Wall Street – Fact is stranger than fiction

If you don’t follow the stock market, you are missing some amazingdrama. While the headlines go to jailed CEOs from Enron, Worldcom, RiteAid, Tyco, etc, they are alljust greedyguys gone bad, and gone to jail. But drama outside the courtroom abounds. Some funny, some serious, some unfortunate, but none have taken on the XFiles qualities of this story.

In the free world, the CEO of Overstock.com, Patrick Byrne hasemerged as the star of his own XFiles like drama. Insteadof searching for the truth about extraterrestials, Mr Byrne is on a mission to find out the truth about short sellers and naked short selling.

I have written in the past about both topics, so I won’t go into that here. There is no need to write about the performance of the company, Jeff Matthews does that well in his blog. There are blogs that praise Mr Byrne as well.But I will suggest that anyone who wants to listen to a drama, that is stranger than fiction andplays out like aradio show from the 40s (I used to love to buy tapes of the old shows and listen) with plenty of comedic elements, they immediately go to the overstock.com website and sign up to listen to the conference call

Never before in the history of Wall Street has a single conference call mentioned the following topics:

Miscreants, an unnamed Sith Lord he hopes the feds will bury under a prison, gay bath houses, whether he is gay, does cocaine, both or neither, and an obligatory, not that there is anything wrong with that, phone taps, phone lines misdirected to Mexico, arrested reporters, payoffs, conspiracies, crooks, egomaniacs, fools,paranoia, which newspapers are shills and for who, payoffs, money laundering, hisIrish temper,false identities, threats, intimidation, and private investigators. All in 61 minutes.

As I listened, allI could think of was whether or not HDNet Films should consider making a movie out of it andthat Mr Byrne clearly was giving Tom Cruise a run for his money on the “what was he thinking meter”.

I can’t wait to see how this plays out.

In the interest of disclosure, I am short 10k shares of OSTK. I want to be short more, however the stock is impossible to borrow, the puts are expensive and it’s hard to get any volume off and I don’t know how to Naked Short a stock. If you or anyone you know has naked shorted a stock, or knows how or where I can,I would be curious to find out how it’s done, so please feel free to add it as a comment below.

If you are a screenwriter or movie producer and you put together a script about OSTK and Mr Byrne, please send me a copy!

63 thoughts on “Wall Street – Fact is stranger than fiction

  1. The investigatethesec.con website thus continuing the fraudulent theme of ‘you’re being naked shorted’ to cover the criminal pumps and dumps of unaudited penny stock scams they run or tout for still.

    Comment by runescape money -

  2. “I’m quite confident that this is a much larger issue than anyone cares to consider,” says CrossCurrents editor Alan Newman. It’s hard to find bears any harder-core than Newman, who in February 2000 put a then-unthinkable 3000 target on Nasdaq and who today expects the Dow to sink to 8500.

    Comment by wow powerleveling -

  3. Tommy Malone boy, wher’d you go? Seems funny to me that this Irish dude Lochrie who is partnered up with James Dale Davidson would be an ol’ FBI man. You seem to have a lot of inside dope on what’s going on. You a federal man yourself sir?

    Comment by Roy D. Mercer -

  4. Move over James Bond: FBI Issues the UK’s Patrick Lochrie a “License to Steal”

    by J.D. Capehart

    BENTONVILLE, Arkansas (ACNN) June 20, 2006 – For decades, movie lovers have thrilled to the escapades of British spy James Bond. Licensed as “007,” Bond traveled the world, usually just one step ahead of the featured evil force, and always escaping death only by the skin of his teeth.

    In the real world though the grit of life is rarely as glamorous. Witness the case of U.K. national Patrick Joseph Lochrie, born February 18, 1955 under a gloomy Irish mist, Lochrie moves in and out of the shadows of U.S. federal agencies who pay him to be “a dealmaker” according to several of his recent victims. While working either for or with the FBI, Lochrie has participated in a massive securities fraud spanning two continents.

    As recently as May 10, 2006, Little Rock based FBI Special Agent Michael T. Patkus told a Rogers, Arkansas attorney that Lochrie was “law enforcement.” In a taped voice mail message several days later, Patkus told a businessman that Lochrie was “a federal agent.” Considering Lochrie’s business dealings publicly disclosed since 2003, Lochrie appears to be a man that the U.S Federal Bureau of Investigation has “licensed to steal.”

    Lochrie’s involvement with the FBI is now apparently worrisome to the bureau. When U.S. Justice Department officials learned that inquiries were being made about Lochrie by the media, both Patkus and a U.S. Justice Department Criminal Division attorney Peter Loewenberg, based in Washington D.C., immeditaley contacted a Houston attorney, Charles Portz, and asked him to relay a message: if there were any more inquiries about Lochrie, reporters would be immediately arrested and jailed on “federal charges.”

    Both Loewenberg and Patkus remained unavailable for comment prior to publication. Inquiries to the FBI in Little Rock, Arkansas, where Patkus is based were not responded to. Earlier published reports from other publications said their Little Rock inquiries were referred to the Justice Department in Washington, D.C. Sources familiar with the apparent extortion try say the pair of Justice department employees are themselves now under internal scrutiny by the Justice Department.

    The Justice Department’s “Misfortune 500 Companies” . . .

    Loewenberg is assigned to the Criminal Division in Washington. Sources there are mum about his duties other than to say he is a trial lawyer. Recently, Loewenberg left a message on his office voice mail describing him as “out of the office for the week, traveling with the team.”

    The “team” as Loewenberg describes it includes Lochrie. It is Lochrie’s extramural activities that prompted Arkansas Chronicle to investigate what appears to be a federal or FBI agent traveling the world engaging in phony business transactions and securities fraud, all the while supposedly investigating the same.

    Loewenbergs team includes not only Lochrie but a large number of other federal agents in Florida who operate over a dozen bogus Florida corporations from separate mail drops. The fake companies Include:

    – The Mix Group of South Florida, Inc.,

    – Profundo Enterprises, LLC

    – Phoenix Financial Consultant Services, Inc.

    – Southern Star Shipping, Inc.

    – Cabo Rojo Trading, Inc.

    – Leeward International, Inc.

    – C.R.S. Consultants, Inc.

    – Transeuro Holdings, Inc.

    – Amerivest of South Florida, Inc.

    – Noble Enterprises of South Florida, Inc.

    Of the group of companies, telephone numbers are scant and obtained only rarely from Florida corporate records. “Noble Enterprises” and “Dianne Williams,” share a working number but calls placed there were not returned.

    A federal agent interviewed by phone in May, 2006 who is associated with C.R.S. Consultants, Inc., uses the name “Vincent Parrolli.” He confirmed the involvement of one of Lochrie’s FBI associates, John V. Firo, (an alias) in the operations of “The Mix Group of South Florida.” That’s a firm that Firo fraudulently represented in a signed “Broker Engagement Agreement” with Arkansas business executives as being a member of the National Association of Securities Dealers, Inc. Oddly, Firo was listed at that time as a registered representative of a NASD member firm, Talon Holdings, Inc.

    Lochrie was present with Firo at meetings held in Arkansas in March and May, 2006, according to a civil court case naming Lochrie as a defendant. The suit seeks damages for claims of securities fraud and theft of trade secrets. The lawsuit, filed in late May 2006, names “Firo,” as well as Lochrie and a third Loewenberg team member calling himself Mohammed Galani.

    The NASD is also named as a defendant as the result of its creation of “fake brokerages” that led to the injury of Rogers based Shimoda-Atlantic, Inc., a small pharmaceutical company targeted by Lochrie.

    The suit claims that not only did the NASD create fake brokerages, they published false and misleading information to the general public about the brokerages over a long period of time. When confronted, the NASD tried to cover its tracks by altering its “BrokerCheck” database which it encourages the general public to use as a means of “checking out” a broker or a securities representative. NASD erased Firo’s, Talon Holdings and other records, but not before reporters, including a Wall Street Journal reporter, managed to download copies.

    Lochrie’s Changing Story . . .

    As Lochrie’s ties to the FBI were revealed, his story morphed. When Dow Jones reporter Carol Remond tracked Lochrie down by phone, he reportedly claimed that he was some sort of private investigator that had been hired to perform “due diligence” on the Arkansas firm, on behalf of some as yet unidentified investor. According to Lochrie he notified the FBI about his findings and then the ruckus ensued. But Lochrie’s claims clearly don’t match up with exhibits filed in the lawsuit he’s named in.

    For example, one exhibit is an e-mail from John V. Firo, in which he touts a “CRD# 4654582” issued to him by the NASD. The e-mail, sent on April 4, 2005 to Shimoda-Atlantic is clearly a “cold call,” one in which Firo introduces himself and seeks to do business with Shimoda as a stockbroker. The email is obviously a “first contact” and makes no mention of Lochrie. And Lochrie had no contact with the victim company until nearly a year later.

    At the time of the Firo e-mail and up until at Least May 16, 2006, Firo was affiliated with an Addison, Texas based corporation called Talon Holdings, Inc. Until sometime after May, 16, 2006, Talon was registered with both the SEC and NASD as a broker-dealer, licensed to do “private placements” and to trade securities for its own account.

    Talon at the time has headed by its registered principal Robert Bettes, who held a fake NASD registration under the alias “Robert O. Brewer.” Although Bettes retired from the FBI on September 30, 2004 , months before Firo first contacted Shimoda, Bettes continued to hold the NASD credentials. In a New Mexico federal court case Bettes testified he was still signing checks on Talon’s bank account long after he left the FBI. Delaware Secretary of State records show that Talon was duly qualified to engage in business as a corporation during that period through the present.

    It was Firo, according to Shimoda’s suit, who first brought Lochrie to Bentonville, Arkansas in late March, 2006 and introduced him as his “foreign partner.” On May 9, 2006, the pair returned to Bentonville, Arkansas , this time with a fictional “Arab investor” in tow. When they registered at the Embassy Suites in Bentonville, all used fake addresses. Lochrie used his “mail drop” in London that proved to

    Comment by R. Church -

  5. Say Tom, I was watching a chat on Yahoo the other day about all this. Maybe you could tell me how this James Dale Davidson and Patricia Lochrie all fit together in this thing. The Yahoo had links to the Maryland corporate records that shows a picture of Davidson and Lochrie signing papers together on a deal called Amenni. It was names Bioceutica then changed to Amenni then back to Bioceutics then they did it all over again in Florida with Amenni. Now this RECAB thing is claiming to have signed a deal to buy 30% of Amenni and the whole time this is all going on the other scam company Lochrie was running with claims it is naked short a bout a trillion shares. Man thats a whole lot of confusing.

    Comment by Roy D. Mercer -

  6. Sorry Tom, I missed that part in the story. Where exactly did you see that? I even went and dug my bifocals out and still cant see it.

    Even if its true whats that got to do with the NASD and the FBI running fake brokerages for 11 years or so? Hunh?

    Comment by Roy D. Mercer -

  7. Please, Roy, Bolt is a twice convicted felon and graduate member of club fed.

    Comment by Tom Malone -

  8. The story has broken in a magazine read by virtually every securities registered rep in the nation:

    http://registeredrep.com/news/Company_Sues_NASD/

    So much for “market integrity.” The NASD has been caught short. They have clearly destroyed records relating to fake broker-dealerships they helped the FBI establish and fake registered rep credentials they also provided. That the NASD would erase and shred should surprise no one. They are a part of the problem, not the solution.

    This “Lochrie” person is without doubt trading with the FBI. Only someone with “protection” could have operated the RCAB and NANN scams for as long as he has without going to prison.

    It’s time that the registered reps and brokerages of this nation DEMAND reform at the NASD.

    This is the story:

    In Switch, Company Sues NASD For Fraud

    Kristen French

    Jun 8, 2006 6:52 PM

    In an unlikely lawsuit, a private company is suing the NASD for securities fraud. A small cancer-research firm called Shimoda-Atlantic, based in Bentonville, Arkansas, filed a lawsuit against the NASD on Wednesday because, the company says, the self-regulatory organization helped several men, allegedly employed by the FBI, to create and perpetrate a fraudulent securities scheme against the company.

    According to the lawsuit, filed by attorney John Dodge of Little Rock Arkansas, “NASD senior managers and/or Directors instructed subordinate staff at NASD in Dallas, Texas, in Washington D.C., and in New York City, New York, to create false registrations for these defendants, all the while knowing that they were intentionally facilitating bogus operations and operators, regardless of their ulterior motives.” What’s more, the NASD allowed the defendants to operate without a fidelity bond in place — something that is supposed to cover monetary damages to an injured third party — violating NASD Rule 3020, the suit alleges.

    The NASD declined to respond to repeated questions about the case, or about cooperation between the regulatory body and the FBI, saying it doesn’t comment on pending litigation. The Arkansas offices of the FBI said they had been instructed to direct all inquiries on the matter to the Washington FBI offices, which could not immediately respond to requests for comment.

    According to Shimoda’s FDA compliance officer, Jim Bolt, Shimoda was first approached over email by John Firo in April of 2005. After a year of negotiations, on May 9, 2006, Shimoda signed a $3 million private placement agreement with one of the defendants, Mohammed Galani, allegedly a wealthy man from Dubai. The next day, May 10, Bolt says the FBI came to Shimoda’s offices, told them the deal was off, that they had been dealing with “enforcement officers” and handed them a grand jury subpoena for all of their corporate records, patient records and computer hard drives.

    Shimoda also alleges that the NASD, when it got wind of the potential lawsuit, began erasing records of the registrations it provided to the broker/dealer and one of the agents. (According to the lawsuit the NASD issued defendant Talon Holdings with CRD# 126778, and issued defendant John V. Firo with CRD# 4654582. Shimoda provided Registered Rep. with a faxed copy of a former CRD for the broker/dealer and says it called the NASD broker-check numerous times before doing business with Talon to verify that the firm had a clean record. But “Talon Holdings” and Firo no longer exist in the NASD’s official CRD database, records that the NASD says are never eliminated.)

    The lawsuit alleges that in the process of securing the financing from Talon, Shimoda turned over proprietary and trade-secret data to the defendants, one of whom — Lochrie — is engaged in competitive business operations through pharmaceutical companies of his own. In addition, they say, if they hadn’t been contacted by Talon they would have secured financing from other sources.

    Why would the NASD and the FBI want to trick Shimoda? Bolt says they have several theories about that, but he’s not sure. “When people start shredding files, they have something to hide,” says Bolt.

    Comment by Roy D. Mercer -

  9. Patrick J. Lochrie, of Amenni/Nutrapharmx/RCAB/NANN fame appears to have been sued in Wal Mart’s home town of Bentonville Arkansas.

    According to the lawsuit filed by a pharmaceutical company he is accused of stealing trade secrets, impersonating a stockbroker, and associating himself with a fake brokerage operation.

    Also sued? Here’s what’s amazing to me: The National Association of Securities Dealers Inc. and its subsidiary NASD Regulation. Also named in the suit are:

    The Mix Group of South Florida Inc.
    Robert Bettes a/k/a Robert O. Brewer
    John V. Firo a/k/a Thomas V. Faro
    Talon Holdings, Inc.
    Mohammed Galani

    The 4-count complaint filed in the Benton County Circuit Court is being heard by a judge that just finished a large Wal Mart case.

    Dr. Summers of Endovasc is listed in a footnote in Count 1 as being related to Lochrie, but is not sued at this time.

    The case number is CV2006-1095-1 styled Shimoda vs. Talon et al.

    This one may be worth watching closely as Mr. Lochrie is now on the hot seat.

    Comment by R. Church -

  10. Mark their already is a movie about greedy men and stock fraud. It’s called ‘Fun With Dick and Jane’

    None of these stuff is new, it’s just getting more media attention in the latest few years. Stock fraud has been going on since the stock market started.

    Accounting methods are way to ambiguous.

    Comment by Buy WOW Gold -

  11. Film-business – continuous swindle!

    Comment by whales -

  12. You remind me of someone who goes to a symposium on the history of the automobile
    with the express purpose of requesting that Henry Ford’s name not be mentioned.Not that I am comparing Ford to Davidson or vice versa, only that Davidson’s name can’t be left out of a discussion of ‘naked shorting’,or at least the inappropriate or fraudulent use of the claim of being ‘naked shorted’ for the purpose of stock scams in recent stock market history.

    We have been discussing ‘naked shorting’ for some time here and although one might say this is about Patrick Byrne and Overstock.com, well in case you missed it in the excitement about the ‘Sith Lord’etc., this is still all about the O’Brien and Byrne naked short on again,off
    again claim and connection.

    And one can’t discuss the history of ‘naked shorting’ or the claims being made about it by Bobo and Byrne without bringing in James Dale Davidson and how he used the claim for fraud to mask illegal penny stock pump and dump activities and in my opinion possibly money laundering.

    And as if there was not enough confusion by the SEC’s inability or unwillingness to audit shares and the number of shares in the float, particularly of penny stock pumps and dumps, Davidson added further to the confusion in this modern computer era by claiming naked shorting was a problem of the digital age.He conveniently overlooked the fact that paper certificates could be counterfeitted or that
    companies’ insiders and their transfer agents could collude for the very reason that they were the parties with whom he colluded in his orchestrated pump and dump activities.This is why he diverted attention also to the supposed corruption of the DTCC,THEY WERE NOT IMPORTANT TO AND POSSIBLY A THREAT OR IMPEDIMENT TO HIS SCAMS.

    Actually I came here today only to post chatter
    on Yahoo’s OSTK message board again about who is ‘Bob O’Brien’and so that is what is posted below:

    Bobo revealed Naked Truth per NY Post
    by: k9thunderspg
    Long-Term Sentiment: Strong Sell 09/16/05 02:42 pm
    Msg: 43203 of 43221

    Per NY Post…

    Just excerpts as full article require $…

    NAKED TRUTH – POST EXPOSES OVERSTOCK ALLY
    RODDY BOYD. New York Post. New York, N.Y.: Aug 23, 2005. pg. 033

    People: OBrien, Bob, Byrne, Patrick, Saunders, Phillip Ross
    Section: Business
    Text Word Count 628
    Document URL:

    Abstract (Document Summary)
    A self-employed West Coast businessman operating under the Web pseudonym “Bob OBrien” in investing chat rooms is aligned with Overstock.com CEO Patrick Byrne in his campaign against short- sellers targeting his embattled company.

    Saunders is linked to the NCANS site via the Lycaon Group, which, according to Saunders, is a group advising companies under attack from naked short-sellers.

    The poster announcing that he had uploaded …

    Subj: yet how would Phillip Ross Saunders
    By: ncanscam
    Date: 09/16/05 03:03 pm

    come to plagiarise James Dale Davidson’s
    ‘NAANSS’ SCAM TO A ‘T’ and claim he’d never heard of Davidson or ‘NAANSS’ before I brought it up ? That’s just one of the paradoxes.Why do so many Davidson connected individuals come out of the woodwork here ?

    Why does Davidson connected Porter Stansberry of Agora write articles about OSTK claiming it to be a victim of ‘naked shorting’ now ?
    And Howard Hill or hhill who posted on same U.of Colorado message board as Davidson in ’99 ? And Alan Newman who touted the great
    ‘naked shorting’ conspiracy in thestreet.com recently also posted there in ’99.And so did a Geoff Johnston.

    And then there is David Patch of ‘investigatethesec’that was started about the time Davidson and Stansberry were coming under SEC pressure for touting Endovasc and Genemax,(named for Davidson’s ‘newmax’?),and around the time Davidson,Brent Pierce,and Grant Atkins closed ‘NAANSS’ down.Patch was also touting Genemax on Ragingbull gmxx message board under various aliases just as he is ‘repeat05′ on rb jagh board at the moment.That is where news of a letter-ad in Washington Post of Feb.8 appeared a day in advance.

    Both Dave Patch and Alan Newman contribute scam naked short articles to ncans.net.I can
    find no connection between any of these characters and a P Saunders.Not saying there isn’t one,no I’m not gonna do it,but there IS a connection between all of them and James Dale Davidson.

    Comment by Tony Ryals -

  13. Hey Tony, is there anything that has happened in your life that you haven’t blamed James Dale Davidson for?

    Comment by Geoff Altman -

  14. Interesting discussion. Several years ago I spent some time researching naked short-selling as a way to counter and profit by betting against visible pump-and-dump schemes.

    Seems this isn’t as complex as I originally thought.

    Martin Tibbitts

    Comment by Martin Tibbitts -

  15. Below is a copy of an OSTK article by Porter Stansberry from a poster on Yahoo’s NFI board. James Dale Davidson connected Stansberry touts OSTK as a victim of ‘naked shorting’just as they both touted Endovasc, Genemax,and USU in Agora Publications in 2002-2003.Then Davidson began to claim Genemax was ‘naked shorted’ although it was really a pump and dump(as Brent Baker and SEC know so well),and he was instrumental in creating the NAANSS group in the same Blaine,Washington office Genemax office was in.

    Porter Stansberry,as you may note from my post above,was litigated against by former SEC lawyer Brent Baker who now represents Patrick Byrne in his litigation against Rocker Partners and or the Sith Lord or whatever.

    So now both Baker and ‘famed trial attorney O’Quinn’,(who aided in covering up the illegal Endovasc pump and dump under a false claim of ‘naked shorting’),are defending a stock -OSTK – that neither are claiming in their litigation against Rocker,(or even the Sith Lord for that matter),is a victim of ‘naked shorting. And yet Overstock.com’s CEO Byrne surrounds himself with touters who claim,FOR HIM,that Overstock.com IS being ‘naked shorted’!!!

    And while Stansberry, who is coincidentally, VERY connected to James Dale Davidson,as Baker knows so well,is making the same claim for Overstock.com being a victim of naked shorting – ‘Bob O’Brien’ and NCANS ARE BEING PAID TO DO SO !!!

    We know that Patrick Byrne is paying Bob O’Brien’s ncans.net to make the claim of being a victim of ‘naked shorting’ just the same ! My personal feeling is that the claim is in part to illegally promote OSTK shares through another Barnum and Baily tout angle, successful or not.

    And it may or may not be to divert attention from the float,sell ‘certs’ to suckers who are then dependent upon brokers and transfer agents as the stock is manipulated by insiders,and then convince them some ‘Sith Lord’ ‘naked shorted’ them from Germany.But that has been James Dale Davidson’s strategy for some years and ncans seems to be the same scam as James Dale Davidson’s NAANSS scam all over again.It must have been quite profitable the first time around.

    My biggest gripe is that Brent Baker NEVER charged Davidson for what he really did,i.e.-use naked short claim to mask his own illegal pump and dump of Endovasc,Genemax,and other penny stocks.And now in many ways Brent Baker is working with Porter Stansberry,(who he should have convicted),who is now promoting Overstock.com – a company Mr.Baker represents -as a victim of ‘naked shorting’ !!

    Mr.Baker and the SEC,had they been doing their jobs in 2002 until he resigned, would have charged all involved with NAANS,as well as Agora Inc. and James Dale Davidson,with using the ‘naked short’ claim for fraud to divert attention from their own illegal pumps and dumps of mainly unaudited shares,(which is why they have made these claims endlessly in the first place),they know the SEC has been inept at auditing shares.And this problem is more between the companies and their transfer agents than the DTCC !!!

    You’ll note that Bob O’Brien nor James Dale Davidson nor David Patch nor any of the scoundrels who claim being victims of naked shorting EVER say investigate their transfer agents !!! Why ? Because Davidson,et.al select their transfer agents and pay them well to conceal the float as they pmp and dump then finally cry tears of a crocodile about being victims of ‘naked shorting’.

    I’d suggest Mr.Brent Baker examine the Nevada Agency and Trust Co. of former SEC employee Alexander Walker and inquire how much he received for being Endovasc’s ‘transfer agent’ alone.Mr.Baker may decide upon a career change.

    Stansberry newsletter re:OSTK part 1
    by: lee451 08/21/05 08:58 pm
    Msg: 336964 of 336975

    I’m just catching up on emails forgive me if someone has posted already, but this is the first financial writer I’ve seen who gives cred to Byrne…

    August 19, 2005

    THE BLAST: Overstock: An Ultimate Insider vs. Wall Street
    By Graham Summers

    Corporate conference calls are quickly outpacing film and television as my favorite form of entertainment.

    First there was Carl Icahn’s call-in to Blockbuster’s 1Q05 conference call. Starting at the 45-minute mark, Icahn royally roasts CEO John Antioco. His first question isn’t about earnings estimates or EBITDA or any of that stuff. He simply asks if Antioco will put himself and rest of the board up for re-election should none of their 2005 initiatives work. On top of this, Icahn calls Antioco and the rest of management’s recent bonuses “egregious” given Blockbuster’s poor results.

    Maybe I’m a financial nerd, but I love this stuff. It’s like professional wrestling in the financial arena. And what a breath of fresh air from hearing whiny Wall Street analysts ask about a one-cent change in EPS for the quarter.

    But Icahn’s performance absolutely pales in comparison to that of Patrick Byrne, Chairman and President of Overstock.com (Nasdaq: OSTK). Last week, Byrne presented a solo conference call relating to a lawsuit he recently filed against hedge fund Rocker Partners. In it, Byrne detailed what he called the “Miscreants’ ball” a web of individuals he claims have conspired to crush Overstock’s share price. The list included hedge fund manager David Rocker, mainstream financial journalists at Barron’s, The Wall Street Journal, CBS MarketWatch, financial research firms, and even the SEC and the Department of Justice.

    As Byrne himself noted, it sounds like something out of a John Grisham novel.

    In its simplest form, hedge fund managers (David Rocker and others) who were shorting Overstock’s stock used financial journalists and research firms in a smear campaign of the company, causing its share price to fall. Behind the entire ordeal was someone Byrne called the “Sith Lord,” a “master criminal” from the 80s, who aimed to complete a hostile takeover of Overstock once it was trading in the $6-$10 price range.

    It would be easy to write Byrne off as a nut if he didn’t have affidavits from individuals who were actually involved in the scheme. Byrne claims to have the sworn testimony of individuals who witnessed journalists like Herb Greenberg of CBS MarketWatch and Jesse Eisinger of The Wall Street Journal receiving orders from hedge fund manager David Rocker on what to publish about Overstock. In several cases, Rocker was even allowed to edit the stories that would be published, changing ratings and grades as he saw fit.

    Stansberry newsletter re:OSTK part 2
    by: lee451 08/21/05 08:59 pm
    Msg: 336965 of 336975

    Even more disturbing are the numbers relating to Overstock’s trading. Now, brokerage houses are supposed to report how many shares of a company they trade per month. And sometimes, this number is a little off from the actual number of shares that changed hands. After all, we’re talking about thousands, even million of transactions. However, in Overstock’s case, the reported volume was sometimes 100% lower than real market participation. That is, twice as many shares were trading than were reported.

    Pretty crazy, huh?
    An even more disturbing statistic relates to the size of the current short positions in relation to Overstock’s shares outstanding. Overstock has 18.7 million shares outstanding. Of that, Byrne and his family and friends account for 9.5 million shares. Add in the long positions of the top ten institutions and mutual funds, and you’re at 18.4 million. So there are really only 300,000 shares of Overstock stock available. So how is there a six-million-share short position?

    Naked shorting.

    Typically, if you want to short a company, you borrow the shares from a brokerage house and then sell them in the market. Back in the old days, this would involve actually moving paper share certificates. But in the modern world of e-trading, it’s merely a click of buttons. Because of this, there has been an increase in naked sho

    Comment by Tony Ryals -

  16. “Newman explains naked short-selling in eye-opening clarity. Selling unborrowed shares means the buyer doesn’t get delivery of the shares he bought. “There are now two actual owners of the same shares. The exact same shares now show up long in both accounts,” Newman says. “Every 100 shares of a naked short is a duplication of real shares, just as if the shares had been photocopied and distributed.”

    Hmm, wouldn’t OSTK notice when their shareholder vote totals were hundreds of thousands more than their entire legal share count (Byrne has claimed hundreds of thousands of shares shorted naked)? And in the case of dividend paying companies like ACAS and NFI, who pays the extra dividends to the “duplicate” shareholders?

    This is the biggest hole in the “naked shorting” theory. The transfer agent can’t manufacture bogus shares without the owners wondering why they don’t have voting rights or dividends, or the company wondering why it has too many votes and is paying too many dividends. Any naked shorting of any size would lead to huge obvious discrepancies the company and shareholders could detect.

    Comment by Randy Hill -

  17. naked options great to trade. Make sure you have a seat belt and a heart defib close by.
    Val U. Barrutia

    Comment by val u. barrutia -

  18. While I am mixed right now on OSTK and if there is fraud, etc. I must say I give Patrick credit for standing up and voicing his view. While he ultimately could be proven to be yet another Bernie ‘I once was a gym teacher’ Ebbers and promoting his stock, I think his comments are valid to a certain extent. Not many CEO’s in today’s Reg FD world will stand up and at least say what they think. Either way it will be an interesting story to follow.

    Disclosure:

    Long Mavericks / long Red Sox / Long Patriots / Short Yankees

    http://techstockblog.blogspot.com/

    Comment by Craig Bujnowski -

  19. You forgot to mention: terrorism, Al-Qaeda, vegatative motorcycle crash victims, messages from beyond the grave, arms dealing, and whether mr. byrne has any friends or not.

    Comment by simon -

  20. hmmm again,I only noted tonight this article that was put out this morning by Kevin Kelleher of TheStreet.com. titled,’Naked Before Byrne’.What grabbed me most and the part I quote below is an opinion by none other than Alan Newman !!! Why ?!!

    Well it has already been established by some of us on the Yahoo NFI board a while back that Newman and James Dale Davidson,of NAANSS,(and probably NCANS),are connected from way back !!
    Why did TheStreet.com reporter not have enough
    background to know that ?

    True Mr.Davidson has never been convicted for using the naked short claim for fraud to cover up his illegal pump and dump activities but this should be known to business reporters such as Kevin Kelleher by now just as surely as it was known that Al Capone ran organized crime in Chicago long before he was convicted. It should be common knowledge.

    And while that does not implicate Mr.Newman, he is or should be known,to have asociated with Mr.James Dale Davidson in the past who has touted penny stocks that were dumped in mass on defrauded investors followed by ‘coincidental’ cries and claims by him, (fraudulent in my opinion),of ‘naked shorting’.

    So below is TheStreet.com’s Kevin Kelleher citing of Mr.Newman as an authority on ‘naked shorting’ followed by a post on Yahoo NFI board from May 5 of this year with a link to
    the old 1999 University of Colorado website,

    http://www.longwaves.net/feb99/

    they both,(Alan Newman and James Dale Davidson),used to post on. :

    TheStreet.com :

    As is often the case, stock newsletters were among the first to suspect a problem. The straw-man theory argues that critics of naked shorting are burned investors or corrupt executives who blame hedge funds the way failed businessmen blame the government for their own failures. But in recent months, newsletters like CrossCurrents and Biotech Monthly have sounded alarms on naked shorting.

    “I’m quite confident that this is a much larger issue than anyone cares to consider,” says CrossCurrents editor Alan Newman. It’s hard to find bears any harder-core than Newman, who in February 2000 put a then-unthinkable 3000 target on Nasdaq and who today expects the Dow to sink to 8500. When the uber-bears are worried about the adverse impact of shorting, it’s time to start worrying.

    Newman explains naked short-selling in eye-opening clarity. Selling unborrowed shares means the buyer doesn’t get delivery of the shares he bought. “There are now two actual owners of the same shares. The exact same shares now show up long in both accounts,” Newman says. “Every 100 shares of a naked short is a duplication of real shares, just as if the shares had been photocopied and distributed.”

    Yahoo NFI Board post May 5,2005 :

    Hill,Johntson,Newman&Davidson Connected

    Hill,Johntson,Newman&Davidson Connected

    by: ursus_malayanus 05/05/05 08:47 am
    Msg: 301281 of 301414

    “http://www.longwaves.net/feb99/”

    Click on this link to verify for yourself before reading any further.

    I didn’t believe it at first. But, biodog0 (who sometimes seems a little crazy) was absolutely right. If you visit the old longwaves.net archives, you will find the following names posting

    “Howard Hill” (still posting as hhill51)

    “Geoff Johnston” (is this the not so peaceful one?)

    “Alan Newman” (who mentioned his Cross-Currents publication repeatedly on this olds ite)

    “James Davidson” (Is this THE infamous J.D. Davidson? From his posts, it sure seems like it.)

    All of this could just be pure coincidence of course. But, my money says biodog0 was correct.

    Here is the link again. Verify it for yourself. Then ask hhill51 and peacefulposter about this list.

    “www.longwaves.net/feb99/”

    Comment by Tony Ryals -

  21. Mark,

    Is there anyplace on your blog that you show your equity positions and investments? Or do we have to go to SEC.com. Love your blog.

    Comment by eesh -

  22. hmmm,don’t know how i missed the above post from ‘Dave’ until now.It is particularly strange in that I knew Brent Baker,who had
    contacted me when I sent the Belladorgroup.com’s ‘Endovasc Scam Warning’ to
    the Dallas-Fort Worth SEC office,had not persued his Utah SEC litigation against Agora Inc. and had instead resigned and become employed with a Utah law firm.:

    DEFENDANTS

    12. Agora, Inc. is a Maryland corporation based in Baltimore. Agora publishes books, magazines, newsletters and operates at least 15 financial web sites in the United States and Europe. Agora’s publications include The Cutting Edge, Penny Stock Advisory, The Red Zone, Taipan, Rogue Trader, The Flying V Lockup Trader, CSX Trader, Fleet Street Letter, Options Hotline, Outstanding Investments, Richebacher Letter, Daily Reckoning Investment Advisory, Carpathia Letter, Strategic Opportunities, Jim Davidson’s Vantage Point Investing, and the Contrarian Speculator. Agora publications have well over 21,500 paid subscribers.

    13. Pirate Investor, LLC, is a Maryland Limited Liability Company that runs a financial advisory web site and newsletter, PirateInvestor.com. Pirate is wholly owned by Agora. Defendant Frank Porter Stansberry is the editor of PriateInvestor.com.

    14. Frank Porter Stansberry, resides in Baltimore, Maryland. He is the editor of two of Agora’s Internet financial newsletters: Porter Stansberry’s Investment Advisory and PirateInvestor.com. Stansberry’s compensation is based in part, on a percentage of the revenues realized by those on-line publications.

    THE FRAUDULENT SCHEME
    ……………………………………….

    It was and is a fraudulent scheme alright but the SEC only mentions the touting of Genemax,
    Endovasc,and USU through Agora’s various tout mail fraud ops and cyberfraud tout ops,I dare say.The truth is,Agora connected individuals, particularly James Dale Davidson,did not just promote or tout the stocks to sale their advise and expertise ,they,or definitely James Dale Davidson benefitted,as an insider and board member,of both Endovasc and Genemax.

    While Endovasc is important to me because I was ripped off in that pump and dump scheme,fraudulently blamed on the naked shorting of Schwab,Refco,and Ameritrade,(by Endovasc management,James Dale Davidson, and ‘famed trial attorney O’Quinn’),USU
    is perhaps the most interesting stock of the three promoted,and perhaps manipulated, by Agora Inc. ‘insiders’.

    That is because it is a very real company involved in uranium enrichment,recycling and perhaps clean up,if that’s possible.What exactly was Agora Inc. and James Davidson’s
    interest in this ‘security’ that was promoted in 2002-2003 for a Russian contract to recycle nuclear waste in Russia ? I don’t know but a good investigative journalist might find a story within a story there even now.The Yahoo USU message board which seems to have USU employees posting there is an interesting board to read.I’ll leave it at that.

    What truly amazed me was that the Utah SEC investigators completely ignored that Genemax
    and Endovasc had been more than simply touted by Agora Inc.and James Dale Davidson to sell
    their ‘securities’ recommendations or picks. Mr.Davidson even made a completely fraudulent claim of having traded a ‘nicotine patent’ he invented or discovered with Endovasc’s ‘Dr.’ David P Summers,(that had it existed in the first place would have plagiarized the Stanford patent,or both Stanford nicotine patents,as I read and understood them).But of course this was no issue as far as the SEC was concerned.

    And in retrospect,for Davidson it was another way of accounting for free shares he might have if for some unusual reason the SEC might at some point ask him to account for his undisclosed shares.Unlikely.

    And worse yet the SEC litigation,whatever became of it,made no mention of the fraudulent claim of ‘naked short selling’ made by those mentioned above,nor that it was used to mask illegal pump and dump activities and I dare say possible money laundering,if for the only reason that pump and dump activities are supposedly illegal,and thus the money made by such activity is.

    Anyway,very strange,if true,to hear that Brent Baker has gone full circle and joined or represents the ‘good guys’ who ran the illegal pump and dump scams disguised fraudulently as ‘naked shorting’ in the first place.That is if you assume as,I do,that NCANS is NAANSS and
    some,or all,of the past criminals who ran NAANSS are also behind NCANS,which I do.

    Anyway here is a list of the SEC attorneys who began that litigation against Agora Inc.in the foirst place.What ever became of it I do not know.

    DATED: November 14, 2003

    Respectfully submitted

    _______________________
    KAREN L. MARTINEZ
    THOMAS M. MELTON
    BRENT R. BAKER
    Securities and Exchange Commission
    50 South Main Street, Suite 500
    Salt Lake City, Utah 84144
    (801) 524-5796
    (801) 524-3558 (fax)

    Attorneys for the Plaintiff
    Securities and Exhange Commission

    http://www.sec.gov/litigation/complaints/comp18090.htm

    Comment by Tony Ryals -

  23. I’ve figured out how to do a Naked Short:

    It’s an old Sith mind trick, but you make a trader think that he borrowed a stock, then his brokerage shorts it and credits your account (let me remind you that no transactions actually takes place). It’s complicated, and you’ll need to achieve Master Sith status before you can use this strategy.

    Or you have traders engage in this naked position by entering into some forward contracts, swap positions, and some private contracts; but there are probably some legal restrictions on this method. That’s why you need Stinger missiles. You tell regulators that these transactions should be allowed or else you’ll release your Stinger missiles at their secret underground headquarters.

    Comment by Sam Park -

  24. David Patch,

    hee hee,have you ever read anything you’ve written ? didn’t think so and i don’t blame you.

    tony ryals

    Comment by Tony Ryals -

  25. Seth,

    You speaking to Tony Ryals or Bob O’brien when discussing long winded posts.

    As for Jesse Eisinger, I guess you missed the citation he received and ignored the private phone log he held.

    I must make note that so far nobody at the Motley Fool has been able to understand exactly what the basic priniciples the SEC proclaimed when they released SHO. Maybe that is why you call yourselves fools.

    When DOJ arrest Warrants contain verbiage regarding Rhino Advisors where Rhino bribed brokers to “sell with unbridled levels of aggression” what exactly did the motley fool understand this to mean? When Scott Ryan and MM Ryan and co. (RYCO) were bribed by 3 hedge Funds to sell short illegally using the MM exemption for their beneifit, what was that al about. Hilary Shane, Friedman, Billing and Ramsey, SG Cowen, all associated with illegal naked shorting and yet Seh talks about tin-foil hats.

    Here is the link to evaluate Carl Ichan, Mike Milkin, Ladenburg Thalman, Rhino Advisors, Sedona Corporation, Illegal naked shorting. 7 steps of seperation. Something the motley fool has no ability to conceptualize.

    Comment by Dave Patch -

  26. Funny stuff, “Bob.”

    A couple of questions for you. Why don’t you drop the whole secret agent act and tell us all who you are, and what your interest is in this affair? Those of us who write about stocks every day know that your claim of great personal danger is a complete load. How is it that we, who offend so many, so often, don’t get the same attention you do?

    Next, could you please tell me where I apply to get my checks now that I’m part of your big conspiracy? If you could see the place I live and the car I drive, you’d know how bad I could use the dough. In fact, if it’s so easy for these journalists to game the system and rip off the little guy, how come they aren’t retiring to their desert islands?

    Finally, here’s a freebie to tuck under your tinfoil hat. My mother’s family name is Eisinger! Imagine the possibilities!

    Keep it coming. You’re very amusing. But you may want to enlist an editor and keep things a bit shorter. You write a bit long.

    Sj

    Comment by Seth Jayson -

  27. Below,a recent James Dale DAVIDSON scam.Can anyone explain this one ? A new penny stock pump and dump with Dubai-Saudi connections ? Is Iraqgate connected Terry Byrne involved ?

    I presume this is another penny stock pump and dump that will benefit Middle Eastern ‘investors’ or anonymous criminals at the expense of defrauded Americans ? And what about 911 ? Where’s the SEC,the DOJ,the FBI ? Or Homeland Security for that matter ?

    Why does the SEC still allow this to go on ? Is this possible money laundering using the SEC’s Reg S ? Why does the SEC not put as much priority in putting a stop to these offshore penny stock deals as they did to the so-called Regulation ‘SHO’, that not only defraud Americans,who are the biggest victims of these pumps and dumps when these penny stock shares finally come to roost,but these unaudited penny stock shares can also easily be used in money laundering and aiding terrorist activities.

    Why does Senator Bennett not decry this scandal rather than aid fraudsters,in false
    ‘naked shorting’ victim claims which really only protect illegal pump and dump operations and money laundering,including or particluarly,
    those running these offshore frauds and or money laundering activities with U.S. penny stocks ?

    Either Senator Bennett is incompetent or he is aiding the traitors such as James Dale Davidson,knowingly or not,in criminal activities.Can Senator Bennett explain how encouraging illegal pump and dump activities through Dubai etc.,aids our national security ? Can he explain how it doesn’t endanger it ?

    Senator Bennett,is there something I don’t know ? Is the issuing of U.S.penny stocks offshore for boiler rooms like Belladorgroup.com of Kuala Lumpur and Dubai
    for illegal pump and dump activities really good for us? Is this a way for us to some how help the ‘good guys’ like James Dale Davidson and his fraudulent group who always claim they and their victims were ‘naked shorted’ after an illegal pump and dump ?

    Are those of us who lose everything in these apparent Beltway originating scams then true ‘patriots’ for having been robbed and defrauded in a Beltway originating international penny stock scam ?

    I thought I was investing however riskily in a Stanford patent with a Texas biotech but I was instead being ripped off in a Beltway run international penny stock pump and dump operation run by former National Taxpayers Union founder James Dale Davidson.One way or the other this is fraud,Senator Bennett,and this is who and what you ae aiding.

    Can anyone explain,I’m very confused ?

    NUTRAPHARMX, INC – PATRICK J LOCHRIE
    Search Results 1 – 4 of 4 search results
    Active File Date: 6/29/2004
    Officer Name Officer Type Corporation Name
    PATRICK J LOCHRIE Director NUTRAPHARMX, INC.
    PATRICK J LOCHRIE President NUTRAPHARMX, INC.
    PATRICK J LOCHRIE Secretary NUTRAPHARMX, INC.
    PATRICK J LOCHRIE Treasurer NUTRAPHARMX, INC.

    1314 E LAS OLAS BLVD #222 Address 2:
    City: FT LAUDERDALE State: FL
    Zip: 33301 Country:
    Status: Active

    https://esos.state.nv.us/SOSServices/AnonymousAccess/CorpSearch/CorpSearch.aspx

    AMENNI, INC. [was Bioceutics Inc. until 5 Jul 05]
    ——————————————————————————–

    Officer/Director Detail Name & Address Title

    LOCHRIE, PATRICK
    110 EAST BROWARD ST
    FT. LAUDERDALE FL 33301 CEO

    DAVIDSON, JAMES D
    321 SOUTH ST. ASAPH STREET
    ALEXANDRIA VA 22314 PV

    O’DONNELL, MICHAEL
    PO BOX 3273
    ORLANDO FL 32802 SD
    _____________________________________________

    http://amenni.com/NEWS.htm

    Marketing Distribution and Product Development News

    Middle East

    Our Chairman Mr Patrick J Lochrie has recently had discussions with Senior Health Officials from several Middle East countries at our Dubai offices with a view to having our innovative Patch Products approved for use throughout their respective National Health services.

    Comment by Tony Ryals -

  28. Jon,

    I think you should review the list of Attorney’s that Patrick Byrne has enlisted. On that list is Brent Baker. Mr. Baker IS a former SEC Enforcement Attorney working for the commission earlier this year. He worked on the naked shorting issues and resigned over the abuses he was requested to stay away from.

    Mr. Baker has written to me personally and called this “more than a problem, it is near approaching a systemic breakdown”. The other attorney with Baker is the Former head of SEC Enforcement in a field office as presented by Byrne.

    The people he put within this campaign have direct knowledge and awareness of the problem and probably have evidence to utilize to boot. How else would these Industry affadavits be so readily available.

    Ironically Marc ignored these facts in the Blog presented as it is more self-serving to trash a stock you are short than it is to present the total picture unbiased.

    Ironically, the Blog that Marc quotes as Gospel [Jeff Mathews] is getting ripped for the numerous factual inaccuracies he has presented pertaining to OSTK. Mathews is getting ripped BY HIS SUPPORTS! Notice Marc never came back to mention that either.

    When it is all about integrity, we frequently see that those with excessive money fail the integrity test. They are too wealthy to admit fault.

    Comment by Dave -

  29. Well, this whole idea of him pitching “naked short selling” sounds as remedial as one of my relatives asking me “How can I buy short a stock?”. He severely hurts his company making such antics, and then to claim “someone who claimed to be from the SEC….”…..How can a guy that runs a public company say stupid things like this? Personally I like Overstock.com and I hope the company does well, but this guy needs to learn how to adequately slam a short seller by making them look wrong and dumb. As far as a stock, this guy needs to get his business in order so we don’t all comment about how such a good story is likely a net-money-loser this fiscal year and hasn’t proven they won’t be in the same boat next year. Even if you trust a “consensus EPS for FY2006″ this looks like it will still be a forward P/E for FY 2006 of like 160, which fits in just fine if you are maybe one of the trader-meth-addicts out there.

    As far as a movie, I would suggest just giving the money it would take to a friend in need. It will be more pertinent and you won’t feel as bad about not getting it back.

    Before you ask, I have no position in OSTK that is long, short, hedged, nor even naked.

    Any how, I enjoy most of your posts and wanted to throw in my 2-cents here.

    Comment by Jon Ogg -

  30. Tony..you are a real piece of work. Funny how Marc continues to allow you to post yet deletes othesr.

    have you been back to the doctor lately?

    Comment by Dave Patch -

  31. Online..you obviously are not astute enough to get the point.

    Not all short sellers are bad. The problem is that when a short sale is executed and a premium paid to borrow shares, it is a breach of contract by the broker to NOT BORROW the shares. It is also an illegal trade.

    marc cuban started this blog, as he has done many times over, discussing naked shorts and ridiculing anybody fighting for the legal trading of securities. I merely asked Marc if he could prove his shorts were settled and now many hours later he still hasn’t answered.

    Takes a tough guy to ridicule others and yet, when asked to prove a point, you run and hide.

    In case you missed it, the SEC very clearly claimed that naked shorting provides additional leverage to the short seller due to teh imbalance of supply and demand. Stocks with that imbalance are listed on the Reg. SHO list and OSTK is one of them. If you profit off that leverage it is ill-gotten gains as the gains are based on an illegal trading venue.

    Comment by Dave Patch -

  32. All this complaining about ‘clogging’ but who other than Bobo O’Brien and Dave Patch bring along a pack of aliases wherever they go like it’s there own ragingbull.con fraud site.

    David Patch,coincidentally,used to tout James Dale Davidson’s GMXX under a number of aliases and conveniently started his
    investigatethesec.con website to replace Davidson’s,Brent Pierce’s,and Grant Atkins’ old ‘NAANSS’,or National Association Against Naked Short Selling’,website when it closed down.And investigatethesec was named,no doubt, for Davidson’s famous phrase,’The SEC lies’, made when the SEC dared look sideways at his penny stock scams.’

    The investigatethesec.con website thus continuing the fraudulent theme of ‘you’re being naked shorted’ to cover the criminal pumps and dumps of unaudited penny stock scams they run or tout for still.In fact,only a short while ago David Patch was promoting the Saudi arms dealor Adnan KASHOGGI’S old pump and dump,Genesisintermedia,as a victim of(hee),’naked shorting’.And now we see Mr.James Dale Davidson has a new penny pump and dump with some Saudi ‘businessman’.No doubt another scam to rob naive Americans.

    You all really should be in jail and you are correct,the SEC should be investigated for not having put you there and disgorging your stolen money long ago.I have no doubt your stock frauds extend back to the Iraq war era and before.And the internet is in many ways still a new tool in your ongoing and long running penny stock pump and dump ops.

    And I hate to think what some of your frauds have funded over the years.

    Comment by Tony Ryals -

  33. Dave (comment #25),

    Does it actually matter whether the shares are borrowed or not, or how much the broker is earning? It’s important to be able to take profits out of you positions, everything else is priority #2.

    Comment by Online Trading -

  34. Nah. Even easier. Just take your favorite market maker out to lunch, or buy some strippers for him, or maybe a nice vacation.

    Happens all the time.

    This actually reminds me of all the brokers that claimed that they had no idea that anyone was front running the mutual funds, when it later turned out to be ubiquitous. There is never a shortage of credulous folks who claim stupidity about simple things, when they happen every day. Same with the Specialist scandal. Ditto for the analyst scandal.

    The account is here: http://www.independent-media.tv/item.cfm?fmedia_id=11203&fcategory_desc=Under%20Reported

    Or start a small company in Europe and claim you are a German market maker – who’ll check? And what does it even take to be one? Then short away. Don’t even bother marking your sales short. You can just not deliver your long shares. Or short, and tell your (wink wink) clearing broker here that you have a large offsetting long account full of OSTK shares in Switzerland – again, who’ll check?

    There are about a million variations. Anyone claiming they don’t know how to do it is either dishonest or stupid.

    Comment by Bob O'Brien -

  35. HOW TO GO SHORT NAKED? easy, become a NASDAQ Broker Dealer.

    Comment by John S -

  36. I wish Jack Kent Cooke had a blog when that SOB was still alive in the DC metro area…sorry, must be the cold medicine…just had a Redskins flashback.

    Comment by chris franklin -

  37. open an acount in canada. i saw a lot of short sales come out of RBCF (Royal Bank of Canada) for clients watning to short stocks that were hard to borrow stateside. they send orders to the states and flag them “shortsale exempt” meaning not only do they send orders without ensuring they can borrow the shares prior to generating orders, but they also try to get you executed on downtick. If you find the time (i konw, i know) check out GENI (Genesis Intermedia) they no longer trade but Canada sent a large amount of orders daily to short this in the late 90’s until the stock was halted and never resumed in late 2001.
    i am also guessing most of the naked shorts in overstock.com were generated from Canada.

    Comment by totalwaste -

  38. Mark,

    You claim you are short 10,000 shares of OSTK and OSTK is on the threshold security list. While you personally may not be able to naked short the stock, your broker can.

    How about disclosing exactly when you went short and show us irrefutable proof that the short position you took out actually settled with Borrowed securities. By irrefutable, i mean actual paperwork that proves your broker borrowed the shares to settle the trade. Imagine your dismay if you find out you paid a premium for shares they never borrowed to settle. Your broker pocketing the premium.

    If you can’t provide the evidence you have no guarantee it really happened, as no long shareholder has any guarantee they hold long shares without ordering the paper itself. Account statements do not differentiuate between settled trades and unsettled trades.

    Comment by Dave Patch -

  39. I just listend to the CC. I think they did some creative editing of the CC. I was following a transcript and all the juicy pieces are cut out. Is that legal to modify a CC audio tape like that on their website?

    Sean

    Comment by sean -

  40. Mark:

    I don’t know how to naked short either, so don’t ask me.

    If I tried to short OSTK or any other stock without a borrow, the trader wouldn’t do it.

    If I lied to the trader and said I had a good borrow and shorted it anyway, my prime broker would demand the borrow.

    If I lied to the prime broker and pretended to have a borrow somewhere else, my prime broker would demand delivery…and when I failed to deliver, my prime broker would buy in the stock.

    So I can’t figure out how to sell short naked even if I wanted to.

    But “Bob O’Brien” seems to know how to short naked, and so does Patrick Byrne. I guess it takes a naked shortseller to know one.

    Jeff Matthews
    I Am Not Making This Up

    Comment by Jeff Matthews -

  41. Mark, get a good Canadian broker. They let you short without having to borrow first.

    Comment by Babak -

  42. Me too.What is actually funniest to me is that the reporter hasn’t considered that he might have found a guy who contributes to NCANS and has used his cash to help the cause.

    Comment by wow-gold -

  43. Naked shorting is illigal but that does not mean that it is not happening. Large hedge funds that generate tons of commissions goad their broker dealers into letting them short stock that can not be borrowed. When they eventually get “bought in” they just short again in another account and so on. This “rolling” of shorts keeps pressure on the stock and in a market where momentum is king, it does not take long to get a stock to eventually break down.

    Comment by Tim Flick -

  44. Naked shorting is illigal but that does not mean that it is not happening. Large hedge funds that generate tons of commissions goad their broker dealers into letting them short stock that can not be borrowed. When they eventually get “bought in” they just short again in another account and so on. This “rolling” of shorts keeps pressure on the stock and in a market where momentum is king, it does not take long to get a stock to eventually break down.

    Comment by Tim Flick -

  45. Jesse Eisinger and of course Carol Remond of Wall Sreet Journal deserve kudos for having brought Mr.James Dale Davidson,(and perhaps in another context Patrick Byrne),’out of the closet’,so to speak, as either being ‘Bob O’Brien’himself,or the major financial backer,(with the possible exception of Patrick Byrne),to ncans.net.

    Although Motely Fool may have been the first,(and hopefully not the last),to mention James Dale Davidson in context of and with NFI-INFO.NET and NCANS.NET,WSJ’s two top notch reporters have humbly done more to expose what may still have many more surprises in store. Motley Fool must take criticism as well for articles that,intentionally or not,have aided and abetted the naked shorting myth,and in so doing,have protected the criminals who have used the claim to mask their own penny stock pump and dump fraud and securities manipulations.

    I only hope the SEC,DOJ,FBI,etc. begin an investigation if journalistic will or interest is lost.Unfortunately I am left to wonder at the political will of Washington,D.C. to investigate itself in light of such heavy weight politicians as Utah’s Senator Bennett,
    at best looking foolish for the Global Links etc. ‘naked shorting’ claims he made, and at worst,being perhaps connected to Beltway insider James Dale Davidson or even his Utah constituent Patrick Byrne and feeling a need or desire to cover up for them and perhaps OTHER Beltway or politically connected individuals.

    It was Jesse Eisinger’s investigating that scared ncansd3 or ‘bob o’brien’ on yahoo’s nfi board into uttering ‘james davidson’ on June 1 in context of a major financial contributor and sponser,including of cell phones,and ‘a boat’ named ‘James Davidson.Before that,as you may recall,he denied ever hearing of a ‘James Davidson’ both here and elsewhere,including on ncans.net when William Alpert of Barrons put the question to him directly.

    Of course later when he posts his complete email exchange with Eisinger on ncans.net,he xxxx’s out all mention of the boat’s ‘james davidson’ name.Eisinger also appears to have gotten some news of a Wells Fargo account in San Diego for ncans.net and their lawyers,Sadr and Barrera.

    Too funny that James Angel formerly of Haas School of Business and now Georgetown starred in the infomercial with Mary Campbell Helburn and Utah Senator Bennett.I informed him that the only address for the organization appeared to be a striptease joint whose owners were accused of bribing San Diego city council members.I also asked him to provide one example of a company seriously injured by ‘naked shorting’.So far,no answer.

    Note the latest biotech penny stock scam Mr. Davidson is involved in with Saudi investment connections.And no doubt if this new pump and dump meets with ‘success’ Mr.Davidson will have stolen from more naive Americans(such as myself) to benefit himself and the Saudis.This is a Beltway ‘patriot’ ?

    FROM YAHOO NFI BOARD JUNE 1 :

    Re: Send, or not? Comment, or copy? RVA
    by: ncansd3
    Long-Term Sentiment: Strong Buy 06/02/05 12:02 am
    Msg: 310727 of 333497

    I would add that copies of emails in which Mr. Eisinger cites very granular banking info regarding NCANS deposits are available if they wish to email me.

    What is actually funniest to me is that through all of this, the reporter hasn’t considered that he might have found a guy who contributes to NCANS and has used his cash to help the cause – but is someone different than me. Someone who actually has been very helpful with things like procuring anonymous cell phones and the like, but is no more Bob O’Brien than the Granny he went to terrorize. Oh well, I’m sure it will all make great theater, and the attorneys are likely to have a ball with it. Like I said in the beginning – they require a Bob O’Brien at all costs, and it really doesn’t matter much whether he is the genuine article or not at the end of the day.

    And I’m not telling – not going to do it. Kind of pisses everyone off, I can tell. Sorry guys. But I’m quite sure you have the right guy – keep on keeping on – he sounds like a bad ‘un to me. Very mysterious. I was told a sandwich shop was involved. One shudders to think what goes on there. And a boat. I think it’s named the James Davidson. It is all unclear at present. Or maybe the sandwiches are subs – those are marine sounding.

    Actually, I do kind of wish it was me. Not that it isn’t. Or is. Or may be. Or not.

    But what I do know is that violating federal laws is a no no last time I checked – and if what they discovered was a big donor to the cause – I hope it was worth someone going to jail over. That’s what happens when you violate federal law, I think – I haven’t done any federal lawbreaking, so couldn’t tell you.

    So what do we have at the end of all of this? People who can easily be shown to do anything it takes to get their way, regardless of the law, and who aren’t bright enough to get that they are holding nothing. Capital N. Nada. Which they will ultimately find out, as do most who have nothing, over time. In the meanwhile, I think maybe this will be a good mechanism to launch the fiction book – it’s about a corrupt, criminally linked hedge fund who sets out to crush a company as part of its serial killing mechanism, who uses the press to do its dirty work and considers itself above the law due to its political contacts, and decides to go after a guy that creates a website that exposes their scheme and creates considerable difficulty for them. I even have a corrupt reporter or two in it. Sort of wrote itself. I think it’s a good read. Fast, and believe it or not, has a few similarities to real life.

    Have to figure out how to get it out there. I suspect now is the time.

    Oh well, good night all. Thanks for all the FBI and WSJ complaints – they will follow up, and they don’t just poo poo this sort of thing when it involves attorney trust accounts and feloniously obtained bank records.

    We shall see what the day brings.

    Posted as a reply to: Msg 310685 by rvac106

    Comment by Tony Ryals -

  46. Maybe someone can help me out on this.

    Company ABC has 100,000 total shares. 50% are in the float. I happen to own 100% of the float (50,000 shares). Each share gives 1 vote.

    My broker borrows my shares for a short sell (of course I am not aware of this), for clarity we say to 1 buyer. The next trading day I decide to sell my 50,000 shares, for clarity we say to 1 buyer.

    Now there are 2 shareholders who think they own 50,000 shares each. Which one holds the 50,000 voting rights?

    The first transaction or the second?

    Now this is a simple way of describing the issue of short abuse and naked shorting. Now when we are talking millions of transactions and thousands of shareholders, is it not easy to see how the number of “sharholders” of record coulkd exceed the float?

    Comment by elvistcb3577 -

  47. Mark,

    If I understand your logic (please correct me if I am wrong as you said you would like to be able to naked short if only you knew how), you would have no problem if I:

    1. Had a way of finding out which seats would be left unattended for Mav’s home game.
    2. Created fake game tixs.
    3. Sold at considerable discount.

    Now why should you care? If I was really good I could guarantee you a sold out game everynight. And these extra “fans” might buy a game jersey, or an inflated concession item.

    But what if word got around about these tixs? And before you know it, I was selling more tixs than available seats? But my fake tixs were so good that you could not tell them form the original? And what if I got so good at it I started selling this tixs in such a way that I guaranteed entry… you just had to pick up you tix at the arena? Of course no tix is there waiting for you?

    Now you would be fine with this?

    It blows my mind that you are naive in your thinking that it is impossible for unscrupulous activities to be taken place on the Street concerning the loopholes in place for naked shorting.

    Also I cannot understand why you refuse to acknowledge the difference between a legitimate short position and a naked position (I have no problem with shorting).

    The later is what I described above. The former is akin to a scalper of a Mav tix, which I do not know your position on.

    Comment by elvistcb3577 -

  48. Overstock / HDNET Films
    Mark…a film should be made…
    I used to do a lot of biz. with Overstock as VP of Sales and Marketing of USA Inkjets, their primary supplier of printer cartridges…

    I left USA Inkjets when I found out they were putting Chinese cartridges in Made in the USA boxes…I also allerted Overstock to this, but they continue to knowingly market and sell this company;s fraudulent products (import / Export fraud)

    I worked with Overstock for about two years in the area…additionally I was a money manager (CROP/SROP/ series 55 etc) for more than seven years…what I am getting at is that I know the mechanics etc. and might consider writing this one and pitching it to HDNET Films…

    Comment by Paul Hoeper -

  49. Wow, Mark. You are short 10,000 shares of OSTK, and you admit it? I know people do their dd whenever a purchase that large is made so that means you know about all the failures to deliver on this stock, and that ought to also let you in on the fact that a squeeze is imminent. As you know, the amount of money one can lose on a short position is infinite. But that’s only if you own infinity. For you, i guess it’s the Mavericks and the rest of your money. When the squeeze comes, nobody is selling, not the millions that need to be sold for a certain hedgefund to get out. The price just might be headed to infinity. Have you done a calculation to see what price it would have to hit before you are forced to sell your team? Good luck to you.

    Comment by eric -

  50. I got Jeff Mathews’ name wrong. I don’t devote much bandwidth to him, so his last name sometimes escapes me. I find him repellent, given that he is the only blog I’ve come across that censors his commentators, as it turns into a bully pulpit for his agenda: to “talk his book”, and say negative things about the companies he is short. He dislikes me intensely as I make him look like a dolt, and he cannot tolerate dissension. It interferes with his agenda. But if you want to read an endless string of eerily similar responses along the lines of “You are great, Jeff, thank goodness we have you to share your Solomon-like wisdom”, he’s your guy.

    I’ve always wondered if it was all just him and his secretary using multiple ID’s given the strangely similar syntax and word choice, but hey, what do I know. Couldn’t be.

    He is touted by every short and basher on the Yahoo boards, so he has a fan club, or at least very workmen-like folks going out and hyping him every time he bashes someone (or Dr. Byrne is right, and he’s merely the hedge funds going “we need a blog so that we can slam companies we are short”, so they had him create his and they then have the boiler room boys propagate it).

    Comment by Bob O'Brien -

  51. “THE FARCE”

    “The Farce Magazine” recently obtained a rare interview with Yoda, the reclusive, all-knowing Jedi Master. In the following Q&A excerpt, Master Yoda shares a few thoughts regarding the recent Overstock.com conference call, the Dark Side, and his alleged OSTK naked short position….

    TFM: Master Yoda, on behalf of “The Farce Magazine” I would like to thank you for granting us this rare interview….

    Yoda: Help you I can. Yes, mmmm.

    TFM: Thank you, O’ Wise One….What are your thoughts concerning the recent Overstock.com conference call?

    Yoda: Unexpected this is, and unfortunate….hmmm.

    TFM: What is your opinion of Patrick Byrne regarding his performance as CEO of Overstock.com?

    Yoda: Reckless he is….Matters are worse…….Once you start down the Dark Path, forever will it dominate your destiny, consume you it will….mmmm

    TFM: Do you believe Dark Forces are effectively manipulating or suppressing the OSTK share price?

    Yoda: Clear your mind must be, if you are to discover the real villains behind this plot….hmmm

    TFM: Master Yoda, it has been rumored that you have a sizable naked short position in OSTK. Would you care to address the rumor?

    Yoda: Size matters not! Judge me by my size, do you? hmmm….

    TFM: Alrighty then….I have one final question Master Yoda….Do you fear a potential OSTK short squeeze?

    Yoda: Fear is the path to the Dark Side. Fear leads to anger. Anger leads to hate. Hate leads to suffering. I sense much fear in you….Hmmm

    Yoda: Nothing more will I teach you today….Clear your mind of questions….mmmm

    TFM: Thank you Master Yoda….This interview has been an enlightening experience….

    Jim Parham ~ Yuba City, CA
    stockmaverick@gmail.com

    ****Master Yoda quotes courtesy of various “STAR WARS” movie episodes****

    Comment by Jim Parham -

  52. Mark, do us a favor and introduce an ignore feature to your blog. This will be a very interesting topic and I’d like to put Tony Ryals on ignore so I don’t have to wade through 50 pages of him cutting and pasting stuff and self indulging his ego with fragments of illiterate sentences that adds nothing to the conversation but instead clogs any threads of rational discussion.

    TIA

    Comment by mfairview -

  53. Dear Markie Mark,
    IMO you got it big time wrong on OSTK and David Byrne. Could it be cuz he is clanging his balls and your continue to clink away at the issue of naked shorting? I’ve got 2000 shares of OSTK and plan to buy more next week. I would love to loan some to you. Pony up to the table. Watch what happens next week and then post how many shares of OSTK you have shorted. If you weren’t a Hoosier fan I would tell you to pound silicon up your arse. Hawg.

    Comment by Hoosier Daddy -

  54. I wrote and posted this article-complaint on houston.indymedia.org and elsewhere before knowing you started this thread on your blog.It’s actually much longer than this and includes a letter to the SEC’s John Reed Stark and my tirade,(justifiable in my opinion of course),about his Georgetown University colleague,James Angel, doing that infomercial for ncans.net along with Utah Senator Bob Bennett and ‘Mary Campbell’.

    Below is the beginning as it pertains to Houston’s ‘famed trial attoney’ and what I think of him in regards to ‘naked shorting’.

    I noted in doing google search a recent Houston Chronicle article mentions local doctors are up in arms about a medical tower being named for him there as well.

    houston.indymedia.org/news/2005/08/42123.php

    Has Texas Attorney John O’Quinn covered up stock fraud and money laundering ?
    by Tony Ryals Friday August 12, 2005 at 07:05 PM
    ncansisscam@yahoo.com

    Yesterday a press release by Houston attorney John O’Quinn, below,paradoxically announced the strange case of Dr.Patrick Byrne and his claim that his Overstock.com of Utah is being illegally shorted by Rocker Partners Hedge Fund.

    Paradoxically it was Dr.Byrne and his wealthy ex-insurance magnate father(Geico) who gave one million dollars to ads to attack former Democratic VP candidate John Edwards,plus a donation to Swift Boat Captains for Bush to attack Presidential candidate John Kerry’s war record.

    Paradoxical because the supposed Democrat,John O’Quinn,who won billions for himself and Texas in tobacco litigation, is representing the most sleezy of Republican business and corporate interests and the only profit that Overstock has generated are shares sold to suckers.In many ways this dollar stock is very similar to the money losing penny stocks attorney O’Quinn claims were ‘naked shorted’ when in fact Endovasc of Montgomery,Texas,as one example,is now known to have made a false claim to cover up illegal pump and dump activities including from a Charles Schwab account,the very broker and market maker they and ‘ famed attorney O’Quinn’ claimed was ‘naked shorting’ them.

    It was all a lie and a fraud to steal millions and hide or launder money from investors and O’QUINN WAS EITHER PLAYED FOR THE BIGGEST SUCKER AND LEGAL BUFFOON OF THE CENTURY,OR HELPED THEM CONCEAL THE FRAUD !!! And it appears likely one person behind all of the Endovasc scam and going by the alias of ‘Bob O’Brien’ ,that attorney O’Quinn could tell us about,is really James Dale Davidson of of the Beltway,(who accused former President Clinton of killing Vince Foster),and of Agora Publications and newsmax.com, etc., who ‘pumped’,or illegally promoted Endovasc stock and company,and who was a chief beneficiary of the dumping or inundating the market with worthless Endovasc shares from that Schwab account that Endovasc management,and possibly Montgomery,Texas’Judge Ken Reilly,(SEE Judge Ken Reilly,Endovasc and money laundering in Montgomery,Texas on this website or link below), deposited ‘up to 30 million shares’ for unidentified ‘select clients’ of Schwab and Endovasc !!

    Houston attorney John O’Quinn has been claiming since 2002 that Endovasc of Montgomery, Texas and a number of other corrupt penny stock companies and clients he has represented, are victims of ‘naked shorting’,or the dumping of non-existent shares by market makers such as Schwab Capital,etc.,when,in fact,he has every reason to believe his own clients were running illegal pumps and dumps of their own shares. And I have the proof.

    This cover up ,or looking the other way, by attorney John O’Quinn and Wes Christian,further led to the post 911 dumping of additional millions of unaudited shares of Endovasc through a Kuala Lumpur boiler room that also has ties to Dubai,both suspect terrorist money laundering locales. So attorney O’Quinn’s false claims of Endovasc management being victims of ‘naked shorting’ may very well having aided terrorist money laundering.We don’t know.

    James Dale Davidson,et.al.,dumped from a Charles Schwab account and Attorney O’Quinn put his name to a fraudulent businesswire pr claiming the James Dale Davidson pump and dump of shares from a Schwab account was,instead, ‘naked shorting’.

    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.

    Comment by Tony Ryals -

  55. Hey Mark.

    Well, you can always be counted on to have an opinion. Tell me, do you know the 6 law firms involved in the suit against Rocker Partners and Gradient? Did you know that one of them has the ex-SEC naked short selling troubleshooting counsel (he left the SEC a few months ago), as well as the ex-state regulator for Utah and NV? Another has the former Houston FBI head investigating. Did you note that Giuliani, who put away Milken, is one of the partners of his law firm? Do these seem like lightweights to you?

    I agree it was an entertaining call. I remember how fun Iran Contra was when the tiles started coming off that wreck, and how much eye rolling could be had from the establishment apologists in the early days, how much conspiracy mockery abounded – almost as much as greeted Woodward and Bernstein in Watergate.

    Reminds me of the coordinated media response to this. The response is a time honored tradition, as noted above.

    Byrne articulates a well researched, schematically organized stock manipulation scheme wherein the media has strategic elements co-opted, Kroll (next door neighbor to Einhorn) is instrumental in clandestine investigations, hedge fund groups leverage their entre to these media groups to disseminate their propaganda, and the whole machination is the coordinated vision of a guy who was convicted of that type of manipulation in the 1980’s.

    Huh.

    So let me see if I understand this correctly. Your position is that there is no scheme? Because…..well, just because? I mean, we’ve seen similarly elaborate schemes from Milken in the 80’s, and in Operation Bermuda Shorts with Mark Valentine in the 2000’s, and Elgindy in the 2000’s, but you just know this is BS because….help me out here, would you?

    So fat we have seen several of the names mentioned as being co-opted by this network chime in – Herb, Carol Remond (whose “OSTK Facing SEC Probe” false and misleading headline which appeared during Friday’s trading was modified to now read “OSTK subject of Feb. Probe”), and Jeff Michaels (a hedge fund manager and amateurish blog pundit who admits being short OSTK via puts, and acknowleges that he’s buddies with Rocker and Cohodes and Herb), and a guy at Motley Fool who quotes Michaels as if he was the Messiah, along with Tony Ryals – and we all understand how credible Tony is. You seem to like Jeff and plug him as well. Small world, huh?

    So you are in good company. All the hedge fund familiars and quislings are towing a carefully scripted party line – Byrne is a whack job – and now here you are towing the same line. What a coincidence. What a marvelously serendipitous world we live in.

    Do you have any idea of the evidence the 6 legal teams and their investigators have assembled? You must have, as you are so quick to dismiss the possibility that Byrne is correct. Do you know the names that they have evidence on? The number of sworn affidavits? The hard facts that have been painstakingly assembled? Yes? Or no? Do they strike you as a frivolous and fun bunch?

    Which part of the manipulation schematic do you disagree with? The notion that a group of reporters that live and work within a few miles of each other and know each other could be co-opted? That Einhorn’s wife, who worked as an editor at Barron’s until last month, couldn’t have hooked up Alpert with David? That Eisinger, who knows Rocker and Cohodes and Herb from his days at Thestreet.com, is somehow not associated with these same names? That his neighbor, Kroll, wouldn’t investigate targeted companies for them? That a guy whose MO in the eighties (if the speculations are true) involved precisely these sorts of highly structured and complex manipulations couldn’t be doing it again? That wealthy investors in the funds (one of the names is precipitously from TX, the other from Chicago) don’t act as conduits to their buddies at the regulators?

    What part seems the most odd to you? That when large money is involved, and there is an industry that generates its dollars by preying on companies, that some of the more larcenous ones wouldn’t hook up and pool their resources?

    You indicated that you would be willing to break the law and naked short if you could figure out how – why do you have such a hard time understanding that others are just as willing to break the law and know how? Hint: Start a shell tomorrow, declare yourself to be a market maker, get certified as such (offshore is even easier, just claim to be one) and start selling! Or call one of hundreds of MM’s that will sell for you. The NASD just filed charges against a MM that did just that for a bunch of hedge funds, so it isn’t like it isn’t done every day.

    This is nothing new. Read some history of Wall Street. Stock manipulation pools were a big part of the scene in the 20’s and 30’s. Joe Kennedy made his fortune running pools. What Byrne is describing is nothing more than one of Jesse Livermore’s pool-type manipulations updated to present day. It’s all been done before. In fact, the history of Wall Street is littered with exactly the type of scheme Dr. Byrne outlines.

    Kennedy went on to become the first chairman of the SEC, after running pools with names like Rockefeller, Dupont, Schwab, etc. invested in them – so why is the notion that the exact same thing is going on today so far fetched? It would be surprising if it wasn’t, given the regulatory environment. All of these SRO’s (self regulatory organizations) are looking the other way – kinda neat, given how trustworthy the industry has proven to be. Reflect upon the analyst scandal, the specialist scandal, the mutual fund scandal, the corporate accounting scandals…why, these guys are as honest as the day is long!!!

    One of my favorite facts about SRO’s and their claimed lack of requirement for any oversight is the NYSE. Back in the early Thirties when Congress was pushing for regulation of the markets, the NYSE led the charge against any, arguing that no misbehavior was going on, and that they were gentlemen capable of minding their own affairs.

    The head of the NYSE at that time, and chief Wall Street spokesman, was Richard Whitney. Through his efforts and a lot of money spread around, the SEC’s charter was watered down to the point where they didn’t even have prosecution capability, and the stiff rules in the original bill were tossed in favor of vague language allowing the Commission to make rules down the road.

    What is ironic is that Whitney was convicted in 1938 of embezzling his client funds during that entire self righteous period, and went to Sing Sing for five to ten.

    That is the history of The Street. Stock manipulation pools run by criminal minds and funded by a who’s who of society. An ethic where the pros on the street are there to fleece speculators (the general public). A deliberately toothless regulator that was established to “restore investor confidence in the markets” – not to actually do anything that deserved confidence.

    So either you know all this and are ignoring it, or you don’t, and thus are ignorant of the lay of the land. You are a bright guy, so I’ll go with the former.

    Byrne is a bright guy too. He has a savvy legal team that understands what he is embarking on, with some of the top players in the business researching things for him. He does not do things in half measures, as long as I’ve known him. And he doesn’t say things unless he has the data to back it up. I would not be so glib to dismiss his concerns.

    BTW, I already have the fiction book in the can, and am currently writing the non-fiction history of the market with an explanation of the moving parts for the layman, and a large section will be on this episode.

    You really can’t make this stuff up.

    And this will, in hindsight, prove to be one of the bigger bomb blasts to hit Wall Street in our generation.

    As an aside, if you really are short, I have one question for you: Since Byrne and his family and friends and sympa

    Comment by Bob O'Brien -

  56. Mr. Blog said: “In the business world, one way to evaluate the financial importance of news is by watching to see how Wall Street responds to it. If there is the slightest glimmer of hope in a news announcement, at least one person is going to think it will have some level of impact and make a bet on the stock and/or industry impacted.”

    How right you are, look at Friday’s trading action.

    I was watching the interview at work (one of the few times I change from HDNET(thank you Mark for 1080i), I sell home theatres) and when Dr. Byrne started recounting the math regarding the number of shares, coming to the conclusion that there are around 18.5m shares in the hands of family and friends, leaving 200k in the free market, the stock shot up. It appears many folks are anticipating a major squeeze trying to cover 7m shares with only 200k shares. It will be interesting to watch.

    Comment by Peto de Pure -

  57. “In the business world, one way to evaluate the financial importance of news is by watching to see how Wall Street responds to it. If there is the slightest glimmer of hope in a news announcement, at least one person is going to think it will have some level of impact and make a bet on the stock and/or industry impacted.”

    Intresting Mr. Cuban those are your own words in your Kaboom post. I guess on Friday the market had it all wrong and the CEO of Overstock.com isn’t being taken serious? One must wonder what your motivation is now on Overstock. Did Cramer call and ask for a post Mark?

    Comment by My Blog -

  58. “Have a few good quarters and the shorts will go away”
    So the meth craze has hit the CEO types! Nice

    Comment by Andrew Coffey -

  59. Sure sure, Patrick Byne is unsavory as are his mudpies. But man the last couples conference couples have been incredibly entertaining.

    Friday’s call was an epic meditation on insanity induced conspiracism. I’m just amazed that people are still riding the bandwagon of a drunk driver. People think they are just a quarter away! A couple months they will be rolling in it! Etc

    Madness. But fun.

    Comment by Johnny Debacle -

  60. Ummm… didn’t you know that “naked shorting” of stocks is now illegal (unless you’re a broker-dealer “market maker”)?? The SEC passed a rule back in 2003 to ban the despicable practice.

    See the Investopedia:
    http://www.investopedia.com/terms/n/nakedshorting.asp

    See the SEC FAQ related to short sales:
    http://sec.gov/spotlight/keyregshoissues.htm

    You can legitimately write “naked” options (e.g., calls), but that’s a completely different story.

    I’m a firm believer in the concept of investment “tools”. Over many decades of horrendous abuse, “shorting” stocks has turned out to be much more of a weapon than a tool. In particular, we continue to hear of “strategies” which appear to be focused on trying to intentionally *force* the price of a stock down. That’s an abuse, a use of a technique as a weapon rather than a tool to enhance shareholder value.

    Other than “shorting against the box”, I have yet to hear a reasonable rationale for continuing the practice of shorting. There are simply too many opportunities for misbehavior.

    If you’ve got so much extra cash sitting around that you’re willing to dedicate to shorting the stock of people trying to run businesses, what’s your primary objection to using that cash to actually *create* some real social value? Hmmmmm…

    — Jack Krupansky

    Comment by Jack Krupansky -

  61. The stock market this year has been amazing. I don’t own shares but I still follow it. So many IPO’s coming into the market, oil prices skyrocketing, and many more factors playing in, it’s become a fun ride.

    Comment by Walid Matar -

  62. Did you read his letter? My favorite part is when he talks about his “nut”. I *am* a screenwriter and filmmaker… there could be a story, especially if we got the real juice on his young days as a Christmas tree salesman…

    Comment by Nicholas J. Coleman -

  63. There’s definitely a movie here and you’re just the guy to make it…

    Speaking of, can you explain to me why I can’t watch ‘The Smartest Guys…’ on HDNet?

    Comment by Chris Selland -

Comments are closed.