The Naked Short Selling That Toppled Wall Street
DeepCapture, 2 October 2008
The Wall Street Journal stated in a lead editorial last week that the SEC was “reasonable” to “clamp down” on naked short selling. Well, that was progress of sorts, though one wonders how it could have taken all these years for the nation’s most important newspaper to suggest that it might be “reasonable” to put an end to criminal activity that has eviscerated hundreds of companies and destroyed countless lives.
And now that this criminal activity has been implicated in the Humpty Dumptying of our financial system, one grows wistful for the golden age of journalism when editorialists (people working for famous newspapers, not just cyber weirdos) would express a little outrage, demand that heads roll – muster something better than “reasonable” to describe the limpid “clamp down” of an SEC that bows in oily servitude to the very short-sellers who manhandled our markets.
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The Short Seller Myth of “Market Efficiency”
DeepCapture, 12 September 2008
“The SEC’s public data say that on any given day over the first three months of this year, there were more than one billion shares that had been sold and failed to deliver (within the allotted 3 days) and that 70% of those fails were concentrated in just 100 companies. That’s a real red flag for the SEC that naked short selling is very widespread, is highly concentrated, and consequently might be being used today to manipulate the price of scores of stocks.”
-Former Deputy Secretary of Commerce Robert Shapiro on CNBC
It’s great that CNBC allowed someone to report this news. It seems pretty interesting – criminals manufacturing piles of phantom stock in order to systematically manipulate the share prices of perhaps 100 companies. Come to think of it, it sounds like a really big financial scandal.
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Flames Flare Over Naked Shorts
New York Times, 20 January 2007
UNSUSPECTING readers of certain stock message boards may be forgiven for believing they have stumbled into a flame war among 14-year-old boys. But the increasingly vicious online dispute actually involves, among others, the chief executive of a publicly traded corporation and a longtime business journalist.
The chief executive is Patrick Byrne, who in recent years has taken to asserting that a vast conspiracy of securities traders, journalists and government officials is bent on bringing down the stock of his company, Overstock.com, a peddler of excess inventory. The journalist is Gary Weiss, the author and former BusinessWeek reporter who has made a second career out of ridiculing Mr. Byrne on his blog (garyweiss.blogspot.com).
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The Story of Deep Capture
By Mark Mitchell, with reporting by the Deep Capture Team
The Columbia School of Journalism is our nation’s finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession’s gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark. In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.” His exposé reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea.
Introduction By Patrick M. Byrne, Deep Capture Reporter
PDF (69 Pages): Deep Capture Story