CMKM Diamonds Inc. (fka CMKX)

[jetfish]

Why is this significant?

http://www.sec.gov/Archives/edgar/data/1052257/000101376206000897/ex99.htm

Read on…

Circle Group Holdings Declares War On Naked Short Selling
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 4/28/2006

CXN. Circle Group Holdings.

They make a fat replacement that can cut calories by up to 50%, without impacting taste or texture, according to their press releases.

Sounds great. So why care? I mean, why should we care here at this site?

Well, because today, after the bell, they filed an 8K that has one of the most remarkable letters to shareholders I've ever seen.

You can view it here. You should read it, and then consider what it means.

This is significant in a way that I've never seen before. Why? Because they are going to do a public test of the system, and have the O'Quinn law consortium standing by to sue the crap out of the miscreants, should they attempt to game the system.

What CXN is proposing is simple - they are doing a one-for-one swap on their paper certificates, with a new CUSIP number and name for the newly issued shares.

But more significantly, they are issuing a special class of share that will not carry a CUSIP, but will have substantial future cash value. And you can only get it from the company.

Because it doesn't carry a CUSIP, the system can't hypothecate the shares - meaning that the brokers can't just ledger over some bogus D share IOUs, created out of thin air. Which means that every person that owns or buys CXN in the next few weeks will need to get their certificates from their brokers, and then contact the company, to get the new shares AND the D shares. No paper, no D shares. Simple.

Why is that significant?

Because if there are millions of fake shares trading in the system, created by manipulators, then there are going to be millions of more shareholder requests for certificates than there are shares.

Ordinarily, I would guess that the brokers would just stall and tell their shareholders to pound sand at the end of the day. But O'Quinn's group is waiting for that, and it sounds like they are armed for bear, and are ready to file a class action suit for fraud against any of the brokers that try that.

And fraud takes you out of the arbitration area, and subjects you to legal redress in the courts.

Note that the CEO of CXN is Greg Halpern, who also wrote the Advanced Small Business Alliance position paper in this site's library section. So he understands the game the bad guys have been playing, and it sounds like he has created a mechanism to flush out the miscreants.

And because he has chosen to do so publicly, with O'Quinn on his side, instead of just lying to their clients, or waffling, the brokerage system has to behave, or face the mother of all suits - the one they never want to have to face, one that takes them into the courts rather than in their comfortable NY boy's club of arbitration, and one where it sounds like the proof will be ironclad.

I really don't see a way out of this for anyone naked short the company. And there are no grounds for the DTCC to "chill" trading - the CUSIP change is their prerogative, and if they want to do a one time non-CUSIP stock dividend, that is also within their rights as an issuer. There is no rule or law that requires them to do so within the DTCC system - the system that allows those shares to be hypothecated, and lent, or book-entried.

Folks, this looks like the perfect storm. Please spread this message far and wide, and especially to your elected officials, and to the SEC, and Senators Bennett and Shelby.

It would seem that these guys have done their homework, and have crafted a definitive test of the system that can't be faked or ducked by the brokers - and one that it is in our best interests to watch closely, along with the regulators and the cops. And if the SEC suddenly decides that non-CUSIP share dividends are a no-no, and changes the rules, we just got complete and total proof of their complicity in aiding stock manipulators, and trying to cover-up a systemic problem to the detriment of investors and shareholders - a de facto admission of complicity and culpability.

And it doesn't hurt that CXN is apparently a fan of NCANS and this site - who says that we can't effect change by spreading information? Talk about a bomb blast due to information dissemination. Wow.

Get this blog out to every message board and chat room you can think of. This is the single most significant event yet in our battle to end the rampant manipulation caused by a system run amok.

This could well be the little company few ever heard of that revealed that the emperor has no clothes. Trust me, this is a watershed event. I can't wait to see what happens next.

http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/260/Default.aspx