Conversion Solutions Holdings (fka CSHD)

[pennypauly]

OT: Tall Their is a ton but here is his most recent,

link to his site at the bottom

A FAIL IS A FAIL IS A FAIL!!!
by Mark Faulk
I’m at a loss for words here. Reading today’s “DTCC Media Statement on Global Links ” is like standing in front of an all-you-can-eat buffet. There are so many things to choose from that it’s hard to know where to dig in first.

I guess I’ll just go through the DTCC smorgasbord a paragraph at a time, and add my own “seasoning” to the mix.

Ready?

“NEW YORK--(BUSINESS WIRE)--Aug. 31, 2006--DTCC is looking into the facts surrounding transactions that were reported on in a recent media report regarding Global Links Corp. We have been unable to find information that corroborates many of the facts and statistics cited in this story.”

Man, this one is good. First of all, these guys really need to hire a writer, and by writer I mean someone who actually knows the meaning of the words that he or she releases in their media statements. As I’ve been nice enough to do so many times over the past few years, I’ll start by defining a couple of keys words in this paragraph. These definitions are pulled from dictionary.com:

FACT: something that actually exists; reality; truth

STATISTICS: the numerical facts or data themselves

CORROBORATE: to support with evidence or authority

Anyone else getting this? The DTCC admits that the information about Global Links is the truth, that it’s fact, and that, by definition, the statistics are fact as well. Then, they say that have been unable to find information to corroborate what is already defined as fact. EARTH TO DTCC: IF IT’S FACT, IT’S ALREAY BEEN CORROBORATED. And even if facts weren’t confirmed facts, and in some alternate universe needed to be corroborated every time they were passed off to the next entity, then how can the very organization in charge of keeping track of the facts and statistics not be able to “find information that corroborates” those facts and statistics?

“The public record has established that during a three-year period beginning in April 2003, the company engaged in three reverse splits, a name change and one forward split. The 27 million share delivery failure referenced in the recent report occurred in conjunction with one of these 350-to-1 reverse splits. This type of activity is quite rare and unusual for mainstream securities. However, among sub-penny stocks, these activities may occur more often to try and artificially raise the stock’s price.”

Okay, now that we’ve bashed the company again, let’s look a little closer at this paragraph. First of all, this part is lifted almost verbatim from the same argument that every two-bit lowlife basher on stock message boards (plus a few so-called “reputable journalists”) has perpetuated for years: “we think the company sucks, therefore allowing the brokers and whoever else can game the system to screw the shareholders is just fine and dandy.”

Secondly, a reverse split (while not my favorite thing for a company to do) is perfectly legal according to the SEC’s own regulations, and does not “artificially raise” the stock’s price. It raises it mathematically in direct proportion to the number of existing shares. However, in the case of Global Links, the price wasn’t raised proportionately, so that shares that should have opened at around $7 a share (two cents x 350) instead opened at pre-reverse split prices, even though there were only 1,158,064 shares total in the entire stock market. Then, over the next month 208 million shares were traded, and the SEC showed 27 million as undelivered on the first day. The market was flooded with shares that didn’t exist, and the company, and its shareholders, were screwed twice, first by the brokers, and then by the DTCC and SEC.

“The article suggested that during February 2005, when one of the reverse splits was initiated, the stock was trading at 10 cents pre-reverse split and Global Link’s aim was get the price up to $35. According to Bloomberg, the price for Global Links during the two weeks prior to the reverse split ranged from $0.0364 (3.6 cents) to $0.01458 (1.5 cents).”

This one is grasping at straws, a blatant effort to trash the only mainstream newspaper reporter with enough courage to speak out about rampant stock market corruption, for a mathematical error that had nothing to do with the real issue, and that the writer of the article corrected within one hour of releasing her piece (unlike the numerous errors in the DTCC article, which are still glaringly present).

“Whatever the actual cause of the delivery failure, the total value of the 27 million in failed trades described in the media report was less than $38,000, which hardly constitutes the threat to the capital markets that the article implied.”

Okay everyone, this is the good one. Remember, this is the DTCC, who in the prior paragraph was so quick to point out minor errors from the Bloomberg article, and whose job it is to keep track of the $266.5 billion worth of trading that occurs in the stock market every day. The obvious flaw in their data is that the share price was never changed in the system after the reverse split, and that the shares should have been adjusted to the after-split price of around $7. By the way, the stock did open at $.10 on February 1, 2005, the first day of trading after the reverse split, but then it dropped like a rock from there.

But here’s the most stunning part of the DTCC article: If we accept their voodoo economics and pretend like the only loss for shareholders was the actual money spent on the stock (and not what it should have traded at), then the DTCC’s assertion that the loss incurred by the failing to deliver 27 million shares of Global Links stock was “less than $38,000” sounds pretty good. Except for one thing. Even if the stock was beaten down so low when the brokers flooded the market with counterfeit shares that it only sold at the average pre-split price of two and a half cents, than the total loss would have been $675,000, not the paltry $38,000 that the DTCC claimed was lost. I have no idea where they got their figures from, but it appears that they missed in their own basic math calculations by a factor of 18.

Now, imagine for a moment that their math on the overall market problem is as bad as their simple multiplication in this case. Last week I wrote an article about the SEC’s involvement in this fiasco and the subsequent cover-up called “Once a Liar, Always a LiarI could just as easily have included the DTCC in that statement. If in fact they claim that the direct loss in the Global Links case was only $38,000, but their basic third grade math skills were so bad that the number should have been 18 times higher, then what about their claims that overall fails were “only” $6 billion as of December 31, 2005? Does that mean that the real number could be higher as well, say…18 times higher? That would put the total dollar amount of stock that was paid for but not delivered at $108 billion dollars, or almost a third of the total amount of shares bought and sold each day.

Ludicrous? Possibly, but as in the case of the SEC, we’ve already established that the DTCC lied about the Global Links numbers, so why wouldn’t they lie about everything else as well? I called three different phone numbers listed as media links for the DTCC in an effort to get some type of response from them, but apparently, unlike most Americans who have to work all week to make up for the money that’s been stolen from them in the stock market, they all left for vacation on Wednesday.

And now, the DTCC’s last paragraph, the swan song, the final elbow:

DTCC is currently working to determine more of the day-by-day details associated with this corporate action. The available information at this point seems to confirm what Global Links itself stated, this was "a simple error" - likely the result of information about the reverse split not having reached the marketplace- and did not involve naked short selling.

“A simple error?”

In a quote today by Global Links CEO Frank Dobrucki, he said that “Global Links Corp. has never stated that this was a ‘simple error.’ Global Links Corp. states without hesitation, that the market is corrupt and that naked short selling is a practiced poison that is crippling the stock market. Global Links Corp. is without doubt a victim of extremely aggressive naked short selling.”

Global Links COO Pat Donahoo put it more succinctly, “We never made that statement. It is a total fabrication.”

Dobrucki also refuted the figures that the DTCC released about the total value of the 27 million in failed trades being less than $38,000, saying that, according to the DTCC’s own numbers, post reverse split prices would have given the 27 million shares a value of at least almost $140 million. He went on to say that “Your number of $38,000.00 would use a stock price of $0.00014 as a post reverse number. This is completely impossible. Better luck trying to explain this away as just a ‘simple error.’”

Donahoo disputed the DTCC’s claim that it was a simple error. “If it was an error to begin with, then it has become a huge error, a massive error over time. The DTCC has never contacted us in an effort to resolve any problems regarding the trading of the company’s stock. It appears that in eighteen months, they would have had ample time to resolve any issues or errors; instead, we first went on the Reg SHO List 569 days ago, and are still on it to this day.”

“…did not involve naked short selling?”

This is the most egregious sleight of hand of all, the misdirection that Wall Street, the SEC, and the DTCC hopes will make this whole ugly mess disappear. By collectively agreeing on a ridiculously narrow definition of “naked short selling,” the industry and various regulatory agencies have begun to deny that naked short selling is a pervasive problem, while turning a blind eye to the larger problem of stock market fraud in general, and failed deliveries of stock in particular. In the case of Global Links, 27 millions counterfeit shares were sold, but (and here’s the catch) not by short sellers, by the brokers themselves. In this case, as in many cases, the brokers are the naked short sellers, but the SEC doesn’t recognize them as such. That’s why the OTC short selling list shows only 6,800 shares short for Global Links, but the SEC records show almost 6 million fails. It’s a trick! The long fails are still counterfeit shares sold to an unsuspecting public, and never delivered by the brokers.

For the last time: A FAIL IS A FAIL IS A FAIL!!! It doesn’t matter what kind of hocus pocus the SEC or the DTCC uses to try to shift it into another category, selling stock that doesn’t exist is still counterfeiting. It’s still fraud, plain and simple, and ignoring it, covering it up, and then lying about it isn’t going to make it go away. Congress needs to step up and step up now, or the combined effect of all of these “simple errors,” of all this fraud, of all of these fails, will be the biggest fail of all, the failure of our entire American economy.

And that’s the Faulking Truth.

This article is also posted on Mark Faulk’s blog at The Sanity Check, along with an excellent comment section, at:
http://www.thesanitycheck.com/Blogs/MarkFaulksBlog/tabid/86/Default.aspx

Mark Faulk is the Editor of The Faulking Truth, and the author of the upcoming book entitled "The Naked Truth: Counterfeiting the American Dream," due out in September, 2006. For more information on the book and on the stock market scandal, go to http://www.faulkingtruth.com , and to pre-order your copy, go to http://www.theownersgroupinc.com/cart/

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