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If that's what you believe and work for or are
affiliated with any organization that shorts stocks, then please keep posting. If any person who posts in collusion to illegally manipulate stocks and is so completely clueless as to the ease at which your identiy can be traced, they are beyond help.
chi, if the shoe fits wear it.
It's 2005 guys. No one person or group of people post day after day ad nauseum bashing unless there is financial gain to be had or you have the saddest existence on earth. If it is easy for us to see, how much easier would it be for prosecutors to not only see it, but trace it in under 15 minutes?
I Pray This Ouhouse Survives
Posted by: Bo14172
In reply to: Mach1cobra who wrote msg# 35148 Date:3/12/2005 10:36:58 AM
Post #of 36791
Here's why...
What's does an outhouse draw??
It goes without answering. So with the consistant amount of crap drawing nothing but maggots and flies, the market that follows boards for real DD and opportunity will quickly ignore what's said here.
The more crap an outhouse can hold, the more maggots and flies will be drawn. This board is now an excellent way to shine the light on them for all to see. I am using it as a way to identify whose posts to ignore if I see them popping up on other boards.
Is this board now a waste of time?
Without a doubt.
Can we put it to use? Only the limited way I described above...
...I say to this outhouse, keep it going!! Post even worse stuff. Make it more one-sided. Make it more obvious to all that those who post here have a shorting agenda. Draw more of your same ilk out! Don't stop!!! This board will continue to be ignored and keep sinking, but I'll bank the info and use it to my advantage.
Mach, your board and proboards32 had the highest reads with the best content for CMKX DD and discussion.
Good luck, and let this outhouse stand!!
Bo
(PS 3/21 - Computers can be traced easily. If any posters are affiliated with illegal trading activity, you're only making it easier for you to be prosecuted with every post. Given the lack of mentality shown here daily, I have no doubt you'll continue to incriminate yourself.)
Zak, you typed:
"Don't bet on it. We'll be here long after the delisting and the shares are worthless forever, rubbing your noses in the fly infested feeces leftovers."
Even though the flu bug has bit here and have been feeling like a wet towel the past couple days I thought maybe you would be a type of person open to a good debate and actually have something to add. Not only was you answer to my post pathetic, but then we read the above.
See my post of 3-12. You fit the bill perfectly, thank you.
Your posts are worthless and not worth reading on this or any other message board
Bo
Zak,
Your first point is valid and I honestly believe 99% of CMKX longs know this but simply can't bring themselves of admitting there was unmitigated massive diltution to the detriment of the share price.
Zak, for both longs, shorts, bashers & pumpers, 703B is the figure. It's a 2 1/2 week old dead horse. It isn't pretty, but in business you can't look back. It's a done deal and time to move on.
Don't get me wrong, I don't like it. The time people spent last year in this stock, not to mention their damaged reputation in telling others about the stock whenever you could only buy at .0003 and higher...took it's toll in time and money on many. My entry was good so I faired ok, but still felt the toll nonetheless.
But that's water under the bridge, or over the dam...wherever...the water is somewhere. lol
The second part of your post saying it was a scam and CMKX has no fundementals is where I disagree 100% and contend that statement is simply wrong. A scam to me is a company that has no assets nor any revenue generating product or service, nor any real plan of such. The corporation CMKX has much promise and potenital. The claims owned, TDEM survey, the aerial survey, the unranium claims in the Northern region plus the gold mine in Ecuador add up to a company with potential. Management prior to Mr. Meheu lacked in every way possible and simply diluted the stock to the heavens, but CMKX as a corportatin is not a scam.
It was 100% crystal clear that Mr. Maheu was righting the ship by taking bold and decisive action that was sorely absent before. They began the process to become reporting and those who illegally trade stocks and CMKX became scared and threatened. In 2005 with Level 2 and streaming trades, it's clear that manipulation occurs far beyond naked short selling, but revealing nss (like in the case of GLKCE) is the most concrete evidence of such bad faith trading.
I'm not sure why you and others need to come in here day in and day out to point out the same thing. Do you or your like-minded friends have the balls and bravery to admit that you or those you are affilated with short pinksheet stocks?
If you do, that's fine. I'd actually respect you and so it's your choice to respond.
I haven't followed the chatter much the last few days so I apologize if someone already brought up this point. If not, consider this:
The SEC "investigation" centers around the delay in the reporting by CMKX. They are using this deliquency as their reasoning for a determination to be made. Here's my fundemental problem with their entire contention: If the same governing bodies who are now citing CMKX for "delays in reporting" are among the same governing bodies who approved (or accepted) that CMKX was allowed to become pinksheet company in 2003, then their case has no merit. Their own actions and approval (or acceptance) 2 years ago fly in the face of what they are trying to do to CMKX now. lol
Pink Sheet companies do not require any listing requirements to be traded in that market. The companies quoted in the Pink Sheets (with the exception of a few foreign issuers) tend to be closely held, extremely small and/or thinly traded. Most do not meet the minimum listing requirements for trading on a national securities exchange, such as NYSE or NASDAQ. Many of these companies do not file periodic reports or audited financial statements with the SEC.
If there was no requirement for CMKX to file reports to the SEC after being listed on the pinksheets, then the SEC has no case.
I'm open to debate but adding my .02
Bo
Fast, other than no news and
very poor revenue in their last 2004 report, not a lick.
Again, it's stocks like these that ARE ALLOWED to move for no reason versus stocks which have HIGH VOLUME BUYS and good news and book value that don't move at all which should have more people start to question the bad faith trading practices seen in the smaller markets.
Bo
K Tik...
Their filings aren't current then. They may show up soon to reflect the r/s.
I usually go straight to the filings first to get the true scoop on what goes on with these smaller plays.
Thanks for the input here. I hope it stays strong for you! : )
Bo
ZANC - Tiktre...what is the story here?
In looking at recent filings, their last 10QSB in Sept is showing an o/s totalling over 570,000,000 shares, and already in 2005 they increased their A/S to 900,000,000.
Is there is a reason for what we are seeing? Is it valuation or can you confirm the float to be low?
Thanks,
Bo
Our lesson continues to be finding what
are the triggers that knock stocks loose from the MM grip. Even companies showing real revenue are not trading near their book value, ie. ELTK and CGHI. With QBID, they get into the .0023-.0028 range of historical bottoms and seem to run from there regardless of the substance (or lack of substance) of the pr.
What people underestimate is that for MM's to make money shorting a certain stock in the long term, the price of that stock will be ALLOWED to rise at some point in order to set up the painful walkdowns we see. For MM's, the high levels are needed to fan the flames of interest in the stock all the while colluding on what levels short positions can be established and the slow walkdowns to begin again.
IMO, but happens time after time on many plays.
Here, I didn't see many ask where QBID is getting the revenue or financing to even consider bidding for Pride TV. The MLON'ish pr today (well put JB) could answer that question if additional shares are added to the market (dilution) after a spike in the price occurs.
All to be seen. I'm staying sidelined but wish anyone good luck and good trading. Not sure why this pr triggered the MM's to allow this to, but so be it.
GL!
Bo : )
My thoughts exactly JBtrader.
However, continued GL for all who are in it.
CKXE - Elvis + American Idol!
How I wish I still held 2000 shares @ $1.35 when
I brought this to the boards that crazy day in December.
CKXE formally traded as SPEA before going to the NASDAQ.
http://cbs.marketwatch.com/tools/quotes/quotes.asp?symb=ckxe&vc=0&siteid=mktw&dist=dropm....
See today's news.
$23/share and rising.
Bo
pennypyg, seems to be a new trend
in MM tactics. I've seen this week where in the pre-market they gap up the price on stocks with afterhours news 10%-25% on some plays, then when rightfully excited investors enter after the bell it either doesn't move higher than the gap, or doesn't move then a slow walk happens.
It's not in every case, but in more than a fair share of similar plays this week. You almost have to play momentum trading (which I don't, but some are good at it) or catch one early that lists good news during the trading day. Even then you never know. But the gap up and short lived (or no lived) run after the bell (20 minutes tops) is the lastest trading practice becoming more prevelant. They hold the price on high volume buys and drop prices on such small sells, creating the mini-panic/selloffs soon into a trading day on stocks with good news, then turn around and let other stocks soar on nothing.
It's tough out there.
GTG. Later all,
Bo
Doc_o, links or reference?
I see no news for either concerning that. If you have link it would be much appreciated by many I'm sure.
Thanks, Bo
Hi there Joye.
All good plays to follow. Thanks!!
I'm kind of all over the place right now (here mainly on CMKX..it seems the bashers had a 'back to Jesus' meeting, because their posts haven't resembled subway graffiti as much). I post on occasion on BOT and BB for picks. Waiting for Mach's board like many.
Peek at CGHI and please tell me how the chart looks. Their O/S is only 54 million and their news the past 2 months (especially recently) has been very strong. It was beginning the run yesterday when like a fool I mentioned it. They immediately built the wall at .335 minutes into trading, letting MANY trades go through at this level, never raising the bid or ask once. Like a lot of other plays we've called in December and January, this one has too much going for it. It's traded well above this level prior to 2-3 months ago before all of the recent great news.
AKOL and FCCN also on watch today.
GTG for now,
Bo
GM Miss Joye. : )
What's looking good today?? I haven't dug in to scanning and DD'ing this morning yet.
Bo
JShell,
From my post:
If CMKX has the goods on the MM's, the iron is hot and the timing right. IMO
You typed:
"Why would you think CMKX "has the goods" on anyone?"
See the definition of the word 'if'.
Second, for months we witnessed no one being able to buy at .0001 until recently yet trades still went through. That's only one practice blatantly seen.
You typed:
If that were true, why didn't they do something about it a long time ago?
See the second part of my sentence. Explain your disclosure, financial ties and interests in wanting to see a company fail and lose money. Don't be a coward and say you have none and you simply do this because you're "interested in the story". That line is beyond old, and I'm waiting to see the day those who bash have the guts to simply say, "I and those I'm affiliated with short pinksheet stocks." There might be far more respect for what your opinion rather than coming across as having no life.
I know if I was shorting stocks legally, I'd have no problems saying so and give valid reasons for my concern on any stock, not the drivel bashers type 95% of the time. Now if you're shorting stocks ILLEGALLY, then you should continue to do exactly what you're doing.
prospector,
Getting through this will be tough, but it's doable. Once through it will hopefully be a much more focused CMKX under Maheu.
GLKCE is opening many eyes. Think about a senator reading a letter to the head of the SEC about NSS abuse! We could not have aked for a better scenerio or advocate in Senator Bennett.
If CMKX has the goods on the MM's, the iron is hot and the timing right. IMO
Good Nite my friend,
Bo
All that is staked in CMKX now
here is fun money. (1 day before the halt. lol) I feel for the ones that have more in it beyond fun money.
Questions: That term fun money is used so much, and Lord knows I've used it an armload of times, so....
When does the fun part of this kick in?? : )
Fun is parasailing in Jamaica, tobagganing with friends, seeing your kids do great things, etc.
Did gnashing of teeth sneek in somehow and become also a fun thing??
Is rolling ones eyes 48,000 times over the past 10 months or shaking one's head in disgust daily in front of the computer screen now added definitions of the word 'fun'??
If so, we've been having one hell of a 1 year party and didn't even know it. LOL
; )
Bo
Buzz,
I respectfully offer that you're half right.
Both CMKX Version.2004 and the MM's have 'much splaining' to do and as I've said before. Both are to blame here. However when the ruling body also oversees MM's, they are making sure their side never has to be told.
CMKX isn't a scam Buzz. It was a very poorly run operation with prior management that liked to dilute the stock rather than go to work putting time, talent and money in real exploration efforts.
I believe in the claims of FALC region, gold claims in Ecuador and uranium claims in the Northern region, I just didn't like how the company was being run at all.
I like the new leadership and that potential is still there, so if they make it through this I look at it this way: We're in at the lowest levels possible in a company that will be much better run and who's share structure can only improve.
Nite all,
Bo
TigerCat,
That's why I'm concerned that no matter how the SEC has portrayed this to CMKX privately over the last 2 weeks, the SEC is trying to play a game called 'Dead Man Walking'. In this case SEC is trying to draw the bullseye on CMKX.
CMKX has to continue to do what they are doing in full cooperation with whatever the SEC requests. However, if they sense any disconnect between how the SEC deals with them privately versus publicly (i.e. today's filing), then they simply have to become pissed off and proactive if they can confirm massive naked short selling during ANYTIME over the last 2 1/2 years.
If over the last 2 weeks all has seemed well and the SEC sweet talked them and exhibited good cooperation with CMKX, and then blindsided CMKX with this filing today, the company needs to hit back hard, and yesterday wouldn't be soon enough.
Failure of a strong response now just makes the likelyhood of that bus I mentioned in my last post more inevitable at the end.
Bo
CMKX - The #1 concern...
The SEC and the system will order CMKX be delisted or revoked so the MM's will not have to cover and the DTC & SEC remain untouched. Game over. They win.
_________________________________________________________________
The timing of the SEC's filing is curious tells me they not only chose to be blind to CMKX's filing last month, but filed an investigation less than 48 hours CMKX was going to report.
Further, the odd reasoning in today's report looks to me like they are going at CMKX on a technicality. CMKX was officially moved from the OTCBB to the pinksheets WITHOUT HALT OR SUSPENSION AT THE TIME. Wouldn't it have been the governing authorities of the securities market who approved and facilitated the move of CMKX to begin trading on the pinksheets??
SEC is trying to force a checkmate. CMKX has to respond BOLDLY to get this matter HIGH IN THE PUBLIC EYE. If they have ANY EVIDENCE of naked short selling or any other illegal trading practice with their stock, they need to shout it from the roof tops! The pr has to be STRONG and they have to pursue all media outlets and use legal routes if necessary.
They are good at promoting. They need to put those skills to good use now. Making this case a larger than life public issue affecting the market as a whole is their best and only way to respond. Anything less may play into the SEC's hands. It seems the decision is already made and the SEC is simply working backwards to fill time.
CMKX, if you have dirt on the MM's, turn the fan on HIGH and throw it now!!! If not, those investigating you will sweet talk you and pretend everything will be ok, meanwhile they have the bus warming up to PANCAKE you on decision day.
Bo
narvo,
Good point, but consider that the dynmaic is already in place!
Those people that formally filed saying they possess the o/s in their sock drawers are THE most important pieces of the puzzle. ALL shares above that are out of balance shares!
As long as GLKCE holds firm and more people come forward saying they own a substantial portion of the o/s in addition to what already has been filed while others seek to secure their certs, it's truly anyone's guess how this will play out.
I see the possibility of MM's ordered to buy back the excess shares with their own funds and confirm the retirement of those shares. They will be forced to bid up the price in order to make it attractive for people to sell them back to the MM's which could get quite interesting. : )
Til later,
Bo
narvo, count me in.
I got in again after their dip from their run last week to .125 at a nice level. Turned a nice 80% trade on the way up to .125, and now playing a small chunk at a good level, and planning on staying put to see this play out. The more this issue stays front and center, the higher I see this going. Someone is going to have to account for the shares that were traded. As long as GLKCE holds the line, which it appears to be doing, I like the upside here so I'll be calling. : )
They issued minimal shares in March in relation to the tens of millions of shares being traded! If this money sustains them through this investigation (that's what it is now) then so be it and a wise move to see this through.
I'm making an educated guess that with Senator Bennett's questioning last week and the e-mail responses to him which followed, interested government officials may well have contacted GLKCE and want to work with them to get to the bottom of this NOW.
Later all,
Bo
As expected here.
zen & narvo, great posts!
narvo,
GLKCE: Take a peek at my posts from 2-3-05 through 2-7-05. I did everything just short of skywriting this issue identifying this gross anomaly and pointing out the opportunity. I saw it at .004, and in the 15 minutes it took to do further adequate (but quick) DD I brought it here when it was at .006. The last 2 weeks have shown that what we DD'ed was 100% on the money.
The evidence of the DD was confirmed and boldened by the filings of individual shareholders who own more shares than the float, (Those filings may well continue!!), the article exposing this story, Senator Bennett's direct and confident questioning of Mr. Donaldson in which he read the article, and now finally comfirmation from the company itself.
Through this I was never blind to the companies past filings and posted so, however....
...with all that has been evidenced here, and the light that has been shed on their stock, it seems crystal clear from what you post that GLKCE fully understands the importance of this matter and the role their stock has as the WATERSHED CASE of this issue.
I am glad to see them echo what I pointed out 6 weeks ago, and again last week. Here it is. It speaks for itself:
On the day of the R/S, this was the transaction that occurred:
09:42:51 5000 0.015 - OTCBB
09:42:51 5000 0.10 OTCBB
You saw the reaction of Senator Bennett, and the thousands of e-mails to him and others in the wake of his questioning. GLKCE knows they are the example case of a large marketwide problem.
By them continuing to hold their share structure in place means this issue will be continue to be at the forefront.
.004 to .14. The more this issue gets pounded especially now that early evidence is being revealed, this could get very good indeed.
_________________________________________________________________
zen,
Your words to your first post this afternoon could not have been better put. I see so many so far into the quasar here. For them any reality will never be properly digested. I posted before in depth the possibilities and now that the air is semi-clear, I see it narrowing down to 1. I'm going keep it short:
~ 703 Billion & 2004 = Bad.
(Carnival barking to the nth degree, dilution, misuse of funds and abuse of tens of thousands of peoples' trust and time)
_________________________________________________________________
~ NSS and cellar boxing = Bad.
(I deleted a very long explanation here of what we saw ocurring. I'll leave it by saying the trading practices we saw here are very open to question)
_________________________________________________________________
~ SEC inquiry = Could go either way.
(CMKX Version.2004 and MM's were both in the wrong last year as I see it. Glad it's in the open. I'm focusing on simply emerging in tact and hope current leadership (Mr. Meheu) stays in place, and could care less about the fate of prior management whether they stay or be ousted.)
_________________________________________________________________
~ CMKX Future = Promising with current leadership.
(We have to get through this. This will take time, it won't be over tomorrow as I posted a couple weeks back. After it's over, simply not look back and for people to understand we have a promising company that unfortunately has a GINORMOUS o/s. It's going to take time and REAL EFFORT in finally using funds and resources for exploration and mining, rather than what we saw with CMKX Version.2004. TDEM + Aerial surveys + real business being done + bold leadership + improving share structure are what I see occurring, but it will be a long slow road. A good one but a longer road than most are theorizing. Like you, I'll take any quick windfall, but one only has to scan the industry to see that REAL WORK and results have to occur for CMKX be deemed to have value. Proven mines are the only way.)
CMKX has 703 billion shares and is the subject of SEC investigation. It is what it is, fugly.
But having Mr. Maheu leading the company and having the TDEM and aerial results, plus the uranium claims in the northern region and the gold mining claims in Ecuador, makes one hope CMKX can remain in tact with his leadership and start doing business as it should have long ago.
Bo
JustG...CGHI's fiscal year isn't over until March 31st.
Their latest 10QSB reflects the 9 months of their fiscal year reported through December 31, 2004.
Also, I looked at their last 10K for the year ending March 2004 and their o/s at the time was 49 million. It's only 54 million to date which reflected a small share conversion.
Current quarter activity which is very strong will certainly be reflected in future K's and Q's.
With the uncertainty in oil and currency incresing, precious metals companies will be great mid to long term holds.
Bo
http://knobias.10kwizard.com/files.php Then type in
CGHI in the field near the upper right hand corner.
Bo
JustGambling, CGHI had 3 filings less than
30 days ago. I'm assuming the sources you checked weren't showing that for you, but the filings are there.
They're all in EDGAR. If you need a link, let me know.
Bo
ceez, Amen brother. No news, no EDGAR filings.
I go back to the beautiful people theory on this one. They bought in on a deal or news is just a whisper away. Fair trading? Who knows.
Congrats for those that got in at .015!
Bo
OTC BB, true or the beautiful people bought
in on some deal or knowledge of news forthcoming, and MM's are under instructions to let it run.
MM's deal the cards, play in the hand, name each bet and peek at the next card to be played. All we can do is be lucky and guess right.
Bo
OTC BB...what's up with it?? (SPCI)
Amazing companies that have great news and strong potential sit there, when they let this fly on NOTHING.
Bo
Joye, your BIPH & my MCEL calls
in December at 1.40 and 1.33 respectively, look sweet now.
BIPH, MCEL, ALMI, GTEL & BCON.
I just need a spare $10 grand and I'd put $2000 in each and do what I said earlier: not look at them for 3 years. : )
Each has been up 60-200% since January depending on which one you look at. That trend will continue.
Except for a few poppers, kind of a lulled market today.
Bo
Naked Short Selling - Fully Explained & Analyzed
Regardless if you're new to investing or are a seasoned investor, this is simply an outstanding piece by the CEO of Overstock.com worth saving or passing along to others. Bo
_________________________________________________________________
Dr. Patrick Byrne (CEO, Overstock.com) on Naked Shorting:
Patrick M. Byrne (Ph.D., Stanford)
CEO, Overstock.com
<http://ncans.net/byrneshort.htm>
Dr. Patrick Byrne's Summary Of The Naked Shorting Problem
From the Overstock Message Board - 3/13/05
Dear Colleagues,
The issue of “naked shorting” seems to be becoming a news item, and is even (perhaps) a scandal in the making: I have been called by several publications in the last week to discuss the issue, and there is word of a major exposé on a network news program to run soon. This is especially topical, given the issue of Social Security private accounts.
As is known by those who have been regular readers of this board, my involvement with the issue is that of a concerned citizen. However, I figured I would write something here so those who are interested can follow along. Some of this draws together points I have tried to make in earlier threads about “Wall Street Criminals,” but most of this is new. I have tried to explain here the Failure-to-Deliver and Naked Short issue in plain English. You auction sellers in particular will find many parallels between this issue and the issue of auction fraud, albeit it on a grander scale. In any case, I hope that those who are interested may find this a concise and useful précis on the issue.
1. Shorting Stock: This is a legal and honorable method of investing. Suppose a share of IBM stock is trading at $90, but I expect IBM to go down. I “short” it. This means that, through my broker, I borrow a share of IBM, sell it in the open market, and collect $90. Assume that IBM then drops from $90 to $50. That is as low as I think it is going to go, so I “cover” my short: I take $50 of the $90 that I collected, I buy a share out in the market, and return it (through my broker) to the person who loaned me a share in the first place. I am left with $40 profit.
2. Failure-to-Deliver (“FTD”): The American stock market runs on a “T+3” system. This means that when you sell a share of stock, you have 3 days to deliver that share. If you do not deliver within 3 days, you have, “failed to deliver,” or “FTD’ed”. Think of this like someone who posts auctions but does not deliver the goods.
3. DTCC: Depository Trust & Clearing Corporation. This is the back-office of Wall Street. Rather than have people run around with paper stock certificates, the DTCC keeps electronic records of who owns which stock at which brokerages, and settles the trading of stocks. If you “FTD” (“Fail to Deliver”), the DTCC are the folks whose books don’t match.
4. Strategic Failures to Deliver: Not all FTD’s are necessarily illegal. Someone may forget to get shares of stock out of her sock draw and deliver them to her broker within three days of a sale, yet this does not make her a criminal. Also, in the center of Wall Street there exists a job known as a “market maker,” someone who is charged with maintaining an orderly market in a stock by continuously buying and selling to create liquidity. Market makers are allowed (on a good faith basis) to buy and sell stock that does not exist, temporarily, just to keep liquidity in a stock. Again, this is expected and allowed. What is not allowed, however, is for investors to sell and fail-to-deliver purposefully: doing so (through a variety of mechanisms that I will explain below) in an attempt to manipulate the price of a stock, is a “strategic” failure-to-deliver. Some folks believe that Strategic FTD’s played a role in the 1929 meltdown. In any case, there have been regulations against it since 1933 (regulations which provide for criminal and civil penalties). The slang term for “Strategic Failure to Deliver” is, “naked shorting.”
5. The Economics of Naked Shorting: The gist of naked shorting is simply, when a hedge fund pretends to short a stock (I say, “pretends” because it is stock that it does not really own, and which it does not really borrow). It sells those made-up shares into the marketplace, and collects the money just as though it sold real shares (note that this is “counterfeiting,” more or less, though with electrons rather than paper). If it is stock in a small company, and does not trade with much liquidity, then the hedge fund can keep “selling” its made-up shares and drive the stock price down to wherever it wants it to go.
In a healthy market, the check-and-balance on shorting would simply be the number of shares that are available for short sellers to borrow and sell. Since there would only be a finite number of shares to borrow and sell, there would be only a finite amount of pressure the shorts could bring upon a stock (and it would be offset by buying pressure holding that stock up). But if naked shorting is allowed, then there is no limit on how many bogus shares hedge funds can create. Thus means they can drive a stock’s price down close to $0. At the very least, this practice destroys peoples’ savings (remember, the shorts make money by driving the stock down, whereas any stockholders lose that same amount of money as the stock price drops). Some folks believe companies have been driven out of business by this, because they cannot raise new capital once those stocks have cratered badly enough.
The key is this: if given the right to create an unlimited number of new shares, essentially out of thin air, not limited by the number of shares “in the borrow” as legal shorting requires, these hedge funds can always drive the price down and always cover for a profit. That is why it’s, “illegal.”
6. How can Naked Shorting Occur in Our Regulated Markets?
_____a. The lazy explanation: How can a hedge fund get away with selling shares it neither owns nor borrows? One theory is that the DTCC (and some brokers) look the other way for “favored” clients. “Sell 100,000 shares of XYZ for me.” “Do you have the shares?” “Oh, you know I’m good for it!” Large clients enjoy such favored relationships and, because they have deep pockets, the DTCC and the brokers assume they can trust those clients to operate like this and true things up later. This lackadaisical attitude, however, gives dishonest hedge funds opportunity to “sell” stock that does not exist, and thus create downward pricing pressure that becomes self-fulfilling: as the stock gets driven down it reaches the point that other owners lose confidence and dump their stock, and as it gains downward momentum, the naked shorts can cover their shorts and move on.
_____b. The sleazy explanation: Believe it or not, there is a more insidious explanation of how this game works. Imagine that a sleazy hedge fund chooses a small, illiquid company to attack. Often that company is in a poorly understood sector, or is a company with some accounting complexities so it will be possible to create “where there’s smoke there’s fire” skepticism about its books. Here is what happens:
__________i. The hedge fund gets that US firm listed on foreign exchanges.
__________ii. That hedge fund then “sells” shares it neither has nor borrows.
__________iii. When the DTCC calls after three days and says, “Where are those shares?” The hedge fund replies, “I borrowed them on the German exchange, they will take a few weeks to show up,” or “I am a market maker for the German Exchanges in that stock, and thus excluded from the no naked shorting rules.”
__________iv. With a nudge and a wink the DTCC says, “OK, we’ll loan you from our own reserves of that stock.” The DTCC collects a high fee from the hedge fund to do this.
__________v. The hedge fund has relationships with a few compliant reporters, who are called and told, “Do a hatchet job on Company XYZ.” They do so, perhaps in return for off-shore compensation.
__________vi. The combination of bad publicity coupled with the selling of an unlimited number of shares drives the stock down to the point either that the hedge fund covers and moves on, making a quick $20 - $50 million, or the company goes bankrupt, or simply remains a penny stock (in which case the hedge fund never has to cover its short, and hence, never pays taxes!)
7. The Regulatory Environment: After years of pressure, in 2004 the SEC promulgated Reg SHO (for “SHORT”), which directs the exchanges (NYSE, NASDAQ, etc.), to start publishing early in 2005 lists of companies whose FTD’s exceed a reasonable amount (“reasonable” = “greater than .5% of the shares in the company”). This list is called, “The Reg SHO Threshold List.” It does not list the amounts of FTD’s, just the names of companies that are experiencing them.
The way Reg SHO is supposed to work is as follows. If a company crosses beyond the threshold of a reasonable amount of FTD’s, and then stays there for 5 days without crossing back under the threshold, its name goes on the Reg SHO list. Then, after 13 more days, if it is still on the list, brokers are supposed to tell those hedge funds that are failing to deliver that they must stop failing to deliver, and those brokers are not supposed to take any more short sale orders from those accounts for those stocks.
8. Reg SHO is flimsy: So flimsy, in fact, it set folks scratching their heads - does the SEC not get it? Here is why it is flimsy:
_____a. Telling the hedge funds after 13 days, “You are not supposed to do any more naked shorting in this stock,” is meaningless - they weren’t supposed to be naked shorting it in the first place.
_____b. There are no sanctions for violators.
_____c. Why grandfather violations that have been illegal for 71 years?
9. Two theories regarding how big a problem this is:
_____a. Tame theory: This is a problem for a small percent of companies, just those that find themselves on the Reg SHO list. Thus this is not a hard problem to fix. But fixing it is going to cause a lot of hedge funds to lose money. They are well-connected with the SEC, and the SEC is co-opted to the point that they are tightening down on this half-heartedly.
_____b. Extreme Theory: This problem is so endemic that if the SEC tried to fix it the system would crack. There are so many losses waiting to be realized by the hedge funds, it would be like the failure of Long Term Capital Management, but on a massive scale (see Roger Lowenstein’s, When Genius Failed, for an excellent explanation of the risk that the failure of even one large hedge fund put on our financial system). In this scenario, the reason the SEC is not being suitably aggressive is because they know the problem has gotten beyond what can be solved without a systemic failure.
10. Which theory is correct? I don’t know. No one knows outside the DTCC, SEC, and maybe the NASDAQ and NYSE. And they are not telling. I have asked the DTCC, SEC, and NASDAQ for the size of Overstock’s FTD, but they all refused to disclose it. This amazes me: if I sold 100 shares out the back door of Overstock without registering them I would go to jail, but (per our inclusion on the SHO Threshold list) some hedge funds have sold hundreds of thousands (or millions) of phantom shares, and the SEC and DTCC protect them. When I ask, “By appeal to what law or regulation are you refusing to disclose this to me?” they clam up. This is one of the warnings telling me that this may be a problem of catastrophic proportions.
I hesitate to describe the others, as it sounds like I might be lining my hat with tinfoil. But in the interest of completeness, I shall. In 2004 it became public that one well-known short seller, David Rocker (of Rocker Partners), was shorting our company. In October, 2004 I invited him on a conference call to debate me, and it got pretty nasty (see this transcript for details:
Click here for the transcript
Immediately thereafter some knowledgeable-sounding people got in touch and warned me of four things to come, in this order:
_____a) Reporters A, B, C, and D would call and do hatchet jobs on me, as they were lackeys to Rocker;
_____b) I would find Overstock.com listed on innumerable foreign exchange;
_____c) We would find ourselves on the Reg SHO Threshold list when it came out in January.
_____d) The SEC would announce they were starting some inquiry on us.
I already knew Reporters A, B, and C, who had gone far out of their way to write uncharitable articles about me, and while I always wondered at their eagerness to do so, I gave the prediction of more such articles little credit. Yet I had never heard of Predicted Reporter D (Elizabeth MacDonald of Forbes): within two days, she (along with A, B, and C) had called with clear intent to write something unpleasant. Elizabeth hunted for a week, then gave up: we are so squeaky clean, the most such reporters can do is write anodyne trivia: e.g., Herb Greenberg actually once devoted a whole column to how quickly or slowly I returned his calls, and how this could be interpreted as a sign of sinister intent (as opposed to, say, whether or not I was getting on and off planes as I synched my emails).
Then over the autumn of 2004 we found ourselves listed on five exchanges in Germany and one in Australia: someone went to all the trouble to get us listed on these exchanges, though hardly any shares have traded since (this confirms the theory that these foreign exchanges are used simply as smoke screens by hedge funds needing an excuse for the DTCC).
On January 27 we appeared on the Reg SHO Threshold list (only about .4% of companies are on this list).
Thus, these “crazies” had made four pretty far out predictions. The first three of them have come true. The test of any theory is its ability to make accurate predictions, and the “crazies” have passed that test. So I started paying a lot more attention to what they had to say.
Incidentally, their fourth prediction (the SEC trying to make trouble for me) has not come true. However, an increasing number of smart people are telling me that, now that I am taking a lead role in this issue, and am the first non-fringe player to do so, the SEC is going to crucify me, for they (according to these sources) are thin-skinned, vindictive, unused to criticism from those whom they regulate, and partly captured by the very hedge funds that benefit from these practices.
11. The “Pay-No-Attention-To-The-Man-Behind-The-Curtain” Responses: A party line has developed within Wall Street that runs like this:
_____a. “There is no naked shorting”: This used to be the party line, but since 300 companies appeared on Reg SHO since January 2005 it has worn thin.
_____b. “Reg SHO will address this problem”: As only a handful of those 300 firms have dropped from the Threshold List, this is dubious, too.
_____c. “CEO’s who make an issue of this are just mad that their stock is down.” I have nothing about which to be mad: our stock is 2-3X where it was in early 2004. I am trying to bring attention to this because there is a risk to the public.
_____d. “The folks who make a big deal about this are crazies who line their hat with tinfoil.” Could be. I know they sound whacko. I know I sound whacko, too. But the test of a theory is its ability to predict, and these “crazies” make accurate predictions. I have been called by precisely those journalists they predicted would call me. OSTK has appeared on 6 foreign exchanges, none at our own request. On January 27 we appeared on the Reg SHO list (and as we have not come off it since then, I feel the “crazies” are right about the flimsiness of the Reg SHO mechanism, too). The only thing these “crazies” have missed so far is that the SEC has not started any vendetta against me (yet) for bringing attention to this issue.
I hope this gives you, dear reader, a broad enough overview of this problem that it may suggest further inquiry. I repeat, I do not know how deep a problem this is. It could be next to nothing, or it could be an Enron waiting to happen (with far greater ramifications, as the failure could be systemic). I don’t know, but I do know that it would be easy for the SEC to clear up the mystery: all they have to do is publish the size of the FTD’s for the companies on the Reg SHO Threshold List.
This is, I think, a fair question for me to ask: after all, if without registering them I sold 100 shares of Overstock out the back door of the firm I would go to jail. Yet per our inclusion on the Reg SHO Threshold list we know that some hedge funds have done that with hundreds of thousands (or millions) of shares: why won't the SEC reveal who, and how many counterfeit shares they "issued"? The fact that the SEC, the DTCC, and the exchanges refuse to disclose this (though they must have the information every night, else how could the calculate whether or not a company belonged on Reg SHO list?) makes me worried that it might be a bigger problem than they want anyone to know.
On the other hand, if there is really nothing to this issue, then the problem can be cleared up overnight, and myself (and all the other “crazies”) would go away. All we need are the answers to five simple questions, which I write out below in the hopes that some concerned citizens, or an enterprising journalist, can use them to dig a little deeper on her own.
12. Five Questions for the SEC
_____a. Does SEC receive daily data from the DTCC/NSCC on Fail to Delivers?
__________i. If not, why not?
__________ii. How can the SEC regulate without this?
_____b. How large is the fail to deliver problem? Does the SEC even know?
__________i. Why won’t the DTCC tell anyone how large the problem is?
__________ii. Why won’t the DTCC tell the SHO companies how large their FTD problem is?
_____c. How can firms remain on the threshold list if Reg SHO is enforced?
_____d. Why grandfather - pardon - all violations prior to January 7, 2005?
__________i. Wasn’t it against the rules (10(a)2, 15(c)6-1, 17(a)) since 1934?
__________ii. Why won’t the SEC enforce rules on the books for 71 years?
__________iii. What logic supports pardoning flagrant, regular violation of rules?
_____e. Who are the biggest violators of the Failure to Deliver rules?
__________i. Who benefits the most from the past fails being pardoned?
__________ii. Why reward these hedge funds for systematically violating the rules?
_____f. How can private SS accounts be considered while this is going on?
I thank any reader who has stuck with me through this long explanation. I made it as clear and concise as I could, and hope that through these modest efforts some enterprising reader or journalist will have gained the ammunition needed to breech the defenses of Wall Street and get some answers.
And if for my efforts you see me doing the perp walk on TV, remember to send me a cake with a file in it!
Respectfully submitted,
Patrick M. Byrne (Ph.D., Stanford)
CEO, Overstock.com
PS My disclaimers:
- While David Rocker has been public about being short us (and a surprising percentage of other companies on the Reg SHO Threshold List!), I do not mean to claim that he is naked short Overstock. Someone is, but it is not necessarily him. He could simply be short us, and it be some other party who is naked short our stock.
- The Tools of Satan are going to try to claim that this is all some scheme of mine to get people to buy our stock. It is not true. None, and I mean none, of this is intended to get anyone to think about buying Overstock stock. I am doing this because I am convinced enough of the issue to want the public to get some answers. Someone has to do this, and John Wayne is dead. But do not confuse my involvement with this issue with any valuation or other issue regarding Overstock.com. Hey, I get involved in other political issues to (e.g., education reform), and they are not all driven by some secret aspirations to get customers or shareholders.
_________________________________________________________________
AXAI-Sir Buckey, be careful.
From their latest filing:
"NOTE 3 - SUBSEQUENT EVENTS
Subsequent to December 31, 2004, the Company issued 48,000,000 shares of common stock to employees in accordance with the Company's employee stock incentive plan. All options have been exercised."
Because this event happened after the reporting date where they were showing just over 1M o/s, I just wanted to give you a heads up that the o/s is much higher than showing on brokerage sites. This is where AXAI differs from what we saw with GLKCE. (and are still seeing). It's still anyone's choice to invest in this or any stock, but if you hit the buy button with this one I just wanted to shed some light that we're not dealing with the low floater it appears to be at first blush.
Bo
No wonder bashers are here then. LOL
Mach's goal was to have a board without the disprution. Knowing what you just told me, he did a better job than I have been giving him credit.
With that....taking the clothspin off my nose and exiting the outhouse door, letting it smack closed behind me.
It's a shame, but now at least I understand why those with obvious bashing agendas post where they do.
Again for me, it just helps me identify who's posts not to read if I see them on other boards. Bashers on this board and pumpers and bashers seen on other boards serve no purpose other than that in my opinion.
Bo
Churak, if this is true would the
same issues we saw here come up if 'premium members' were being deleted from a premium board?
Meaning, would we see the same concerns from those who were banned or would they have no argument?
Bo
Bob, I agree. You state, "If this was really a good board that benefited all of its users without unwarranted deletions it should continue to be that."
Right on the money. We do agree on this common ground point.
Let me take this 1 important step further. Seeing the growth and success of the board in 9 months, one must not discount the point that warranted deletions are necessary if as you say "a good generic DD board" is the goal.
At least for me, spare me the ephedrine pie in the sky pumper whether it be constant one sentence billboard posts, or a thesis somehow trying to justify a quin-deca-scintillion valuation on a penny stock. Some have potential or valuation in the tens of millions, but the over the top stuff misleads many and distracts from people focusing on DD imho. Misleading info doesn't add up to a reliable board.
By contrast, what I mentioned earlier today offers nothing to the discussion, but has shown to distract many message boards.
I'd rather not get into the 'why are they here' debate again. Those who post in such a way and thousands upon thousands of times day and night obviously have an agenda. Some posts of many posters could be argued to be libelous. But that's not my point here. I'm trying to explore more common ground with you beyond the statement above.
I think either type of posts described in the above 2 paragraphs should be a target for a warranted deletion. Those with a constant pumping agenda either to profit on a large position taken, or try to attract buys to raise the price so a shorting effort can be set up.....or bashers who are easily spotted by the masses now and add nothing to change anyone's mind. The only real purpose I see them doing is disrupting boards to prevent continued DD on a promising company to come out.
Both are easily spotted and overtime become glaringly obvious to anyone following their posts.
People have mentioned free boards versus premium boards, as if the originator and moderators of that board can make "warrented deletions" whenever they want. That's fine and again, I not only agree with this but it should be true on all boards. Here's why...
Say Mach started a premium board on IHUB. Would he have had been allowed to delete the same posters from his premium board without any question?
I'm not being smart here. I'm honestly curious just trying to understand. It's my opinion only but others may agree when I say, if anything Mach was VERY PRUDENT and often times SLOW before making a decison to ban anyone. In a board where in 9 months of existence the rules of the board were crystal clear, and where 10's of thousands of people vistied it everyday!!!...we only see less than a handful of people banned. In my book that's pretty good. I think his judgement and adherance to rules when it came to posters kept a large percentage of bashers away. Anyone with a faint pulse and half their site can see the difference since he left.
But the main point here is my question...if he had a premium board would he be questioned for banning people not following board rules?
Thanks for your input on this,
Bo
Now if you excuse me...
I have a Nerf basketball dunk-off to judge between my son and his friend. : )
Far more important. : )
Bob, I want to bring good DD to the board and make money by investing in stocks taking a long position (whether it be short or long term). I work for no MM or investing company and invest on my own.
That's my full disclosure
I hope that's not a a threat.
Bob, bottom line.... Bashing is obvious, boring and losing it's steam. It does nothing but disrupt good boards and DD. Stay ahead of the curve and allow good boards to flourish without bashing.
I respect the fact that it's your site and your call. But the more you question a good DD board, the more you yourself will be questioned and your agenda. Allowing such will lead to other top boards like you saw here.
Later gators, it's dunkoff time!
Bo : )
You're showing your colors Bob.
I'm very surprised.
We're talking apples an oranges and again you need to be careful because you're showing your hand.
The etiolgy of why a stock fails is public information and available to all. SEC filings, articles, pr history, financial history, trading patterns, etc.
My friend if it were only true that I lost money on only a few trades. LOL
I am 100% sure that anyone who trades ANY market has lost money on trading. Please don't tell me you debate this.
But you are saying that every person that trades and gets burned has an obligation to spend his or her time day in and day out 8-4, 4-11 and 11-6 shifts bashing stocks they lose money on??
It's far more fishy than compasionate. People don't waste time doing this and their attitude certainly isn't to help others. If you have a remedial eduation you can see their attitude putting others down all along the way.
You do realize I have made posts questioning IBZT, CMKX, SSWH, SIRI and many others.
But to bash 24/7, with nothing postive to add??
Come on. It's so transparent now. How prevalent would you like bashing to get??
Also, with many many bashing boards all over the net, does one board on IHUB that wants to disucuss DD without obvious bashing pose this much of a threat?? Is there no room for such a board here, out of the many you tout are at IHUB?
Bo
Only you know what that means Bob...
"doesn't make right"
I don't think there is any debate on whether Mach's board was a top read board (the word "perceived" as you used doesn't apply here), so whatever problem you had with Mach went far beyond this.
The board was fast becoming a haven for real DD and good picks. I love following the other stock boards, but this one was the only consistant good board for day trades that actually were quickly and acuartely DD'ed, rather than a pure momentum play. Further, it was a good board where DD on mid to longer term holds were being brought out. Lastly, it welcomed constructive discussion on all stocks and posts involving direct contact with the companys on many important matters (i.e CMKX, GLKCE, PYST, etc). Rightfully and thankfully, Mach simply chose to ignore useless posts of attacks and people with suspected agendas, which can be found on 98% of the boards out there. It was refreshing and fast became a fixture as one of your most read and posted boards.
Again, I know logic and gray matter mean nothing in our society anymore. So if what I described above wasn't acceptable to you, then Mach's decision to move was a very wise one.
This board was beginning to take a different look at stock plays in a very positive forum. There was nothing threatening in what this board was becoming, unless there are paid interests of those who short stocks advising you otherwise and wanting you to give him problems, and try to oust his board from IHUB. Then I can see how this would be threatening.
Bo
MachZero...
I would actually have a semblence of respect for those kind if they would simply admit who they are.
Think of this. There are a lot of stocks I don't like. Many of those that come to mind are big board stocks. Do you see me wasting my life posting negative assuptions all day and all night? The ONLY reason I would would be if it was for financial gain from shorting those stocks or if someone was paying me to do it.
I know each day in our society logic and reason mean less than the day prior, but who would waste time or their life doing that? For the sake of those that do, I sincerely HOPE YOU DO GET PAID! Going off topic from the stock world for a minute, I'm clinging to the fact that there is more hope for people than watsing time posting negative assumptions about a stock day in and day out. I hold to the hope that life isn't that sad for some.
Let's relate this to the small market. I'm not a fan of IBZT and SSWH. I got burned on both as I was introduced and learned more about this small market. Now, I made many good plays last year, but these 2 weren't one of them.
Neither company appeals to me in many ways. Am I part of the 8-4, 4-11 or 11-6 shift of bashers of these stocks? Of course not, why do I care? Why would anyone care if they don't own the stock? You sell at a loss and move on.
You would only bash stocks you don't own if you have a shorting agenda or are being paid to do so.
Don't get me wrong, those who post like this in their '100% bashing boards' will continue to be ignored and that will only increase. But if they would quit being cowards and simply admit they are being paid or have a shorting agenda in the stock, then that makes sense and let's me know people's lives aren't as sad as they seem.
Bo