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DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?"
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 8/31/2006 7:18 AM
The DTCC just released a beautifully crafted piece which highlights the problems with that privately held company.
What is stunning is that whoever put this together was oblivious to the irony it contains.
You can view it here:
home.businesswire.com
The piece starts off by saying that it is unable to find any data that corroborates "many" of the facts and statistics used in the recent Forbes article.
Now, first off, Liz Moyer's first rev of her article had one innacuracy, in terms of the trading price. That was only up for an hour or two, that I can recall. In an email to her, she indicated that there was some garbled info from the transfer agent and the company, where something got lost in the back and forth messages.
It changed nothing about the veracity of the story, nor the point of it - incredibly high levels of fails in a company - 27 million fails in a stock with 1.1 million shares issued and outstanding.
The error was corrected almost as soon as the article appeared.
That is the only data that the DTCC is unable to corroborate, yet it makes a point of devoting 1/5 of the piece to the quickly fixed stock price error, and further sets the tone of the release with it.
Would that the DTCC corrected their errors in anywhere nearly that sort of timely fashion. The Global Links fiasco is still unfixed, a year and a half after Senator Bennett demanded and investigation.
The DTCC makes the dollar value of the "error" in the system's handling of the Global Links shares the point of the story. The problem with that is that they fail to acknowledge that the reverse split cut the number of shares by 350. Thus, a share that was trading at, say, 0.02, should have been trading at $7 post split. But more importantly, by not correcting the number of shares trading, the occurrence in Global Links effectively slashed its market cap by 99.7%.
Now, the DTCC apparently feels that slashing a company's market cap by 99.7% is OK. No big deal. It happens. Gotta break some eggs to make an omelet. No need to fix it within a year or two of it happening. Whatever.
What it doesn't say is more important.
It doesn't say that the mistake in re-pricing and re-numbering the Global Links shares, if error it was, should have been corrected within a few days, if not hours, of it taking place. It doesn't say that the market cap of the company was destroyed, diluted down to nothing. It doesn't explain why the SEC didn't immediately stop trading. It doesn't explain why the participants who made the "error" get to keep the money, while the investors and the company lose. It doesn't discuss the windfall profits made by anyone with a huge short position in the stock - possibly the same market makers who traded it as a "mistake."
No, instead it trivializes the issue by using sleight of hand calculations.
But here's the best part. It also shows its true colors with this statement regarding reverse splits:
"However, among sub-penny stocks, these activities may occur more often to try and artificially raise the stock's price."
Huh. "Artificially" increase the price? You mean by reducing the number of shares, thereby legitimately increasing the per share value? That is artificial? Huh. How is it artificial? The market cap stays the same. The share count is reduced, but the price is adjusted to reflect each ownership unit having 350 times more value.
Doesn't it seem that is kind of like trying to blame the victim for doing a split? What is the difference between this statement, and the statement, "However, among hussies and women of loose morals, short skirts are often worn to stir the passions of innocent men" - when explaining a rape?
Does everyone get that this is a private company, owned by the same participants who benefit financially from these sorts of errors, issuing press releases to blame the victim?
And to smear the messenger? Forbes is riddled with inaccuracies, the company is up to shenanigans due to its treatment of its stock. And if you use our math, it's no big deal.
I love these sorts of releases. They underscore how self-serving and one sided this privately-owned entity is, and how uninterested they are in protecting issuers. The message is clearly that, you can reduce the market cap of a company by 99.7%, make short sellers rich in the process, but that's all good. In the scheme of things, it's just another day at the office for the DTCC.
Note no explanation of why 18 months later, nothing has been done to make the company or the investors whole. Note no remorse over it. Note nothing but arrogance and dismissal, and attack.
Anyone surprised? That it took a week is almost as funny as the content of the piece. In addition to being glacial in fixing actions that destroy issuers' market caps, they are not particularly nimble in the PR department, either.
Copyright ©2006 Bob O'Brien
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Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By JR on 8/31/2006 9:24 AM
I surely hope Liz will fire back with something. The privately held Fed and DTCC need to be dismantled...until then, business as usual.
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By gregcable2002 on 8/31/2006 9:32 AM
The DTCC think they are above the law,we'll see about that,I think they are getting a little nervous,I would be,because Grandpa and Grandma are going to be apart of the jury someday.TIC TOC TIC TOC
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By SteveM on 8/31/2006 9:38 AM
Isn't 27 million shares at $.015 (the lowest value of the shares) equal to a value of $405,000?
Did someone move a decimal?
And, I really could be wrong!!!
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By Niel Storts on 8/31/2006 9:39 AM
Bob. It's all just dazzle paint. A blind man can see that the markets are being manipulated. The only thing the miscreants are doing with the outpouring of bull shit such as this is merely deflect anyone attention from the single underlying fact that must be covered up at all costs. To wit: That the street is nothing more than a collection of felons. Geared totally to their own enrichment at the expense of everyone else. They must keep intact their reputation though. In order to keep the supply of new money coming in to satisfy their greed. Beings so many of the political "powers" in this country are sleeping with the miscreants, there will also be massive efforts put into play from that quarter to keep the truth under wraps. Power is after all power. That is what we are fighting against. Power. Our enemies will not give up. They never will. They must be distroyed. This is only the current battle of the same war that just folks have been fighting since the dawn of history. The quest to achieve a little freedom. That will never be granted. We must take it. Hope you are able to open up enough eyes to provide the mass necessary to beat back those ruining our lives. Merely beating them back will leave the job unfinished though. This time we must declare total war. If we are lucky enough to get the upper hand......... This time we must distroy the enemy. Elsewise the powers of enslavement will rise again more quickly then they will without a total victory in our little part of this war. Good luck.
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By jcline on 8/31/2006 10:00 AM
Yeah, and a little bank robbery here and there is not a threat to the banking industry either... but it still is illegal, a crime, and punishable!
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By newspaper on 8/31/2006 10:17 AM
Would a bank ever dare to mess up your checking account?
Would they ever give a banking client 1 cent extra?!!?
A bank would never ever let a 1 cent mistake stand.
How can they be allowed to be this incompetent?
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By Rule 3210 on 8/31/2006 10:27 AM
been reading the NITE Yahoo page. some pretty amazing stuff. According to 1 poster, Nite's volumes are 90% otcbb/pink shhets and 10% nasdaq and listed volumes. Further, that NITE had almost 200 $ US million in customer fails in the first 2 quarters of 06. What's amazing is that their top 10 traded bb and pink sheet stocks don't add up to 10 cents. They were #1 trader in GLLC and Sedona. How much evidence does the SEC need to investigate this firm?
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By newspaper on 8/31/2006 10:30 AM
BOBO i smell blood in the water. the DTCC is trying to tell us that a 38,000 dollar mistake is not a big deal!!!
i repeat would your local bank make a 30k mistake? if it did it would apologize and set the account straight.
The dtcc is telling us it is ok to swipe 30k from here and oh maybe 20k from overstock and another 15k from msft.
Yeah they are all small numbers we don’t have to be EXACT when we deal with YOU LOW CLASS PLEBS money.
YOU PLEBS CAN AFFORD TO LOSE 30K after all you are investing with your own free will.
The gall to say its “ONLY A 30K MISTAKE”
BOBO I am peaceful but this is filling me with rage.
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By gregcable2002 on 8/31/2006 10:31 AM
DTCC stated that Global Links said it was a simple error and it didn't envolve naked short selling? I would love to see exactly where and when Global links said that!
Re: DTCC: " A Little Rape is No Big Deal - Why Is Everyone Bent Out of Shape?" By Wonder Boy on 8/31/2006 10:36 AM
First, I think the DTCC should check their math.
Second, I don't think we know the true value of the damage until the fails are covered and the certificates properly delivered to the rightful owners.
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