Hey, It's Not My Default!
Yesterday, we reported that Dallas-based Affiliated Computer Services, Inc.--ya know, the embattled company with the red-light camera contract with the city and the duel federal investigations into its issuing of stock options--was suing its bank in federal court here. ACS isn't really angry with The Bank of New York Trust Company; it just wants the bank to prove that ACS isn't in default of its loan agreements. That's what someone's claiming, after ACS missed the deadline for filing its annual financial report with the Securities and Exchange Commission--due to those pesky SEC and Department of Justice investigations, of which I can't get enough.
This morning, I finally got a look at ACS' lawsuit in U.S. District Court, and as it turns out, on September 22, represenatives of a company called Cede & Co. delivered to ACS and The Bank of New York Trust Company notices that said ACS was in default. The reason? ACS has yet to file its annual financials with the SEC, which is indeed part of the agreement the company has with the bank (but not, says ACS, the sole reason it would default on its loan). But for the moment, the more interesting question is: Who, or what, is Cede & Co.?
As it turns out, there's not a real easy answer to that question. But let's go with this: Says here that it's a corporation controlled by The Depository Trust & Clearing Corporation, which is the world's largest securites depository. No, really. Has almost $23 trillion in assets. Trillion. Most stocks bought and sold in this country go through the DTCC, and most of them are put in the name of Cede & Co. so you can't find out who actually owns the stock. Which means it wasn't just anyone sending ACS and the bank those letters, but the people who touch almost every stock certificate being passed around the country every single day. Which is no doubt why ACS felt it necessary to file suit against its own lendor; something about desperate times and drastic measures, no doubt. --Robert Wilonsky
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