Jim-the latest O'Quinn case goes down in flames:
'Get Shorty' Campaign Suffers New Setba
by: strethoechasity (24/F/las vegas) 05/16/06 06:02 pm
Msg: 95614 of 95623
=DJ IN THE MONEY: 'Get Shorty' Campaign Suffers New Setback
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--The "Get Shorty" campaign suffered another blow Monday when a federal judge dismissed a complaint filed by Whistler Investments Inc.
The lawsuit is one of several brought by struggling public companies and a group of class-action lawyers who have been trying to build cases against short sellers - those investors who profit as share prices drop.
The law firms and their clients generally allege a wide-ranging conspiracy to illegally depress stock prices. Their crusade has taken several forms over the last four years, evolving from allegations involving so-called death-spiral
financing and illegal short selling to more complex accusations that brokerage firms and the entire securities clearing system managed by the Depository Trust and Clearing Corporation, or DTCC, are complicit in bear raids on snsuspecting companies.
Whistler, now known as Hybrid Technologies Inc. (HYBT), sued DTCC in November 2004 in Nevada state court, alleging that its stock-borrow program resulted in the creation of non-existent stock and contributed to naked short selling of the
company's shares. The case was later removed to the U.S. District Court for the District of Nevada.
Short sellers typically borrow shares to sell them short and profit when the price drop. Trading without a borrowing agreement is called naked short-selling.
It is illegal for most investors, but legal for firms that make markets in stocks and bring liquidity to the market.
Under its stock-borrow program, DTCC facilitates the lending of shares from one brokerage firm to the other in the event a firm is unable to deliver stock to settle a transaction on time. The program is designed to facilitate trade settlement and is approved by the Securities and Exchange Commission.
The Whistler complaint is identical to one filed by Nanopierce Technologies Inc. (NPCT) against DTCC in July 2004 in the Second Judicial District Court of the State of Nevada, Washoe county. That case was dismissed a year ago after a judge found that federal law preempts Nanopierce's claim for relief. Nanopierce is appealing the ruling in front of the Nevada Supreme Court.
Federal & State Regulators Battle
A lot is riding on these two cases and federal and state regulators have taken notice.
The SEC in February took the unusual step of filing an amicus brief in the Nanopierce case in support of DTCC, arguing that the company's "lawsuit threatens to disrupt or to impose substantial and unwarranted costs" on the
clearing system.
Earlier this month, the North American Securities Administrators Association, or NASAA, also filed its own legal brief in support of Nanopierce's appeal, arguing that claims filed in state courts shouldn't be preempted by federal law.
Whistler and Nanopierce share a Nevada counsel, Michael Morrison, a lawyer who has worked with the legal consortium - led by Texas law firms O'Quinn, Laminack & Pirtle and Christian Smith & Jewell - which represents a number of plaintiffs in suits alleging illegal short selling. Although it focused solely on the Nanopierce case, Morrison introduced the amicus brief filed by NASAA in federal court to counter DTCC's motion to dismiss Whistler's complaint.
Even NASAA's law firm, Bailey Merrill, has ties to the consortium of plaintiff lawyers led by O'Quinn and Christian. Every lawyer listed on Bailey Merrill's Web site used to work at Lionel Sawyer & Collins, a Nevada law firm that also
represents Nanopierce and Jag Media Holdings Inc. (JAGH), another penny-stock company that claimed illegal short selling of its stock.
What is clear is that the SEC didn't take lightly NASAA's challenge of the federally approved clearing and settlement system administered by DTCC.
Tashkent Basher Drop-box.
AI
