agree pump and dump is dangerous, but the Enron fiasco, when all is told, will I think be worse for the credibility of our markets and financial system.
But don't you see the simularity?
In your typical pump and dump, you have non licensed people dealing in stock "fraud". They don't disclose to you that the balance sheet, although, it tells you that 10 Zillion shares are authorized, like most balance sheets, on this one they are ISSUED or will be issued at a moments notice.
In Enron, on a VERY PRELIMINARY basis, one of the problems is that potentional debt was not debt on the balance sheet because it was guarenteed by the issuance of STOCK. (Stock goes in the equity account, not in the debt account, cute huh?)
This is almost the same type of option that is not fully disclosed on the balance sheet of the pump and dump.
(The cute part of the pump and dump, that I have always liked is that to explain the extra shares floating around they invent the "short" squeeze, whereas Arthur Anderson I AM TOLD used "8 pages of footnotes". Same thing. :)) |
