Re: 1/21/06 - [NCANS] Gary Weiss' Blog: "...the anti-naked-short-selling campaign -- the Baloney Blitzkrieg"
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bob obrien said...
Perhaps you can take some time to elaborate on comments attributed to you wherein the naked short selling issue is a straw man created in order to distract folks from the real issues.
My blogsite - www.TheSanityCheck.com - is quite popular and has a depth of info and opinion you might find interesting.
While you are cogitating over your comments, I would propose that you think about the following data points, and address them in your iniminable way:
FOIA requests from the SEC published at the website show hundreds and hundreds of millions of naked short sold shares, sometimes well over a billion per day, that had money paid for them, but were never delivered.
Professor Boni - on BEHALF OF THE SEC - created the report linked in the Library section that shows that the average settlement failure lasted 56 days, and impacted 7% of all stocks traded.
Former Clinton undersecretary of commerce Robert Shapiro is on record there saying that this is a huge problem.
NASAA recently had a conference where the top authorities in the country agreed it was a very real issue, a significant issue, and that there was no justifiable reason to keep the information on the problem secret, as is now the practice.
The SEC itself admitted that the problem was so significant that it had to grandfather all prior FTDs rather than settle the trades, as Congress and the law mandates.
Why is there a Reg SHO list, and why do companies land on it?
Why do men like Dr. Byrne of OSTK buy hundreds of thousands of shares in the open market and then cannot get delivery? For many months? Repeatedly?
Why does the SEC refuse to let the public know what the actual size of the actual FTDs are?
Why does the SEC refuse to tell us how many FTDs they grandfathered - you know, just let those that had taken money and never delivered the product keep the money, and never deliver?
Why the REFCO court documents have to be sealed so that the $430 million "undisclosed liability which floats marked-to-market every night" doesn't become understood by the public?
Why the SEC won't divulge any FTD data, including aged data of no interest to anyone but academicians, because it doesn't want to create problems for the rule violators by disclosing their "trading strategy secrets"?
Why, if it doesn't take place, Goldman Sachs was recently fined for naked short selling?
Why Ryco was sanctioned for abusing its market maker status for naked short selling to help its hedge fund customers?
Why, in the case of Sedona, that Rhino Advisors, Thomas Badian et al were prosecuted for naked short selling from thousands of offshore accounts?
Why Elgindy's trial trancripts demonstrated a concerted naked short selling scheme in many companies involving everything from crooked FBI officials to complicit SEC staffers?
It is easy to have hyperbole and opinion as a substitute for hard data, but none of it addresses the huge elephant in the room that everyone is spending so much time pretending doesn't exist. Hopefully you will be able to address these issues, here, or at TheSanityCheck blog, and help us better understand your grasp of the issues.
Thanks for your consideration.
AKA Bob O'Brien
1:02 PM, January 21, 2006
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Gary Weiss said...
No, Bob, it's not quite precise to say that I called the anti-naked-shorting issue a straw man. Yes it is that, as it does indeed distract folks from the real issues -- which, in the case of microcap market, includes, but is not limited to, rampant hype and doggy doo-doo companies. But it is a good deal more than that.
It is also an example of how dumb regulators can be when they really set their minds to it.
Bob, the best answer I can give you is that I'll address the subject of the anti-naked-short-selling campaign -- the Baloney Blitzkrieg -- when the spirit moves me. It may be sooner rather than later. After all, this is an important topic.
What makes the Baloney Blitzkrieg important, Bob, is that the SEC foolishly curbed short-selling in the corner of the market that needs it the most -- the market for small, illiquid microcap stocks. I'm sure you'd agree with me that that's really pretty lamentable, and demonstrates that regulators are capable of being influenced by a tiny band of cranks.
There is indeed a lot of misinformation and spin out there, and as you point out (mentioning Mr. Shapiro and my friends at NASAA), a lot of smart people have been saying and doing a lot of foolish things on the subject.
But hey, that's what makes this a great democracy, isn't it? People can say whatever they want, and actually influence the regulatory process, even if they are cynical stock promoters, CEOs of dreck companies, deluded small investors, and good old-fashioned crackpots.
4:32 PM, January 21, 2006
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