Wow are there really crooked shorts?
Naked Short Seller Controversy
SEC, Courts Double Slam Short Sellers
February 28, 2003. ((FinancialWire) The world of the “Short Seller Wars” turned upside down Thursday as the Securities and Exchange Commission stepped forward to fine an alleged short seller of Sedona Corp. (OTCBB: SDNA) $1 million and issue a stern warning to others. With the SEC now watching, the company’s shareholders benefited from a 35.29% rally on 5-times normal volume.
Meanwhile, FreeStar Technology (OTCBB: FSTIE) claimed a court victory over alleged short sellers vFinance, Inc. (OTCBB: VFIN) in the dismissal of a Chapter 7 involuntary bankruptcy petition brought by vFinance, David Stefansky, Richard Rosenblum, Marc Siegel, Papell Holdings LLC and Boat Basin Investors Ltd., in what it said was a thinly-veiled attempt to depress the stock while the petitioners covered an illegal “naked short” position. FreeStar said it is now able to pursue damages. In other news, MBIA, Inc., (NYSE: MBIA) as reinitiated its share repurchase program after halting it due to short selling, and Rocky Mountain Energy Corp. (OTCBB: RMEC) said in an interview that it has been victimized by short selling.
In filing a settled civil action against Rhino Advisors, Inc., and its president, Thomas Badian for “directing a series of manipulative short sales of Sedona Corp. that contributed to the decline in price,” the SEC warned both issuers and investors to “evaluate carefully” financings, particularly “those having conversion or issuance mechanisms tied to a company’s fluctuating stock price” as opposed to fixed conversions.
Thomas C. Newkirk, Associate Director for the Division of Enforcement said that “toxic” or “death spiral” convertibles “present the temptations for persons holding the convertible securities to “engage in manipulative short selling of the issuer’s stock in order to receive more shares at the time of conversion,” and said the $1 million penalty imposed “shows the Commission’s determination to address these abuses.”
The SEC has also posted a series of websites of interest to investors and issuers alike:
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The timing is extraordinary. This Sunday night, the “Short Seller Wars” hits the airwaves for two hours, as “Corporate Strategies with Tim Connolly,” on 275 radio stations and live on the web at BusinessTalkRadio (http://www.businesstalkradio.net) from 8 p.m. to 10 p.m., will be airing the views of those on both sides of an issue that has now embroiled the Dow Jones (NYSE: DJ) Newswires, Reuters (NASDAQ: RTRSY), the Depository Trust Corp., several major brokerages and some 60 public companies – and that is said to be on the “to do” list for new SEC Chair William Donaldson. Co-hosts are Scott Eisler and Michael Kravitz, Senior Vice Presidents of Wachovia Securities, a unit of Wachovia Corporation (NYSE:WB).
Connolly’s special show is co-sponsored by the CEO Council, Investrend Broadcast (http://www.investrendbroadcast.com) and Princeton Research. In addition to live commentary from CEOs, attorneys and professionals embroiled in the controversy, Connolly said he and the guests will take live questions and comments from market makers, financiers, brokers and individual investors at 1-877-266-7465.
Connolly is CEO of Merchant Banker Corporate Strategies, Inc., and the Executive Producer of
the show is broadcast news veteran Jan Carson, an award winning journalist with more than 20 years experience as a top rated television news anchor and reporter for network affiliates of NBC, a General Electric (NYSE: GE) unit, ABC, a Disney (NYSE: DIS) unit and CBS, a Viacom (NYSE: VIA.b) unit. Recent guests have included former SEC Chairman Arthur Levitt, former Hewlett-Packard (NYSE: HP) unit Compaq CEO Eckard Pfieffer, Money Manager Louis Navellier, and many others.
Noted Economist Mike King of Princeton Research provides live technical analysis for the show and hosts the "Not For Widows and Orphans" segment.
The complete list of the 62 companies now associated on one side or another of the naked short seller controversy includes A.G. Edwards, Inc. (NYSE: AGE), Federal Agricultural Mortgage Corp. “Farmer Mac” (NYSE: AGM), Allied Capital (NYSE: ALD), American Motorcycle (OTC: AMCYV), American International Industries (OTCBB: AMIN), Ameri-Dream (OTCBB: AMDR), Bluebook International (OTCBB: BBIC), Blue Industries (OTCBB: BLIIV), Bentley Communications (OTCBB: BTLY), Biocurex (OTCBB: BOCX);
Also, Critical Home Care (OTCBB: CCLH), Composite Holdings (OTC: COHIA), Edgetech Services (OTCBB: EDGH), Endovasc Ltd. (OTCBB: ENVC), Enviro-Energy Corporation (OTCBB: ENGY), Environmental Products & Technologies (OTC: EPTC), FreeStar Technologies (OTCBB: FSTI), GeneMax Corp. (OTCBB: GMXX), Global Path (OTCBB: GBPI), Goldman, Sachs & Co. (NYSE: GS), Group Management (OTCBB: GPMT), Hop-On (OTC: HPON), H-Quotient, Inc., (OTCBB: HQNT), International Biochem (OTCBB: IBCL), Intergold Corp. (OTCBB: IGCO), InternetStudios, Inc. (OTCBB: ISTO), ITIS Holdings (OTCBB: ITHH), Jag Media Holdings (OTCBB: JGMHA), Knight Securities, LP (NASDAQ: NITE), Lair Holdings (OTCBB: LAIR), MBIA (NYSE: MBI);
Also, MetaSource Group, Inc. (OTCBB: MTSR), M. H. Myerson & Co., Inc. (NASDAQ: MHMY), Midastrade.com (OTC: MIDS), Make Your Move (OTCBB: MKMV), MSM Jewelry Corp. (OTC: MSMJ), Nutra Pharmaceutical (OTCBB: NPHC), Nutek (OTCBB: NUTK), Pitts & Spitts (OTCBB: PSPP), Sales OnLine Direct (OTCBB: PAID), Pacel Corp. (OTCBB: PCEL), Presidential Air Corp. (OTCBB: PDAR), PayStar Corporation (OTCBB: PYST), Petrogen Corp. (OTCBB: PTGC), PrimeHoldings.com, Inc. (OTC: PRIM), Reed Holdings (OTC: RDHC), Rocky Mountain Energy Corp. (OTCBB: RMEC), Sedona Corp. (OTCBB: SDNA), Sionix Corp. (OTCBB: SINX);
Also, Soundcomm Technologies (OTC: STEH), Sports Resorts International (NASDAQ: SPRI), Technology Logistics (OTC: TLOS), Ten Stix, Inc. (OTCBB: TNTI), Tidelands Oil (OTCBB: TIDE), Toronto-Dominion (NYSE: TD), Trezac Corp. (OTCBB: TREZV), US West Homes (OTCBB: USWH), Vega Atlantic (OTCBB: VATL), vFinance, Inc. (OTCBB: VFIN), Vtex Energy (OTCBB: VXEN) and Wizzard Software (OTCBB: WIZD).and WorldTradeShow.com (OTC: WTSW).
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