CMKM Diamonds Inc. (fka CMKX)

[jetfish]

More criminal behavior...

Law Firm Milberg Weiss Bershad & Schulman takes a hit, NFI Back On Reg SHO

So, is that bad, when a federal grand jury indicts your law firm for 20
counts of felony criminal behavior, including money laundering, fraud,
bribery, mail fraud...you name it? When the word racketeering is used,
implying that the government means business?

Here's the latest from Reuters, UK: http://tinyurl.com/g5h2u
And here is the indictment: http://tinyurl.com/lxwuj
I'm going to say it's bad.

Of course, Milberg insists that it is a valuable watchdog, and innocent as
the day is long.

Here's a blurb from the front page of the NY Times today I found
particularly interesting:

"According to the charges, the scheme involving Mr. Lazar and two
other paid plaintiffs worked like this: Plaintiffs would buy securities
anticipating that they would decline in value, hence positioning themselves
to be named plaintiffs in the class actions."

So here's a question: How did they know those securities would decline in
value?

That's a pretty good question, no?

I think that the example of NFI would be a wonderful one to bring to the
attention of the US Attorney General. Here's how that timeline worked out:
David Rocker bought a boatload of put options in NFI (for the first time)
just days before the WSJ came out with a huge hatchet job that resulted in a
precipitous drop in the stock's price. 48 hours later Milberg Weiss had
filed a class action suit - begging the question when they were retained,
and by whom? I mean, they had the suit literally ready to go. Doesn't that
seem odd?

Those put options wound up being worth many, many millions, BTW, instead of
expiring worthless a few weeks later. What a fortunate coincidence for Mr.
Rocker, no? Mr. Rocker, as we all know, also insists he is innocent as the
day is long of engaging in the illegal front-running of stocks he targeted,
after conspiring with research firms and journalists to issue uglies about
them.

So here we have MW insisting that the 20 count indictment is all a big
mistake, and we have Rocker, who has had a wildly high number of his short
positions sued by MW, insisting that the allegations against him are all a
big mistake.

Huh.

A year and a half ago I got on a conference call with OSTK CEO Patrick Byrne
and described a stock manipulation scheme were hedge funds used the media
and captive research firms, along with class action attorneys and co-opted
members of the SEC, to serial kill companies. Oh, and lots of Naked Short
Selling.

I described it as racketeering, and a 10b5 violation, and fraud, and a host
of other things.

And now here we have Milberg pretty much accused by the government of the
legal profession equivalent of their side in that sort of a scheme.

And everyone claiming to be innocent.

Small world.

Speaking of NFI, guess which company reappeared on the Reg SHO list of
heavily naked shorted stocks today?

That's right. NFI.

After a few weeks off, which eerily corresponded with our publishing of the
FOIA data on the litany of abusive fail to delivers that defined its history
on the list, it has reappeared - not surprisingly, in conjunction with a
massive drop in the company's stock price, for which many excuses were
tendered by the crews of bashers on the Yahoo message boards - and for which
I opined the explanation was the same as many other times: Someone is
selling a bunch of stock, and then failing to deliver it, in an effort to
manipulate the stock price down, and cause panic selling and margin calls.

Turns out my explanation is the correct one.

Again.

Isn't that something? Thank God we have the SEC on deck to ensure that
companies don't get manipulated in an obvious fashion by miscreants.

I mean, it isn't as though the Rocker Put purchase/WSJ timing/MW suit should
have set off any bells.

Nor the year and a half reign on the SHO list, with some days FTDs being
40%+ of the trading. Nor 12% of the total outstanding shares being FTDs.

No, those are apparently not enough to get the SEC clued in that they are
watching a massive, obvious manipulation.

Just as Overstock's presence on the SHO list for over 280 days now, and also
shorted by the same firm (Rocker), also apparently doesn't really warrant
their settling the trades and getting the DOJ involved.

So I look at this, and I ask the obvious: If that won't get them to move,
what, precisely, would? I mean, what would the clues have to look like?

Fortunately, we have Cox chilling the subpoenas into the network of
suspected journalists, so we won't know what their role in this is -
although the litany of negative articles from the same names certainly
raises some interesting possibilities.

I wonder what happens now to the Milberg Weiss class action suit, which uses
as its basis the WSJ hatchet job so serendipitously front-run by our
favorite hedge - and which "news" was no more than a poorly constructed
hodgepodge of the same false claims and rehashed news that had been
trumpeted on the message boards for months, by the suspiciously vocational
crews of bashers...who are still working those same boards today?

Life certainly is interesting.

In closing, we have Milberg accused of a twenty year run of illegal behavior
in buying plaintiffs, in anticipation of large drops in the companies' stock
prices - and the unanswered question as to how they knew those stocks would
drop.

We have the wildly high percentage of stocks Rocker Partners is believed to
have been short also sued by that now indicted firm. We have a wildly high
percentage of the Reg SHO list also being those companies...

If only we had a sign.

It's all just so difficult to piece together...but I'm sure there must be an
explanation...

An innocent one, of course.

As everyone is saying they are innocent...

Maybe we should make this weekend's person to email the US Attorney General,
who is prosecuting the case - U.S. Attorney Debra Wong Yang.

Refer her to this blog.

Just a thought. Anyone got her email?

Copyright C2006 Bob O'Brien

http://tinyurl.com/hkcqr