Retraction

In attempting to expose Street malfeasance FallStreet.com goes to great lengths to ensure that our conclusions are wholly accurate. However, on April 23, 2004, in an article entitled "Shorts Didn't Front Run The Current Rally", we made statements that were not accurate. Indeed, our statement 'caught in the act' - which could be construed as meaning 'caught in the act' of front running - was not fully researched and/or edited before publication. After being notified of these statements by Keane Securities Co. Inc., we have made the appropriate changes. We apologize to both Tucker Anthony Inc. and Keane Securities.

Reaction

Keane Securities went to great length - mail, telephone and fax - to contact us and rectify this issue. For that we thank them. However, Mr. Keane's firm also, in our opinion, took the completely unnecessary step of threatening litigation against us.

We respectfully regret to inform Mr. Keane that we will not, as per his request, be purchasing add space in the Wall Street Journal to print our retraction at this time. Moreover, with respect to Mr. Keane's threat "We will monitor FallStreet.com affairs to the end that if your company attempts to raise capital in a public offering in this country, we will retain counsel to intervene with the SEC", we regret to inform him that this isn't the 1990s: FallStreet.com is a small enterprise and not even with his firm's help could it be spun into IPO success. Lastly with respect to Mr. Keane's contention that "Keane Securities Co. Inc., has been in business for over twenty years without a customer complaint or any accusation of illegal activity," we regret to inform Mr. Keane that we do not agree with his interpretation of the word 'complaint' and the phrase 'illegal activity.'

Keane's Regulatory Track Record

While it is true that Keane Securities has never been charged for breaking rule 92 (front running), the NYSE has investigated and held a hearing on Keane in the past. Here are some of the highlights:

EXCHANGE HEARING PANEL DECISION 02-238
http://www.nyse.com/pdfs/02-238.pdf

-- "During the period June 2000 to March 2001, the Firm failed to adequately supervise certain critical aspects of its Floor broker trading activities, including the Floor broker error account, multiple order representation, intra-day trading, on Floor trading and front running."

-- "The Firm was unable to evidence that it had conducted supervisory reviews of its Floor broker's trading activity, including but not limited to Floor error account trades, multiple order representation, intra-day trading, on Floor trading or front running."

-- "The Firm failed to obtain a list of all trades or review all Floor tickets for trades its Floor broker executed for another member firm XYZ, which also employed the Floor broker as a clerk pursuant to a dual employment arrangement&.During the relevant period, the Firm's Floor broker was also employed by, and executed orders for, XYZ."

-- "The Firm failed to maintain a written record of the compensation agreement between its Floor broker AB and the other member firm for which AB executed orders, XYZ."

If Mr. Keane's statement on his company's spotless complaints and accusations record were true we would applaud Keane Securities. However, in our opinion, the statement is not completely factual. Rather, in addition to the NYSE Exchange Panel Hearing Decision - wherein the panel unanimously agreed to 'the Stipulation of Facts' but nonetheless didn't pursue any admission of guilt - there are other instances on the disciplinary record.

Because of the risk of litigation let us be clear: we have no direct evidence of customer complaints or accusations of illegal activity at Keane securities. Rather, what we have is a document which, in our opinion, refutes the bold claim by Mr. Keane that his firm has never done any wrong.

We would gladly reproduce this document, but we are told that NASD agreements do not permit us to. If you are interested in acquiring it:

Go to: http://www.nasdr.com/
Click: NASD BrokerCheck
Click: Look Up a Broker/Dealer Firm or Individual
Follow Instructions.

Ethics Knows Some Bounds

Mr. Keane could argue that his firms' 20-year track record is pretty good - it is, and we congratulate him! Moreover, he could state that other firms have a much worse record - they do, and we would highlight them specifically and in full if we could get the proper clearance from NASD. However, Mr. Keane doesn't argue these things. Instead, he vehemently attacks our honest mistake under the guise of saving some fabled track record that exists outside of the Street's reality.

In fact, the reality is that when the average investor reads the terms 'Without admitting or denying guilt' and 'without admitting or denying the allegations' they are not swayed. Rather, paying off the regulators to make the pain go away (there is no specific evidence that Keane's 'paid off' anyone beyond the fines levied) doesn't massage well with the average investor.

Compiling direct evidence of malfeasance is difficult to do. However, more difficult still - with the rare media ripened exceptions (Milken, Leeson, Quattrone, etc.) - is the task of actually using this evidence to arrive at the verdict 'guilty'. There is publicly available information to suggest that Keane's has bent rules and done many things that would make customers complain (we wish we could expand on each one) but no final verdicts - only fines and toothless censures.

In short, we believe that certain traders profit from front running and that these actions are not dealt with properly and timely by the regulatory bodies. Furthermore, we believe that most front running is not prosecuted simply because it is not caught (the surprise eruption of mutual fund scandals shows just how widespread these activities can become without anyone ever suspecting). As for being 'charged' -- what was Wall Street ever really 'charged' with for their late 1990s lies? Better yet, who on Wall Street ever said they were sorry?

That said, we also believe that we must endeavor to keep our statements factual, and not lace them with erroneous undertones to suit our pre-conceived conclusions. To this end, we know for certain that no one has ever been 'caught in the act' of front-running at Keane Securities. Again, we apologize for the mistake.

Contrarily, what we may never know is how the NYSE and NASD can catch a firm doing so many things wrong without getting one verdict right. The reality is that Keane's went to great lengths to demand a retraction from us - we gladly gave it to him. Our reaction to Keane's letter is to demand Mr. Keane to come clean.