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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (2724)	8/21/2007 5:27:28 AM
From: rrufff	Respond to of 5034

Overstock's Byrne Says ‘I Told You So' By Christopher Faille, Senior Financial Correspondent Monday, August 13, 2007 5:26:52 PM ET SALT LAKE CITY (HedgeWorld.com)—Patrick Byrne, the chief executive of Overstock.com Inc., posted a manifesto of sorts on a company-run message board Friday, [Aug. 10] the gist of which was that recent events, especially a joint report of two Senate committees on the Gary Aguirre whistle-blowing case and the market volatility of late, prove that he has been right for two years in his campaign against naked short selling and its enablers. The manifesto, which caused quite a stir in the blogosphere over the weekend, also acknowledged that Mr. Byrne is himself the target of an investigation by the Securities and Exchange Commission. In the past, although Mr. Byrne has acknowledged the receipt of subpoenas, he has denied that he as an individual or Overstock.com as a corporation was the focus of an investigation. In a post on a stock-trading bulletin board in May, Mr. Byrne said: "The funny part is how it still has not dawned on the miscreants that a fair bit of the material being requested by the SEC concerns THEM, not me or Overstock." But in Friday's posting, Mr. Byrne referred to himself as a "target." Then, in a postscript, he added, "Regarding the federal investigation: I have no beef with it, actually. Everything I have done has always been legal and ethical, but I do recognize that my actions have been somewhat irregular and, coloring outside the lines as far as I have, I do not begrudge the attention I have received from the Federales." Mr. Byrne's larger message in the post, though, was that the "wig is slipping"—that the naked short-selling scandal, the accumulation of unsettled trades by "a vast network of hedge funds and their prime brokers," and the overly tame watchdogs at the SEC, is becoming public knowledge. Mr. Byrne attributed this to the retirement of SEC Inspector General Walter Stachnik, the departure of Commissioner Roel C. Campos Previous HedgeWorld Story and unconfirmed reports that Commissioner Annette Nazareth is leaving soon, as well. "The departure of the [inspector general], and especially of Annette Nazareth, is a first step in fixing this most vital of regulatory bodies," Mr. Byrne wrote. SEC spokesman John Nester declined on Monday [Aug. 13] to comment on reports of Ms. Nazareth's possible departure. Some of the blogospheric commentary on Mr. Byrne's communiqué over the weekend concerned the question of whether Mr. Aguirre's whistle-blowing is really in harmony with Mr. Byrne's charges. There are, after all, lots of reasons to be unhappy with an agency, and not every grievance confirms every other. Mr. Aguirre couldn't be reached for comment Monday. Another line of discussion involves Mr. Byrne's view of the causes of the "systemic crisis." Herb Greenberg, a financial journalist who was himself on the receiving end of an SEC subpoena in early 2006 Previous HedgeWorld Story, suggested in an entry on his blog Sunday [Aug. 12] that the critics of short sellers might look closer to home in assigning blame for recent market turmoil. He said that the market meltdown last week was due to the mortgage mess, which started with subprime mortgages, and that one paradigmatic example of the problems in the subprime market has long been NovaStar Financial Inc., of Kansas City, Mo., a company that has been a favorite of short sellers for years now. According to Mr. Greenberg's analysis, then, it was the anti-naked shorting crusaders who "ridiculed and routinely dismissed" reasonable concerns about NovaStar's accounting and its earnings, and the troubles that now loom so large show just how reasonable those concerns were, and just how unreasonable was that ridicule. CFaille@HedgeWorld.com