Reality is the ultimate paradigm, and once the paradigm of limitless growth (aka "perfection") was exposed as a fraud then a reevaluation of stock prices was in order.
Let us not forget that this 'fraud', (despite the fact that we, as traders, bear significant responsibility for over-valuations) cannot simply be the result of our over-enthusiasm and self-deluding behavior. The talking heads and committed bears are quick to blame it on our mirrors, but that's simply a disingenuous way to cover the hind ends of an industry rife with something more than excessive hype, but outright fraud.
When a fraudulent PR caused EMLX to tumble, did the SEC invalidate the trades so the property stolen by dishonesty could be returned to its rightful owners? No.
When an analyst downgraded a sector, and dozens of analysts rushed to decry the lone voice... and 4 to 6 weeks later, the lone analyst was proven correct, did the other analysts get taken to the woodshed? No.
When new SEC rules required greater standardization of accounting methods and investors started gaining access to the previously hidden 'discrepancies' in books that were more cooked than a steam table vegetable at closing time, were the liars punished? No, the investors were.
When the CEO of a company in a declining sector stepped up to say, "hey, nothing's changed in our outlook" (as happened with TSTN and many others), then within two weeks they issued earnings warnings that proved them not just to be liars, but extraordinary liars, tongues clucked and that's all. Outright fraud, yet operating under the threadbare cloak of freedom of speech.
If the market principals are going to insist that all's fair in love and war and Wall Street, and persist in promoting fraud as an acceptable form of business in a new millennium version of the lawless frontier that us poor dimwitted pioneers simply got stung by because our wagons were poorly built, I think it's equally fair to begin a discussion of how a besieged community is to provide for its self-protection until a lawman shows up.
Among the proposals we should seriously entertain:
1) An online virtual post office lobby, with 'Wanted' posters for the analysts whose own record of upgrades and downgrades, coupled with the sale-of-stocks patterns of the brokerages they work for, display that their words were designed to produce profits for the brokerage via the promotion of stocks they (or other analysts under the same roof)subsequently downgraded within 60 days of the original pronouncement.
For this type of wild west crime, the punishment should be their dismissal from their jobs. By notifying customers of the guilty brokerage houses of specific examples of this sort of fraud, the website would become a lobbying effort focal point to begin letter campaigns to get the analyst dismissed. With the threat that customer accounts will be closed at the offending brokerage if they do not dismiss the offender.
2) When direct and overt fraud occurs that benefits the perpetrator of false press releases and/or message board manipulations, the SEC penalties have proven too weak. I propose that we resort to the tracking and horsewhipping of such scoundrels. If they turn out to be minors, one parent of the offender could be horsewhipped in their stead.
3) Class action suits against corporate miscreants typically benefit the lawyers, while investors and traders collect pennies on a dollar of losses. I propose, for the CEOs, CFOs and PR flacks whose press releases contribute to the stream of outright deceptions that result in successful lawsuits against the company.... that their names and addresses be published online. With the encouragement that, if viewers encounter these scoundrels, they should be given an actual coat of tar and feathers.
4) If such examples of corporate fraud extend further, to the cooking of books, where accounting discrepancies prove egregious in nature (think LHSP), similar postings of names and addresses of every officer and board director of the offending company should take place. With the encouragement that the real property and automobiles of such individuals should be vandalized and destroyed, providing the same care to their property as they provided to ours.
5) Of course, such websites should carry disclaimers indicating that we are not advocating anyone to act outside the law or to commit crimes of violence, but that we simply are encouraging folks to imagine such outcomes and talk about them. That way, if the corporate criminals ever do experience justice, the website owners will remain completely protected. That's the beauty of disclaimers..... they can promote all manner of anarchy and acts of vengeance, then snub their noses at the US Marshals and say "Neener-neener, you can't touch me!".
Property and corporate and libel laws are writ to provide protection from lawlessness. But when the laws are proven to protect only the scoundrels and provide little or no protection of the innocent, it can easily be argued that an obedience to a higher conscience is in order.
The frauds that have been exposed so steadily in the past year indicate it's time we all consider the need for and application of frontier justice, since real justice is being denied. When practitioners of the law refuse to construct laws that protect property owners, the law itself proves unjust and meaningless.
And I'd propose it's up to the communities damaged by unjust laws to take matters in their own hands, either by designing and instituting better laws, by conventional or unconventional means. And sometimes, an extremist application of fresh justice is the only avenue left to get the message out loud and clear that changes had better occur because fraud's soon going to become a behavior that puts perpetrators at serious risk.
And what of the media hypesters who help cloak and promote such fraud? Despite the barren consciences of those who work under the necessary protections of freedom of speech, there's another form of justice available that finds equal protection under the Bill of Rights' press freedoms.
For them, a website with their photos, descriptions (spoken or artistically rendered) of their sex organs and their predilection for bestiality and necrophilia (again, perhaps lovingly rendered by an artist's brush) ought to suffice. Time has demonstrated that some analysts are pretty adept at seeing through hype and BS, while others are parrots or hypesters themselves. I say, let the forces of justice work their magic with those who prove to act in a vacuous fashion, providing hype and entertainment without delivering the facts as any respectable news organization should.
Disclaimer: Nothing I've said herein should be construed as an advocacy position for any specific act within or without the constraints of existing law, even the most impotent and ill-serving laws. This posting is simply an expression of opinion about the existence of many types of legal fraud, coupled with imagined remedies that fraud perpetrators ought to be subject to, as a minimum sentence for their gross and unconscionable actions. I say, if public ridicule and voting with our wallets does not deliver justice, a return to the days of tar-and-feather just may provide relief from the misdeeds of liars and scoundrels whose works result in the sale of damaged goods to consumers. If any retailer acted as these frauds do, they'd be punished under bait-and-switch laws or other laws. And corporate offenders deserve like treatment, or worse. |
