Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Investment Chat Board Lawsuits -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey S. Mitchell who wrote (7418)	2/21/2005 11:18:27 PM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 12465

Re: 2/18/05 - Int'l Herald Tribune: If a stock falls, blame the SEC Floyd Norris: If a stock falls, blame the SEC Floyd Norris International Herald Tribune Friday, February 18, 2005 It is a criminal conspiracy when stocks move the wrong way, and the government should do something about it. That is the cry these days of some American investors in stocks that have been heavily shorted even after a new rule from the U.S. Securities and Exchange Commission took effect. Patrick Byrne, chief executive of Overstock.com, an Internet retailer, has no doubt why his company's stock took a sudden $13 plunge late last month, just after releasing what he viewed as fantastic earnings. "Someone is manipulating our stock," he said in an interview by telephone this week. He says that is proven by the fact that Overstock has shown up on the new list of securities mandated by the SEC. That list shows stocks in which a substantial number of shares were not delivered by sellers. To him that proves that "naked short-selling" is going on. That term refers to selling shares without owning or borrowing them and he wants it stopped: "I don't think grandmothers should be eating dog food so a couple of hundred guys on Wall Street can be driving Mercedeses." There may not be too many such poverty-stricken investors at Overstock. This is a stock that now trades at three times what it fetched a year ago, and that had run up $9, to about $66, in the three days before earnings were released, on speculation about a "blowout" quarter. An analyst from Piper Jaffray removed his "buy" recommendation, saying that while he still expected sales to soar, it appeared that costs would also rise more rapidly than he had previously expected. When I asked about that report, Byrne said he had not read it. The SEC rule makes it harder to sell short securities on what is called the threshold list. But two advertisements run in The Washington Post by the National Coalition Against Naked Stock Shorting have denounced the SEC for not forcing brokerage firms to buy stock to cover trades that failed to settle before the rule took effect. The ads view naked shorting as clearly illegal, but in fact it is sometimes permitted in the name of orderly markets. Byrne said he helped to pay for those ads, and during a conference call he introduced the man who runs the coalition, who describes himself as a 44-year-old retired businessman from Las Vegas and uses the name Robert O'Brien. Byrne said the man had warned him that short-sellers were going to smear his company. In an interview by telephone this week, the man told me he dared not disclose his real name because of security concerns. He said he became involved in the effort because he had lost money in another stock, Novastar Financial, and concluded that short-sellers caused its decline. At the SEC, Annette Nazareth, the head of the division of market regulation, said the rule was aimed at assuring that new naked shorts will be cleaned up relatively quickly. Some people, she said, "are very disappointed that the impact of this rule was not to make these stocks go up." She may be right about that. Another campaigner against the SEC, a Massachusetts aircraft engineer named David Patch, who also cites security concerns in not giving his home town, points to the decline in the price of Krispy Kreme Doughnuts as evidence of such short-selling. He says the company's myriad problems, including plunging sales, cannot explain the high share volume as it fell. There are 47 common stocks on the Nasdaq national market system or the New York Stock Exchange that have been on the lists for more than two-thirds of the days since it was introduced in early January. Most have declined this year, and as a group they have underperformed the market by a significant margin, although some, like Martha Stewart Omnimedia, have rallied nicely. Those same stocks did very well late last year. I suspect that some speculators piled into them in hopes of profiting as short-sellers were forced to buy, and then bailed out when that did not happen. Too many investors are like students who think good grades reflect their brilliance and bad grades show unfair teachers. It is too early to reach conclusions, but it may be that the new threshold lists will have the opposite effect of what some expected. Rather than containing stocks that are sure to rise as shorts are squeezed, they may show stocks whose valuations are questionable. Investors who own such shares might do better to try to understand the bear case, rather than simply rail about unfair short selling. Floyd Norris can be reached at fnorris@iht.com Copyright © 2005 The International Herald Tribune iht.com

To: Jeffrey S. Mitchell who wrote (7418)	2/21/2005 11:32:38 PM
From: Jeffrey S. Mitchell	Respond to of 12465

Re: 2/?/05 - NCANS.net: Dr. Patrick Byrne of Overstock.com's interview with Carol Remond of Dow Jones Dr. Patrick Byrne of Overstock.com's interview with Carol Remond of Dow Jones Email is Carol.Remond@dowjones.com Dr. Byrne's summary I just spoke to a reporter named Carol. I had never heard from her before. She agreed as a condition for the interview that before she published anything she would call me back and verify each quote of mine she used, and I hope that she honors that agreement, as I got the distinct impression that it was possible that she might take liberties, put words in my mouth or your mouth, etc. - possibly due to the language issue - she has a distinct French accent. Here's my capsule summary: 1. Carol kept trying to say that you said, or I said, that Rocker is naked shorting Overstock.com. I know you would never say that (O'Brien's note - I didn't, and corrected her multiple times during my interviews, which she steamrollered over). Finally I stopped the interview and said, "I am going to say this carefully, so there can be no mistake: I am not claiming that David Rocker is naked-shorting Overstock. I do think that someone is naked shorting Overstock, but that's not me saying it: it is the SEC Reg SHO Threshold list saying it. David Rocker has publicly acknowledged that he is short Overstock, and apparently has also publicly acknowledged being short a number of other companies that have turned up on the SEC Reg SHO Threshold list. But that could be a coincidence: you'd have to ask David Rocker." Her response was along the lines of, "So, you're saying that David Rocker is illegally shorting your stock...." Perhaps it is a language barrier. I'll be charitable and believe that it is. 2. Carol saw no significance to the fact that our stock got registered on 6 exchanges, but that essentially no trading occurs on those exchanges. She claimed not to understand how this could be a ruse tied in to naked shorting. She seemed so deliberately obtuse on this that it set off alarm bells. (O'Brien's note - I spent a good fifteen minutes clarifying that the trading wasn't coming through the exchanges, but that rather it was used as a pretense to fail to deliver - she apparently didn't apprehend the nuance, even though I directed her to the OSTK CC where I made the point, or on the Sanity Check columns where it is explained in excruciating detail). 3. Carol was adamant that you and I have been cooking up this plan for months. I confirmed for her that I have cooperated in the writing of the Washington Post ad and contributed money to run it. I told her, however, that lots of the money for the ad came in the form of $200 checks from grandmothers (who really have no business doing this), and that in fact, at least $40,000 (O'brien - probably more than $50K) had come in from such folks. She asked if it was safe to infer that you and I had contributed the rest, and I said it was: still, she seemed not to believe that any money had come in from anyone but me and you. (O'Brien - she has received dozens of emails from people who contributed, so it is difficult to be charitable at this point as to why she is ignoring those actual testimonials). 4. Carol made it clear that she believes that I know who you really are, and that you and I have been cooking up this enormous plan together going back many months, and continuing up to the point that I planted you on the January conference call with a script. I told her that I had never heard of you or spoken to you until shortly after our October conference call, but that we had spoken half a dozen times since then, that whatever you had to say on our January 28th conference call was your own doing, and that I was open to taking questions on our conference calls from anyone, not just analysts. She seemed not to believe this (though I pointed her to a message I posted on our auction message board the night before the conference call, inviting anyone to join our earnings call). (O'Brien - are you starting to sense that the reporter isn't interested in the truth, but is rather just making pronouncements from a bully pulpit?) My reason for being so specific about what I told her is that, by the end of the call, I'm fairly certain that Carol could easily misstate what I had said. I reminded her, "Now, you agreed to check all quotes with me before you publish, right?" Carol said, "Right, ciao" and hung up quickly. My fear is that Carol will write a story that links us, claims that we have cooked up a scheme together, and that we are saying David Rocker is naked shorting Overstock and other companies (perhaps giving Rocker grounds to sue for libel). That is untrue, and not what was said. I want it on the record what was actually said - I endorse this effort to bring the naked shorting issue out into the public eye, and am happy to lend my name and personal funds to supporting the efforts of NCANS. I am also proud of all the small investors who put up their hard earned money to stand shoulder to shoulder with us in demanding an end to the abuses of the system. I am not saying Rocker is naked shorting or breaking the law - (O'Brien - neither am I, although I will say that it is an astounding coincidence that he's short 30+% of the US companies on the NYSE Reg SHO Threshold list and at least 10% or more of the US companies on the NASDAQ list - but that is me wondering aloud at the mystery at it all, not accusing him of anything but astounding luck). I hope that Carol sees fit to honor her commitment to confirm any quotes with me before running any article, and does he same for you - I know you are very careful with your use of language, as am I, and would hate for us to be the victims of a reporter's misunderstanding of the actual message or words used. Copyright © 2005 NCANS.net ncans.net