INTEGRITY SECURITIES KINDLY REQUESTS CORRECTION TO "DOW JONES IN THEMONEY ARTICLE" BY CAROL REDMOND
City of Industry, CA, Jan 24, 2003 (financialnewsusa.com via COMTEX) -- Integrity Securities CEO and Chairman Matthew Marcus commented on a recent Dow Jones (NYSE: DJ) Article "DJ IN THE MONEY: DTC Stops Move By Cos. To Physical Delivery By Carol S. Remond (201 938 2074 Carol.remond@dowjones.com).
According to Carol Redmond, "A tool some small companies have used to make it difficult for investors to short their stock has just been taken away. The Depositary Trust & Clearing Corp. (DTCC) has decided companies that clear and settle through it cannot exit DTC's global electronic system for the purpose of moving to physical delivery of stock... In addition the following companies have said that they would exit, or that they were considering exiting DTC:... FreeStar (FSTI) and Sionix (SINX)."
Matthew Marcus, Chairman of Integrity Securities stated "To my knowledge at no time did FreeStar or Sionix Officers state verbally or in a news release that it would exit DTC or Consider exiting DTC. We are always available by phone or email to the public and am shocked that Dow Jones did not call us or the companies CEO's directly to verify this information. We kindly request Dow Jones issue a corrected statement or contact us for clarification at 626-961-5694."
To clarify, the CORRECT quote per Integrity Securities recent release states "The group of companies exiting are making a positive impact on the market system. This is a bold and significant step toward curbing illicit naked short sellers and organized offshore syndicates. I have urged our clients FreeStar and Sionix to follow suit and facilitate a more transparent and level playing field for retail shareholders".
THE PHYSICAL CERTIFICATE DELIVERY ALTERNATIVE
JAG Media Holdings, Inc. announced today that it has adopted "custody only" trading of its stock to insure that purchasers of the Company's shares are bona fide stockholders of the Company.
As an alternative to "Certificate Custody Only" trading, OTCBB companies may urge its shareholders to utilize a little known DTC system known as the DIRECT REGISTRATION SYSTEM or DRS. (Please visit: dtcservices.dtcc.com/custody/drshome.htm)
We urge all CEO's and especially our clients FreeStar, Growth Management (OTCBB: GPMT), and Sionix to facilitate DRS or any other alternate and legal clearing process to create a more transparent and level playing field for shareholders without worrying about naked short sellers moving the goal posts". (Carol at DJ please note: this doesn't mean these companies have stated that they are considering or have decided to use DRS)
The DRS system according to sources at DTC provides a mechanism whereby investors can take physical delivery of stock out of the DTC system, yet still physically hold them electronically at the transfer agent level. This is congruent with statements made by a spokesman for the SEC recently according to Dow Jones News Wires: "The SEC is concerned with any trend that runs counter to immobilization and dematerialization."
The Direct Registration System (DRS) provides investors with an alternate approach to holding their securities in certificate or "street" form. Under DRS, investors can elect to have their securities registered directly on the issuer's records in book-entry form. An investor electing to hold a security in a DRS book-entry position will receive a statement from the issuer or its transfer agent evidencing ownership of the security. The investor can subsequently transfer electronically the DRS book-entry position to his/her bank or broker/dealer.
All CEO's must urge their current shareholders to request from their brokerage firm a physical certificate or delivery via DTC's DRS system. By doing this, each shareholder will then become the shareholder of record, which will cause the brokerage firms to require physical delivery of the shares previously purchased by the shareholder. This will ensure that illegitimate shareholders do not continue to dilute legitimate shareholders and the value of their investments through abusive naked shorting activity or manipulation.
The group of companies that have opted out of electronic share ownership via the Depository Trust Corporation (DTC) in favor of actual share certificates includes JagMedia Holdings (OTCBB: JGMHA), GeneMax Corp. (OTCBB: GMXX.OB), Hadro Resources (OTCBB: HDRS.OB), Vega Atlantic Corporation (OTCBB: VATL.OB), Ten Stix, Inc. (OTC Bulletin Board: TNTI.OB), Intergold Corp. (OTCBB: IGCO.OB) amongst others. These companies began exiting the DTC system in 2002 due to its inability to provide authenticity of actual shares trading, allowing for illegal naked short selling trade abuses.
These OTC companies have subsequently been the target of a media campaign that questions the validity and legality of this procedure have jointly confirmed the precedence for the use of this method and support by all governing bodies concerned. Dow Jones News, The Street (Nasdaq: TSCM), MartketWatch (OTCBB: MKTW) such as Knight Ridder (NYSE: KRI), Time Warner (NYSE: AOL); (Nasdaq: TWTC), Reuters (Nasdaq: RTRSY); (Nasdaq: INSI), Thomson (NYSE: TOC), Bloomberg or and any other financial media companies have provided little news coverage does not address the real underlying concerns. Namely that the 3-Day Settlement System in the U.S. does NOT WORK!
The three days settlement system run by the National Securities Clearing Corporation ("NSCC") does not ensure that shares that are sold in a transaction are ever delivered. The basis for moving to a certificate only share transfer system has nothing to do with short selling but instead with "naked short selling" where shares sold are never borrowed, never delivered by the seller, but where the seller collects money for the stock they never delivered in three days. This takes place routinely in the U.S. Securities industry.
Under a naked short sale of stock, short positions are not declared, shares are not borrowed to cover the short sale, and shares are sold without delivering the stock to the purchaser. Naked short selling results in the undermining of real shareholder ownership by naked short sales of stock and resulting failed deliveries of real certificates that artificially inflate share ownership and devalue the trading prices of shares in the marketplace. Unscrupulous brokers and market makers may conspire to manipulate and devalue the price of securities in this way.
A case in point is FreeStar Technologies which was covered in a recent Investrend article (www.investrend.com). The saga of the OTCBB stock certificate rebellion versus Dow Jones (NYSE: DJ) columnist Carol Remond has a new twist with the entry of FreeStar Technologies, Inc. into the fray... It is not unusual for financiers of small public companies to hedge their financings, for example, and as a result, such financings, often by overseas groups, are termed "death spirals." The reason for these kinds of financings is that small companies often can find no other source for equity raises.
FreeStar Technologies, Inc. (OTCBB: FSTI), a company providing one of the world's first live, operational debit and ATM solutions with PIN-authenticated payment solution on the Internet, PaySafeNow, and a leading Northern European Processing subsidiary, Rahaxi Processing Oy, has been notified that a Chapter 7 Involuntary Bankruptcy Petition has been filed against the Company.
Paul Egan, President and Chief Executive Officer of FreeStar, stated in a recent news release: "There is clearly a connection between this petition, filed in the Southern District of New York yesterday afternoon by Larry Ivan Glick on behalf of vFinance, Inc., David Stefansky, Richard Rosenblum, Marc Siegel, Boat Basin Investors LLC, and Papell Holdings Ltd., and the short selling activities of vFinance (OTCBB: VFIN) and affiliates during the month of December 2002. We dismiss the petition as a frivolous and transparent attempt to mitigate the financial losses of the aforementioned individuals' illicit short selling activities. FreeStar Technologies is solvent and will therefore defend the petition vigorously."
Continuing, Egan added: "This is a bad faith filing, pure and simple; vFinance has possession of collateral underpinning their claim, thereby rendering the debt secure. We will continue to resist Messrs. Stefansky, Rosenblum and Siegel's increasingly desperate attempts to circumvent Rule 144 provisions. FreeStar Technologies has funding commitments exceeding the claims in question and will seek substantial punitive and consequential damages pursuant to the Bankruptcy Code."
Grant Atkins, a director of GeneMax Corp. and a representative of other public companies also commented, "The trading system in America allows abusive trading practices to over inflate share ownership in U.S. public companies. The 3-day securities clearing system operated by the NSCC and DTC fails to operate correctly to ensure that a fair marketplace exists to trade U.S. public securities. While the world is watching the U.S. struggle with issues relating to corporate misconduct, and President Bush has in recent months asked corporate America to 'Stop Cooking the Books,' the world has not yet discovered that the U.S. Trading system lacks integrity. The ramifications to Americans is that the U.S. people, through the federal reserve, have inherited the DTC and NSCC, and a system that can cook the books of public company issuers on American Exchanges. What happens when the world finds out that share ownership in American companies is over inflated? What happens when the world finds out your can sell U.S. securities, never deliver them, and collect the funds? The only question left will then be, 'Why would the world invest in American companies when selling is the only game in town?'"
About Integrity Securities LLC
Integrity Securities is a NASD licensed Registered Investment Advisor and member of Synergy Investments clearing through Pershing, a division of the Bank of New York. Integrity specializes in providing institutional investor relations services designed to enhance the liquidity and growth of its publicly traded clients. Mr. Marcus currently serves as Chairman of, and was recently presented with the Magellan award for excellence in Financial Communications by, the Los Angeles Communications professionals (www.lacp.com). Mr. Marcus specializes in OTC market analysis and curbing short selling activity. He has had long term relationships with financial professionals at institutions such as Dean Witter (NYSE: MWD), Citigroup (NYSE: C); (NYSE: TPK) subsidiary Salomon Smith Barney, Prudential Securities, Barron's, Investors Daily, Motley Fool, CBS Marketwatch, TheStreet.com, Smart Money, Fortune, CBS radio (NYSE: GE), and CNBC television.
Integrity and its affiliates has an equity position in the companies mentioned herein please visit the disclaimer at www.financialnewsusa.com. Certain statements in this news release may contain forward-looking information within the meaning of Rule 17B under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
By Staff Reporter
CONTACT: Integrity Securities
Tel: 626-961-5694
Email: info@integritysecurities.com
Web: www.integritysecurities.com
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