"Overstock drops a bomb"
Dr. Byrne Sets Off A Nuclear Device at the JP Morgan Conference
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 3/15/2006
So, Dr. Byrne was standing at the podium, discussing the future of Overstock.com, when he drew to the end of his prepared statements about the company.
And that is when the fireworks began.
Everyone should go view the slide-show, paying special attention to the final slides. You can't listen to the audio or video, because it mysteriously stopped working a few hours after the conference. Isn't that special? Just like it never happened...
Slide 24 is my favorite.
----------------------------------------------Beneficial
Participant -------DTCC Position -----Ownership List ----------Difference
-----------------------(1/12/06) -----------(1/12/06)
____________________________________________________________
Goldman Sachs ----1,024,234 ------------2,720,747------------1,695,513
Citigroup ---------------88,706 ------------1,031,596 --------------942,890
City Securities ---------------0 ---------------811,972 --------------811,972
Morgan Stanley --------86,258 --------------705,356 --------------619,098
Barclay Capital -------147,286 --------------577,196 --------------429,909
NFS LLC ---------------937,315 ------------1,354,520 --------------417,205
Lazard Capital --------------50 ---------------309,750 -------------309,700
Charles Schwab ------388,346 ---------------665,178 -------------276,832
Merril Lynch ----------145,673 ---------------415,977 -------------270,304
UBS Securities --------293,834 --------------515,131 -------------221,297
Daiwa --------------------------0 --------------159,100 -------------159,500
Daiwa --------------------------0 --------------159,100 -------------159,500
Bear Sterns -------------22,508 --------------180,059 -------------157,551
Natl Inv ----------------137,624 --------------293,411 -------------155,787
Ameritrade -------------251,320 -------------383,245 -------------131,925
E*Trade ----------------150,825 --------------254,372 ------------103,547
____________________________________________________________
------------------------3,673,980 -----------10,536,710 ---------6,863,730
Now, for those that aren't sure what they are looking at, the first column shows the actual number of shares at the DTC being held for the broker in question. The second row shows the total outstanding securities entitlements that the broker has outstanding to his customers. The third row shows the number of securities entitlements not covered by any legitimate share at the DTC.
So, how can that be? Well, one of two possibilities jumps out at me - either the NSCC's stock borrow program DOES in fact generate a float of Securities Entitlements in excess of the number of shares that are legitimately issued - the old "counterfeit share" story - or the brokers are all in violation of the 1934 Securities Exchange Act, Section 9 - creating the appearance of trades or the appearance of a market without transfer of ownership (manipulation) - as well as UCC Section 8, for misrepresenting invalid Securities Entitlements as valid.
If any brokers self-cleared, they're also in violation of 17A, for not ensuring transfer of ownership, and de-linking clearing and settling.
Here's the shorthand - guys like Daiwa and Lazard and the rest appear to be taking money for shares, and issuing Securities Entitlements, and then never spending the money to buy the shares and deliver them. Alternatively, they are issuing Securities Entitlements, and failing to break the trades when no shares show up, so that they can keep the commissions.
Huh.
Exactly as I have been hypothesizing. Sort of like a massive fraud, where they cheat investors out of their money, and then lie about it, breaking a host of laws, but safe in the knowledge that if they are caught and fined, it will be a sliver, a fraction, of what they made.
Does everyone get what is going on here?
Step one: I give larcenous broker A, who could be my own broker for all I know, a bunch of real money I worked hard for.
Step two: He tells me I got the shares, and stuffs the cash in his pockets, never buying a share.
Now folks, this would be where we see, up close and personal, that there is a huge problem, and that the system is so badly broken that a company that's plunged in market value has done so, not because investors were selling, but rather because abusive participants are manipulating the market to sell the company into the ground, triggering margin calls, panic selling, and loss of faith in the company.
God, I can't wait for discovery, where all these third parties will have to cough up their records, and we get to find out on whose behalf these trades were placed. Any guesses out there?
How about guys like Lazard, that own 50 shares, and yet have sold over 300K? Daiwa, with zero?
Goldman Sachs, Rocker's prime broker, with millions never bought to make good on the Securities Entitlements.
Wow. How about that. Doesn't this start to look like a massive abuse of the system that is 100% consistent with a 10b5 violation: Stock Manipulation?
And doesn't it also start looking like crazy Patrick has been correct all along, and that the prime brokers, as well as other unscrupulous participants, are working together - colluding, even - with someone to manipulate the company's stock down?
Want to bet that NFI, and TASR, and NFLX, and HANS, and KKD, and quite a few others are also in the same boat?
Now what do all the apologists have to say - you know, where this is all in our heads?
We are being screwed, day in and day out, by Wall Street. I for one think an immediate trading halt is in order, as well as a formal SEC review of this massive, ongoing sham, in all of the above names. Want to bet that NFI has at least that many, if not more? How about TASR?
What does it look like when virtually every big name on Wall Street (except JP Morgan) appears to be stealing from investors, on a wholesale basis, and actively assisting stock manipulators in destroying a company's market value? That's my opinion of what is going on.
When do the first lawsuits hit? If I was Byrne, or the shareholders, I would be going class action and opening up a can of whupass on some of these Wall Street thieves.
Talk about a crisis of confidence in the system.
Is there ANY reason you can think of why anyone would have one iota of confidence in the system? Any, at all?
And this doesn't even count the ex-clearing stuff, as those aren't on the books of the DTC. This is only the in-system violations.
Think about that long and hard. I've been saying that ex-clearing is 5X or greater than in-system. At least. Now, doesn't that start to sound like Wall Street has got 50-60 million OSTK Securities Entitlements in the system, and only 8 million or so real shares not owned as paper? This could, and should, be the mother of all squeezes, and spawn billions and billions of lawsuits.
Astounding. And shameful at a level that is criminal.
The SEC should immediately open the DTCC's books for what is clearly now an orchestrated, felonious fraud against investors.
If they don't, how can the possibly pretend that there is any justice, or even semblance of reason to the system.
This is theft, pure and simple. The fact that the presentation was pulled is clear evidence of a massive attempt at cover-up.
That is the word. Cover-up.
Cover-up.
Are we going to let them get away with this?
Copyright ©2006 Bob O'Brien |
