Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
Bethany McLean
CNN Money, 1 November 2005
Patrick Byrne, the 42-year-old CEO of online retail liquidator Overstock.com, is under growing pressure to deliver numbers that prove his business will make money.
Certainly the third-quarter results, announced on Friday, Oct. 28, did not help his cause. Once again Overstock.com (Research) lost far more than analysts were expecting.
John Reeves, 05 October 2005
The nearly endless fount of mirth surrounding Patrick Byrne’s lawsuit against Gradient Analytics, short-selling hedge fund Rocker Partners, and others is obscuring a case with fairly broad implications for security analysis, First Amendment rights, and the credibility of our public markets.
While fanciful visions of Sith Lords and evil shorting hordes make for good copy, this is a lawsuit that is about something more substantive: an accusation that Gradient and Rocker resorted to unfair business practices to knock down Overstock.com’s (NASDAQ:OSTK) share price. Too much coverage has been spent plumbing the entertainment value, and nearly none on the facts of the suit itself. Continue reading “Article: Overstock’s Three Affidavits”
Christopher Byron
New York Post cited by RGM Communications via Wayback, 26 September 2005
One of the first things any new chairman of the Securities and Exchange Commission does after getting the job is to clear his throat, put on his best “I mean business” scowl, and announce to the world just how tough he intends to be on the miscreants of Wall Street.
Normally, this harmless ritual lets the man taking on Washington’s most thankless job preen a bit in public before getting smacked to the canvas by a system that basically doesn’t want him to be tough at all.
But these are not normal times — and the one thing this country needs more than anything is a government that knows what it is doing and that deserves to be taken seriously by its citizens.
Mark Faulk
FaulkingTruth.com cited by RGM Communications via Wayback, 20 September 2005
In yet another twist in the stock market scandal known as Stockgate, the Faulking Truth has learned that Senator Richard Shelby (R-AL), Chairman of the Senate Banking Committee, has shelved a planned Senate Subcommittee Hearing investigating the issue. Originally scheduled for February of this year, and then postponed several times, the hearing, which has been advocated by Senator Robert Bennett (R-UT), has been cancelled indefinitely.
According to a reliable source inside of the planned investigation, “The authority and the responsibility to take the necessary steps to deal with the issue of naked short selling lies squarely at the feet of Senator Shelby, and he has chosen not to allow the planned Senate Banking Subcommittee hearing to go forward.” In an earlier interview with the same source, we were told that “Senator Shelby tends to grab things like this for his own purposes, and his own purposes don’t always mesh with what’s best for the public.”
Kevin Kelleher
TheStreet, 29 August 2005
It all started when the company completed a 350-to-1 reverse stock split — an unusual step in itself, but one that paled alongside what came next. With 5.43 million shares outstanding and a float of 1.15 million shares, Global Links saw trading volume of 143.5 million shares in the first four sessions of February, driving the stock as low as 8/100ths of a penny.
Kevin Kelleher
The Street, 18 August 2005
Naked shorts. There’s something about those two words that begs for sensational coverage. But the scarcity of hard data on the illicit trading tactic so far has only polarized the debate on how serious a problem it has become.
Overstock Faces SEC Probe, Details Short-Selling Lawsuit
Carol S. Remond | Dow Jones Newswires, 12 August 2005
Overstock.com President Patrick Byrne said in a conference call Friday that the Securities and Exchange Commission began an informal inquiry into the company in February. Continue reading “Article: Overstock Faces SEC Probe, Details Short-Selling Lawsuit”
CIBC will pay $125M US fine to settle mutual fund trading investigation
CBC News, 20 July 2005
CIBC confirmed Wednesday it will pay out $125 million US to settle an investigation into the bank’s role on behalf of hedge funds that engaged in improper mutual fund market timing and late trading. The bank said the deal was reached with the U.S. Securities and Exchange Commission and the New York Attorney General’s Office.
The agreement will see two of the bank’s subsidiaries, CIBC World Markets Corp. and Canadian Imperial Holdings Inc., pay a penalty of $25 million US and disgorgement of $100 million US related to financing and brokerage services provided to the hedge funds.
Continue reading “Article: CIBC will pay $125M US fine to settle mutual fund trading investigation”
How CIBC Cashed In on Mutual Fund Fraud
MATTHEW GOLDSTEIN, 20 July 2005
One of the darkest realms of the mutual-fund trading scandal was laid bare Wednesday as state and federal prosecutors detailed how a Toronto financial company served as broker, banker and back office in a hedge fund scheme that victimized thousands of retail investors. The Canadian Imperial Bank of Commerce agreed to pay $125 million to settle the charges, which included fraud and deceptive business acts. The allegations cover a five-year period in which dozens of hedge funds used the bank’s money and connections to make abusive trades that resulted in huge profits to them but diluted other investors’ overall returns. From 1998 to 2003, regulators say, CIBC lent up to $2 billion to such traders, generating more than $75 million in fees. The bank neither admitted nor denied guilt in the settlement.
Continue reading “Article: How CIBC Cashed In on Mutual Fund Fraud”
Christopher Byron
New York Post cited by RGM Communications via Wayback, 27 June 2005
On Thursday the Securities and Exchange Commission’s departing chairman, William Donaldson, will step down from his two-and-a-half year stint as Wall Street’s top regulator, vacating the most thankless and difficult job in the administration to make way for President Bush’s third nominee.
Though Donaldson is widely credited with having been an effective and activist-oriented SEC chairman who — among other things — pursued more high-profile corporate-fraud cases than any chairman before him, he actually initiated only one major SEC fraud probe that has led to litigation against a defendant.
Former FBI Agent Pleads Guilty to Obstruction of Justice
Robert Nardoza
United States Attorney’s Office, 23 June 2005
ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, and JOHN A. KLOCHAN, Acting Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, announced that LYNN WINGATE, a former Special Agent of Federal Bureau of Investigation, pleaded guilty this afternoon to obstruction of justice in connection with her role in interfering with a grand jury’s investigation relating to Amr “Anthony” Elgindy and former FBI Agent Jeffrey A. Royer by accessing the FBI’s confidential law enforcement computer system and then relaying pertinent confidential information to Royer, who was one of the subjects of the investigation.
13 June 2005
NASD announced today that it has charged Scott W. Ryan of Bryn Mawr, PA, and Ryan & Company, LP (RYCO) of West Conshohocken, PA, with engaging in a long-term, widespread scheme of impermissible short selling activity on behalf of three hedge fund clients.
Short Selling, Death Spiral Convertibles, and the Profitability of Stock Manipulation
John D. Finnerty
Fordham University, 31 March 2005
The SEC recently adopted Regulation SHO to tighten restrictions on short selling and curb abusive short sales, including naked shorting masquerading as routine fails to deliver. This paper models market equilibrium when short selling is permitted and contrasts the equilibrium with and without manipulators among the short sellers. I explain how naked short selling can routinely occur within the securities clearing system in the United States and characterize its potentially severe market impact. I show how a recent securities innovation called floating-price convertible securities can resolve the unraveling problem and enable manipulative short selling to intensify.
DTCC Announces Effort to Correct Record on Its Stock Borrow Program & Naked Short Selling
Business Wire, 30 March 2005
The Depository Trust & Clearing Corporation (DTCC) has provided its bank and broker customers with a detailed explanation of its Stock Borrow program and the issue of naked short selling in an effort counter a widespread campaign of distortions and misleading information.
Karl Thiel
The Motley Fool, 30 March 2005
The subject of naked short selling has gained some momentum with the introduction of Reg SHO early this year and a rising tide of complaint from companies like Overstock.com (NASDAQ:OSTK) and others. But in addition to this general attention, 12 separate lawsuits have accused the DTCC itself of engineering naked short-selling schemes. Nine of these, according to Thompson, have been dismissed or withdrawn, while three are still pending.
THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?
