When does a journalist cross the line? Part II
The intent of this post is to open the minds of investors; to see beyond the hype and the bashing; to get a more accurate picture of "The Street"; with its network of relationships and early information that can result in large gains by a few, who benefit from trades against such knowledge. This information is strictly intended for educational purposes of those that follow the HOME or FISHING threads in order to learn about the ways of the market.
A few weeks back we saw a Bloomberg journalist make an all out attack on a 15 year old child here on Silicon Investor, named Daniel Miller. It was a disgusting display. Was it based in jealousy? And did they cross the line? Draw your own conclusions.
Ever since the Wall Street journal published an article about the Silicon Investor posters, every no name journalist and their brother are jumping on the bandwagon and taking pot shots at Silicon Investor celebrities.
The latest follower is a little known reporter named Gregg Wirth, from the Street.com, an internet website apparantly made popular by appearances by James Cramer on CNBC. Is there truth to the rumor that the Steet.com has been building a reputation on the REAL street for siding with short-sellers? Do they take positions in the stocks they bash? No, of course not. Because that would be illegal.
Meanwhile, the SEC appears to be being PLAYED by short-sellers. Lately, they have found themselves smack dab in the middle of short-squeeze plays like SEVL and WCTI. The modus operandi? DURING the short squeeze on these and other such plays, "suddenly" the SEC internet fraud division gets bombarded with "complaints" by "innocent investors," watching from the "sidelines."
As though through ESP, one of the Street.com's writers writes articles revealing SEC investigations, which the SEC refuses to confirm or deny, by policy. How do they do it? The timing of one of these articles was a windfall to the shorts caught in the SEVL short-squeeze. Was this coincidental?
Or were these just complaints by innocent investors, coincidently timed with the short-squeeze? Or could these complaints have been a tactical ploy by short-sellers to involve the SEC in this long vs short-seller tug-of-war, hoping for a trading halt?
Such "investigators" profit most when the stock is halted, due to their short positions, which may never need covering, meaning a 100 percent profit. And the REAL innocent investors were the inexperienced newbies that bought these companies for long-term investments. Based on the potential for the company to improve its performance in the future, these investors put down their cash and invested in these companies, with hopes of seeing a return on their investment somewhere down the road.
But too often, these halted stocks never trade again, leaving the REAL investors holding worthless stock certificates, while the short-sellers that initiate these investigations make incredible profits, by short-selling borrowed and often illegal naked shares of the stock prior to the investigation.
Case in point, WCTI was "picked" long by 15 year old Miller. Any reasonably intelligent investor would take that for what it is worth, and act accordingly. But the stock rose to 35 dollars. The short-sellers seized this opportunity for making quick and easy money from these "newbie" investors, commonly referred to as sheep, and collectively "attacked" WCTI with a barrage of short-selling, sending it promptly back under 15, before inexperienced investors once again recognized "value" and created a support level for the stock.
This group of short-sellers spans 3 different threads on Silicon Investor, but has been shown to be highly organized, strong in numbers and deep in pocketbook. Their anonymity makes them all the harder for the SEC to identify, and makes "concerted efforts" all the harder to prove.
It is against the law to launch a "concerted effort" to squeeze a stock, thus artificially manipulating its price. But organized short-sellers often snub their noses at the law, claiming they are doing the investor world a "favor" by driving the price lower, so that more inexperienced traders are not tempted to make bad investments. Of course, it is only when the stock price falls, due to these concerted efforts that such investors lose their money in the first place.
Has the SEC launched investigations into both sides of such manipulative trading tactics? And will we begin to see short-sell leaders names appearing when we search the SEC databases? And when the SEC catches up to these short-selling criminals, will these same journalists be there immediately to write the stories?
Most recently the organized short-sellers attacked SEVL, shortly after SI celebrity, Tokyo Joe called a pick on the stock at around 3 dollars. One of the short leaders placed a "short call" on SEVL when it reached 6 dollars. But this leader did not anticipate unexpected and important news about a deal with AOL. And the stock rose to 12 dollars, before falling off some on speculative profit taking.
Unfortunately, many short-sellers that sold short at 6, got nervous in their inexperience and covered between 8 and 12, thus showing a losing nearly their entire investment. These short-sellers sold short SEVL without even knowing why, only to lose as much as 100 percent of their money, leaving them to find new hobbies as they try to explain to their families, how they were coaxed into short-selling a stock they didn't even know, by a popular SI short leader. And how they lost everything, by following this leader blindly.
SEVL just did not want to die, despite the declarations by the short-sellers that the company had released "fraudulant" press or because the company was a "turd" or even more colorful descriptions, often in proportion to the losses showing by the posters.
But make no mistake. There is no difference in the losses suffered by newbie shorts, than the losses by newbie longs.
So how do these articles become amunition by shorts to further their cause against the longs? Asking the SEC to investigate Tokyo Joe during the heat of a short-squeeze play, in hopes of discrediting him, was one thing. But when this series of articles came out about the SEC investigation, [spaced out over time, which again benefits the short-sellers], it really raised some eyebrows around Silicon Investor and around the REAL street.
Did it raise any eyebrows at the SEC? Since SEC investigations often take many months or even years to conclude, we will have to wait and see.
This latest Gregg Wirth article twice refers to SWAT, with regard to SEC investigations. thestreet.com At first reading, it doesn't appear that this crosses the line into convincing the reader that the subject of the article is dangerous. But let's look a bit closer at what that says.
S.W.A.T. stands for Special Weapons and Tactics. These are military operations within police forces that are trained to storm a house, occupied by a dangerous criminal. This squad is noted for their "shoot-to-kill" policy and the high incident of subject deaths during their operations.
Has there EVER been a SWAT team used in an SEC investigation of a securities violator? I would say the answer is OBVIOUSLY an emphatic "no."
And yet by reading this latest Gregg Wirth composed Street.com article attacking Silicon Investor members in general, the reader is left with a sense that the SWAT team is being deployed to the homes of any Silicon Investor member that has ever touted or has been overly excited about a stock.
This is GROSSLY negligent journalism. And as a member of Silicon Investor, I am offended at the implication made. As such, it is my belief that SI members should collectively demand a retraction of the entire story, and an apology by its writer and by the Street.com.
I further would expect that the Street.com investigate the questions raised concerning intent, with regard to this latest article referring to SWAT. It appears to me to contain malice. And that raises the question of motive. Why should a journalist resort to SCARE tactics with members of Silicon Investor? That just makes no sense.
The Street.com has a search engine to find articles about specific subjects. A search of "Wirth" reveals some interesting and timely articles, a surprising number of which deals with celebrities on Silicon Investor, as well as SI picked stocks that became concerted short plays. Two stand outs on the list include USAT and MLRE, as these were very popular Silicon Investor plays, that were "called" by short-sell leaders on SI.
I would think that the Street.com company would be looking closely at ANY relationship between their writers, the stories they write and the stock positions of the employees of the company. If I were the SEC [which I am not], I would likewise be investigating relationships between writers of any or all such 'well timed' articles, and of the leaders of organized short-selling groups on Silicon Investor.
The TIMING of the release of articles is the key to any suspicions, and the part that raises the most questions.
Manipulation is manipulation, no matter how you slice it. There is no difference between the hype by touters to get a stock to rise and the bashing by "investigators" that get a stock to fall. In the eyes of the law, they are the same.
Have I a struck a nerve? Watch the articles, you'll know when they add my name to the list. And boy would I ever love to go before a judge with all that I know about this sleazy scummy scammy industry.
Rande Is
NOTE: These are strictly my opinions as a private investor. They are for educational purposes only. I have NO position in any of the stocks mentioned above, nor do any of my friends or family. I have never traded in any of the stocks listed above. Furthermore, I challenge all securities journalists to post similar disclaimers on each article they write. Such disclosure should be mandatory by all journalists. But until such a time, it should be offered freely by the ethical ones. |
