All of this commentary about naked shorts has been entertaining and somewhat informative. I have learned a few things, but have had far more “MC rules of investing ” reinforced. None of the comments or emails have changed my mind on how i would invest or perceive the market and its ability to regulate itself.
Here is where I stand.
1. Too many people get religious about stocks. A stock becomes personal to them. Some shareholders build
communities around these stocks and treat the stocks like family members. Falling into the ” i know he is a serial killer, but he is my uncle” category.
Its a stock people. A financial investment. Rule no 1 of any smart investor is dont get attached.
People get stocks right and wrong, we all promise not to think you are a genius in a bullmarket or an idiot when you lose money on a stock. Please dont send me emails about a stock and tell me who i should talk to, or what a terrible person I am because I do or dont like a stock you have a position in.
I typically only have positions in about 10 stocks. I dont trade in and out, I tend to stick with them until I
find out that Im wrong, or that the expectation I had has played out. On the long side, I stick to technology and stocks where I think I know them better than the market.
On the short side, I typically dont look for valuation plays. I look for companies with problems.
2. As far as Naked Shorts – Of all the emails that I got, and all the comments on the blog, there were a total of 6 companies listed as examples of stocks wronged by naked shorts.The datesthat the naked shorts
perpetrated theirmaliciousness in these examples go back to 2001.
Six examples in 4 years is not a runaway trend.
Which leads the anti – naked consortium to suggest that this lack of examples is purely a reflection of thelack of enforcement effort by the SEC. If the impact of naked shorting is significant, and its happening rampantly across the US, why arent more companies and long investors making noise on this ?
I dont know a single Wall Street brokerage that doesnt make more money when stocks go up than when stocks go down. Where is theoutrage from them ? More curious to me is that while 6 companies have been held up as companies that have been victimized by naked shorts, shouldnt there be many, many more that have seen evidence of naked shorting in their stocks and reported it to their shareholders ?
If Naked Shorting was happening as rampantly asBob O Brien and his brethren would like us to
believe,wouldnt there be more than the CEO of Overstock.com making an issue of this ?
Now Bob might argue that its happening, but the companies just arent aware of it. That the SEC and other
organizations dont do a good job of educating public companies about naked shorting, its warning signs and its impact.
I dont buy that and here is why.
To pull a page from the CSI tv shows, Naked Shorting leaves “markers” that would pose red flags in the normal course of corporate business.
Companies take shareholder votes on any number of issues. In the course of counting these votes, which across the thousands of public companies, probably happens 100k times a year, I would think that somewhere across those votes, across the last however many years, some well known company would have had to report to their shareholders and possibly the authorities that they received more votes than there were shares outstanding .
Of course the easyput down to this, is that nakedshorts dont receive notifications.So I asked myself, self I said, ifso manyshareholders have been left out of the voting process, wouldnt at least oneshareholder of a major company be aware of a corporate vote and ask why they didnt receive notification ? That might be a marker that would raise a red flag.
Which might lead to the response that a company might not make a big deal of a shareholder or two asking for the ability to vote. A rounding error that happens all the time. THe SEC hasnt educated companies, so they would ignore this warning sign.
So I asked myself again. Self I said, It occurs to me that naked shorts arent sold only in small lots to
individual investors. If naked shortselling is rampant, and the volumes far greater than we could ever imagine due to the lack of enforcement, then at some point, some big fund or shareholder , with an interest in corporate governance would have picked up a significant volume of “naked shares”, wouldnt they ? That fund is going to want to vote those shares. Somewhere along the line, if the problem were rampant (my new favorite word), a red flag would have popped up at some big public company that could have been traced to naked shorting.
Disney and HP were short favorites. How could there not be a HUGE number of naked shorts in thesestocks ? Very public corporate governance decisions, of which there have been many in heavily shorted, big market cap companies. Why not a single report from any of these companies at least referencing Naked Shorts as a governance issue ? THere is no question that if there are more votes or requests to vote than shares, thats a material issue.
Whether the SEC does or doesnt make enough of an effort to enforce the rules of Naked Shorting, a bigger
question is whether or not its enough of an issue in US Markets for them to redirect resources. I say no. Its not a problem in the USMarkets.
3. I do think that Naked Shorting could be an issue forthinly traded companies that can be traded in Canada.
There are no rules against naked shorting in Canada and companies can be targeted. As I said in my first post, this isnt a problem for well managed, well capitalized companies. Where it could be an issue is when a company is resource constrained and struggling. That bombing a company with Naked Shorts can create a governance nuisance.
I still dont think its enough to put a company out of business that wouldnt have gone out of business anyway, but it can create costs to deal with sharedholders who want to participate in governance that the company wouldnt otherwise have to deal with.
I dont know if its possible to exclude a stock from participating in Canadian markets, but it might be something small bulletin board and pink sheet companies with legit intentions to consider looking into.
4. Finally, and this has nothing to do with Naked Shorting, I wanted to reference Mamma.com. I had purchased stock in Mamma.com in hope that it could be an up and coming search engine. I thought I had done some level of due diligence. Talked to the company management. Talked to some employees who worked in sales. Read the SEC Filings. I knew that they had a checkered past and had been linked to stock promoter Irving Kott, and that their law firm still handled some of Kotts business, but the CEO, Chairman, lawyers all said that things were reformed and the company was focused on its business.
Then the company did a PIPE financing. Im not going to discuss the good or bad of PIPE financing other than to say that to me its a huge red flag and I dont want to own stock in companies that use this method of financing .
Why? Because I dont like the idea of selling in a private placement, stock for less than the market
price, and then to make matters worse, pushing the price lower with the issuance of warrants.So I sold the
stock.
I bring all of this up now, because in one of the comments in the Naked Shorting thread, a poster mentioned Lines Overseas Management of Bermuda and how there had been allegations made against them
(http://www.theroyalgazette.com/apps/pbcs.dll/article?AID=/20…)
. That rang a bell. Turns out this was the same company that Mamma.com’s current CFO used for a private placement for Mamma(http://www.sec.gov/Archives/edgar/data/839435/00010842410300…)
I said at the top that I found out some interesting things in this thread, this was probably the most interesting. I will leave you to make your own decision as to whether this connection matters or not. Im glad I sold my stock.
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Great read on naked shorting and shorting in general. A bit of an eye opener.
http://www.lemminginvestor.com/ArgumentagainstShorting.html
http://lemminginvestor.com/Nakedshortingp1.html
http://lemminginvestor.com/Nakedshortp2.html
Comment by elric -
great site with very good look and perfect information…i like it
Comment by Litfaßsäule -
According to the complaint filed by the SEC, Davidson, Beirne and Bush violated SEC regulations by covering up their short selling activity by continuously entering false buy tickets thereby fooling the system. The following day they would cancel the trades and repeat the process.
Comment by runescape money -
He games the system by transferring the legitimate responsiblity to someone who is in place simply to help execute the fraud. The DTCC has committed fraud by lending shares rather than having the broker buy-in the open market as the law requires. We have a sell-side bias then that allows the price to be manipulated down.
Comment by wow powerleveling -
good!
Comment by 11nong -
Looks good!
Your site is very good. Thank you for the opportunity to post comments.
Go on like this and i will surely visit your site again sometime.
http://www.100down.com/search.htm
Comment by download -
Mark,
I do not have a stake in any of the smaller companies that are frequently mentioned in this discussion. Nor do I know any of the major players, though I must disclose that my only equity position right now is a big long position in Berkshire Hathaway accumulated over the last year.
I am a regular joe kind of guy who has made a small fortune by age 30 in common stocks, and I think that the issues that Patrick Byrne and Bob raise are potentially serious. Regardless if you dislike Patrick’s style of presentation, you should consider his basic arguments based on whether the core argument is clear and well supported by data. An argument being true or not has nothing to do with who says it or under what circumstances it is said or whether you like the guy saying it.
With respect to Byrne and Obrien, what is going on in the media is a lot of “at the man,” not “at the argument” attacks. If you go to http://www.businessjive.com and listen to Patrick Byrne’s power point presentation, you will find a pretty clear presentation and a fairly logically persuasive argument:
1. It clearly defines what FTDs are
2. It clearly gives evidence and data proving that they do exist and that they COULD be pervasive in our system
3. It clearly gives evidence that the DTCC and SEC are being deliberately opaque for no good reason.
If you or anyone wants to discredit Bob and Patrick, attack their arguments, not their persons. I tried to attack the argument on http://www.businessjive.com and could not find any major flaws with Byrne’s presentation.
Regards,
William
Ps. If I became a fabulously wealthy overnight during a tech bubble, I would probably have bought a pro basketball team too. Could not imagine a more fun occupation. Kudos!!!
Comment by William -
This is my website – http://www.howtogtamble.net/
Comment by the online sports bettor -
Mark, It’s obvious from your perception of NAKED SHORTING, you have another agenda…
Bottom line….IT IS ILLEGAL!
So, instead of condoaning it, why don’t you join the fight to help prevent it.
Or have you been naked shorting stock for so long, it has become common place in your life?
Seems to me, you have a very scued image of what’s right and what’s wrong…maybe you should take up basket-weaving, and cover your naked short positions, before they jump up and bite you in the butt.
Comment by tokenjo -
this has been an interesting and informative discussion. i’m disappointed it seems to have dried up. it makes wall st look like a nice place to trade, but i wouldn’t want to invest there. it makes those in power look like a bunch of pirates.
Comment by JIm -
I am writing to you because of the power you hold in the United States Marketplace and Wall Street. I am sure that if someone who was employed by YOU at one of your companies, stole from the company by counterfeiting some of the companys checks, or stock certificates or personnel info….that you would take the appropriate actions and insure that the individual was fired if not prosecuted.
Now, as I initially stated above, you have a large amount of influence and POWER in what trends are excepted or rejected. Therefore I am BEGGING YOU to PLEASE take a look at the rampant COUNTERFEITING OF STOCK SHARES that has been going on in the marketplace for a couple of years now. While I understand that the stock borrowing pool had a purpose once, it’s time has now past! You are aware that this is going on in the US marketplace, yet I have seen NO REPRESENTATION by you of it’s wrongfullness. Now is the time to take a side on this issue and be a leader within the reform that MUST TAKE PLACE if the market is to continue on it’s upward climb. Therefore, I am personally inviting you to be my guest at a RALLY against the Counterfeiting of Stock Shares, on the steps of the DTCC on July 29th, 2005! Show your support for the average investors who sink their hard earned money into the companies that are being stolen away! Please respond! Thank you.
http://www.counterfeitconspiracy.com/
http://gopetition.com/online/6645.html
Comment by HndtoHnd -
Mark,
you say you have just 10 stocks. What are they?
Comment by Ben Goodman -
Interesting entry, however, if you know of only 6 companies that have been affected by naked shorting then you need to do a little more reading about the topic.
For instance the lawsuit against the DTC names over 100 companies whose share price has been eroded due to selling of phantom shares.
It is obviously a bigger problem than you care to admit to or they would not have addressed the issue with regulations against it. It is a huge problem as the Senate Hearing of March 9 confirms: http://www.banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=140
The threshold list isn’t working as they simply do not list all the companies who should be on it. The first list had thousands of names, now it’s hundreds and our company that was on the 1st one is no longer mentioned even though every day thousands of shares are being sold yet we know that no legitimate shareholder is selling them.
It obviously is bigger than you claim or why “forgive” all naked short sales prior to 2005? The amount is in the trillions of dollars and that is why they are letting the naked shorters get away with stealing money from legitimate shareholders and the issuers.
Comment by John Neufeld -
What ever happend to the success and motivation series… i was veyr much looking forward to the next part after browing through the archives!!
Comment by Fan -
Naked Shorts….Someone should investigate “The Streaming News Network” (URL/link below.) I believe these guys are posting/airing bogus interviews with various companies’ officers in an attempt to manipulate stock prices.
As an example, there is a supposed interview with the President of a company called DSL.net, ticker symbol BIZ on the website. The company’s ticker is listed as DSLN, and the company is listed as being traded on the Nasdaq. DSL.net actually currently trades on the AMEX with the ticker symbol BIZ. I believe “The Streaming News Network” is posting/airing old or bogus interviews and are changing the old dates to current dates. As a side note, they claim the interview is with the Persident (mispelled on their website) of DSL.net. Everything about that interview looks fake. I would also like to point out that (very recently) I noticed BIZ had been on the Regulation SHO Threshold Securities List….”naked shorts.” Someone should investigate this site…….
http://www.streamingnews.net/company_show.asp?TICKER=DSLN
Thanks, James….Yuba City, CA
Comment by James Parham Jr. -
J.D. Davidson’s PowerChannel, Inc. Delisted From Berlin Stock Exchange
By were they gonna ‘naked short’ him again ? on 8/15/2004 7:37:58 PM
E-mail: biodog0@yahoo.com
j.d. davidson’s PowerChannel, Inc. Delisted From Berlin Stock Exchange
E-mail or Print this story
3 June 2004, 11:12am ET
Company One of Hundreds Listed on Exchange Without Prior Knowledge, Consent
and Authorization
NEW CITY, N.Y., June 3 /PRNewswire-FirstCall/ — PowerChannel, Inc. (BB:PWRC) today announced that it has been removed from the Berlin Stock Exchange. The Company learned late last week that it had been listed on the exchange without its prior knowledge, consent or authorization.
“As soon as we learned of the unsanctioned listing, our SEC counsel took the necessary steps to effect the successful removal from the Berlin Exchange,” said Steve Lampert, PowerChannel CEO. “Apparently, information that we have come across has led us to believe that our Company, along with more than 200 U.S. publicly traded companies, were part of an organized effort by brokers to circumvent recent National Association of Securities Dealers (NASD) and Securities Exchange Commission (SEC) restrictions against so-called naked short selling. We believe this unconscionable act against our Company and its shareholders may have had a negative impact on our recent share price, and we are optimistic that the removal from this Exchange will allow our stock to trade in a more customary, regulated manner.”
About PowerChannel, Inc.
Mentioned Last Change
PWRC 0.19 0.02dollars or (11.76%)
PWRCE N/A (Unchanged)
PowerChannel, Inc. is a consumer electronics marketing company dedicated to offering a wide range of electronic appliances and services to the consumer market. PowerChannel has a unique marketing strategy that enables the company to focus its efforts on the mainstream and ethnic market segments. PowerChannel’s product line includes low-cost, through-the-television Internet access in the United States. It is bilingual, opening the door to the virtually untapped Hispanic market. PowerChannel has an outstanding opportunity to penetrate what it believes is the fastest-growing sector of the U.S. population with a product that is tailored in all respects to its audience’s linguistic, ethnic, cultural and economic needs. At the same time, PowerChannel provides these simple and cost-effective Internet access solutions to the public at large. PowerChannel also offers a variety of other consumer electronic products and service applications. For more information, please call 1-877-577-6937 or log on to http: // www . powerchannel . com .
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain of the statements contained herein, which are not historical facts, are forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the Company is detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission.
Contact: Steve Lampert 1-845-634-7979
SOURCE PowerChannel, Inc.
-0- 06/03/2004
/CONTACT: Steve Lampert, PowerChannel, +1-845-634-7979/
/Web site:
http:/ / www . powerchannel . com
/
(PWRC PWRCE)
CO: PowerChannel, Inc.; Berlin Stock Exchange
ST: New York, Germany
IN: CPR FIN OTC CSE
SU:
CH-KW
— FLTH022 —
6348 06/03/2004 11:12 EDT
http:// www . prnewswire . com
Comment by Tony Ryals -
J.D.Davidson and the Stockgate Scam:
http://www.kycalert.com/message_board_detail.asp?id=13507&page=3
Comment by Tony Ryals -
Hey Tom.
Apparently it is easier to ignore the inconvenient facts that are the companies on the SHO list than to acknowledge that the FTD’s are a real problem.
If you can marginalize your targets or trivialize them by relegating them to a pejorative category that hardly warrants attention (penny stocks) it is easier to defend the violation of the rules and the consequential savaging of the victims – after all, they are only penny stocks, or minorities, or whatnot. It is a classic and shopworn technique. And one that I am unfortunately more than passingly familiar with.
This is not the stuff that understanding is built upon, nor is it the rhetoric of honest discourse.
It doesn’t matter. It’s a free country, and everyone’s entitled to their opinions, no matter how patently false they are or how easily disproved. You can’t make someone understand, you can only provide the information. I would encourage you to press on to a venue where your efforts will gain more purchase and pay more dividends.
But that’s just me.
Comment by Bob O'Brien -
For someone who fears for his safety he certainly likes to be front and center. This just doesn’t add up. Nope, not for a minute .
Comment by Its strange -
Mark said :
>>>>>>>>>>>>>>I actually agree with you. Which also means its a non issue for any investor or trader who is honest and stays away from penny stocks.
That should allow 99.99 pct of us to realize that Naked Shorting is a non issue
If you want to fight the battle for the couple penny stocks fighting the bad guys. Go for it.<<<<<<<<<<<<<< Apparently Mark, you haven't seen this list : http://www.nyse.com/Frameset.html?displayPage=/threshold/
Not a single one of these is a penny stock. Many are also funds, like the China Fund or Mexico Fund and some are companies employing tens of thousands of people, like Delta Airlines and American Airlines.
Mark, I don’t know why you divert into always talking about Penny stocks in defending your position that naked shorting is not a problem. To each his own, but what yo say is factually wrong. It’s been pointed out here before, Maybe you don’t read all the posts or the evidence presented here. But anyone else can. Just look at the list of companies on the REG SHO list and ask yourself if these are penny stocks – None are. Most have a market cap of 500 Million to 1 Billion – even after being beaten down by naked shorting.
You don’t like penny stocks, OK we get it. What has that got to do with Billion Dollar companies like ALD (3.6 Billion) or NLY (2.4 Billion), that have an obvious and admitted naked shorting problem with their shares?
I hope you can come up with a better answer than the, “hey, it’s a penny stock…so it doesn’t matter..” one.
Another, more disturbing question is, why would this naked shorting even be possible? Why are all the powers that be – SEC, NYSE, DTCC, NASD all hiding the magnitude of the fail to delivers (naked shorting) on ALL companies traded on all exchanges? Last I heard, no penny stocks trade on the NYSE.
These powers that be, have proven they can not be trusted and you are naive in thinking that the problem is contained only in a small area of the market – and that it will remain there. It won’t. It’ll spread. Already you’re not up to speed on how far it has gone.
This country is better than that. At least I hope it is.
Comment by Tom -
Mark said :
>>>>>>>>>>>>>>I actually agree with you. Which also means its a non issue for any investor or trader who is honest and stays away from penny stocks.
That should allow 99.99 pct of us to realize that Naked Shorting is a non issue
If you want to fight the battle for the couple penny stocks fighting the bad guys. Go for it.<<<<<<<<<<<<<< Apparently Mark, you haven't seen this list : http://www.nyse.com/Frameset.html?displayPage=/threshold/
Not a single one of these is a penny stock. Many are also funds, like the China Fund or Mexico Fund and some are companies employing tens of thousands of people, like Delta Airlines and American Airlines.
Mark, I don’t know why you divert into always talking about Penny stocks in defending your position that naked shorting is not a problem. To each his own, but what yo say is factually wrong. It’s been pointed out here before, Maybe you don’t read all the posts or the evidence presented here. But anyone else can. Just look at the list of companies on the REG SHO list and ask yourself if these are penny stocks – None are. Most have a market cap of 500 Million to 1 Billion – even after being beaten down by naked shorting.
You don’t like penny stocks, OK we get it. What has that got to do with Billion Dollar companies like ALD (3.6 Billion) or NLY (2.4 Billion), that have an obvious and admitted naked shorting problem with their shares?
I hope you can come up with a better answer than the, “hey, it’s a penny stock…so it doesn’t matter..” one.
Another, more disturbing question is, why would this naked shorting even be possible? Why are all the powers that be – SEC, NYSE, DTCC, NASD all hiding the magnitude of the fail to delivers (naked shorting) on ALL companies traded on all exchanges? Last I heard, no penny stocks trade on the NYSE.
These powers that be, have proven they can not be trusted and you are naive in thinking that the problem is contained only in a small area of the market – and that it will remain there. It won’t. It’ll spread. Already you’re not up to speed on how far it has gone.
This country is better than that. At least I hope it is.
Comment by Tom -
Kevin M. West if your imaginary friend were honest he would divulge his name and past ‘trading’ activities.
If he and you were honest he and you would have a look at James Dale Davidson’s ‘National Association Against Naked Short Selling’ and acknowledge that the ‘naked short claim’ had been used for penny stock fraud in the past.
But your ‘team’ or ‘mafia’ does not have honesty as one of its objectives,only defrauding more Amercans with your scam is your objective.
Mark Cuban has comported himself honorably and intelligently by not giving creedence to your scam.
Comment by Tony Ryals -
Mark,
Concerning naked short selling, your seemingly quick assumption that something doesn’t exist simply because not enough companies are crying about it, caught me by surprise. I am guilty of making an assumption myself.
I made the assumption that you were more about really caring to find out the truth about something that could be so devastating to the financial sovereignty of this country.
Something that, if true, would greatly affect the retirements of so many American people that weren’t as fortunate as you and rely on an investment or social security to retire. Imagine, if naked short selling is as rampant as Bob O’brien is telling you it is, imagine what would happen to social security funds if/when our President’s plan for privatization of these funds take place.
Lets try and see why more companies wouldn’t come forward. Could you ever entertain a statement like companies may be AFRAID to come forward because every time they try to, the SEC ends up taking it out on them? Would the SEC actually allow something like this? The answer is NO, they SHOULDN’T. But, the SEC just enacted regulation SHO to try and stop this non-existent problem and they even “Grandfathered” in all the previous CRIME. Doesn’t this help you to believe that something isn’t quite right?
As big as you are on making sure that things that are wrong are righted, I would think someone with your status would want to really give something back when he knows he COULD make a difference if he was made to believe there is a wrong.
That’s the kind of man you are, isn’t it?
Remember this story from your childhood?
And Horton called back, “I can hear you just fine.
But the Kangaroo’s ears aren’t as strong, quite, as mine.
They don’t hear a thing! Are you sure all your boys
Are doing their best? Are they ALL making noise?
Are you sure every Who down in Who-ville is working?
Quick! Look through your town! Is there anyone shirking?”
Through the town rushed the Mayor, from the east to the west.
But everyone seemed to be doing his best.
Everyone seemed to be yapping or yipping!
Everyone seemed to be beeping or bipping!
But it wasn’t enough, all this ruckus and roar!
He HAD to find someone to help him make more.
He raced through each building! He searched floor-to-floor!
And, just as he felt he was getting nowhere,
And almost about to give up in despair,
He suddenly burst through a door and that Mayor
Discovered one shirker! Quite hidden away
In the Fairfax Apartments (Apartment 12-J)
A very small, very small shirker named Jo-Jo
Was standing, just standing, and bouncing a Yo-Yo!
Not making a sound! Not a yipp! Not a chirp!
And the Mayor rushed inside and grabbed the young twerp!
And he climbed with the lad up the Eiffelberg Tower.
“This,” cried the Mayor, “is your town’s darkest hour!
The time for all Whos who have blood that is red
To come to the aid of their Country!” he said.
“We’ve GOT to make noise in greater amounts!
So, open your mouth, lad! For every voice counts!”
Thus he spoke as he climbed. When they got to the top,
The lad cleared his throat and he shouted out, “YOPP!”
And that Yopp…
That one small, extra Yopp put it over!
Finally, at last! From that speck on that clover
Their voices were heard! They rang out clear.
And the elephant smiled. “Do you see what I mean?…
They’ve proved they ARE persons, no matter how small.
And their whole world was saved by the Smallest of All!”
“How true! Yes, how true,” said the big Kangaroo.
“And, from now on, you know what I’m planning to do?…
From now on, I’m going to protect them with you!”
And the kangaroo in her pouch said,…
“…ME TOO!
From sun in the summer. From rain when it’s fallish,
I’m going to protect them. No matter how smallish!”
What’s that sound Mark? Can you hear it?
It’s your country men/women beginning to YELL!
Thank you for your time Mark.
Respectfully,
“The Team”
Comment by Kevin M. West -
Bob chooses to maintain his security by remaining anonymous. I have other ways.
Comment by craig -
I have been reading Mr. Greenberg for many , many years now and i know perfectly well history has shown it smart to avoid most of the stocks he has flagged . I have been reading you for about a year now and i still don’t know your name. And your view NFI would be trading over $100 by now was wrong. If someone can’t find their own ass i say its the people that believe you
Comment by Its strange -
Ha ha ha ha ha ha ha ha ha.
The lapdog couldn’t find his own ass if it had a handle on it. Besides, do you think he even reads the articles he is sent to put his name on? There has yet to be one coherent or correct statement in ANY of his dross about NFI.
Then again, who needs facts when you can just declare your opinion as “expert” and print whatever idiocy comes to mind?
Go to http://www.nfi-info.net and see the multiple debunkings of the journalistic sham that is the lapdog.
Comment by Bob O'Brien -
Lets see if Sarbanes-Oxley forces NFI to explain the many issues brought up by Mr. Greenberg and others .
I am the turd ? Didn’t you call for NFI to be trading over $100 now ?
Criag Cunningham claims on the Yahoo NFI board ( number 234278 and a link provided from your site ) that you two meet in Las Vegas . Has the mafia been after him ? Has the mafia tried to force him to identify you ?
Comment by Its strange -
Boy, those naked shorters really made it hard for Krispy Kreme to sell donuts. When I went to buy one this morning, the guy at the counter told me, “Sorry, I can only sell you one. The Naked Shorters are killing us and won’t let me sell you a dozen.”
Oh, and the Naked Shorters have just killed Krispy Kreme so much that Warren Buffett has decided the comnpany is worth investing in. So I have a new conspiracy theory: Warren Buffett is behind all the naked shorting. That way he can distress the prices of companies to the point where he is comfortable paying for them. It just makes so … much… sense.
Comment by Jim Kerr -
It’s Strange:
As typical with turds, you pretend to know things that are unknowable. That is one of the giveaways.
The 10K will show substantial growth of 2004 TI over 2003 TI. My guess is that if they use the new rules, which they might, we will see $7.50 or so TI. If they use the old rules it will be $9+.
Do you have any factual basis for your statement, or is it more of the same gibberish we have been treated to with your many vacuous statements here?
Let me guess – you have nothing factual.
That figures.
Comment by Bob O'Brien -
Bob, i get the feeling NFI’s 10K just might prompt you to melt away .
Comment by Its strange -
At this point the thread is beginning to remind me of that old truism: Never get into a mud wrestling contest with a pig. You get covered with mud, and the pig enjoys it.
You were provided the example of CALM – oh, but that doesn’t fit your theory, so censor the post away. You were provided with solid examples of where you were in error about NFI – you simply chose to pretend those didn’t exist. You were shown the areas of the law that Failing To Deliver violates, and further were given the statements of the SEC that it posed a genuine danger to the system as well as to honest companies on all the exchanges – again, you just disregarded it. That is disappointing, as it requires at least the pretense of intellectual honesty to have a dialog. My sense is there is no there there, but the there is a willingness or ability to have an honest dialog.
Pity, that, as I’ll bet it is fairly rare that you encounter someone that can keep up and that forces you to think. But no one can force you, as we’ve seen.
Between the facile, sophomoric aphorisms and the Tony poop, I’m afraid that there’s not much to amuse on this topic here – the cloggers have found it and think it the height of witticism to cut and paste seemingly at random from any number of off-point idiocies. There seems to be a general reluctance to discuss substantiative issues, and when the blog king is shown to be in error, he simply censors the thread and manages his followers’ perceptions.
They deserve one another, methinks.
You now may return to the well defined, provably in error perspective that is the comfort you prefer to be ensconced in, and ignore any data that hints that you could be wrong.
Because that just isn’t possible, huh?
I’ll be back once the discovery at the DTCC is open and the level of duplicity endemic to the system becomes front page news. And I’ll be graceful about accepting the apology.
I’m big that way.
And then I’ll quietly melt away, my work here done.
Perhaps the margarita on the beach in some sleepy little hamlet well south of the border. It has a certain appeal.
Comment by Bob O'Brien -
And I’d like to know why Dave Patch and his many aliases on rb’s jagh board(now dogdays30, same as an investor’s alias,dogsday2,who he conned to going long on that fraud ?) and ‘dogkillers’and all his aliases and SIRIUS(SINCE ’99 ON RB) A LONG TIME FRAUDSTER WHO ALSO USED TO COINCIDENTALLY TOUT James Dale Davidson’s gmxx ‘naked short pump and dump scam’ on rb,has camped out at rb’s jagh board for so many years touting naked short and ‘famed trial attorney 0’Quinn’s’ legal and ethical follies.
O’Brien seems to have known or been involved with Dave Patch and his ‘investigatethesec’ penny scam tout site AS WELL AS JAGH’S Gary Valinoti .Patch’s Vancouver based ‘anti’naked short selling ‘investigatethesec’ website out of Vancouver appeared to be replacement for J.D. Davidson’s(‘the SEC lies’) fraudulent ‘naanss’ website when it disappeared in 2004 from it’s Blaine office with gmxx.
Why don’t you speak of these issues here Dave Patch ?,we’ve hweard your ‘ant-naked short’ bs far too many times as insider shares were dumped.
from DJ’s Carol Remond :
In an interview, O’Brien said that Gary Valinoti, former chief executive of Jag Media Holdings, “contributed heavily to NCANS” and provided a tremendous amount of support to the group. O’Brien said Valinoti did not contribute financially.
Valinoti acknowledges that he spoke to O’Brien once and sent him some information about trading settlement failures.
Jag Media and Valinoti sued over 100 brokerage firms, investment firms and financial institutions in 2002, alleging that they entered into a civil conspiracy to short sell the company’s stock. A judge dismissed Jag Media’s claim last September finding that the company didn’t have a viable claim. Valinoti controls 12% of Jag Media’s shares, according to SEC filings.
Byrne says that he doesn’t know who O’Brien really is. Byrne said O’Brien contacted him shortly after Overstock.com’s third quarter conference call and that they have since spoken several times.
TOO FUNNY
Comment by Tony Ryals -
I would love to know who O’Brien is and how he came to inherit James Dale Davidson’s old ‘national’ ‘anti-naked short scam’ to con investors under false pretense to go long on pos penny stock scams he was dumping.Is all this offshore-onshore pump dump and money laundering legal for an American like James Dale Davidson or ‘O’Brien’ ?
How can one run suspect anonymous letter-ads to U.S. President in post 911 era,possibly involving stock fraud,and remain anonymous ?
Comment by Tony Ryals -
Right….The donut business is / was a growth business ! It is/ was as sexy as the Ipod ! I can’t wait to hear what the DOJ has to say about KKD ..
Comment by Its strange -
Okay, so naked shorting has nothing to do with stock valuations. Stocks are being priced based on legitimate analysis on fundamentals. Right!
Lets take a look at a recent “Pile-On” stock – Krispy Kreme. Yea the poster child for finacially troubled. Of note, however is that KKD has also been qualified for Regulation SHO since the NYSE first published it’s early list in December 2004.
On December 3, 2004 the stock was trading at $10.00/share and qualified with greater than .5% of the O/S being failed. That is 300,000 shares at $10.00/share in failed status ($3M in Counterfeit sales).
By Late December KKD had reached nearly $14.00/share. Then came the news.
Krispy Kreme was having financial difficulties and may file for Bankruptcy. The $14.00 stock tanked to $5.00 but the status of failures never changed. KKD remains a threshold security. Those greedy sellers of failed trades still could not be convinced to buy-in and cover the fails. The potential 66% profit was not yet enough.
Then something happened.
Warren Buffett bought some KKD. The potential bankruptcy is still in play. The fundamentals that was the rationalization for the loss of nearly 66% of the stock remains intact, as are the fails. But the stock rose from a $5.00/share valuation to a Friday close of $7.50. That is 50% growth – ON WHAT? Can one that believes stocks are priced on valuations please tell me what the valuation of KKD should be?
There are reasons why trades must be settled and settled within a timely manner. That is to insure that the piling on affects of selling does not overly manipulate stock pricing that would otherwise not be achieved with legitimate sell side controls. KKD may be yet another example of the implications of unsettled trades.
Here is another interesting story. Time will tell soon as to whether the raid on this stock was caused by legitimate shareholder selling or whether selling was created on shares that did not exist to sell in the first place. Will the following company suddenly reach SHO threshold levels? The next week will tell. If they suddenly reach threshold list qualifications would that not imply that illegal selling manipulated these investors out of their investment capital?
http://www.thestreet.com/tech/billsnyder/10211569.html
Comment by Dave Patch -
I would love to learn who is shorting NFI naked and i would love to hear it has stopped . Perhaps then we can discuss NFI and where it gets the money for its dividend and Bob’s yahoo posts claiming NFI would be over $100 a share by now .
Comment by Its strange -
Bob, it’s nice too see how, umm, passionate you are about this naked short selling thing. I mean, heck, you could have crusaded against other illegal things like not coming to a full stop at a stop sign or hiring people who risk their lives to sneak over the US border.
The point is that there are many ways to “break the law” here in America. The fact that some laws are more rigidly enforced than others is not some vast conspiracy against a select group of people; it’s a matter of priority.
Like all crusades, the goal is to get people to listen and take action. As Cuban and others have tried to point out to you, the vast majority of alleged victims are companies at the tail-end of the publicly traded spectrum: the penny stocks. For every “innocent” company with a legitimate dream, there are a multitude of others that range from delusional to scam.
You see, Bob, the SEC and NASD don’t have unlimited resources. If you want to get them to pay you serious attention, which I presume is your ultimate goal, you need to do more than just embark on tautological rants on “moral relativism.” You need to show why your cause célèbre – your priority — should be theirs as well.
Comment by Jeff Mitchell -
Again, my friend, it’s not about the penny stocks or the $11 stocks or the $30 stocks. It’s about abuse.
Valuation is kind of meaningless in that scheme. You asked for an example of a fairly significant company that has alerted their shareholders of material risk, and you were provided CALM. You blew that off. NFI, you were shown to be incorrect in your central points. You blew that off.
The DTCC just lost their attempt to block discovery in Eagletch. That will enable us to definitively see whose perspective in fact correct.
I am open to the possibility that I am wrong, and would seek to understand any and all evidence provided in order to test my hypothesis.
I tend to operate like that.
Not everyone does.
It is easy to say that someone has lost credibility (you’ve lost all credibility, Mark – see?) or say they are talking in circles. It’s another to prove it.
I would encourage you to keep watching this topic – it ain’t over till it’s over. And it ain’t over.
I think you will see a wave build wherein the Fail to Deliver thing gains momentum and scrutiny. I could be wrong.
But I don’t think so.
Comment by Bob O'Brien -
Bob ,
what little credibility you had is gone.
Have you been drinking? Knocking back a few cold ones, thought you’d sling one onto the boards, maybe a little bored? Having us on, a little fun, heh he heeeeee….?
>>>>Nice. Typical of you.
1) Large companies are typically better capable of defending themselves against what is really just a penny stock manipulation/scam moved up the food chain to attack the $1 billion and under crowd. Criminals are typically cowards, and cowards like to pick on the weak and the vulnerable – they typically don’t like a fair fight, and don’t like an even match. That’s one of the reasons, character-wise, why they are cowards and criminals. I’m not sure whether cowards become criminals, or the other way around, but what I do know is that if you aren’t quite smart or productive enough to start your own company or do something positive, criminal cowardly enterprise is a natural fit.
>>>>>Amazing how we have gotten from NS ruining the market to big companies being exempt and criminals being behind when it happens.
I actually agree with you. Which also means its a non issue for any investor or trader who is honest and stays away from penny stocks.
That should allow 99.99 pct of us to realize that Naked Shorting is a non issue
If you want to fight the battle for the couple penny stocks fighting the bad guys. Go for it.
BTW, if big companies had issues with Naked Shorting, they would have made it public.
2) I have no idea what the hell the company in question even does, nor anything about them. Maybe they are morons. Maybe they are debt riddled. Maybe they are criminals. Maybe they have been handed their heads by the market for no good reason. Don’t know, don’t care. What I do know is that they are afforded the same protection under the law as everyone else – the special kind of arrogant moral relativism that I’m sure is just a put on for our entertainment, which somehow equates being small or stupid or weak with being acceptable fodder for illegal behavior, is at odds with the notion of living under the rule of law. I actually can’t believe you are serious with that.
>>>>Yes they are, but as I said above, all any prudent investor or trader has to do is stay away from penny stocks .
YOu have certainly established yourself as the protector of the penny stock community from Naked Shorts. Congrats. Its a crown Im sure you will wear well.
3) Same applies to the dim who are on the buy side of an equation. If they are dumb, they may well lose their money, but it shouldn’t be because someone allowed a predator to eviscerate them while standing around declaring it to be God’s will or natural selection. It may well be, but the reason we have laws is to protect the dim and those unable to protect themselves from the bad guys – those that can don’t need to worry.
>>>>>Good for you for standing up for these people.
4) So now I’m a criminal or an idiot. Huh. OK, sure. Ya got me – ya found me out. Man, you sure are smart. Whoooooo. And here I was hoping to make another 5 hundred by engaging in some penny stock swindle which I didn’t even hear about until it broke in the paper – damn you, you’ve foiled my evil plans. Seriously, you do realize that there is absolutely not one sliver of factual evidence for your charges? That it frankly seems just a wee bit, er, unhinged? I don’t mind being called an idiot or a crook – I’ve been called far worse (I was married for a while) but never supported upon such a thin reed. It is certainly possible that I am a dolt – I’ve found that most dolts don’t realize they are in fact dolts, and instead have wildly high opinions of themselves. I’m not sure I have that quality in the requisite quantity – they usually believe that they are the cock whose crowing forces the sun to rise, to quote a friend – but I’m open to considering it; then again, I am probably not bright enough to understand what you are getting at, so I’ll have to muddle along in my dim, delighted bliss. Fat, dumb, and so on.
>>>>>Talking in circles and about everything but the issue.
I had no doubt that by engaging you long enough, the argument would get to the point where it was obvious that there was no there there.
I have to admit that I was wrong inthat thought. Your argument and efforts are very valuable to those stocks that tend to trade under a nickle and those who buy and sell those stocks.
I congratulate you.
Comment by mark -
Hey Mark, wise up!
Takes a big man to admit he’s wrong.
This could be a real wave to catch.
To hell with those steroid-crazed basketball sociopaths. I bet you are as bored dealing with them as we are watching them.
Join with DDD and the rest of us and slay this dragon. The fraud and conspiracy in the DTCC could be the story of the decade, involving the biggest brokerages and the biggest republican contributors.
Are you a man of the people? If course you are. And you have the high profile to get the media to focus in on this, and the resources to get the information we need.
Use the money you made in the stock market to help clean it up. What could be better than that?
Comment by Ryan O'Neal -
Mark, are you really serious?
Honest?
Have you been drinking? Knocking back a few cold ones, thought you’d sling one onto the boards, maybe a little bored? Having us on, a little fun, heh he heeeeee….?
1) Large companies are typically better capable of defending themselves against what is really just a penny stock manipulation/scam moved up the food chain to attack the $1 billion and under crowd. Criminals are typically cowards, and cowards like to pick on the weak and the vulnerable – they typically don’t like a fair fight, and don’t like an even match. That’s one of the reasons, character-wise, why they are cowards and criminals. I’m not sure whether cowards become criminals, or the other way around, but what I do know is that if you aren’t quite smart or productive enough to start your own company or do something positive, criminal cowardly enterprise is a natural fit.
2) I have no idea what the hell the company in question even does, nor anything about them. Maybe they are morons. Maybe they are debt riddled. Maybe they are criminals. Maybe they have been handed their heads by the market for no good reason. Don’t know, don’t care. What I do know is that they are afforded the same protection under the law as everyone else – the special kind of arrogant moral relativism that I’m sure is just a put on for our entertainment, which somehow equates being small or stupid or weak with being acceptable fodder for illegal behavior, is at odds with the notion of living under the rule of law. I actually can’t believe you are serious with that.
3) Same applies to the dim who are on the buy side of an equation. If they are dumb, they may well lose their money, but it shouldn’t be because someone allowed a predator to eviscerate them while standing around declaring it to be God’s will or natural selection. It may well be, but the reason we have laws is to protect the dim and those unable to protect themselves from the bad guys – those that can don’t need to worry.
4) So now I’m a criminal or an idiot. Huh. OK, sure. Ya got me – ya found me out. Man, you sure are smart. Whoooooo. And here I was hoping to make another 5 hundred by engaging in some penny stock swindle which I didn’t even hear about until it broke in the paper – damn you, you’ve foiled my evil plans. Seriously, you do realize that there is absolutely not one sliver of factual evidence for your charges? That it frankly seems just a wee bit, er, unhinged? I don’t mind being called an idiot or a crook – I’ve been called far worse (I was married for a while) but never supported upon such a thin reed. It is certainly possible that I am a dolt – I’ve found that most dolts don’t realize they are in fact dolts, and instead have wildly high opinions of themselves. I’m not sure I have that quality in the requisite quantity – they usually believe that they are the cock whose crowing forces the sun to rise, to quote a friend – but I’m open to considering it; then again, I am probably not bright enough to understand what you are getting at, so I’ll have to muddle along in my dim, delighted bliss. Fat, dumb, and so on.
I noted that you deleted the previous incarnation to this post but neglected to delete yours, so I thought I’d repost it in the spirit of frank and open exchange. Unless, of course, you don’t want frank and open exchange…
Comment by Bob O'Brien -
Ha!
Well now, maybe we will get to see who is correct after all.
I’ll bet you a dollar you are wrong.
Depository Trust And Clearing Corporation Ordered To Produce Trading Documents
NEW YORK – PRNewswire-FirstCall – March 4
NEW YORK, March 4 /PRNewswire-FirstCall/ — Eagletech Communications Inc. (BULLETIN BOARD: EATC) , announced today that it has obtained a ruling of a New York court directing the Depository Trust and Clearing Corporation (DTCC) to produce trading records for Eagletech shares. Eagletech was represented in the motion by the law firms of Christian Smith & Jewell of Houston, Texas and Koerner Silberberg & Weiner, LLP, of New York City.
Eagletech is a plaintiff in a stock manipulation action pending in the state of Florida. It commenced a special proceeding in the Supreme Court of the State of New York to obtain certain trading reports from the Depository Trust and Clearing Corporation. Subsequently it filed motions to compel the DTCC to comply with the subpoena.
Attorney Wes Christian commented: “This is a significant victory in our on going battle to bring restitution to our clients for the brazen manipulations that were perpetrated against them. Our ability to obtain these records is essential. The judge’s clear ruling takes us further down that road.”
Comment by Bob O'Brien -
Here is how the ‘naked short scam’ ran in an Endovasc BUSINESS WIRE pr conveniently right after a pump and dump through James Dale Davidson’s Agora or’Vantage Point’.This was perhaps shortly before Davidson set up his ‘National Association Against Naked Short Selling’ that would later be taken off line but be replaced by Dave Patch and gang.
Endovasc had already filled a Schwab ‘select clients’ account(possibly LOM) with millions of shares in May 2002,while pretending a reverse split that should have left under 3 million shares in existence.
A previous pr at time of supposed reverse split claimed shareholder proportionate percentage ownership would not be effected.So Endovasc insiders dumped and diluted with James Dale Davidson,even later doing a deal with boiler room Belladorgroup in Kuala Lumpur.
Yet with ‘famed trial attorney O’Quinn’ they had the nerve to put out a pr claiming Schwab ‘naked shorted’ me so I needed to buy a ‘cert’ from Alexander Walker and his Nevada Agency and Trust Co.(who would later get $200,000 in dumpable shares as an insider)to protect myself from Schwab!!! And they named my broker as involved with naked shorting and my broker would not answer so I took the ‘cert’.But worse as I explained the broker Charles Schwab turns out to host the pump and dump account !!!!!
Guess I shouldn’t have trusted a Texas lawyer ?
Guess I shouldn’t have trusted in ‘Dr.’Summers or Judge Ken Reilly or Dwight Cantrell et.al. of Montgomery,Texas and an incorporation in Nevada and on and on.Oh what a tangled web they weave.
MONTGOMERY, Texas–(BUSINESS WIRE)–Nov. 12, 2002–Endovasc (OTCBB:ENVC) – a biotechnology company with two new cardiovascular drugs approved for final FDA phase III trials -announced today that it has — in the opinion of its consultants — uncovered an oversold position in excess of 1,000,000 shares in the company’s stock, held primarily by The Charles Schwab Corp. (NYSE:SCH), Ameritrade (Nasdaq:AMTD) and Refco. The findings are a result of an ongoing litigation intelligence work conducted in connection with the $216 million stock manipulation lawsuit filed by Endovasc and accepted on contingency basis by the legendary trial attorney John O’Quinn, who also won the record $17.3 billion dollar settlement for the State of Texas vs. Big Tobacco.
“The oversold position in our company’s stock can actually be great news for our shareholders,” says Dr. David P. Summers, Chairman and Chief Executive Officer of Endovasc. “The overselling in our stock in the past few weeks does not seem to have had a negative impact on our share price. But, if shareholders actually asked for physical delivery of the shares they bought, the market would probably have to pay a premium in order to deliver them.”
“Additionally, our Board has recently approved the issuance of a tracking stock dividend plan. But according to our plan, as approved, it won’t be possible to issue any dividends to anyone that the company can’t identify as a legal beneficial shareholder. This is why it is imperative that our shareholders contact their brokers to ask their stock to be taken out of the street form and put into physical form,” states Summers.
ALL THE TIME FRAUDDUKTUR SUMMERS KNEW DAVIDSON WAS PUMPING AND DUMPING,AND WHY NOT?, SUMMERS,CANTRELL,AND WALKER HAD ISSUED FREE SHARES TO HIM.ONLY WE NOW KNOW SUMMERS,ET.AL. IS TOO GREEDY TO GIVE ANYTHING AWAY ONLY TAKE FROM OTHERS, SO WE CAN ONLY ASSUME THERE WAS SOME UNDER THE TABLE, OR THAT DAVIDSON HAS SOMETHING ON THE DUKTUR, WHICH IS WHY ALEXANDER WALKER IS PAID SO WELL…….
Comment by Tony Ryals -
Notice the spread or re-spread of the ‘meme’ for ‘naked shorting’ through the internet and most particularly message boards of questionable penny stocks.
Not only did ‘O’Brien’ open or re-open his own website devoted to this phenomena,(only slightly less elusive than tracking flying saucers),but penny stocks across the board are using it for touting again just as in the earlier days of 2002 when James Dale Davidson perhaps was the first to pioneer a website in its name.
With the ‘meme’ for ‘naked shorting’ spread particularly through internet come other erroneous beliefs designed to lure the already desperate ‘investor’ into variations on the scam of going long ‘to fight the evil naked shorters’ while insiders to the scam dump. One going around right now on ragingbull’s cmkx and other boards is to ‘buy a cert’ to protect yourselves from naked shorting,same as James Dale Davidson and Endovasc and GMXX promoted certs through what turned to be insider transfer agents for whom anything appears to go for a fee.I believe the transfer agents could expose the ‘naked short scams’ more than mms.
Anyway below is another scam site devoted to the same cause and no doubt a production of insiders and touters who wish to sell the illusion of ‘naked shorting’ to shareholder victims.And of course it links with its fellow website in the ‘naked short tout scam’,NCANS.
NCANS: Today, we contact Baltimore Times Newspaper
http://www.ahandup.us/NSS_Abuse_Plan.htm
///////////
(quote)
Do a Kind Deed for Someone Today and help “MAKE THE WORLD A BETTER PLACE”
A quick way to get the media’s attention!
We want to do our part to help get the story about the Naked Shorting Abuse out in front of the media. If everyone writes their media one at a time, it does little good because the editors only see a couple of letters.
We have decided to find one major newspaper in one major city per day and make a link available for everyone to be able to hit one paper everyday as a large group.
This way, each paper gets maybe 200-1000 letters within 24 hours and they know they have readers wanting to know what is up with the Naked Shorting Abuse issue. Tell all your friends and relatives and get them to do the same and this number can grow to thousands of letters.
/////////////////////
What to do: It’s extremely simple.
Go to the link below and you will be taken to a form for the paper of the day.
http://www.ahandup.us/NSS_Abuse_Plan.htm
At this form you will fill in your comment and optional name / e-mail address.
You can copy and paste any one of the various articles from our links below or write your own comments concerning the Naked Short Abuse issue.
Please address the NSS issue in general and tell them how hot the news is and how fast it is spreading.
Comment by Tony Ryals -
Mark,
Do you seriously think that the hogwash that you are telling here is to be even read (forget about anything else), somehow it all starts to fit .. buying of mama.com …. subsequent selling … it all adds up ….No sense even writing here.
Comment by mumbaiguy31 -
Ripley, Believe It Or Not: 70M Shares Trade After Michigan Man Puts Them All in Sock Drawer
(financialwire.net via COMTEX) —
March 4, 2005 (FinancialWire) A Michigan man, Robert C. Simpson, who claims to have acquired 100% of the issued and outstanding stock of Global Links Corp. (OTC: GLKCE), if true, is likely to become the poster boy for those opposed to illegal naked short sales.
Illegal naked short sales have mostly victimized small companies such as Global Links, but has also been cited as problematic for large companies such as Martha Stewart Living OmniMedia (NYSE: MSO), Krispy Kreme Doughnuts (NYSE: KKD) and Overstock (NASDAQ: OSTK), whose CEO is said to have helped write a national ad on the subject in the Washington Post directed to President George Bush.
Simpson filed a U.S. Securities and Exchange Commission Schedulce 13D ( http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=3299823) on February 3, showing his purchase of and sole voting power for 1,158,209 shares of the corporation.
Yet, here’s the rub:
The day after Simpson purportedly stuck every last corporate certificate for Global Links in his sock drawer, the company traded 37,044,500 shares. The next day it traded 22,471,600 share. Thursday it traded 199,616.
Simpson is said to have gone back to his sock drawer, and despite the fact that a sock or two, as is always the case, were missing, all 1,158,209 Global Links certificates were still there.
Observers are asking where those other millions and millions of certificates are therefore coming from.
Hmmmmm.
The San Antonio Express-News raised the question this week as to how Congress could seriously consider placing Social Security into what it inferred is a “mess.”
Comment by Corey Griffith -
Mark,
To divert my subject for a second, Management is a Company cannot naked short stock. ONLY Wall Street can. Managment has no control over a security in terms of trading once those shares are in the hands of the public.
Now to a more simplistic look at why naked shorting is not only illegal but harms the entire financial system (As Defined by the Securities Act of 1934)
Section 17A of the Securities Act requires prompt and accurate clearance and settlement of all trades. It states that this is necessary to protect the investor and the industry. When a naked short is entered into the system here are two damaging events that can take place:
1. During Proxy periods, individuals who thought they owned the rights that come from ownership are denied such rights as the stock they own is a journal entry without pedigree from the issuer. This diminishes the value of this person’s holdings over a one whose shares settled. Under a legal short, the loanee has given up rights to vote as part of their margin agreement. No such agreement was created on a failed trade due to naked shorting.
2. When companies file for bankruptcy and ensuing class action lawsuits come out of it, shareholders will sign up for the lawsuits based on an account statement. When settlements are made, the settlment is divided up into those who were part of the lawsuit. Except…Some of those individuals may not have been legitimate shareholders. The company was paying out a settlement to individuals that purchased securities that never settled. The company overpays or…the real shareholders got a reduced value settlement because they had to pay off people that were not even owners.
In this case of a class action, Wall Street and the illgal short seller both benefitted from the bankruptcy. The short seller was actually able to sell shares that did not exist and pulled investors into the stock by selling into the market and keeping the prices depressed. Lower stock valuations pulled more victims into teh stock than otherwise would have been there. Now that the Bankruptcy took place, the short seller may or may not ever cover and the Unsettled shares become a burden of the Company and not the financial burden of the Wall street firm holding teh bogus shares.
It is for these reasons that the Securities Act of 34 mandated prompt and accurate settlement of trades. Shareholders must have rights and financial obligations must be clearly defined.
Who has recently filed for bankruptcy – Tower Automotive. According to the NYSE, they have been oversold with unsettled trades since before December 3, 2004 and they remain on the SEC’s threshold list as a Pink Sheet today. Thay are down 83% since in this period. They also have the Class Actions all lined up against them.
There are many reasons why naked shorting is against the law, these are just more reasons. All trades must settle for the safety and value to the Financial Systems.
Comment by Dave Patch -
Mark,
You are tarnishing your image and it doesn’t seem like you care. Where is the guy that did not move his season ticket seats after he bought the Mavericks? To each his own. I went from admiring you to thinking you have not once ounce of credibility in a New York second. Is it possible you don’t have an ethical bone in your body?
Comment by Eric Engen -
So if I can sum up your last statement mark…
1) Scamming is ok and anyone that gets caught in a scam is dumb and deserve it.
2) Naked shorting, while illegal, is a fact of life and you just have to deal with it. Sorta like mosquitos.
Did I pretty much capture it right?
Comment by mfv -
well bob, atleast you are modifying your rant “What we are seeing are smaller, weaker companies being sold into the ground by ” to limit the impact to smaller, weaker companies.
And as far as GLKCE.OB, 1 of 3 things is happening here and they are all bad
1. The management of that company are the dumbest human beings on the planet. They supposedly own a building in Vegas and 1k lots in Arizona and someone was able to buy all the stock for 5 grand.
2. The people buying the stock are the stupidest people on the planet and they get what they deserve for not reading any of the filings. The SEC shouldnt do anyhing. People that dumb deserve what they get. The information is there
3. Most likely, the company mgmt knows exactly what its doing. They are scamming anyone that will listen to their “look what the naked shorts are doing to us” song by naked shorting the stock themselves and selling it to the idiots that are buying it from whatever bucket shop.
5cents a pop on a few million shares adds up.
If management naked shorts the stock, there is nothing for them to report to the SEC, since they arent doing it legally anyway., A clever scam. Question is how long before someone gets thrown in jail on this ?
So Bob, are you being used in this case and you are aghast, or are you making money off of it ?
Comment by mark -
Post #30 – Mumbaiguy
The law DOESN’T allow the hedge fund to do what many suspect they are doing – it is the regulators NOT enforcing the law that is the issue.
To be clear, the rules and regulations against the practice of failing to deliver/naked shorting is quite clear – but if those chartered with policing the system don’t actually require that the market participants adhere to those rules – well, that’s the problem, isn’t it?
I think Mark’s disconnect is that he is arguing a philosophical, namely if a strong company is being attacked via legal shorting and a little naked shorting, is it a big deal in the long run?
What we are seeing are smaller, weaker companies being sold into the ground by a system that has no interest, motivation or ethic to follow the rules – which are apparently only there to make the participants appear more honest to the gullible unwashed masses, who deserve what they get if they are foolish enough to put their money into the market.
The two worldviews are inconsistent, mainly because the first one doesn’t admit that it is possible that the second one exists in quantity. The second one includes the first one as part of it, and then additionally explains the data set that the first simply dismisses or filters out. My sense is that it is a troubling, yet more accurate picture, of the actual state of affairs. And if correct, it also explains why so many have so much wrapped up in keeping the systemic grift from becoming evident to the public.
Mark actually has an opportunity to look behind the curtain here and expose a critical problem with the markets. As the article preceding this indicates, there are abundant examples one could find of a bad situation – Jag media just had a vote where folks with 800K shares that voted all of them had 1500 “show up” at the company. And on and on and on. Ample evidence exists. The question is what will be the response to the evidence.
That’s always where the wheels hit the road.
Comment by Bob O'Brien -
How odd…
—
Friday , March 04, 2005 07:14 ET
(financialwire.n e t via COMTEX) –March 4, 2005 (FinancialWire) A Michigan man, Robert C. Simpson, who claims to have acquired 100% of the issued and outstanding stock of Global Links Corp. (OTC: GLKCE), if true, is likely to become the poster boy for those opposed to illegal naked short sales.
Illegal naked short sales have mostly victimized small companies such as Global Links, but has also been cited as problematic for large companies such as Martha Stewart Living OmniMedia (NYSE: MSO), Krispy Kreme Doughnuts (NYSE: KKD) and Overstock (NASDAQ: OSTK), whose CEO is said to have helped write a national ad on the subject in the Washington Post directed to President George Bush.
Simpson filed a U.S. Securities and Exchange Commission Schedulce 13D (http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=3299823) on February 3, showing his purchase of and sole voting power for 1,158,209 shares of the corporation.
Yet, here’s the rub:
The day after Simpson purportedly stuck every last corporate certificate for Global Links in his sock drawer, the company traded 37,044,500 shares. The next day it traded 22,471,600 share. Thursday it traded 199,616.
Simpson is said to have gone back to his sock drawer, and despite the fact that a sock or two, as is always the case, were missing, all 1,158,209 Global Links certificates were still there.
Observers are asking where those other millions and millions of certificates are therefore coming from.
Hmmmmm.
The San Antonio Express-News raised the question this week as to how Congress could seriously consider placing Social Security into what it inferred is a “mess
Comment by mfv -
Funny how Tony likes to attack the person and can’t argue against the issues. Bob is a serial rapist! Bob likes to club baby seals. Bob is a terrorist! Well if you have money with O’Brien Enterprises, I suppose you’re screwed.
How about arguing the issue of, as someone so correctly pointed out, “Unsettled Shorting”.
Oh, you can’t. Talk about one trick pony…
Comment by mfv -
This is from yahoo’s nfi board where ‘O’Brien’,or’dirtydirtydeeds’,as he calls himself there,has had a track record,but it doesn’t look good.Perhaps it is those who have no perception who are drawn more to manipulation.:
Subj: dirtydirty changed his story
By: larry_walterbyrd
Date: 03/04/05 12:36 am
A year ago at the very top he said:
“I say short away, more cheap shares subsidized by fools”
How cheap were those shares at twice today’s price dirtydirty? I wonder how many people you suckered into the stock at the high?
But at least you sounded authoritative when you were recommending the stock at $70/share and telling people it had $100 of upside.
100% snake oil salesman
Subj: ddd
By: pdaamort04
Date: 03/04/05 12:43 am
We all knowthat close to a year ago DDD gave really bad advice. We’re all pretty sure that the naked shorting push is his response to his really bad advice. He’s a person that can’t deal with giving really, really bad advice, but has to find why other events/etc would have made his advice ok!! that doesn’t or hasn’t worked. the net; DDD has been a real negative for advice. history suggests that; the anniversary show will demonstrate that.
More shorts – it’s true
by: dirtydirtydeeds (43/M/las vegas)
Long-Term Sentiment: Strong Buy 03/23/04 11:26 am
Msg: 120084 of 276580
That’s what makes a market, I guess. One of my contacts at a large house indicated that there’s some new, relatively small shorts coming in. 10K share range.
There’s a fool born every minute.
But that explains the relative availability of shares. Same as it ever was – shorts at work.
They are going to get killed at the close. Just like yesterday, I’ll bet.
Once the shorting dries up this rockets. Because very few real long shares are being sold. My broker buddies concur that it appears to be churning and shorting.
Same as it ever was. I say short away, more cheap shares subsidized by fools. Every short up until now is underwater unless they shorted today at the top, and those will likely be underwater by day’s end.
This isn’t hard. LEND up, FBR up, TMA up, ANH up, NCEN up…Up we go. My bet is close mid 70 dollar mark or even $71. We shall see. Note – I suck at predicting daily moves.
But at least I know it.
Comment by Tony Ryals -
http://www.ncans.net/sanitycheck.htm
This is a brief excerpt from ‘O’Brien’s’ latest fiction or prediction called hee heee ‘Mama Ju Ju Say’,link above. I still ask myself,am I reading it correctly ?
‘O’Brien'(HEE HEE)predicts :
1)I think we can expect an SEC investigation into the company or Dr. Byrne – probably an informal inquiry, as those are easy to initiate – all it takes is a staffer to write a letter. It will be purely for headline value, or to build a case, as the SEC tends to dislike folks who draw attention to their failings, which Dr. Byrne has been doing of late.’
2) I think we will see a nasty C section of the Journal or Barron’s or whatnot article filled with alarming predictions and half truths, which may or may not mention the investigation – the sequence I’ve seen is either the investigation is driven by the article, or the article by the investigation – it can work either way.
3) The class action squeegee boys will file suits based on the premise of either wrongdoing, or a precipitous drop in price. Again, doesn’t matter if there is no merit – it’s all designed to get the price tunneled and to let the shorts get out with their skin.
It will be interesting to see this play out. I have never, ever not seen the above take place when the hedge fund in question runs into trouble, or gets it wrong. It’s a standard part of their playbook.
Consider this notice that the tactics are well understood, and that we are all watching and waiting for these next shoes to drop – perhaps some emails to the SEC and the FBI and the DOJ to alert them to the likelihood of this being next would be in order.
Feel free to send them this article, as well as the transcript from the call, and warn them that this is part and parcel of an illegal stock manipulation tactic, and to be on the alert for it. Who knows, maybe it will stop this crap from happening over and over and over, with our regulators breathlessly expressing surprise that anything like it could be contrived, much less used as part of an orchestrated manipulation.
At some point someone has to put a stop to this. Maybe this time it will be you. Stranger things have happened.
O’Brien NCANS . NET
Comment by Tony Ryals -
A letter to the editor from Mary Helburn the executive director of NCANS.NET. I wonder why she’s not afraid of the old ‘horse head in the bed’ trick ?
It seems Davidson,I mean ‘O’BRIEN’,IS USED TO HIDING BEHIND WOMEN OR AT LEAST TRYING TO AS HE ALSO GAVE A FALSE ADDRESS IN LAS VEGAS RELATED TO A STRIP JOINT.
A letter from Mary Helburn,NCANS
Bare truth about naked shorting
Dear JUST Response and Joel Hirschhorn,
Re: Economic corruption US style
Wall Street depends on volatility, and volatility is a function of news. Reuters owns Instinet. We should be able to invest in a company without worrying that its capitalization is going to be withdrawn by short-sellers. We should be able to invest in a company without worrying about the DTCC watering down our investment with counterfeit shares. Bob O’Brien is a real person. I admire him so much for what he is doing and because of him I was willing to put my real name on this.
The rules have changed to suit the foxes. This one is the most subtle and lies at the heart of the fraud. A broker hires someone to locate a share to borrow. This gives him “reasonable expectation of delivery”. When the shares are not located and becomes an FTD, the system kicks in and the DTCC prints up a new counterfeit shares borrowed from the pool they control. Wham, bam, thank you, Mam! He games the system by transferring the legitimate responsiblity to someone who is in place simply to help execute the fraud. The DTCC has committed fraud by lending shares rather than having the broker buy-in the open market as the law requires. We have a sell-side bias then that allows the price to be manipulated down.
I think George Bush earnestly believes in this privatization and I also believe that Charles Schwab is behind it. Schwab was behind the tax cuts and consults with the President.
The whole system is pretty complex. People’s eyes glaze over when you start talking about naked shorting. Two per cent doesn’t sound like much to start, but it is a huge amount to be administered by the banks and brokers. It is 2% more than the banks and brokers currently have. They are fighting for market share with decreased commissions and that is why the market is becoming so nasty. There are going to be take-overs. The NYSE will probably go public and be owned by the seats. It will eliminate the specialists and compete in the pre/after hours.
I would like to ax everyone at the SEC since they have failed. I would like a prosecutor-type to come in with a scythe and cut off heads. In Japan, this kind of failure would call for suicide. Is there anyone that has the integrity to pull this off?
Your article was so good and so deep! Thank you.
Thanks again for taking a lead role in exposing a huge and important issue.
Mary Helburn
Executive Director
National Coalition Against Shorting
Cleveland, Ohio – USA
Note: This letter was published by JUST Response on February 27 2005.
Comment by Tony Ryals -
I feel ungratious posting in Mark’s thread – I hope he doesn’t mind as there is no where else to discuss this anonymously.
Most CEO’s keep their mouths shut.
Mark has brought up intelligent points and I agree that most companies that complain about shorting deserve it.
I am in high tech and I short all the time when I think a play is overvalued. I’ve made a lot of money both long and short based on my understanding of technology.
I’ve also been bought in on short plays where I was right including one on the SRO list. I lose money even though I am right and the stock goes down to nothing. It’s annoying. I asked my broker why I couldn’t naked short and he said that’s left to the big boys.
It is a bit inaccurate to use the term naked shorting as it brings up naked puts, naked calls, etc. which are legal and which I also do all the time.
Instead, this issue should be referred to as “unsettled trading” which means the buyer doesn’t get what he paid for which should be guaranteed to settle in three days. Definitely illegal.
When a broker sends a confirmation slip, I think it could constitute fraud as they are confirming delivery of something that hasn’t been delivered.
Believe it or not, there are a vanishingly small minority of genuine OTC companies that are laying off staff and failing because they are being manipulated.
Imagine a scenario where a Microsoft type company is shorted into the pennies because it is in R&D with no revenue and the shorts believe it will dilute at ever lower levels to stay alive.
Instead of going to the market, I’ve treated it as a private company – I donated salary without taking shares, mortgaged my holdings to buy stock in the pennies and pulled the cert., lent the company money, etc. because I want the investors that believed in us to be rewarded. If someone bets on me and we win, they should get the pay off.
We originally went public through a reverse takeover of a mining shell and most of the initial money came from family and friends (and their family and friends) who I don’t want to screw.
To be honest, I thought that by drying up the float, the shorts would have to cover. I didn’t understand the game was fixed.
It took several years, but we’ve turned the corner and are getting huge contracts, we’re profitable and we don’t need to go to Wallstreet and will never do another financing unless it is our choice.
We announced our biggest deal in our existence and I was astonished to see the stock fall 50% the day we announced it (even though the trading volume exceeded the float).
My phone was off the hook with investors calling to say they were buying but wanted to know why the stock was plummeting.
Now the SEC is asking us weird questions about revenue recognition.
We announced another huge deal and the stock traded huge volume without going up a penny even though no one with a position above 100,000 shares was selling.
Some days, I get 20 hedge funds calling looking for a placement or to loan insiders money securitized by their stock. “Don’t worry, we can lend you x millions of dollars and you don’t have to file insider trading. It doesn’t matter if you never pay us back, the loan is below prime and non recourse”.
Then I had friends and relatives calling telling me their brokers were telling them we were a scam, we were going bankrupt, etc and begging them to sell.
Or, never buy OTC companies even if they are good because the shorts will drive the price down and you can’t fight the OTC conspiracy. Brokers actually told that to my investors.
The coup de gras was when my grandma was distraught because her broker told her that I was a scammer and she needed to sell before the stock went to zero. She didn’t know what to tell the other old ladies in her complex as she had bragged about our huge successes and hadn’t realised I was a stock scammer and I had been lying to her.
She only owned $1000 worth of stock, but it created a huge emotional issue for her in a company I’ve built up for many years privately before going public.
It was this incident that made my blood boil.
I’ve intentionally not used my own name because Mark is right – companies shouldn’t complain about being shorted because it brings negative attention.
I know we are naked short because I had my own control position in electronic form. I fought for six months to get my certificate, hearing everything from you can’t pull it without filing insider trading to the company or transfer agent is holding it up. I could see my broker didn’t have even a fraction of my position when I looked at the sheets.
The SEC will not intervene as they consider certificate issues to be controlled by state law of the state where the company was incorporated. Unfortunately, the states don’t have authority over a brokerage out of their state. In other words, if you own an IOU instead of a cert., you have no way of getting your cert.
Mark says to borrow money to go private, but R&D and minimally profitable companies can’t borrow money to go private.
I’m not worried about our case as I see it as an opportunity. Through luck and hard work, we are past the dark times and we are 1 of 100 good companies that were able to survive the attack of Wallstreet without going under.
When our profits grow, we will buy back shares and cancel them. We plan to go to a senior exchange this year and we should show up on the SRO list (it doesn’t seem to list OTC companies).
We were able to get over the hurdle.
What about the other R&D companies that thought the OTC public markets would provide financing to only discover they bankrupt most start ups. How much human progress and economic success has been killed? How many investors were right at picking the next Microsoft only to lose everything?
Anyway, a word of advise to anyone reading this.
If you are investing rather than trading, ask for your certificate.
You get 100% voting rights and your vote isn’t scaled down, you get full dividends (even if the dividend is a private sub instead of cash) and you aren’t at risk if your broker goes bankrupt.
And Mark – ask yourself why the SEC banned certificate only trading that protected companies from the DTC if there was no problem. Even if you agree with naked shorting, there is a huge opportunity for you as this issue comes to light.
I don’t know who O’Brien is and it shouldn’t matter. This issue is bigger than any one person.
For my company, I am worried about derivative lawsuits because of lack of disclosure about naked shorting even though I have no proof. I had a DTC report where a house came up with a negative position. I called the DTC for an explanation and they said “that doesn’t happen very often, but it should be gone by next report as it is expensive to go negative”. I asked for a further explanation and I got referred from person to person until no one called me back.
The DTC’s nominee is Cede and Co. Look up the word “cede” in a dictionary…
Comment by dennis louw -
Gayle Essary’s ‘Financialwire’,or Dave
Patch’s ‘investigatethesec.com’ – (both used to tout the massive ‘naked short scam’),are – like the ‘new’ NCANS and the now disappeared NAANSS that was run by James Dale Davidson – a many headed snake.Same with ‘The Faulking Truth’.
Davidson touted such penny stock pump and dump scams as gmxx,evsc,etc..STLOF,that had a pr agreement with Davidson’s short lived ‘ICI’, also coincidentally dumped from LOM’s Schwab or other U.S.accounts.Then,no doubt, the money was sent offshore by Charles Schwab for its and LOM’s ‘select clients’,thus avoiding the need to even pay taxes on illegal gains from pumps and dumps out of Schwab,VFinance,etc.,U.S. accounts.
This is not only defrauding Americans or other U.S.retail purchasers of these same U.S. ‘securities’ through the illegal pump and dump activities but also the IRS out of taxes they would have received had U.S.taxpayers not been defrauded.
Paradoxically Davidson founded the ‘National Taxpayers Union’ yet will defraud his fellow Americans through pumps and dumps and naked short scams to cover it up and take their money overseas to avoid taxes on what this ‘patriot’ steals from his fellow Americans !!! I guess patriotism is the refuge of scoundrels which explains why Davidson likes the word ‘national’in his self-dealing organizations’ titles.
The Battle Against an Imaginary Enemy Takes a McCarthyesque Twist
The recent implementation of the Threshold Security lists by NASDAQ, NYSE and AMEX has embarrassingly demonstrated the lack of the huge naked short selling conspiracy as claimed by the pump and dump and anti naked short selling community lead by “stockgate” evangelist Gayle Essary using his self proclaimed “independent” news service, Financialwire. Essary’s response has apparently been to create naked short selling abuses where none exist.
With the absence from the Threshold Security lists of many of the companies actively blaming naked short selling for stock price declines that were most likely the result of massive insider sales, Financialwire and its sources have found a new enemy in a “stockgate” conspiracy.
Suggesting an ongoing conspiracy between the Depository Trust Company (DTC) who is the clearing agent for market activity, brokers and even the SEC itself, anti-naked short selling forces have managed to keep the alleged naked shorting scandal alive temporarily, but the cause apparently needed someone to point to as proof. Essary and Financialwire provided just such a scapegoat when the SEC filed suit against David Davidson, Lloyd Beirne and Brandon Bush.
The only problem was, naked short selling isn’t a part of the case.
According to the complaint filed by the SEC, Davidson, Beirne and Bush violated SEC regulations by covering up their short selling activity by continuously entering false buy tickets thereby fooling the system. The following day they would cancel the trades and repeat the process. This allowed them to effectively hide their true margin requirements on the rising stock. The plan fell through when the stock they were shorting, Expedia, Inc, jumped in value from $38.90 to $47.15 in one day when the largest shareholder in Expedia announced his intention to purchase the remaining stock of the company. This forced an $18 Million buy in and blew the conspirators’ cover.
In a February 22 article, Financialwire reported on the SEC’s action against the trio with an attention grabbing headline of “SEC Action Against One Broker Naked Shorting One Company Hints At StockGate Magnitude”.
Noting the lack of any mention of naked short selling in the SEC’s complaint we contacted the Philadelphia office of the SEC and were referred to, and spoke at length with, David Horowitz, assistant district administrator in the SEC’s Philadelphia office. David assured Our-Street.com that the SEC had no reason to believe, and was certainly not alleging, that Davidson, Beirne or Bush engaged in naked short selling while committing the offenses they are accused of.
Horowitz went on to confirm that this particular case is about illegally covering up a short position using phony buys to avoid margin requirements and has absolutely nothing whatsoever to do with naked short selling.
Gayle Essary, Investrend and Financialwire were recently awarded the “Wolf in Sheep’s Clothing” 2004 Scammy for the best imitation of legitimacy by a scam and this latest example of irresponsible journalism is yet another example of why this award was so well deserved.
Another Scammy documenting the use of naked short selling as a scapegoat for insider abuses went to Richard Altomare, CEO of Universal Express (OTCBB: USXP). Altomare won the award for “Worst attempt to blame short sellers while insiders dump stock into the market”
http://www .our-street .com /newsletter / newsletter28feb .htm
Comment by Tony Ryals -
Hi Mark,
It is very easy to misunderstand what is actually happening here, If you thorughly analyse a couple of companies which are victims of Naked Shorting you will understand the magnitude of what is happening, it has very nefarious designs The capitalists society is in danger, think if you could just buy any stock as much as you want without ever having to pay for it what can happen, Check a couple of companies and you could even get a couple of investment ideas, you said tech is your strength lets see there is a company OVTI Omnivision technologies its become a victim of this nefarious plot. Let us see if you can find a red flag in the company please go back atleast a year and then comment what is happening, its the same hedge fund which is shorting OSTK and NFI and NFLX and many others, they are able to abuse the system because the law allows them to do so. It has to be stopped, Maybe after undestanding the gravity you might also start to actively champion the cause.
best to Mavericks.
Comment by mumbaiguy31 -
Why ‘O’BRIEN’,for someone not attached to James Dale Davidson you sure are sensitive about LOM that Mr.Davidson has run much of his pump and dump fraud out of,even recommending it in his book,’Soveriegn Individual’.I’m most surprised the SEC did not ask LOM for its GMXX OR GENEMAX RECORDS – YOU KNOW, THAT PUMP AND DUMP THAT WAS JAMES DALE DAVIDSON’S POSTER STOCK FOR BEING ‘NAKED SHORTED’.
Oh a little off topic but did you read email I received from James Dale Davidson and posted here ? Isn’t it eerie how similar your writing styles and attitudes are ? More worth noting, or probable,I would say than Vince Foster’s handwriting being a forgery which is what your partner in similar crime,James Dale Davidson, paid a handwriting ‘expert’ to swear to.
Comment by Tony Ryals -
Post lots of meaningless dribble so the readers get board,, Well jeff and tony ,, You will have your day in court…
Comment by Troy Wine -
So the Jeff and Tony tag team (same dolt?) who believe that I am someone else based solely on the name of the organization sounding somewhat like the name of another organization continue their drivel.
Here’s the logic: Cat sounds like rat. Therefore rats are cats.
That’s it. The whole thing. I haven’t left anything out. NCANS seems to them to sound or look strangely like NAANSS – absent a hard consonant and plus a few more letters. Actually the cat/rat thing is not a good simile – more like cat/carts. All carts are cats, or all cats are carts.
The only one the absurdity of this conclusion seems to be lost on is tony/jeff. Why, no one knows. They are diligent about clogging any thread of substance with this poop, though, almost as though they had an agenda…
Wonder why that is?
Comment by Bob O'Brien -
Above URL got butchered by the blog parser because it was too long. To access the above link, try cutting and pasting the following into your brower’s address line:
http://www.stockwatch.com/swnet/newsit/newsit_newsit.aspx?bid=B-358778-c:*SEC
– Jeff
Comment by Jeff Mitchell -
Explicit details on Lines Overseas Management’s troubles…
SEC wants info on two Vancouverites in LOM matter
2004-06-25 17:02 ET – Street Wire
by Stockwatch Business Reporter
http://www.stockwatch.com/swnet/newsit/newsit_newsit.aspx?bid=B-358778-C:*SEC&symbol=*SEC&news_region=C&name=Securities+and+Exchange+Commission&title=SEC%20wants%20info%20on%20two%20Vancouverites%20in%20LOM%20matter
Comment by Jeff Mitchell -
At least they(lawyers ?) warned you about the horse head in your bed. Is it still warm ?
What a fraud you are ‘O’Brian’ but the fact that they allow you to rob others blind says little for what America has become.
Comment by Tony Ryals -
I’ve thought about setting up a blog, but frankly my time is so badly constrained at present I don’t think I’d be able to do it justice. For example, this is hour number 17 today on this sort of thing – I’ve done several interviews, am working on some articles, and get about 200 or so emails per day, easily, that I try to respond to. Maybe if things ease up a bit….nobody told me that taking on the whole US financial system would be time consuming….
As to the Canadian thing, don’t even get me started. But I honestly believe you have to chose your battles, hence my focus on keeping the scope definable and solvable – the 60 or so US companies on the SHO lists that have larger caps. You make it too big and it’s like AIDS in Africa – too big for anyone to want to tackle solving. I liken it to eating an elephant – one bite at a time. Nobody will sign up for a problem that is so huge it can cause a mushroom cloud over Wall Street – so give them a problem that is solvable, and then worry about the rest later. Show them an elephant foot, and give them a fork and a knife – a more easily digested portion.
As to the SRO and the lack of micro caps, I’ve heard three decent theories – actually discussed them with one of the preeminent professors in the country today, whose specialty is trading systems and such. It is either that A) In the first few days of the list they were counting things incorrectly, and now that they are doing it correctly there just aren’t really any with that level of fails; B) The reporting for the BB and OTC stuff is so badly broken at the transfer agent level that the reports are gibberish and are resulting in GIGO; or C) There is a conspiracy that is being perpetrated and they are the least likely to be able to defend themselves – bankruptcies waiting to happen – so nobody is bothering with defending them or enforcing the rules at that level. Sort of a they deserve what they get as they are all scams anyway mentality.
I believe it is a combination of all three. So does he. We are in agreement that a system that has complete opacity is useless for much of anything but larceny. And the clearing and settlement system is opaque. Further, the DTCC wants to have everyone believe that they are quasi-governmental and thus afforded a certain latitude, which is complete horseshit if you think about it – the board looks like a who’s who of Wall Street Brokers, and they distribute hundreds of millions to their stakeholders. There’s a new suit being brought against the NASD that will be helpful there – apparently they like to have quasi-governmental status when it suits them, and private company status when it suits them, too. No wonder that mindset is prevalent, as the NASD and the NYSE are owners of the DTCC/NSCC. This is all going to hit the fan pretty soon, my guess is within this year, so it will be fun to watch the fireworks as the rats all scramble for cover.
Comment by Bob O'Brien -
Bob, have you thought of setting up a discussion thread like this on your site, so we don’t have to clutter Mark’s page? There are probably other officers that would feel more comfortable discussing what they know in this sort of forum.
I think the biggest problems are with other depositories such as the Canadian Depository for Securities. The Canadian brokers seem to be able to regularly have far less stock with the CDS then their customers have with them.
There also could be issues with Canadian brokers that claim to have stock with both the CDS and DTC. I think it could be double counted. The DTC shows it with a double asterisk.
Why doesn’t the CDS stick to Canadian securities. Canadian brokers who want to trade US securities should have to clear through the NSCC in the US. If all clearing took place in the US, the SEC could more easily regulate.
There also seems to be problems with other clearing agencies and brokers that trade on behalf of boutiques.
It’s funny Mark mentioned mamma.com. That traded like it was being heavily naked shorted.
I agree with Mark that this will really come to light when someone tries to buy a little OTC company only to find that the 50% of the company they thought they’d quietly bought up isn’t real and they can’t vote it.
Bob, any thoughts why there are almost no OTC stocks listed on the SRO lists?
Comment by dennis louw -
Dennis:
Interesting. I am aware of other companies whose votes were seriously compromised. You might want to drop me a line some time – NCANSinfo@gmail.com – it’s always interesting to compare notes and compile data.
And fortunately now the SHO list provides a definitive litmus test.
That’s the part that always kills me in these discussions – the only ones authorized to issue shares in your company is you (the management) and yet a system has been set up to deliberately violate that privilege/responsibility so that those with nothing whatsoever to do with your company can use your currency to profit. They are parasites that create nothing, and that exist due to loopholes or oversights or deliberate abuses in the system. That’s why the apologists always bug me – they seem to forget that your stock is your property/currency and that you, not some guy in NY, worked the 20 hour days to make it worth something – hence only you are authorized to issue it.
I’ve been involved in enough startups to understand what it takes to make a company succeed, and it makes me furious to see opportunistic predators feed off the labor of others, protected by the system that is supposed to shield the investors and the companies.
But what do I know.
Comment by Bob O'Brien -
Bob O’Brien’s interview with Carol Remond of Dow Jones
Email is Carol.Remond@dowjones.com
Bob O’Brien speaks with the press – a summary
I spoke at some length this morning with reporter from Dow Jones. She seemed troubled by the idea that I have chosen to remain anonymous. I pointed out that I have several attorney friends that indicated that was a prudent choice, as I didn’t want a horse head in my bed one morning. She seemed to feel that it brought my message into question – she really seemed to dislike the idea that nobody else was troubled by it, that I was completely up-front as to why I had made that choice, and that it was common knowledge that I used a pseudonym for privacy reasons.
We discussed the Reg SHO problem, and her position was that the system seemed to be working, and that the Reg SHO list had all sorts of plausible explanations – none of which she was able to articulate for specific examples I brought up. I pointed out that the preliminary list had been circulated as of Dec. 3, and that many of the companies that had been on the list as of that date were still on it today. I also asked what her logic was for pardoning the failures up to January 7, 2005, given that there had been rules against naked shorting/Failing To Deliver for 71 years. She was non-responsive to that. We chatted about the foreign exchanges, and I articulated my theory that they were being used as a pretense by offshore hedge funds to Fail To Deliver – “waiting on Berlin time” as ’twere. She indicated that the SEC and the NASD had gone to Germany and satisfied themselves that no naked shorting was going on through Germany – I pointed out that I didn’t say that they were naked shorting through Germany, but rather using the German exchanges as a pretense for Failing To Deliver here. She didn’t like that and instead went back to her statement, attempting, I believe, to attribute it to me. I corrected her.
This seemed adversarial at this point, and I inquired why a highly intelligent, obviously informed person would be deliberately introducing fallacious arguments and attempting to re-configure my statements so that they seemed pejorative. She indicated that she thought it was dishonest of me to be Bob O’Brien rather than using my real name. I asked why that changed the truth of the message. She didn’t have much to say about that, other than that I could be some sort of a stock tout or trader or something – to which I responded how did running an advocacy ad with no symbols on it constitute a stock tout – no answer from her.
We then discussed who the contributors were for NCANS, I invited her to check the Yahoo message boards so that she could see all the small investors who had posted “I sent my check” messages.” She seemed really stuck on the notion that it was all some sort of a scam. Dave Patch, who runs investigatethesec.com, and who has been very helpful in bringing me up to speed on the abuses, and Gary Vallenotti, CEO of Jag Media, were both introduced to the discussion – she seemed very interested in whether they were members of NCANS or not. I indicated that they hadn’t donated, but I considered them members – hey guys, you want to be members? Anyway, she then wanted to know if we were registered or licensed anywhere, and I indicated that I wasn’t aware of any registration or license we required, and asked her if she did? She didn’t, but acted as though we should have been. Interesting.
The topic returned to why I was a rat b*stard for not wanting the bad guys on Wall Street to have my home address and phone number. I again pointed out that not all the players on the street played by the King’s rules. She poo-pooed that, and went back to what I “should” do in order to have “credibility” – I again asked why the messenger was so important when the message was so important. No reply. She indicated that if you were going to write to the President, you should be willing to sign it. I asked where the etiquette rules were as I’d misplaced my copy – there was a conspicuous lack of amusement from her end.
She brought up the Cheetah Club and BVI locations of the http://www.nfi-info.net website registration, and seemed annoyed at my sense of humor. I can understand that not everyone has the same sense of humor, or any, for that manner. I think it’s safe to say at this point that this was fairly adversarial – there wasn’t a lot of interest in hearing about the issue, but rather a non-stop barrage of “when did you stop beating your wife” sorts of questions.
We then moved to who was involved in creating the ad, and I indicated that it was an agency that had asked to remain anonymous. She hated that. Wanted to know if we had any high profile contributors – I said all would be revealed on our schedule. She asked if I’d ever heard of some other coalition, and I said I thought I had heard of something from years ago that was linked in some way to some penny stock scammers, but I could be wrong – it was a long time ago and it was an email exchange that it was mentioned in. She seemed to feel that had significance, but couldn’t articulate why.
We then again returned to why I was suspect as I wouldn’t say who I really was. We discussed Rocker Partners, and I indicated that they were presumed to be the large short in NFI – she reframed some of my statements, and I corrected her and indicated that I wouldn’t say anything libelous about Mr. Rocker. She went back to who had threatened me, and wanted to know if I was saying that Rocker was threatening me. I replied that I was saying no such thing. And so on.
We went back to why I thought that there was a problem with naked shorting/Failing To Deliver. I pointed out that Reg SHO was proof of the Fail To Delivers being fact, not theory. We then went round and round on whether there was definitive proof that the DTCC and the NYSE and the NASD and the NASDAQ and the SEC were covering up a systemic problem. I asked what she would need other than a list of companies where the laws on the books for 71 years had been violated. She didn’t have an answer for that.
She asked for Mary’s phone number, which I got back to her with. Wanted to know how many checks we’d received. I told her somewhere between 50 and 100 – I wasn’t sure as I’m not handling that. She wanted again to know how many members we had, I said 150-200 or so, but growing steadily.
I think it’s safe to say that my chances of having dinner with Carol are slim at this point. I try to give people the benefit of the doubt, but I detected an agenda that didn’t have a lot in common with telling an impartial story. So we can all assume that she will not be depicting me with a cape and a little mask, defending the downtrodden.
I hope I’m wrong, and that I misunderstood. Perhaps anyone that sent in donations can email her so she knows that real people are really upset about this and really sent money. Maybe then she’ll get that we really are mad as hell and aren’t going to take it any
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Comment by Tony Ryals -
In answer to the question about voting, only registered shareholders can vote. If you don’t have a certificate, then you are only the beneficial owner by way of a trust agreement with the actual owner (the DTC’s nominee, Cede and Co).
They go through the process of collecting your directions to the actual owner, but you may not get your full vote.
Cede & Co. Ltd. is the actual owner of the shares and they file an omnibus proxy on behalf of all the beneficial owners.
If there are twice as many beneficial voters as registered shares at the DTC, they give each beneficial holder only half a vote.
I know because that happened to the insiders in our company. We couldn’t get quorum even though there were enough insiders voting to get quorum. We realised our votes were being scaled because of the naked short against us.
The reason emerging R&D companies avoid making a big deal about naked shorting is that you can’t prove it (you can get the list of Non Objecting Beneficial Shareholders, but not the totals of the people that object) and if you make noise about it, your company becomes a bigger target.
Comment by dennis louw -
Mark – Mr O’Brien has been getting lots of publicity lately. Here is an article from the Wall Street Journal (membership required)
http://online.wsj.com/article/0,,SB110970947684967356,00.html?mod=e%2Dcommerce%5Fprimary%5Fhs
Comment by Brent Mastenbrook -
I guess Bob must have a recognizable face and voice..
Comment by Its strange -
Mark- You say no one complains when about stocks goes up? Quite the contrary. I short some of the worst turds and more times than not can’t get shares from anywhere. Funny thing is short interest continues to grow on some of them. And, yes I even shop around to get shares, so it’s not like one or two brokers. Even worse is when I get called by a broker who says the shares I was borrowing were sold and I need to cover…sorry.
Personally, I think short-interest institutional holders should have to disclose their positions just like institutions holding long positions.
Comment by Brian -
Mark:
We will all have to wait a while for that, given that the Reg SHO list just came out and is the only definitive that naked shorting exists as an issue. My gut says that it will take a quarter or two for that to sink in and for the implications to be manifest to the management of the companies and their legal counsel. As you are aware, that always takes a little time to digest. Although I am a little troubled by your market cap requirement – why are smaller companies not entitled to the same protections as the larger ones? But I’ll play nice on that and concede the point that a lot of the BB companies bitch and moan about shorting as a smoke screen. I never said that they didn’t.
I happen to be of the opinion that a very real shareholder derivative suit is possible under that exact legal theory – that the companies on the Reg SHO list are in fact being prevented from making full and adequate disclosure of a material risk by being denied access to data by the DTCC and the SEC – namely the size of the unauthorized and unregistered float that the SHO list is proof positive exists. By not suing the DTCC for that information themselves, they are not taking every *reasonable* step to discover and divulge material risks that shareholders have a right to know. Stay tuned on that one – like minds think alike.
How about addressing the very real and reasonable questions I posited, and choosing something that it is possible to procure now? How about the proof that you had indicated that you would be interested in seeing that it IS possible to get, namely companies that have had their shareholders’ most fundamental right (the right we are at war to defend and propagate, theoretically) – namely the right to vote – abused and obliterated by the Fail to Deliver problem?
Now, we both know that the incidence of actual voting with most companies is a fraction of the outstanding shares, generally, so it is hard to use a lack of overt abuse in those instances as a meaningful metric. How about companies where there was a more activist shareholder base, where the majority voted, and the company received more votes than their total outstanding shares? Or how about where holders of hundreds of thousands of shares received 1500 shares worth of voting rights – will that do?
If not, why not?
And please, don’t get started on the market cap blah blah blah vis a vis the right to have a legitimate vote. All public companies have that right and that protection under the law. Or are only companies of a certain status entitled to that protection? Some pigs more equal than others?
Comment by Bob O'Brien -
Mark,
Your Answer – Cal-Maine (CALM). The Market Cap is presently over 200MM and the Officers of the company have taken steps to contact their shareholders regarding the massive shorts and fails on their stock.
Cal-Maine is presently listed as a NASD Rule 11830 Security (Same Settlement Failure Criteria as Regulation SHO) dating back to October at least. Admittedly, October is a long time to carry excessive fails in a “Fair Market”
http://www.goldmoods.com/upc11830.html
Below is an excerpt from a WSJ article:
In Cal-Maine’s case, the recent earnings plunge has renewed a long-running debate over how much the company’s shares should be valued at, and whether some short-sellers are betting too aggressively against it.
Short-sellers are bearish investors who try to profit from an anticipated drop in a stock’s price by selling borrowed shares, hoping to replace them later with less expensive ones. The outstanding short positions in Cal-Maine stock represent about 85% of its public float.
In October, Mr. Adams took the unusual step of writing investors to ask them not to make shares they own available to borrow. But the short interest has barely budged since then, suggesting either the stock remains available to borrow, or existing short-sellers have stubbornly held on to their positions.
Hedge-fund manager Eric Von der Porten, of Leeward Investments, said his firm has remained bearish on Cal-Maine, using options contracts known as “puts” that convey the right to sell the stock at a given price in the future. In a recent e-mail, Mr. Von der Porten said the real value of Cal-Maine shares is probably near or below $5 each.
Comment by Dave Patch -
From your post Bob:
I would frame the questions thus:
1) Is there naked shorting on a reasonably large scale, and if so, what would be evidence that would be incontrovertible?
2) Does naked shorting harm the companies where it has been perpetrated, in a material way (presuming 1 is proven), ane what is material?
3) If evidence of violations in the voting process is advanced, will that be adequate proof of systematic violation to begin a dialog on a rational basis, or will I find ways to exclude the evidence (they are too small, or in the wrong industry, or a sham, or X arbitrary reason to dismiss the data set)?
I think these are reasonable questions. To actually learn or understand, I think you’ll agree that two things have to take place: You have to be willing to learn, and you have to be intellectually honest about the data you are looking at.
>>>>>YOu know what bob, these are reasonable questions.
Here is the evidence I would accept as irrefutable….
Evidence in this case would be a company with a market cap of more than 200mm dollars and a stock price of more than 5 dollars, at the time of filing, reporting to its shareholders in SEC filings that it feels it has corporate governance issues because of naked shorting expanding the number of shareholders currently owning its stock beyond shares issued
Lets start there. Find me 1 company with a substantive business and valuation who feels harmed enough by naked shorts to disclose it to their shareholders. If its material, they have to disclose it. They cant hide behind any excuses, otherwise they could be sued by those shareholders for not disclosing it and acting to resolve it.
Comment by mark -
Mark,
First off, thank you for your views on naked shorting. Whether we agree or not is beside the point. You took the time and effort to put your 2-cents worth in, and we all appreciate it.
What’s far more troubling to me is the media’s complicity in manipulating the price of stocks, in this case, NFI. If you study up on NFI through both NFI’s own official site, and Bob O’Brien’s http://www.nfi-info.net site, then go back and read the last two year’s worth of negative articles written mainly by Herb Greenburg at both CBS Marketwatch and TheStreet.com (his previous employer), you’ll see articles full of false information, innuendo and general “it’s too good to be true, so it must not be” kind of writing. Look at the wording he uses, and check his “facts”. Lately, the only thing he, and others have been able to raise “red flags” about is the fact that an NFI fan has created an enthusiasts website not connected with the company in any way, and he refuses to give his real name. That is hardly a reason to slam a company. No more reason to not invest in GM because I have a website about how bad my Chevy truck has been.
Every time Mr. Greenburg writes a negative article, the price of NFI drops, at least for awhile. He seems to have a particular interest in this company based on the number of articles he writes, and the timing (usually just before the dividend comes out). Of the thousands of stocks out there, why has he zeroed in on NFI?
A little more research may show you that he used to work for TheStreet.com, which has connections to Jim Kramer, and David Rocker of Rocker Partners. Rocker Partners is reported to be one of the biggest shorters of NFI, naked or not.
As bad as naked shorting is, I think it pales in comparison to what should be trusted sources in the media using false and misleading information to drive the price of a stock down, and hurting we little guys who depend on our investments to live on.
Comment by Jeff -
Wall Street self corrects? Look at this example:
Global Links went through a 1:350 Stock split on February 1, 2005. They reduced their entire O/S to 1,158,000 shares. Prior to the split they were trading at $.07/share. On February 3, 2005 a single investor purchased 1,158,000 shares of the security for slightly more than $5K. He filed with the SEC claiming 100% ownership of the O/S. Here is where it gets bizarre.
Global links has traded 100 Million shares since February 1, 2005. That is 100 Times the reported O/S as reported by the Company in an 8-k
http://biz.yahoo.com/e/050202/glkce.ob8-k.html
Global links is a Threshold Security.
1. How does a stock trade 100X the O/S with one shareholder owning reportedly all the shares?
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=3299823
2. Obviously Wall Street did not conduct theeverse split as required. Where is theversight to this issue?
The reason this is allowed to happen is because the Regulators are fools and let Wall Sreet do whatever they want. Somebody screwed up but.. according to the filings, people are buying this stock based on a valuation with only 1.1 million shares in the O/S. How do you correct that fraud?
Comment by Dave Patch -
Mark,
Please reread Posts #1, #3 and #5 as they are all right on the money.
Relying on the NYSE, Nasdaq and the DTC to “self-regulate” naked shorting is akin to you and 94% foul-shooting J.J. Reddick playing a one-on-one Winner’s Out, players call their own fouls basketball game for $10 Million. Suppose JJ “self-regulates” and calls a shooting foul on you anytime you get within two feet of him, nails his free throws and starts over again with the same routine. You and I would call that beyond the “threshold” of fair play and “abusive”, and think it should be reported to the event’s sponsors.. but JJ may just view it as an easy way to make money given the lack of sponsor enforcement.
Good luck to the Mavs this year.
Comment by Larry Greco -
Mark:
I can and will address your seemingly reasonable comments and the fallacies contained therein in another post. But first, I think it would be helpful to one and all if we could at least get clear on a few basic concepts and your position on them:
1) Naked Shorting/failing to deliver is illegal/ a violation of SEC Rules. Yes or No.
2) The REG SHO Threshold list represents a list of companies that have been naked shorted/failed to deliver beyond the SEC’s definition of a reasonable threshold. Yes or No.
3) Evidence of Naked Shorting just became official in January of 2005 – before then it was the realm of conspiracy theorists and penny stock scams. Yes or No.
4) To test a reasonable hypothesis, it is useful to frame it in such a way that it is testable. Yes or no.
5) Citing an absence of proof, while excluding a body of hard evidence, would be a bad mechanism for testing a reasonable hypothesis -indicates observer or confirmation bias. Yes or No.
6) A single person’s lack of expertise in a given field does not make that field or set of facts incorrect, rather it speaks to the lack of expertise of the observer – it just means that they lack the expertise to be capable of making a rational and informed decision on that topic. Yes of No.
7) Refusing to speak to specialists in a field where you lack expertise is a conceit that you somehow, of your own volition, can just know things that take specialists years to understand. This conceit is not based in any evidence that such a thing is possible, regardless of IQ or innate capabilities. Yes or No. (Just because you “feel” you know how to do brain surgery or fly the space shuttle after reading a book doesn’t mean you are qualified or are even capable – rather, just evidence of what you believe. Hallucinations seem very real to those having them – external testing is required to determine whether they are hallucinations or not.)
8) If confirmed and acknowledged specialists in fields where you lack expertise are offered to you, and you decline their input, that is evidence of irrationality or an unwillingness to learn. Yes or No. (Saying you aren’t “interested enough” is specious as you have been interested enough to write screeds on the topic.)
9) Ignoring a data set when you have been provably wrong in your assumptions about that data set is evidence of irrationality – i.e. not wishing to arrive at a rational conclusion based on facts, but rather to ignore when you are wrong about your beliefs about a set of facts. Irrational decisions are bad decisions, generally speaking. Yes or No.
10) If factual data were presented that contradicted your hypothesis, and you found a mechanism to exclude that data for arbitrary reasons (like it didn’t support your “belief”), that would be irrational and color any conclusions you arrived at as irrational. Yes or no.
Help me understand your position here so that I can appropriately frame the discussion in a way that will definitively decide the question, if the question is definitively decidable. I don’t want to waste more bandwidth if your responses indicate that you are irrational, as any evidence presented will simply be ignored if it doesn’t support your assumptions and conclusions. As with the statements about NFI, where you were provably wrong on two of the three points, and the third was just silly, it does nobody any good and is frankly embarrassing if we can’t agree what constitutes the question, and the proof of the answer.
I would frame the questions thus:
1) Is there naked shorting on a reasonably large scale, and if so, what would be evidence that would be incontrovertible?
2) Does naked shorting harm the companies where it has been perpetrated, in a material way (presuming 1 is proven), ane what is material?
3) If evidence of violations in the voting process is advanced, will that be adequate proof of systematic violation to begin a dialog on a rational basis, or will I find ways to exclude the evidence (they are too small, or in the wrong industry, or a sham, or X arbitrary reason to dismiss the data set)?
I think these are reasonable questions. To actually learn or understand, I think you’ll agree that two things have to take place: You have to be willing to learn, and you have to be intellectually honest about the data you are looking at.
Selectively filtering it is intellectually dishonest, as is ignoring your misses and remembering your hits, as is changing the subject when the data set doesn’t provide the outcome you had hoped it would. Ignoring data is the first red flag of irrationality.
You’ve been so generous with your time, would you take a few moments out to answer the yes or no questions? Then I’ll know how to best proceed.
Comment by Bob O'Brien -
Forgot this one…
Wall Street Institutions are taking their capital and investing into offshore Hedge Funds. Why is that? The Insurance Industry started doing that years ago when they started having to cover significant losses.
Because Mutual Funds cannot short stocks but they are finding out how lucrative it can be to SHORT stocks and even more so when you can short and not have to borrow for delivery.
Funny thing is, a Hedge Fund can also buy long, loan the shares for capital, and then short against those same shares in a Hedge and get away with not delivering. They make the Vig and essentially doubled the short on a single long. Nobody questions the fail in the system as a Hedge Fund is given an exemption on 3-day delivery. Why? You want to Hedge a long position, put it up as capital for the short.
Finally, Compudyne. They were manipulated by Hilary Shane through naked shorting (Sale of Unregistered Securities). Happens all the time in teh Hedge Fund Community. Have we seen any PUBLIC outrage on this and the NASD actually started enforcement actions against the fraud.
Mutual Fund Late Trading and the special relationships they kept with the wealthy Hedge Funds took several years to pick up steam and only exploded once AG Spitzer opened up pandora’s box.
Spitzer is less likely to delve in here due to the widespread abuses and the fear of actually instilling a pain on Wall street that means something. Forced Buy-Ins is much more costly than the slap on the wrist placating he did in the past (the reason the SEC grandfathered the fraud). Spitzer NEEDS Wall Street to finance his campaign. This fool knows you don’t really bite off the hand that feeds you you just pretend to.
Comment by Dave Patch -
Mark,
While you have certainly taken the time to dig deeper into the matter you brought up so casually the other day you still mis-interpret the ways of Wall Street.
1. Wall Street does not make money on the value of stocks, they make money on the liquidity of stocks. Illegal shorting that drives volatility and liquidity is just as prosperous as a stock that moves up a percent here and there. It is called commissions and why Wall Street cuts so many deals on commissions for services.
2. Why big Company CEO’s don’t complain. They do! Unfortunately the SEC is as corrupt as corrupt can be. they passivate, ignore, and downright lie to you. The SEC will become malicious once you voice your opinion publicly and show displeasure for the SEC not protecting you. Just look at the rift between the SEC and Spitzer when Spitzer showed them up. Imagine being a company who NEEDS the SEC. At the present time Netflix has a reported 100% of the float held by institutions and mutual funds – down from last months reported 134%. Did these Institutions seem to care that together they owned more than the float themselves without retail? NO
3. Do not marry your positions. That sounds good but should you have to buy long and bail out at losses all the time because of illegal downside abuses? When you buy INTO a stock because it looks promising but are forced out at a loss because it is manipulated – is that fair? Wall Street made their money in the commissions and the investor lost to a manipulator.
Our Securities Industry is based on Full Disclosure and Enforced laws. These are means put in place to protect ALL Investors. P/E ratio’s mean nothing if naked shorts and fails are not properly disclosed. Securities Laws like Rule 15c6-1 that requires contract for trades to not exceed 3 days are meaningless if they are not properly enforced. But we do not get fair disclosure on Naked shorting abuses and we do not get enforced laws on 3-day settlement because of the Money generated from the fraud itself. Most of teh abused are the little folks who cannot afford the price to get a politician to act.
Today the WSJ reported about a Hedge Fund in Florida that went out of Business. The FBIO and SEC are all over it because wealthy people lost their money. Funny how the SEC and FBI are ignoring this because it is only Millions upon millions of lesser people losing their life savings and more.
You live by different standards because of your wealth. Come down to the real world for a change and then decide where your heart is. People are victimized, as they always are, by the ones with power and money. We are simply trying to find a way to fight back. SETTLE ALL TRADES within teh Required 3-days with LIMITED exemptions.
Comment by Dave Patch -
MC,
I’ve left a message for you and we should speak regarding the formation of a hedge fund which ties into my idea for next gen. reality series which makes apprentice look like childs play. This will be off the hook entertaining and the Hedge Fund biz will be real. Let’s discuss rights … i am a 12+ yr institutional equity professional at a major bulge bracket firm located at Rockefeller Plza, manhattan. I know me and my partner are your type of guys and nobody knows the untold dynamics of institutional equity and the mutual fund/hedge fund bus. as I, including the real story on naked shorts. DJ
Comment by Derek Johnston -
Everything can be drilled down to less than one paragraph. If the SEC does its job and the gamblers do their job, i.e. shorters, then everybody wins. Shorting is just another word for gambling on a company while helping it raise funding. Might not be direct funding, but it helps the stock, thus funding. You do your job as an investor, and if the SEC enforces the rules properly, then capitalism, and freedom, march onward and upward effectively.
Comment by Rob Thrasher -
Mark’s blog , Jeff Matthew’s blog , NCANS , NFI-NET , Yahoo and its message boards ……..Well Yahoo turns 10 years old today and i can’t help but think how irrelevant CNBC has become
Comment by Its strange -
Mark,
First of all, I hope you do meet with Bob or anyone he designates, I’m sure you’ll learn a few things that you don’t know. I’m sure of it. As you said in your very first message on shorting, if you’re trading without full knowledge of what’s going on, you have your hand tied behind your back.
Let me get right to your argument, that well, it just doesn’t affect enough companies or people to really warrant listening to the cries of investors caught up in heavily naked shorted stocks: First, the following is the official list of companies, that the exchanges admit to having unsettled open short positions right now :
http://www.nasdaqtrader.com/aspx/regsho.aspx
http://www.nyse.com/Frameset.html?displayPage=/threshold/
As you can see, it is far more than just 6 companies, It’s also important to know, that this is a fairly new list, that began in earnest only on Jan 07, 2005. Also new, after this list started, the specialist was granted permission to naked short stocks on this list, contravening the entire goal of removing open naked short positions in the first place.
Mark, you seem to have come across situations were you’ve fallen victim to pump and dump situations, were the companies try to inflate their share price, along with false PR and other parties, perhaps trading amongst related accounts to make a false impression on the market. And you didn’t seem to like that experience one bit Mark. As a matter of fact, you seem to have real contempt for them. Well, you and the victims of naked short sellers feel the same way towards those fraudsters. Only in the pump and dump, you can’t “naked buy” to inflate the price, where as in naked shorting you can do all the schemes of pumping and dumping and also sell almost an unlimited amount of naked shares that don’t exist, even if temporarily, and slam the stock. Now the specialists have a license to do that too, blessings of the SEC.
Why would the NYSE and the SEC allow this? Well, the tip of that iceberg might be found by listening to the presentation of the NYSE to it’s members. After the boring part, the members start bickering and asking who will be liable for the open failed short positions.
But I’m talking investors here. What about the companies? Take a good look at that list. You’ll find American Airlines and Delta Airlines among many others. Now we know these companies are struggling badly. Delta recently made an offer for it’s debt in exchange for new terms and shares. It has said itself that access to capital markets is heavily restricted. No kidding! Well, enough to say, that when a company is restricted from raising capital through the issuance of new stock, the company suffers. It’s not just the new upstarts. Tell the Delta and American Airlines employees and investors who lose, that naked shorting was partly to blame for finally putting them out of their misery. Naked short enough shares in them enough and access to capital markets will be closed for them.
Perhaps they deserve to go under anyway. Maybe they’ll never make it and it’s hopeless – pension liabilities and all, so let’s just kill em now. Or should we give them a fair opportunity to straighten out their mess? Perhaps we should wait before we rename the American Airlines Center?
As to the markers you mentioned, there are plenty of them. The very example you bring up has already happened, where more votes where counted in a shareholder votes, than shares existed. Ask Bob or his associated for documentation on real world examples. Does the SEC listen? The echo is still bouncing off the walls there, maybe some day….. And we all know, that not every shareholder actually votes. We all know that. And in a company like Disney or HP, those companies are far too large for a hedge fund to go in and naked short and also move the stock price in a meaningful way. The market in those large companies are way too deep. So naked shorting is not an issue with those large caps.
In any case, the way the fungible pools of shares are accounted for at the DTC and NSCC, would never allow for the actual determination of if a fund had purchased naked shorted shares, rather than “real” shares, because shares are not traced by their certificate numbers that way, but in pools of shares in various ledgers and accounts at the clearing houses during settlement at the NSCC and the DTC when they are bought and sold.
Another marker is the SEC rule, “grandfathering” naked shorted stock, that was sold before Jan 03, 2005 – so that they officially now, by the rule making power of the SEC, never have to be bought-in and covered. Never. Bless you SEC, some naked short sellers must be thinking. This marker would only exist, if it indeed were a problem, otherwise why would the SEC explicitly make that rule? And a totally idiotic one at that, sure to attract a lot of attention?
And Mark, you’re wrong in thinking that the naked shorting of thinly traded companies is limited to Canadian companies. Right here in the US markets is where the problem is rampant. Take NFI for instance. Back in 2002, when the shorting started, NFI traded far less than 10,000 shares a day. Is that a thin enough target for manipulators? Look at ALD, ACAS, NAT and many others. None of these are bulletin board stock. Even if they were, it wouldn’t make it right.
The most frequent thing that is heard by proponents of naked shorting, that it should be made legal, is the pump and dump schemes, Sure they exist. But two wrongs do not make a right. And the pump and dump is no excuse for naked shorting. Both are a fraud on the markets and are two separate things.
Going back to your markers, what you are seeing is the groundswell of activist shareholders that are fed up and won’t take it anymore. The outrage of which you speak is coming around the corner. I personally think that even if fund managers do understand the mechanics of the stock settlement procedures in their entirety, that they only know the official version. The fact that the DTCC settles shares differently from the official explanation and assurances, is were the cover-up fraud of the naked shorting takes place. So with naked shorting we have two frauds, In pump and dump, at least the authorities try to get the perpetrators. At the very least, there is no active covering up of the problem, unlike with naked shorting of thinly traded stocks.
This problem is growing, festering. The S&L crisis of the 80’s, the LTCM meltdown and other crisis’ that had a wide ranging market impact didn’t happen overnight. Saying that it only affects maybe 4% of the companies traded in US markets and not all of them, is like excusing a serial killer for not blowing up the entire town, only 10 people. Who’s to say that unchecked, sooner or later he won’t blow up the entire town?
This procedural problem of first allowing, then ignoring and now covering up the problem of open fail to deliver positions will not fixed itself, nor by those who allowed it to get to this point. The problem will get worse and so will the cover up. At some point, something nasty is going to happen. Giving the specialist sudden power to naked short his own stock and keep this data confidential, even though it already has an abusive open fail to deliver situation and is on the SHO list, is just the tip of the iceberg of what is to come if a dead stop is not put to naked shorting – or deliberate failure to deliver shares.
I agree with you that healthy companies will not really be affected by all this. Just like NAT, NFI, NLY, ACAS, ALD and many others have thrived anyway. But many of their shareholders have been battered. Naked shorting forces a disconnect between the companies performance and the stock performance. Add the cover up of market data and what do we have? Roulette is more like it.
Again, I hop you do meet with either Bob or anyone he sends in his place. You’ve done a great thing with the Mavs. Respect.
Comment by Tom -
My $.02: Overstock.com is poorly run. It is evident in their prices. They are overpriced and the selection sucks. (in my opinion)
I have tried their site 5 times in the last year and have never found a good deal for what I was looking for. So far their site has been less than useless for my computer building business and related customers.
If Pricewatch.com was a public-traded company, I would invest. I wish I had invested in eBay back when it was an upstart. I seriously considered it.
Comment by Tor -
Mark, remind me of your tolerance to ill behavior the next time a ref blows a call against the Mavs. Your insinuation that a company should just perform and shut up about illicit behaviors against said companies is obviously “do as I say and not as I do” advice.
Prior to Reg SHO (1/2005) there was no public proof of naked shorting and thus people complaining as such were labelled paranoid cry babies.
Now that we have Reg SHO and naked shorting is known to be occuring, it’s labelled “not as bad” as we believe. This comment comes from ignorance (literally) as neither you, me, or my pet dog knows the extent of the problem so we sit and speculate. Many CEO’s don’t say anything as they are then labelled as whiners and obsessive about their stock and therefore must not care or are not devoting enough time to running their business (sound familiar?)
Once the numbers of failed to deliver (FTD) transactions are revealed (don’t you find it odd that no one can retrieve these numbers? If they are nontrivial as you speculate, what’s the harm in divulging them?), I wonder what the Herb Greenberg’s of the world will blame next?
Now those companies that complain about NS and have been shown to engage in illegal activities themselves deserve what they got. But using that argument to trivialize or even justify NS is completely irresponsible on your part. It’s like saying, because certain Maverick’s players use steriods, it’s ok for Refs to intentionally make bad calls against my team during play. That’s just crap and you know it.
Comment by mfv -