The farce continues unabated: OSTK receives subpoena from SEC
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 5/8/2006
So, there's this company, and it is operated by a guy who has had the balls to tackle what is arguably the most difficult crisis to hit our markets for 50 years - and he has taken pains to try to clearly articulate that there is a massive problem with the clearing and settlement system, so much so that it could destabilize the economy.
He has done slide shows a monkey could follow and understand.
He has bough hundreds of thousands of shares of his own stock, and failed to receive delivery for months - to illustrate how bad the problem is.
He can clearly demonstrate that there are millions more shares trading than there are legitimately issued shares.
His company has been on the SHO list for well over 250 days.
He is suing miscreants he claims have been engaging in stock manipulation, via their front-running bogus research reports and creating hatchet jobs.
The person who was heading up the SF office investigation into the claims against the hedge fund and research firm suddenly got offered a huge job with Kroll, a private investigation firm tied by our hero to the miscreants - and now she is off the table, making huge amounts of money - an offer from out of the blue...
Is this a Grisham novel detailing the improbable saga of a protagonist beset by a conspiratorial system bent on destroying him? Battling a cabal of evildoers whose reach extends into the very corridors of power?
Nope.
It is real life, and it is the story of Dr. Patrick Byrne, who received a subpoena from the SEC, requesting data on not just the research firm and the like, but also about OSTK's accounting and such.
Dr. Byrne says it could be a blessing.
Yeah. Uh huh. It could.
Or it could be the latest in the farcical treatment of bad guys by the SEC - where if you steal billions on Wall Street you might have to cough up a penny on the dollar, where we see companies with a year's worth of delivery failures (like OSTK) and yet nobody does anything, where the Director of Enforcement issues subpoenas to journalists and is promptly cut off at the knees by her boss...
And now this.
What kind of travesty is this? We have companies like NFI where we KNOW that 40% or more of a day's trading was fails, and yet nobody is being investigated, we have many of the longest on the SHO list shorted by one group, we have the attorneys who invariably sue those same companies being investigated for malfeasance...and now, the short-staffed SEC can find the resources to slam the victim, but can't follow through on things like subpoenas to the journalists.
How much worse can this crap get?
I would like to know the name of the person who decided this was warranted. I would like to understand what is being investigated, and I'd like to know how badly a company has to be abused before the SEC will step in and do its job.
I may be all wrong about this, and Dr. Byrne is correct that this is an opportunity.
But I smell rat, not perfume. And my hunch is that the bad guys have gotten one of their sympathetic ears at the SEC to do some dirty work for them.
Anyone considering investing in Bolivian real estate because it is more honest than the US markets?
You aren't alone.
I smell someone's connected lobbyist making the right calls to the right folks, and helping the shorts create some liquidity by crafting a tempest in a teacup.
Anyone recall the big TASR investigation that got all the hype, and then amounted to nothing?
This is how the cartel that is gaming OSTK works - they initiate frivolous investigations in order to get headline value and damage the stock, so that everyone can cover as the panic selling starts. That's how TASR played, how NFI played, how ACAS and ALD and all the rest played.
I want to know who in Washington is driving this - I am saying right now that there was never anything there in most of those cases, and yet the regulator's role was abused to create headline value.
Wanna bet that this is EXACTLY what I predicted a year ago - a bogus regulatory probe coupled with a pile-on from the quisling journalists, and a follow-on lawsuit from the class action squeegee boys?
That they are so brazen and operate with such impunity is shocking.
I really hope I am wrong, but I suspect that the system really is this badly broke.
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