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Posted: 2/28/2006 2:25:20 PM EDT
Illegal short selling is occurring on a grand scale. Overstock.com has more shares shorted than are in circulation. Every share shorted must be borrowed and delivered to the purchaser on the other side of the short sell. Many other stocks are being attacked. I am not an overstock.com investor.

thesanitycheck.com/

Jim Cramer has just been supoenaed by the SEC for giving sell instructions to the public after the hedge funds (e.g., Rocker partners) took a major short position. Other journalists are implicated. Read, enjoy, but spread the word.

I've been following this for about 14 months and it appears to be finally making some headway.

Send e-mails to Chris Cox at the SEC to go forward with the investigation. coxc@sec.gov
Link Posted: 2/28/2006 2:31:36 PM EDT
Dow Jones News Service or Dow Jones or whatever have also been served a subpeona.

The fecal matter may be about to impact the aerofoil.

Link Posted: 2/28/2006 2:34:07 PM EDT
So bad as in like the enron thing?
Link Posted: 2/28/2006 2:35:09 PM EDT
This doesn't surprise me.

For the past few months, I've seen a good number of, ahem, questionable activity and manipulations. Maybe the SEC has opened an eye towards it.
Link Posted: 2/28/2006 2:35:18 PM EDT
Link Posted: 2/28/2006 2:37:26 PM EDT
Not even the hot chick in the commercial can save them.
Link Posted: 2/28/2006 2:38:43 PM EDT
And It's ME that's crazy for not investing.
Link Posted: 2/28/2006 2:40:22 PM EDT
A "dot com" and stock trouble? NEVER.
Link Posted: 2/28/2006 2:41:31 PM EDT
I've told the wife to avoid overstock for months now..
Link Posted: 2/28/2006 2:48:55 PM EDT
[Last Edit: 2/28/2006 2:50:58 PM EDT by callgood]
Their CEO is a nutjob. Check out "Squawkbox" Wed am on MSNBC. He's on. The company isn't performing and he's trying to shift the blame. He should run Alcoa so he could get unlimited tin foil.

IF THEY WOULD MAKE THEIR NUMBERS, all those people who were short would be screwed. The stock would go to the moon as everyone tried to get some shares to close their position.

Last I heard the subpoenas had been withdrawn.

drrocket- what did you mean about "illegal" short selling?
Link Posted: 2/28/2006 2:52:59 PM EDT
Umm...do I smell a short squeeze coming?
Link Posted: 2/28/2006 3:02:51 PM EDT
Link Posted: 2/28/2006 3:05:00 PM EDT
Byrne is a nutcase like others have said. They are based out here....worked for em. Yup, he's a nutcase.
Link Posted: 2/28/2006 3:09:47 PM EDT
Let me be the first.................it's all Bush's fault.
Link Posted: 2/28/2006 3:09:49 PM EDT
I think if the board issued a statement that they had a new CEO lined up, I wouldn't want to be short. IIRC, the chairman is CEO's (Byrne) daddy.
Link Posted: 2/28/2006 3:12:41 PM EDT

Originally Posted By Hellhound:
Not even the hot chick in the commercial can save them.



This one?

Link Posted: 2/28/2006 3:13:15 PM EDT
Just a question here. Illegal short selling - OK, I get that this is fradulent, but this isn't Enron - a company making itself look better than it is.

Illegal short selling profits from making a company look worse than it really is to drive the price down. I guess if you sold a stock for less than its true value you lost money, but there are not hidden losses here. Actually the stock is worth more than its current value. Illegal short sellers could get creamed, but there shouldn't be additional pain for anybody else.

Sellers have already incurred their losses right?
Link Posted: 2/28/2006 3:14:18 PM EDT
Know what sucks?
Being an employee there right about now.

I was at WorldCom when they collapsed....because of what 10 greedy assholes did, 80,000 hardworking folks that had nothing to fucking do with the corruption got screwed. All those pieces of shit that caused the problems are still millionaires, meanwhile, 80,000 families get screwed......hard

We used to sit around and talk about the trial when they were ramping up for it....I think they should have killed that son of a bitch for ruining so many lives. So many regular folks get caught up in this kinda thing through no fault of their own, yet the criminals serve a couple of easy years and then go back to their millionaire, or in some cases, billionaire lifestyles.

Scumbag greedy fucks. I would give a lot for 5 minutes alone in a cell with the CFO or CEO.
It nice to know that at least one person, Ebbers, will in fact die in prison. I enjoy that.
Link Posted: 2/28/2006 3:14:30 PM EDT
hmmm, I expected to hear about UAL's esop program
Link Posted: 2/28/2006 3:15:16 PM EDT
That chick could be hocking sweat socks in the ads and still make it sexy as hell.



Originally Posted By CAR_16:

Originally Posted By Hellhound:
Not even the hot chick in the commercial can save them.



This one?

www.davidmsc.com/wp-images/sabine.jpg

Link Posted: 2/28/2006 3:16:29 PM EDT
OK - I read the link. Fishy stuff, but shouldn't only the short-sellers get hurt?
Link Posted: 2/28/2006 3:31:01 PM EDT

Originally Posted By MillerSHO:
So bad as in like the enron thing?



Much much bigger since Enron was just one stock. Naked short selling affects hundreds. Just check out the SHO list on NYSE and NASDAQ.

Stocks appear on the SHO list if there is difficulty in obtaining shares to borrow from owners to lend to short sellers. Technically, for stocks listed on the SHO (for SHOrt) list, the broker must source the shares to borrow before he can allow his client to short sell the stock. If that were true, how could there be more shares trading or shorted than exist?

There is one story of a shareholder purchasing all 1.2 million outstanding shares, filed with the SEC the appropriate form that he now owns 100% of a publicly traded company. 4 million shares traded every day for a week on that stock.
Link Posted: 2/28/2006 3:38:39 PM EDT

Originally Posted By callgood:
Their CEO is a nutjob. Check out "Squawkbox" Wed am on MSNBC. He's on. The company isn't performing and he's trying to shift the blame. He should run Alcoa so he could get unlimited tin foil.

IF THEY WOULD MAKE THEIR NUMBERS, all those people who were short would be screwed. The stock would go to the moon as everyone tried to get some shares to close their position.

Last I heard the subpoenas had been withdrawn.

drrocket- what did you mean about "illegal" short selling?



1. Cramer, Greenburg, and other reporters are implicated. Patrick Byrne isn't trying to shift the blame. Please read the blog I linked above to get the much much bigger picture. It isn't just about Overstock. There are hundreds of stocks. The brokers and DTCC (the stock clearing house) are also implicated. If there isn't a political blockages from Chris Cox, the new SEC chairman, this will be very very big. Many stocks are actually profitable and paying dividends.

2. Illegal shorting means shorting a stock without actually borrowing a real certificate from your broker (who actually borrows it from someone who is long the stock) and delivers the certificate to the purchaser.

3. I can't do the subject justice, and I suggest for those interested that you check out thesanitycheck.com
Link Posted: 2/28/2006 3:45:21 PM EDT

Originally Posted By H46Driver:
Just a question here. Illegal short selling - OK, I get that this is fradulent, but this isn't Enron - a company making itself look better than it is.

Illegal short selling profits from making a company look worse than it really is to drive the price down. I guess if you sold a stock for less than its true value you lost money, but there are not hidden losses here. Actually the stock is worth more than its current value. Illegal short sellers could get creamed, but there shouldn't be additional pain for anybody else.

Sellers have already incurred their losses right?



When you purchase a stock, shouldn't you be allowed to receive delivery in certificate form of the shares? How long should that take? (Answer: 3 days to settle the trade and perhaps 2 weeks for your broker to actually mail the certificates) Some have never been delivered because they do not exist.

The value of a company divided by outstanding shares should be the value you hold per share. What if the number of shares was doubled? Whatever you are holding is now worth half. And if there is a bear raid going, it will be far far less.

THIS ISN'T ABOUT OVERSTOCK.COM The media is trying to shift this to an Overstock issue or 1st Amendment issue. Think about this. The SEC enforcement division would not issue supoenas to such visible persons in the media if it weren't sure there was something serious going on.

If the same company tried to raise additional funds in the market, they would have to sell their shares at a major discount to their true market value further hurting their shareholders.
Link Posted: 2/28/2006 3:48:41 PM EDT

Originally Posted By H46Driver:
OK - I read the link. Fishy stuff, but shouldn't only the short-sellers get hurt?



Yes. This should be fun. But more importantly, we'll get to see first hand if the greedy criminals get to buy their way out of it with political favors.

Enron and others from the late 90's were easy to understand by Joe Public. Illegal short selling and this type of stock manipulation is tough to understand. So don't expect really clear reporting by the media--especially since so much of it is bought off.
Link Posted: 2/28/2006 4:15:01 PM EDT

Originally Posted By drrocket:

When you purchase a stock, shouldn't you be allowed to receive delivery in certificate form of the shares? How long should that take? (Answer: 3 days to settle the trade and perhaps 2 weeks for your broker to actually mail the certificates) Some have never been delivered because they do not exist.

The value of a company divided by outstanding shares should be the value you hold per share. What if the number of shares was doubled? Whatever you are holding is now worth half. And if there is a bear raid going, it will be far far less.



I don't disagree with your points at all, especially regarding share delivery. Maybe I misread the article, but what I took away with it is that because of the "float" associated with short selling there are what I will call "virtual shares" out there. I borrow the stocks from you to sell, but before I get them, someone else borrows them from me to sell short. There aren't actually more shares in existence, but the current rules allow the market to function that way.

I see how current holders can get hurt and even legitimate short-sellers who aren't in on the scam, but the only ones taking actual losses are those who sell into the trend. Short sellers will get burned if/when the "stirring" stops. That will be a nasty time for the last set of short sellers.

That's why I stay away from selling short. There is no limit to the amount of money you can lose. Normal ownership, you can't lose more than you invest.
Link Posted: 2/28/2006 4:34:28 PM EDT
[Last Edit: 2/28/2006 4:42:57 PM EDT by USMC2111]
If any one starts mentioning a certain mining company, I'm going to break out in laughter. The naked short selling claim seems to be the first resort for companies where the wheels are coming off. "We haven't generated any profits, the money from the IPO has evaporated into my salary......Wait, it's naked shorting that's the problem". If you're making money, naked shorting would depress the stock price, but not the balance sheet.

I hear enough from clients that received cash in lieu when their shares were loaned, now I'll get to listen to this.

Semper Fi
Link Posted: 2/28/2006 5:05:31 PM EDT
I'm in the money management business. Funny thing hapened to us about 5 years ago.

We owned a thinly traded, tech stock in client accounts. The brokerage firms who custodied the accounts held the stock in "street name", meaning they were free to lend the stock out to short sellers, without the owner's approval.

When a number of people started shorting the stock, we figured that our clients shouldn't help those who were trying to hurt the stock, so we made the brokers "register and hold" the stock.

This means that they would still hold the stock for the client, but they couldn't lend it out without approval, which they weren't going to get.

Bottom line: They had to go into the market to buy stock to register and hold for all these people, because they had let short sellers borrow the shares. This caused enough of a run in the stock to stick it to the shorters. That was some fun. Pissed the brokers off too.
Link Posted: 2/28/2006 5:22:51 PM EDT
Its about frigin time.
I hope they throw the book at the street.com
Link Posted: 2/28/2006 5:29:47 PM EDT
I always wondered why google stock was so high priced
Link Posted: 2/28/2006 5:47:40 PM EDT

Originally Posted By jmzd4:
I always wondered why google stock was so high priced



This is about pushing prices down.

Google has a silly stock price because people are stupid!
Link Posted: 2/28/2006 5:58:00 PM EDT
[Last Edit: 2/28/2006 5:58:41 PM EDT by raven]
Mark Cuban was having an extended media feud with Patrick Byrne over this. Byrne said manipulators and cheats were conspiring against his company, including Mark Cuban who ridiculed him in his blog. Cuban said he'd short Overstock more if he could, but there just weren't enough available out there to sell, and he thought LEAP puts were too expensive.

You can read Cuban's blog about his take on all this, he seems like an even-keeled guy,

www.blogmaverick.com/entry/1234000137073540/
Link Posted: 2/28/2006 6:02:15 PM EDT
The hedge funds are manuplipating the stock market with their shorts, etc. The average person has no chance
Link Posted: 2/28/2006 6:03:22 PM EDT
Same thing happened to CMKX.
Link Posted: 2/28/2006 6:20:09 PM EDT

Originally Posted By raven:
Mark Cuban was having an extended media feud with Patrick Byrne over this. Byrne said manipulators and cheats were conspiring against his company, including Mark Cuban who ridiculed him in his blog. Cuban said he'd short Overstock more if he could, but there just weren't enough available out there to sell, and he thought LEAP puts were too expensive.

You can read Cuban's blog about his take on all this, he seems like an even-keeled guy,

www.blogmaverick.com/entry/1234000137073540/



Cuban is a major ASSHOLE!
Link Posted: 3/1/2006 12:11:45 AM EDT
drrocket, it sounds like you've been drinking the same Kool-Aid as the CEO of OSTK.

The company is fucked up. Sure, naked shorting can hurt the stock price, but it wouldnt' destroy the company if the company itself weren't already seriously fucked up. Moreover, the shorts wouldn't be targeting the company to begin with if the company weren't royally fucked up.

All of the nonsense about "evil short sellers" is nothing but cover for the raving loon and bad management who have driven the company to the brink of death.

You are being manipulated even more than the stock. If you are already long, pray that a miracle occurs. If you are short, best of luck. if you are not in it at all, I suggest you stay out.
Link Posted: 3/1/2006 7:07:26 AM EDT

Originally Posted By 71-Hour_Achmed:
drrocket, it sounds like you've been drinking the same Kool-Aid as the CEO of OSTK.

The company is fucked up. Sure, naked shorting can hurt the stock price, but it wouldnt' destroy the company if the company itself weren't already seriously fucked up. Moreover, the shorts wouldn't be targeting the company to begin with if the company weren't royally fucked up.

All of the nonsense about "evil short sellers" is nothing but cover for the raving loon and bad management who have driven the company to the brink of death.

You are being manipulated even more than the stock. If you are already long, pray that a miracle occurs. If you are short, best of luck. if you are not in it at all, I suggest you stay out.



1. I stopped drinking Kool-Aid decades ago.
2. I mentioned I am not an Overstock.com investor--long or short. And I don't recommend OSTK.
3. This is not just about OSTK. There are hundreds of stocks on the SHO for a long long time.
4. This is about market manipulation, timing of stories. The SEC enforcement division wouldn't issue supoenas on "journalists" unless something was cooking. The media backlash would be too embarassing.
5. I agree that certain non performing CEO's would try to misdirect the light to the shorts. That may be occurring here in OSTK.
6. But wouldn't you agree with me that creating shares that don't exist out of thin air thereby diluting the value of the real shares you own in a company is wrong? I have no problem with investors shorting a stock if they can borrow it legitimately. Creating more short shares than the company actually issued is just wrong.
7. Interestingly, if the company goes bankrupt, the short seller never has to buy back the shares and there is no income tax consequence.
Link Posted: 3/1/2006 7:20:40 AM EDT

Originally Posted By drrocket:
3. This is not just about OSTK. There are hundreds of stocks on the SHO for a long long time.
6. But wouldn't you agree with me that creating shares that don't exist out of thin air thereby diluting the value of the real shares you own in a company is wrong? I have no problem with investors shorting a stock if they can borrow it legitimately. Creating more short shares than the company actually issued is just wrong.


It's a zero-sum game at that point. Most importantly, perhaps, the company itself can thoroughly destroy the shorts by buying back its own stock cheaply, then watching the shorts scramble as the stock rebounds.


Originally Posted By drrocket:
7. Interestingly, if the company goes bankrupt, the short seller never has to buy back the shares and there is no income tax consequence.


Actually, that is no longer the case. That was changed years ago.
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