May 2, 1996) ………………………………13, 18, 22
Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)………………….……….. 6
Rousseff v. Dean Witter & Co., 453 F. Supp. 774 (N.D. Ind. 1978)………… 13, 28
vS.E.C. v. W. J. Howey Co., 328 U.S. 293 (1946)……………………………..……7
Zuri-Invest AG v. Natwest Fin., Inc., 177 F. Supp. 2d 189
(S.D.N.Y. 2001)…………………………………………………………….6, 14, 19
Statutes and Regulations
15 U.S.C. § 77p……………………………………………………………….12, 14
15 U.S.C. § 77r.……………………………………………………………………14
15 U.S.C. § 78bb…….……………………………………………………………13
15 U.S.C. § 78q-1……..………………………………………………18, 21, 25, 27
15 U.S.C. § 80b-3a……………………………………………………………..…. 9
17 C.F.R. § 275.203A-1………………………………………………………..…. 9
45 Fed. Reg. 41,920 (June 23, 1980)………………………………………….21, 22
48 Fed. Reg. 45,167 (Sept. 23, 1983)……………………………………………. 21
69 Fed. Reg. 48,008 (Aug. 6, 2004)………………………………………..…22, 26
NRS Ch. 90……………………………………………………………………….. 9
NRS 90.310- 90.450………………………………………………………………. 9
NRS 90.330……………………………………………………………………..… 9
NRS 90.460……………………………………………………………………… 10
NRS 90.565………………………………………………………………..…..… 10
NRS 90.570……………………………………………………………………….11
NRS 90.660……………………………………………………………………….11
NRS Ch. 104…………………………………………………………………..….13
viNRS 104.8111…………………………………………………………………… 17
NRS 104.8501…………………………………………………………………… 16
NRS 104.8503…………………………………………………………………… 16
NRS 104.8505……………………………………………………………………. 16
NRS 104.8511…………………………………………………………………… 16
Prefatory Note to UCC………………………………………………..……….….16
UCC § 8-111 (1994)………………………………………………………………17
UCC § 8-204 (1994)……………………………………..…………….………… 17
UCC § 8-501 (1994)……………………………………..…………………….… 16
UCC § 8-503 (1994)……………………………………..…………………….… 16
UCC § 8-505 (1994)……………………………………..………………………..16
UCC § 8-511 (1994)…………………………………….…………………………16
Uniform Securities Act § 101 (1956)….…………………………….…………8, 11
Uniform Securities Act § 410 (1956)…….………………………….……………11
Uniform Securities Act § 101 (1985)…………………………….………….…8, 11
Uniform Securities Act § 101 (2002)…………………………………….………..8
Uniform Securities Act §§ 301-307 (2002)……….……………………….………10
Uniform Securities Act § 302 (2002)……………………………………….…….10
Uniform Securities Act, Art. 4 (2002)……………………..………………………9
Uniform Securities Act § 404(a) (2002)………………………..………………….9
viiOther Authorities
69 AM. JUR. 2D SECURITIES REGULATION – FEDERAL § 1070…………………….13
12 JOSEPH C. LONG, BLUE SKY LAW (2005)…………..……………………7, 10, 28
Brief of the North American Securities Administrators Association, Inc.,
In Support of Respondents Broudo et al., in Dura Pharmaceuticals, Inc.
v. Broudo, Case No. 03-932 (S. Ct. Nov. 17, 2004)…………………………..……2
H.R. CONF. REP. NO. 104-369 (1995),
reprinted in 1995 U.S.C.C.A.N. 730…………………………………….…………28
LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION (3d ed. 1989)……7, 8, 15
NASAA Member Enforcement Statistics for 2004/2005, available
at
http://www.nasaa.org/issues___answers/enforcement___legal_activity/1002.cfm.
……………………………………………………………………………………………..11
S. REP. NO. 104-98 (1995), reprinted in 1995 U.S.C.C.A.N. 679………….…….12
viiiIDENTITY AND INTEREST OF THE AMICUS CURIAE
North American Securities Administrators Association, Inc. (“NASAA”) is
the non-profit association of state, provincial, and territorial securities regulators in
the United States, Canada, and Mexico. It has 67 members, including the
securities regulators in all 50 states, the District of Columbia, Puerto Rico, and the
U.S. Virgin Islands. Formed in 1919, it is the oldest international organization
devoted to protecting investors from fraud and abuse in connection with the offer
and sale of securities.
The members of NASAA include the state agencies responsible for
regulating the securities markets and industry participants under state law – a body
of law that first emerged nearly 150 years ago. Their fundamental mission is twofold: protecting investors from fraud and abuse, and protecting the integrity of the
marketplace so that capital formation is fair and efficient. The principal activities
of state securities regulators include registering certain types of securities
offerings; licensing the firms and agents who offer and sell securities; and
educating the public about investment fraud. Perhaps most important, state
securities regulators investigate violations of state securities law and file
enforcement actions where appropriate, typically against those who have
committed fraud against the investing public.
1NASAA supports the work of its members in many ways: coordinating
multi-state enforcement actions, conducting training programs, publishing investor
education materials, and offering its views on proposed laws and regulations – both
state and federal – governing financial services. Another core function of the
association is to represent the membership’s position, as amicus curiae, in
significant cases involving financial services regulation. In its briefs, NASAA
addresses legal issues arising not only in governmental enforcement actions but
also in private actions in which wronged investors seek relief under the securities
statutes or the common law. See, e.g., Brief of the North American Securities
Administrators Association, Inc., as Amicus Curiae, in Support of Respondents
Broudo et. al., in Dura Pharmaceuticals, Inc. v. Broudo, Case No. 03-932 (S. Ct.
Nov. 17, 2004) (supporting investors’ position on the pleading requirements for
loss causation in securities fraud action), available at
http://www.nasaa.org/issues_answers/enforcement_legal_activity/968.cfm.
NASAA and its members have a stake in the outcome of this case for two
reasons. Of paramount importance is protecting the right of these appellants
(hereinafter, “Investors”) and similarly-situated companies and investors to seek
redress under state law for any fraud or similar abuses they may have suffered at
the hands of the nation’s clearing agencies. The Investors are alleging that they
have lost substantial sums of money in securities transactions as a direct
2consequence of the Appellees’ (hereinafter, “Clearing Agencies”)
misrepresentations and market manipulations. While the Investors’ claims may be
novel, they nonetheless deserve a fair hearing. In a rapidly changing marketplace
where financial crime is increasingly subtle and sophisticated, plaintiffs who have
suffered injury must often fashion new theories to reach those who are responsible
for their losses.
In essence, the Clearing Agencies contend that their role in the clearing and
settlement process is too important, that the national market system is too fragile,
and that the disruption threatened by the fraud claims at issue is too great to permit
this case to go forward. This defense is legally unsupportable and also
unacceptable from the standpoint of investor protection and public policy. If the
Investors’ claims are taken as true, as they must be on a motion to dismiss, then the
entrepreneurs and investors before the Court have been the victims of fraud and
manipulation at the hands of the very entities that should be serving their interests
by maintaining a fair and efficient national market. Allowing the Clearing
Agencies to avoid accountability for this conduct through the preemption defense
deprives the Investors of a chance for redress. Dismissal of this case may also
allow unlawful conduct to persist, to the detriment of other emerging companies,
investors, and the marketplace as a whole.
3At the same time, the Clearing Agencies’ alarming scenarios are unfounded.
The Investors are invoking traditional state causes of action that provide remedies
for fraud and similar misconduct. They do not seek through this lawsuit to replace
or restructure the nation’s clearing agencies or any legitimate mechanisms that
Congress and the SEC have established for clearing and settling securities
transactions. Their claims are aimed at unlawful conduct in connection with the
operation of those mechanisms, and they should not be extinguished in the name of
preemption.
NASAA and its members have a second, more general interest in resisting
the preemption of state laws that protect the public. State statutes governing
securities transactions and other financial services all play a vital role in protecting
consumers. Congress can and does set limits on the scope of those laws, but those
limits should be sparingly applied, not only because Congress and the courts have
said so, but because investors and consumers usually suffer when they are denied
access to state courts to seek redress for unlawful conduct. Limiting the scope of
preemption in accordance with a fair interpretation of federal law and
Congressional intent is vital, not only in this case, but for the sake of other
consumers whose best, and perhaps only, recourse is in state court under state law.
Thus, if the preemption arguments advanced by the Clearing Agencies are
validated, then other plaintiffs with legitimate claims regarding other types of
4securities fraud may also be denied redress. Especially today, as financial frauds
of all kind continue to proliferate, barriers to the courts should be removed, not
fortified.
For all of the foregoing reasons, NASAA supports the Investors in this
appeal and urges the Court to reverse the ruling below.
ARGUMENT
I. The Investors’ Claims Are Not Barred Under the Doctrine of Field
Preemption, Because the Federal Government Has Not Occupied the
Field of Securities Regulation, Either Generally or With Respect to the
Clearance and Settlement of Securities Transactions.
The long history of state securities regulation, the extensive application of
state law to modern securities transactions, and above all, the repeated enactments
of Congress expressly preserving state jurisdiction all establish that federal law
does not occupy the broad field of securities regulation. A similar analysis, tracing
the history of state regulation and federal law, demonstrates that even in the more
narrow realm of clearing and settlement on national exchanges, Congress has never
intended to occupy the field of regulation. Accordingly, the lower court’s ruling,
which was based in part on a finding of field preemption, should be reversed.
A. Field Preemption Is Disfavored Where States Have Traditionally
Exercised Jurisdiction and it Is Impossible to Establish Where
Congress Has Expressly Preserved the States’ Role.
To establish field preemption, a party must show that the federal scheme of
regulation is “so pervasive as to make reasonable the inference that Congress left
5no room for the State to supplement it,” or that the federal statute in question
“touch[es] a field in which the federal interest is so dominant that the federal
system will be assumed to preclude enforcement of state laws on the same
subject.” See Zuri-Invest AG v. Natwest Fin., Inc., 177 F. Supp. 2d 189, 195
(S.D.N.Y. 2001) (National Securities Markets Improvement Act of 1996
(“NSMIA”) does not preempt state common law claims for fraud and conspiracy)
(quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Few statutes
possess this “extraordinary pre-emptive power.” Id. (quoting Metro. Life Ins. Co.
v. Taylor, 481 U.S. 58, 65 (1987)). And if, in a savings clause, Congress has
expressly allowed for the application of state law, then a finding of field
preemption cannot properly be made. See, e.g., International Paper Co. v.
Ouellette, 479 U.S. 481, 493 (1987) (savings clause in environmental statute
“negates inference that Congress ‘left no room’ for state causes of action); Jevne v.
Superior Court, 111 P.3d 954, 964 (Cal. 2005) (finding conflict preemption but
noting that because the Securities Exchange Act of 1934 Act contains two savings
clauses, field preemption was not at issue).
The Clearing Agencies have failed to establish field preemption under the
foregoing standards. The states have traditionally played a major role – at times an
exclusive one – in the regulation of securities transactions. Furthermore, Congress
has very clearly preserved the application of state law in numerous savings clauses
6found throughout the federal securities acts. Accordingly, a finding of field
preemption cannot be made in this case.
B. State Law Has Occupied a Central Role in Securities Regulation Since
the Inception of Such Regulation 150 Years Ago.
States began adopting statutory provisions regulating securities transactions
in the mid-19th century, long before the federal securities laws were conceived.
See generally LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 31-32 (3d
ed. 1989). Among the earliest state securities laws was a Missouri statute passed
in 1907 that regulated the operation of exchanges by outlawing “the keeping of
places for dealing in stocks” unless trades were properly documented. Id. at 32.
Kansas passed the first comprehensive securities law in 1911, id. at 34, and by
1929 and the Great Depression, “virtually all the states had some sort of securities
act,” see 12 JOSEPH C. LONG, BLUE SKY LAW § 1.1 (2005).
Early state securities law had a profound impact on the evolution of federal
securities law. For example, the term “investment contract” – one of the most
important definitional concepts in securities law – originated in state securities
laws and judicial decisions dating back to the early 1900’s, before Congress had
enacted the federal securities laws. See S.E.C. v. W. J. Howey Co., 328 U.S. 293,
298 (1946). For this reason, the United States Supreme Court in Howey expressly
adopted state judicial interpretations of the term “investment contract” as a guide
to its meaning under federal law. Id.
7In the modern era, state securities laws have been refined and unified in a
series of model statutes – the Uniform Securities Acts of 1956, 1985, and 2002 –
and most states have adopted a version of those uniform laws. See UNIF. SEC. ACT
§ 101, U.L.A. 1 (1956) (table of adopting states); UNIF. SEC. ACT § 101, U.L.A. 1
(1985) (table of adopting states); UNIF. SEC. ACT § 101, U.L.A. 1 (2002) (table of
adopting states). All three acts share fundamental similarities, in part because the
drafters modeled their core provisions on corresponding language in the federal
securities laws to promote uniformity and state-federal coordination. For example,
the uniform act provisions imposing civil liability and prohibiting fraud reflect this
approach. See SECURITIES REGULATION, supra, at 4134 (Section 410(a) of the
1956 uniform act, which imposes civil liability, tracks Section 12 of the Securities
Act of 1933); id. at 70 (Section 101 of the 1956 uniform act, which prohibits fraud,
tracks Section 17(a) of the Securities Act of 1933 and Rule 10b-5 promulgated
under the Securities Exchange Act of 1934).
The end result of this evolution is a dual system of securities regulation in
which state law continues to play a central role, alongside federal law, not only in
the enforcement arena but also with respect to regulation. For example, the states
now regulate broker-dealers, their branch offices, and their representatives in areas
ranging from licensing and books and records requirements to a wide array of
misconduct including sales fraud, churning, manipulation, conversion, and failure
8to supervise. See generally, e.g., UNIF. SEC. ACT (1956) and annotations thereto;
NRS Chapter 90. State law also plays a major role in the regulation of investment
advisers and investment adviser representatives. See generally UNIF. SEC. ACT,
Art. 4 (2002) (provisions on investment advisers); NRS 90.310 – 90.450 (licensing
of investment advisers and other industry participants). Under the 1996
amendments to the Investment Advisers Act of 1940, state securities regulators
bear sole responsibility under state law for the licensing and regulation of all
investment advisers with less than $25 million in assets under management, while
the SEC regulates the larger investment advisers. See 15 U.S.C. § 80b-3a; 17
C.F.R. § 275.203A-1.
1
State regulators are also responsible for licensing and
overseeing all of the individual representatives of investment advisers, regardless
of the amount of money their firms have under management. See Unif. Sec. Act §
404(a) (2002) (requiring investment adviser representatives to be registered in the
states in which they do business); NRS 90.330.
The states, with the support of NASAA, also play a critical regulatory role in
the testing and licensing of firms and individuals in the retail securities industry.
Through a contractual relationship, NASAA and The National Association of
Securities Dealers (“NASD”) jointly operate the Central Registration Depository
(“CRD”), a computerized database used to collect and house licensing information

1
Congress expressly preserved the application of state antifraud laws even to
federally licensed investment advisers. See 15 U.S.C. § 80b-3a(b)(2).
9on broker-dealer firms and their agents. NASAA has contracted with the NASD as
a vendor for the operation of the Investment Adviser Registration Depository
(“IARD”), a system similar to the CRD. Industry participants obtain their licenses
through the CRD and IARD systems. Information in these systems concerning
testing results, disciplinary histories, and licensing status is available to the public
via the web or from state securities regulators.
For most of the 20
th
century, the states exercised the authority to register and
regulate all securities offerings, whether the securities were nationally traded or
strictly local in character. See 12 JOSEPH C. LONG, BLUE SKY LAW § 5.1 (2005)
(states exercised plenary parallel authority with federal regulators after 1933 and
1934 Acts). Although Congress substantially reduced the state role in registering
national securities offerings with the passage of the National Securities Markets
Improvement Act of 1996 (“NSMIA”), the states nevertheless continue to register
local securities offerings. See UNIF. SEC. ACT §§ 301-307 (2002); NRS 90.460.
Even as to federally registered securities, the states are entitled to receive notice
filings, collect fees, and issue stop orders in the event of non-compliance with
these filing and fee requirements. See UNIF. SEC. ACT § 302 (2002); NRS 90.565.
State law is also a powerful weapon used by regulators and private plaintiffs
against all types of business entities and individuals who commit fraud,
manipulation, and related abuses in connection with securities transactions. See,
10e.g., UNIF. SEC. ACT §§ 101, 410 (1956) (anti-fraud and civil liability provisions);
NRS 90.570; NRS 90.660. These egalitarian provisions apply regardless of
licensing status, and they may be brought to bear with equal force against the
unscrupulous boiler room operator, the large Wall Street brokerage firm, or any
number of other market participants – including clearing agencies – who have
deceived or exploited the investing public to advance their own economic interests.
See, e.g., Goldstein v. Depository Trust Co., 717 A.2d 1063, 1064 (Pa. Sup. Ct.
1998) (suit brought under state law for breach of fiduciary duty arising from
depository’s failure to segregate and account for interest owed on funds paid for
IPO shares), appeal denied, 736 A.2d 605 (Pa. 1999).
State securities regulators bring an enormous number of enforcement actions
each year under their securities codes, seeking remedies that include restitution,
injunctions, administrative orders, fines, licensing sanctions, and criminal
penalties.
2
Private plaintiffs also routinely invoke state law under state securities
statutes, private rights of action, or the common law, to obtain monetary relief for
misconduct in connection with securities transactions. For years, Congress and the
courts have recognized the important role that private actions play not only as
means of personal redress but also as an important complement to the enforcement
efforts of governmental authorities defending the integrity of the marketplace. The

2
http://www.nasaa.org/issues___answers/enforcement___legal_activity/1002.cfm.

11Senate Report accompanying the Private Securities Litigation Reform Act of 1995
(“PSLRA”) described the importance of private rights of action at the federal level
as follows:
The SEC enforcement program and the availability of private rights of
action together provide a means for defrauded investors to recover
damages and a powerful deterrent against violations of the securities
laws. As noted by SEC Chairman Levitt, “private rights of action are
not only fundamental to the success of our securities markets, they are
an essential complement to the SEC’s own enforcement program.”
[citation omitted]
See S. REP. NO. 104-98, at 8 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 687; see
also Basic Inc. v. Levinson, 485 U.S. 224, 230-32 (1988) (private cause of action is
an “essential tool for enforcement of the 1934 Act’s requirements”).
The foregoing summary demonstrates that state law has played, and
continues to play, a vital role in regulating the securities markets in the United
States. Thus the notion that federal law has occupied the field of securities
regulation to the exclusion of state law is plainly wrong.
C. Far From Occupying the Field, Congress Has Expressly and
Repeatedly Preserved State Law in the Area of Securities Regulation.
Congress has made clear in numerous savings clauses that state law applies
to securities transactions. The federal securities Acts of 1933 and 1934 each
contain broad savings clauses that preserve state regulatory and state common law
remedies in the securities field. Section 16 of the 1933 Act provides that “the
rights and remedies provided by this subchapter shall be in addition to any and all
other rights and remedies that may exist at law or in equity.” 15 U.S.C. § 77p(a).
12Section 28 of the 1934 Act contains an identical provision, as well as a separate
clause that expressly preserves the authority of state regulatory authorities:
“[N]othing in this chapter shall affect the jurisdiction of the securities commission .
. . of any State over any security or any person insofar as it does not conflict with
the provisions of this chapter or the rules and regulations thereunder.” 15 U.S.C. §
78bb(a). These savings provisions apply to state common law as well as statutory
law, and they also preserve state laws that were enacted subsequent to 1933 and
1934. See Rousseff v. Dean Witter & Co., 453 F. Supp. 774 (N.D. Ind. 1978).
Courts and commentators have repeatedly observed that by virtue of these
savings clauses, a finding of field preemption as to securities regulation is
inappropriate. See id. at 780 (two savings clauses are “a clear and unequivocal
congressional expression not to preempt state securities laws”); see also Raul v.
Am. Stock Exch., Nos. 95 Civ. 3154 (SAS) & 95 Civ. 8361 (SAS), 1996 WL
381781, at *5 (S.D.N.Y. May 2, 1996) (1934 Act savings clause “has consistently
been interpreted by courts as a protection of state authority in the field of securities
regulation, not as a limitation on that power”); 69A AM JUR. 2D SECURITIES
REGULATION – FEDERAL § 1070 (two savings clauses “make it absolutely clear that
Congress was not preempting the field”).
It is true that over the last 10 years, Congress has enacted provisions
expressly limiting the application of state securities law in discrete areas.
13However, none of those limitations effected a general repeal of the savings clauses
discussed above. For example, in NSMIA, enacted in 1996, Congress preempted
the regulatory authority of state regulators to register nationally traded securities.
See 15 U.S.C. § 77r. However, Congress did not otherwise disturb the general
savings clauses from the 1930s, nor did it limit state common law fraud claims.
See Zuri-Invest AG v. Natwest Fin., Inc., 177 F. Supp. 189, 193-94 (S.D.N.Y.
2001). Moreover, Congress clarified the scope of its preemption by expressly
preserving the authority of state securities regulators to “bring enforcement actions
with respect to fraud or deceit, or unlawful conduct by a broker or dealer,” in
connection with all types of securities, including those traded on the national
exchanges. See 15 U.S.C. § 77r(c)(1).
Similarly, in 1998, Congress passed the Securities Litigation Uniform
Standards Act to restrict certain causes of action based on state law. However,
those restrictions were targeted at specific abuses unique to class action lawsuits.
See 15 U.S.C. § 77p(b) (preempting certain class actions alleging fraud under state
law). And, as with NSMIA, Congress expressly preserved state jurisdiction both
generally and with respect to specific types of class actions under state law. See,
e.g., 15 U.S.C. § 77p(a) (reiterating 1933 savings clause preserving state common
law “except as provided” in the amendments); 15 U.S.C. § 77p(d)(1) (preserving
certain class actions for fraud under law of state where issuer was incorporated).
14Thus, with certain limited exceptions, Congress has left the field of securities
regulation open to state statutory and state common law.
D. A Finding of Field Preemption Also Is Unwarranted in the Specific
Area of Clearing and Settlement.
A similar analysis based upon the history of state regulation and
Congressional enactments shows that state law also plays a significant role in the
specific area of clearance and settlement of securities transactions. Here too, a
case for field preemption cannot be made.
Prior to the Securities Acts Amendments of 1975 (“1975 Amendments”), the
clearing and settlement of securities transactions on the nation’s exchanges was
unquestionably regulated as a matter of state law. See SECURITIES REGULATION,
supra, at 2897 (3d ed. 1989); see also People v. Ruskay, 152 N.E. 464 (N.Y. 1926)
(under New York law and exchange’s clearing and settlement procedures, broker’s
criminal conviction for cross-trading with customer could not be sustained).
During that era, state common law and state statutes modeled after the Uniform
Commercial Code (“UCC”) defined the property rights and liabilities of parties to
securities transactions.
Notwithstanding the increased prominence of federal law in the area of
clearing and settlement as of 1975, the UCC, which has been adopted by virtually
every state, has continued to occupy this central role. Part 5 of Article 8 of the
UCC is headed “Security Entitlements,” and it sets forth an extensive body of legal
15principles governing the transfer of securities. As stated in the commentary,
“Article 8 deals with the settlement phase of securities transactions. It deals with
the mechanisms by which interests in securities are transferred, and the rights and
duties of those who are involved in the transfer process.” See Prefatory Note to
UCC, at 11. The topics include the acquisition of security entitlements from
securities intermediaries, UCC § 8-501 (1994); NRS 104.8501; the property
interests of entitlement holders in financial interests held by intermediaries, UCC §
8-503 (1994); NRS 104.8503; the duties of intermediaries with respect to payments
and distributions, UCC § 8-505 (1994); NRS 104.8505; and the priorities among
security interests and entitlement holders, UCC § 8-511 (1994); NRS 104.8511.
Revisions to the UCC over the years confirm the ongoing relevance of state
law to the regulation of clearance and settlement in securities transactions. For
example, the drafters made significant changes to the UCC in 1994, to ensure that
state law kept pace with changes in the way securities were being owned and
transferred. “[T]he prior version of Article 8 did not adequately deal with the
system of securities holding through securities intermediaries that has developed in
the past few decades.” See Prefatory Note to UCC, at 3. The method of owning
securities and recording that ownership has evolved from a “direct system”
(involving the recordation of ownership in the name of the beneficial owner
through either paper certificates or book entry) to an “indirect system” (involving
16the recordation of ownership in the name of a central intermediary, such as the
DTC or its designee, in book entry). It is precisely this innovation in securities
ownership – now governed by the amended provisions of Article 8 of the UCC –
that creates the potential for manipulation through the Stock Borrow Program
(“SBP”), as elucidated in the Investors’ Complaint.
3

There are numerous cases illustrating the point that the UCC and other state
laws govern disputes between exchanges and market participants over securities
transfers. See Delaware v. New York, 507 U.S. 490, 504-05 (1992) (UCC and
additional state law governed determination that depositories and other
intermediaries holding securities were the “debtors” for purposes of interstate
escheat claims); Lucas v. Lucas, 946 F.2d 1318, 1323-24 (8
th
Cir. 1991) (court
applied state law to determine that stocks transferred by book entry at DTC rather
than by paper certificate could be the subject of conversion); Dean Witter
Reynolds, Inc. v. Selectronics, Inc., 594 N.Y.S. 2d 174, 176-77 (N.Y. 1993) (UCC
§ 8-204 applied so that broker had cause of action against clearing house, transfer
agent, and others for their failure to note transfer restrictions on face of stock;
federal private offering regulations dealing with transfer restrictions did not

3
The UCC’s “conflicts” provision also negates field preemption. It states that a
rule adopted by a clearing corporation governing certain rights and obligations is
effective even if the rule conflicts with the UCC. See UCC § 8-111 (1994); NRS
104.8111. Such a provision is antithetical to the notion of field preemption:
resolving potential conflicts in the law is only necessary when different bodies of
law concededly apply to the same regulated activity.
17preempt state claim); see also Carapico v. Philadelphia Stock Exch., Inc., 791
A.2d 787, 790-93 (Del. Ch. 2000) (request by member of exchange to examine
books and records in relation to charges of mismanagement held proper under
Delaware law).
Congress has made clear in numerous savings clauses that the UCC and
other state laws are to apply not only in the general field of securities regulation,
but specifically in the area of clearance and settlement. In the 1975 Amendments,
Congress actually instituted reverse preemption in favor of the states. It granted
the states plenary authority to adopt laws that differ from the provisions of any
SEC rule relating to the transfer of securities, provided that the states act within
two years after the SEC adopts its rule. See 15 U.S.C. § 78q-1(f)(3). Congress
further provided that even when states have not invoked their authority to override
federal law, the SEC’s rules and regulations take precedence over state law only if
the SEC can make certain findings regarding the need for the rule and its impact on
the rights of shareholders and other persons under state law. See 15 U.S.C. § 78q-
1(f)(1), (2). Finally, Congress added yet another savings clause preserving the
authority of state regulators to enforce rules governing clearing agencies and
transfer agents, provided those rules are not inconsistent with the 1975
Amendments. See 15 U.S.C. § 78q-1(d)(4); see also Raul v. Am. Stock Exch., Nos.
95 Civ. 3154 (SAS) & 95 Civ. 8361 (SAS), 1996 WL 381781, at *7 (S.D.N.Y.
18May 2, 1996) (although the 1975 Amendments expanded SEC’s oversight of the
SROs, they do not reveal a Congressional intent to “preclude previously
established causes of action;” state law claim for exchange’s failure to enforce own
rules was not preempted). In light of these Congressional enactments that
expressly preserve state law with respect to clearing agencies and their activities,
the Appellees’ field preemption argument simply cannot be sustained.
II. The Investors’Claims Are Not Barred Under the Doctrine of Conflict
Preemption, Because Actions for Fraud and Related Misconduct Under
State Law Do Not Interfere with the Federal Regulation of Clearing and
Settlement and Actually Advance Some Goals of Federal Law.
The lower court also predicated its ruling on a finding of conflict
preemption. Conflict preemption can occur in two forms: where it is “impossible
for a private party to comply with both state and federal requirements, . . . or where
state law stands as an obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” See Zuri-Invest AG v. Natwest Fin., Inc.,
177 F. Supp. 2d 189, 195 (S.D.N.Y. 2001) (internal quotations and cited authorities
omitted). The lower court’s ruling should be reversed on this issue as well,
because the investors’ state law claims do not conflict either with the obligations
that federal law imposes upon the Clearing Agencies or with the policies and
objectives that Congress intended to achieve through federal law.

19A. It Is Not Impossible for the Clearing Agencies to Comply
Simultaneously with the State Laws Underlying the Complaint and
With Federal Laws and Regulations.
In this case, it is not impossible for the Clearing Agencies to comply with
federal law and at the same time refrain from engaging in the fraudulent
misconduct alleged in the Investors’ Complaint. In principle, of course, state laws
prohibiting fraud are thoroughly compatible with federal law, insofar as state and
federal securities laws parallel each other so closely and reflect a shared
commitment to the eradication of securities fraud.
This general principle holds true as applied to this case. While the Investors
may indeed believe that the SBP is inherently flawed and contrary to the public
interest, that is not the essence of their complaint. They allege that the Clearing
Agencies have engaged in a pattern of deceiving the public about the SBP and
fostering its use as an instrument of market manipulation. For example, the alleged
misrepresentations and omissions include false statements about the nature of the
“loans” of stock made to satisfy delivery obligations through the SBP (First Claim
for Relief); false statements about the efficacy of the program as a prompt and
accurate settlement mechanism (Second Claim for Relief); and false statements
about the dilutive impact of the program when shares are credited to borrower and
lender accounts in the “loan” process (Third Claim for Relief). See, e.g., Compl. at
15-20.
20Assuming these allegations of fraud are true, it is difficult to see how
Congress, the SEC, or any SRO could have shielded such misconduct from the
application of state law. No federal law, SEC regulation, or SRO rule requires or
authorizes the Clearing Agencies or anyone else to commit fraud. And nothing in
those laws and rules prevents the Clearing Agencies from describing the SBP
truthfully and accurately in their communications with the public.
In fact, the state law standards of conduct being applied in this lawsuit easily
coexist with the federal standards of conduct that govern clearing agencies. The
federal requirements applicable to clearing agencies are set forth in a variety of
sources, including Section 17A of the 1975 Amendments, 15 U.S.C. § 78q-1; the
SEC’s release approving the registrations of the NSCC and the DTC, 48 Fed. Reg.
45,167 (Sept. 23, 1983); and the guidelines adopted by the SEC for registering
clearing agencies, 45 Fed. Reg. 41,920 (June 23, 1980). Although the
requirements generally concern operational capabilities and internal governance,
some provisions relate, directly or indirectly, to standards of honesty and ethics.
For example, Section 17A of the statute provides that clearing agency rules must
be designed in part to “protect investors and the public interest.” See 15 U.S.C. §
78q-1(b)(3)(F). In addition, the statute requires that clearing agencies be capable
of complying with “the provisions of this chapter,” a reference that encompasses
the antifraud provisions of the 1934 Act. See 15 U.S.C. § 78q-1(b)(3)(A); see also
2148 Fed. Reg. at 45,179 (with respect to safeguarding participant funds and
securities, there will be no “unique federal standard of care for registered clearing
agencies”); Standards for the Registration of Clearing Agencies, 45 Fed. Reg. at
41930 (June 23, 1980) (state standards of care apply to bailees for hire, such as
clearing agencies).
Insofar as these provisions collectively require clearing agencies to protect
investors, observe the federal prohibitions against fraud, and conform to state law
standards of care, they are compatible with the provisions of Nevada law
underlying the Complaint. There is no clash between the Investors’ state law
claims and federal law.
A number of cases highlight the distinction between prohibitions on
misconduct that are compatible under state and federal law, and regulatory
obligations that cannot be reconciled for purposes of a conflicts analysis. For
example, in Raul v. American Stock Exchange, Inc., No. 95 Civ. 3154 (SAS) & 95
Civ. 8361, 1996 WL 381781 (S.D.N.Y May 2, 1996), the court allowed claims for
common law fraud and breach of fiduciary duty to proceed against an exchange.
See id. at *6. It held that conflict preemption did not apply because the exchange
was subject to essentially the same obligations under its own rules and under state
law. Id.
22In Raul, the court differentiated other cases in which the relief sought
pursuant to state law was in direct conflict with the SEC’s directives. Id. Those
cases are typically ones in which the plaintiffs seek remedies under state law for
practices that are expressly and specifically permitted under SEC regulations. For
example, in Guice v. Charles Schwab & Co., 674 N.E.2d 282 (N.Y. 1996), the
plaintiffs sought damages under state common law agency principles in connection
with the defendants’ receipt of order flow payments – payments that wholesale
dealers make to retail broker-dealers to attract order volume. The court dismissed
the claims on the basis of conflicts preemption, finding that the claims “directly
conflict[ed] with SEC regulations” and would furthermore interfere with the
achievement of Congress’s objectives in passing the 1975 Amendments. Id. at
289.
Guice and similar cases are distinguishable from the one before this Court.
Although the plaintiffs in Guice alleged inadequate disclosure of the order flow
payments, id. at 284-85, the court explained that the SEC had promulgated detailed
regulations addressing the precise timing, form, and degree of disclosure that was
required in connection with order flow payments. Id. at 286-88. Hence a conflict
arose specifically as to disclosure obligations. The court also perceived the threat
of an even more profound conflict: the imposition of additional disclosure
requirements under state law might induce firms to abandon the practice of order
23flow payments altogether – a practice that Congress and the SEC had carefully
weighed and chosen to permit in the interest of promoting efficiency and
competition. Id. at 290-91. The court concluded that allowing the state law claims
would therefore interfere with Congress’s policy objectives. Id.
The instant case is different: there is no SEC regulation that creates an
informational “safe harbor” for the Clearing Agencies; there can be no suggestion
that the imposition of state antifraud provisions will imperil the existence of the
nation’s clearing and settlement system; and there is no conceivable Congressional
policy that could justify allowing the Clearing Agencies to commit fraud and
market manipulation unimpeded. Accordingly, even under Guice and similar
cases, no conflict preemption arises. Cf. In re NYSE Specialist Sec. Litig., 405 F.
Supp. 2d 281, 298, 304-05 (S.D.N.Y. 2005) (dismissing claims on technical
grounds but finding that misrepresentations by exchange would not qualify as
legitimate quasi-governmental activities and therefore would not fall within the
ambit of the exchange’s immunity).
B. Allowing the Investors’ Claims to Proceed Will Not Interfere with the
Attainment of Congressional Objectives, and Will Actually Advance
the Goals of Federal Securities Law.
Allowing this case or similar actions to be brought against the Clearing
Agencies will not “create an obstacle to the accomplishment and execution of the
full purposes and objectives of Congress.” On the contrary, this case actually
24advances some of the most fundamental policies underlying the federal securities
laws – transparency and investor protection.
Congress had essentially three objectives in mind when it passed Section
17A: (1) to establish a national system, (2) for the prompt and accurate clearance
and settlement of securities transactions, (3) that would be fair to investors. See 15
U.S.C. § 78q-1(a). The Investors’ lawsuit does not interfere with the attainment of
any of these goals.
First, it does not imperil the national nature of the current market system.
As the Clearing Agencies are at pains to emphasize, they are by far the most
dominant clearing agencies in the country and they process the overwhelming
majority of securities trades executed on our nation’s exchanges. See, e.g.,
Appellees’ Opening Brief, at 1, 8. (Feb. 16, 2007). If the Investors prevail, this
configuration will not change. The result will be that the Investors are made whole
for any damages they can prove. If the lawsuit also reveals unacceptable flaws in
the SBP and in the manner in which the Clearing Agencies have operated it, then it
will be up to the federal authorities to institute any regulatory fix they deem
appropriate. Cf. Capital Research and Management Co. v. Brown, No. B189249,
2007 WL 195785, *4 (Cal. Ct. App. Jan. 26, 2007) (possible impact of fraud action
25on behavior of mutual fund does not limit application of NSMIA savings clause).
None of these outcomes will make the system any less national or centralized.
4
The Investors’ lawsuit also will not make the clearing and settlement system
any less prompt or accurate. It will either have no effect whatsoever, or it will lead
to improvements on both counts. If the Investors’ allegations are true, then it is the
Clearing Agencies’ manipulative operation of the SBP that is undermining prompt
and accurate settlement. Settlements are not prompt to the extent the SBP enables
short sellers to shirk their delivery obligations for long periods, and settlements are
not accurate to the extent the Clearing Agencies use the SBP to manipulate share
prices through the proliferation of phantom shares. Any changes in the system that
address those problems – assuming they exist and are revealed in the litigation –
will only enhance prompt clearing and settlement.
To support their preemption claim, the Clearing Agencies resort to a familiar
scare tactic, arguing that unless this lawsuit is dismissed, the uniform regulatory
scheme governing clearance and settlement will be converted into “an

4
Contrary to the SEC’s suggestions, see SEC Brief at 27-28, the adoption of
regulation SHO, 69 Fed. Reg. 48,008 (Aug. 6, 2004), can have no impact on this
case because it was not in effect during the time period relevant to the Complaint,
it does not address the Stock Borrow Program at all, and it could not possibly
remedy the Investors’ specific injuries from fraud. The case law supports this
analysis. See New York v. Grasso, 350 F. Supp. 2d 498, 507 (S.D.N.Y. 2004)
(SEC’s future intention to address problems revealed in litigation through
rulemaking had no bearing on the case, not only because the proposals had not yet
taken effect, but also because the suit was predicated on fundamentally distinct
state law claims).
26incomprehensible ‘Tower of Babel.” See Appellees’ Opening Brief, at 25. This
argument is groundless for a number of reasons. The Investors are invoking
traditional state law provisions prohibiting fraud, manipulation, conversion, and
related misconduct. Those provisions are simply not disparate among the states.
On the contrary, they share a high degree of uniformity throughout the country.
Furthermore, experience to date does not justify the Clearing Agencies’ fears.
Neither state regulators nor private litigants have shown an inclination to
superimpose myriad, conflicting regulatory demands upon the nation’s clearing
and settlement system. At issue in this case is abuse: lying about the true nature of
the system to facilitate and perpetuate manipulation. Finally, even if “disparate”
state laws and regulations were brought to bear upon the system, the result would
not offend Congress. In Section 17A, Congress expressly allowed for a significant
degree of variation in the regulation of clearing and settlement under state law. As
discussed above, the law permits states to adopt regulations in direct conflict with
SEC rules, subject to specified rule-making procedures, see 15 U.S.C. § 78q-
1(f)(3).
Rather than undermining Congressional objectives, this lawsuit will advance
them. The overriding purpose of the securities laws is protecting investors and
maintaining their confidence in our markets. When Congress enacted PSLRA, it
made this point clear by opening the Conference Report with the following
27declaration: “The overriding purpose of our nation’s securities laws is to protect
investors and to maintain confidence in our capital markets . . . .” See H.R. Conf.
Rep. No. 104-369, at 31 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 731
(emphasis added). The core postulate of all securities regulation is that investors
are best served through transparency: give them the truth, either through a
prospectus or an antifraud provision, and they will protect themselves. See, e.g.,
Rousseff v. Dean Witter & Co., 453 F. Supp. 774, 781 (N.D. Ind. 1978) (primary
purpose of federal securities laws is protecting investing public by insuring it
receives full disclosure of information necessary to effect informed securities
transactions; longer state statute of limitations enhances that purpose and therefore
does not conflict with federal law); 12 JOSEPH C. LONG, BLUE SKY LAW § 1.44
(2005) (main focus of 1933 Act is full disclosure). By holding the Clearing
Agencies to a standard of honest disclosure and fair trade practices, the Investors’
claims promote the goals of the securities laws. The company and the individual
investors before the Court seek the truth about an important mechanism used in the
clearing and settlement process, a mechanism they believe is being used
unlawfully to devalue their investments. Their claims should be put to the test at
trial, not extinguished on grounds of preemption.
28CONCLUSION
For the reasons set forth above, the Amicus Curiae respectfully suggests that
this Court should reverse the lower court’s decision to dismiss the Complaint.
Bailey™Merrill
By: _______________________________
Dennis L. Kennedy, Esq.
Bar No. 1462
Sarah E. Harmon, Esq.
Bar No. 8106
8691 West Sahara Avenue, Suite 200
Las Vegas, NV 89117
(702) 562-8820
and
Rex A. Staples, Esq., General Counsel
Stephen W. Hall, Esq., Deputy GC
Joseph V. Brady, Esq., Associate GC
Lesley M. Walker, Esq., Assoc. Counsel
North American Securities Administrators
Association, Inc.
750 First Street, N.E., Suite 1140
Washington, D.C. 20002
(202) 737-0900
Counsel for NASAA
29CERTIFICATE OF COMPLIANCE
PURSUANT TO FED. R. APP. P. 32(A)(7)(C)
AND CIRCUIT RULE 32-1 FOR CASE NUMBER 06-16088
I hereby certify that pursuant to Fed. R. App. P. 29(d) and Ninth Circuit
Rule 32-1, the attached amicus brief is proportionately spaced, has a typeface of 14
points or more, and contains 7,000 words or less.
Bailey™Merrill
By: _______________________________
Dennis L. Kennedy, Esq.
Bar No. 1462
8691 West Sahara Avenue, Suite 200
Las Vegas, Nevada 89117
(702) 562-8820
30CERTIFICATE OF SERVICE
I hereby certify that on this day, the original and fifteen copies of the
foregoing amicus curiae brief were sent by overnight delivery to:
Cathy Catterson
Clerk of Court
U.S. Court of Appeals for the Ninth Circuit
95 Seventh Street
San Francisco, CA 94103-1526
I hereby further certify that two copies of the foregoing brief were sent by
overnight delivery to each of the following persons:
Michael J. Morrison
1495 Ridgeview Dr., Suite 220
Reno, NV 89509
Gregg M. Mashberg
Proskauer Rose
1585 Broadway
New York, NY 10036
Bruce Laxalt
Laxalt & Nomura, Ltd.
9600 Gateway Dr.
Reno, NV 89521
William E. Cooper
601 E. Bridger Avenue
Las Vegas, NV 89101
Jacob Stillman
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

31_______________________________
Dennis L. Kennedy, Esq.
Bar No. 1462
8691 West Sahara Avenue, Suite 200
Las Vegas, Nevada 89117
(702) 562-8820
Dated: March 19, 2007
32

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