In a 10-page order, the SEC said the Securities Regulation Code was explicit that 'securities should be registered before being offered or sold to the public in order to protect the investing public from
worthless securities, which if unchecked, is likely to cause grave and irreparable damage and injury to the investors and public in general.'
Note that the amended regulations on
worthless securities (Reg.
* After you have filed a claim for a loss from
worthless securities or a bad debt deduction, keep the relevant records for seven years.
JPMorgan Chase said that even though it loaned more than USD70bn to Lehman Brothers on September 18, 2008 after the company had entered into a sale deed with Barclays Plc (LSE: BARC), Lehman Brothers helped Barclays Plc select the securities it wanted to buy back and left behind billions of dollars of
worthless securities for JPMorgan Chase.
Central forced it to buy what it considered to be
worthless securities right before U.S.
All incentive to make loans prudently were swept away when they dropped historically conservative lending practices in order to generate more loans to bundle into
worthless securities which they would sell, thus relieving themselves of risk (or so they thought).
(Of course there is an effect on the ownership of the money supply, in that now the
worthless securities are owned by the taxpayer, and the new money by the bank).
The deduction for
worthless securities must be taken for the tax year in which the securities became completely worthless [IRC section 165(g)].
Last October, the Osaka District Court sentenced three former executives of the Daiwa Toshi Kanzai group to two to three years in prison for defrauding clients through sales of
worthless securities. Two more former executives were convicted last December.
For example, the "Ponzi" scheme, born in the early 1900s, simply used new investments in
worthless securities to pay the returns on old investments--a pyramid destined to collapse.
It also stated that counterfeit,
worthless securities and guarantee instruments were used by the defendants to convince investors that this program was safe.
The investors holding the now
worthless securities accused Andersen of violating provisions in both the Securities Act of 1933 and Illinois's consumer fraud act.
