Byrne: SEC Enforcement Division Takes Orders From Short-Sellers
gary-weiss.com, 19 September 2009
Patrick Byrne has a new conspiracy theory to explain why his corporate crime petri dish Overstock.com is under investigation by the SEC. Seems that short sellers, in addition to having a fax machine at CNBC, also have a hotline to the SEC, in which they bark out orders to start investigations against innocent CEOs like Byrne.
Byrne made that comment on Fox Business News, where he is trotted out as an “internet retailing expert,” no doubt because of the skill at which he has eased Overstock into negative shareholder equity. He was brought out this time for a ritual denunciation of new bank compensation rules.
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Judge Rejects Settlement Over Merrill Bonuses
New York Times, 14 September 2009
As President Obama traveled to Wall Street on Monday and chided bankers for their recklessness, across town a federal judge issued a far sharper rebuke, not just for some of the financiers but for their regulators in Washington as well.
Giving voice to the anger and frustration of many ordinary Americans, Judge Jed S. Rakoff issued a scathing ruling on one of the watershed moments of the financial crisis: the star-crossed takeover of Merrill Lynch by the now-struggling Bank of America.
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ATSI Communications, Inc. v. Shaar Fund, Ltd.
Smarter Legal Research, 02 September 2009
More detailed factual background is provided in our previous opinion in this case, ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (” ATSI I”).
ATSI describes itself as a firm which was “founded in December of 1993 to capitalize on the opportunities anticipated by trends towards deregulation and privatization of telecommunications markets within Mexico and other Latin American countries.” In 1999, needing capital, ATSI issued four series of convertible preferred stock (“Preferred Stock”), shares of which were convertible, with minimal restrictions, to ATSI common shares in increasing amounts as the price of ATSI common shares declined. Because there was no limit on the number of common shares into which the Preferred Stock could convert, securities such as these are called “floorless” convertibles. ATSI I, 493 F.3d at 94. A holder of such Preferred Stock who wanted to increase ownership or acquire the company could actually benefit from a decline in ATSI share price. Accordingly, ATSI elicited the purchasers’ representations that they would not sell shares short, or were not purchasing with an intent to resell. Id. at 95-96. ATSI issued Preferred Stock at various points to (among others) defendants The Shaar Fund, Ltd. (“Shaar Fund”) and Rose Glen Capital Management, L.P. (“Rose Glen”).
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