Beyond, Inc. (BYON)

[fourkids_9pets]

Patrick Byrne
I am a concerned citizen who has been hunting the oligarchy since 2004 and the Deep State since 2006.

The Deep State Cries “Bazoomba!”
September 18, 2019

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What has gone on in recent days in the trading of OSTK reminds me of that joke. As you will understand if you have read about the Dole case, or are familiar with me and my work on Deep Capture, you will understand that I think our national capital market’s stock settlement system has shocking slop in it, and that this is the source of much miscreancy in America, and truly the source of much wealth for the oligarchy.

This year we saw an opportunity: Overstock had issued ˜ 37 million shares, and could generate 3.7 million blockhain-based tokens, and distribute them as follows: every 10 shares a shareholder owns gets him a dividend of 1 token. To receive it, each recipient (that is, each shareholder) would have to obtain from Overstock’s new blockchain capital market firm, tZERO, one of tZERO’s new wallets that can hold such a blockchain dividend. I could teach my cat to follow that arithmetic.

OSTK has approximately 40,000 shareholders. By issuing OSTK shareholders a digital token, they would have a reason to open digital wallets with tZERO. There is a wonderful business reason a way to create an incentive for 40,000 people to open accounts with tZERO: if each customer is worth $10,000 (which is about where some brokerages are valued, I am told), that would bring $400 million of economic value into the tZERO firm.

Of course, the Powers That Be on Wall Street did not want to let that dividend go through and expose the slop. They pointed out that it put legitimate short sellers in a bind, to which my reply was, “As CEO of Overstock my responsibility is to shareholders, and not to anyone who might have shorted our stock, legitimately or otherwise.” I saw this as the ultimate litmus test for the SEC: were they in the business of protecting American retail investors, or are they still protecting Wall Street cronies holding out job offers (as 2007-2008 demonstrated)?

As an ancillary benefit, it would expose that slop fully. If I am correct that the national market system as overseen by the SEC has slop in it, then there are in fact people thinking they own not 37 million shares but 50 – 60 – 70 million shares, and hence, there will be expectations of 5 – 6 – 7 million tokens. After all these years of fighting, this dividend would settle the question once and for all.

I did not just dream this up on a whim. I designed it carefully (and if there be any criminal liability associated with it, let me stipulate right now that I am 100% responsible for this: come after me). The Outside General Counsel of Overstock was (and still as) Cliff Stricklin, the most highly regarded authority on white collar crime in the USA. Cliff’s resume is beyond impeccable: he was a DEA agent, then a federal prosecutor, then the youngest judge in the state of Texas, then the DOJ hired him back to prosecute Enron, where he went 19-0: that is, all 19 Enron people he prosecuted were convicted (don’t confuse that number with the record with Andy Weissman of recent Mueller Commission fame, who was the part of the team that prosecuted Arthur Anderson, took the firm down, and destroyed tens of thousands of professional jobs, all on a prosecutorial theory that, when it reached the US Supreme Court, was rejected 9-0). The design of this token and dividend were thoroughly reviewed by Cliff and his leading securities partner at Bryan Cave, itself one of the world’s premier law firms. It is rock-solid.


Something funny happened to me over the weekend here in Asia. I started receiving detailed messages saying that since the morning of last Friday (13th), major prime brokers on Wall Street (e.g., JP Morgan, Morgan, and Goldman) were telling clients that the SEC had let them know last Thursday night and Friday morning that they going to do something special to let short-sellers off the hook (and incidentally, I can easily trace back the names of the people at the primes saying that). These prime brokers were, in short, promising clients that the SEC would call “Bazoomba!” for them.


An article has just appeared in the New York Post (again, for people who move their lips when the read Entertainment Weekly) that ignores the entire business case for this dividend (enticing 40,000 new customers to tZERO), and attributes much intentionality to me, though they never contacted me (is that good journalism?) about it. One quote in the article reads that this will fail: “…thanks to brokerage firms JPMorgan and Morgan Stanley agreeing to take cash of an equivalent value to the digital dividend when short sellers return their borrowed shares, sources said.”

I am not a lawyer, but this doesn’t sound right to me in three ways:

I do not think the timing of a dividend payment or a “Payment in Lieu” can be left to the short seller whenever they want to close out their position. The timing is governed by tax law and/or the beneficial owner. There are IRS implications here, and so it is bizarre that tax rules can be trumped by short sellers just choosing when they pay their dividend.

I am pretty sure the SEC should not be making regulatory decisions (such as creating a new “Bazoomba!” rule) to protect prime brokers, they should be making regulatory decisions to protect the American investor. Short sellers are sophisticated investors who received all the information they needed to understand this dividend in an 8K issued by Overstock in the last week of July. If two months later it has caught them off-guard, that’s life in the Big City (as they say on Wall Street, “If you want a friend, get a dog”). A decade ago the SEC was exposed as having protected the prime brokers and those with “too much juice” at the expense of the public (which happened as a result of something economists call “the problem of dispersed costs and concentrated benefits”), but I had reason to hope the SEC had gone straight.

Even if the SEC did suddenly and inappropriately make up a “Bazoomba!” rule, I am really sure they are not supposed to first leak it five days in advance to a few preferred brokers on Wall Street, so those brokers and their clients can trade on inside information coming from the SEC about their own regulatory intentions. As I said, I’m not a lawyer, but that doesn’t sound right to me (by the way, it is going to be easy for some folks at the DOJ to trace that leak back through the primes to the SEC, as I will be giving them a phone number to call for someone who can get those names of the employees at the primes brokers in five minutes).

Message to SEC: It appears the OSTK shorts were asleep at the switch and got caught in a jam. We Overstock shareholders won this hand fair and square. I have a red line, and that is, if you call a “Bazoomba!” for the shorts now. And my “red line” is not an Obama kind of red line. It is not a Hillary kind of red line. It is a Jack Vessey kind of red line. More than Buffett, more than my Pop, General Vessey is the guy who taught me about handling situations like this. You are referees, not players, and are supposed to be making honest calls. For 15 years you allowed manipulation against OSTK, harming our shareholders and crippling our ability to compete in an industry where everyone we faced had access to capital on outrageously generous terms, but not us (remember, before 2008’s crisis happened we were on your “three day Reg SHO list” for 998 straight trading days, and are on it again now). Now, after 15 years of being scofflaws, the shorts are crying because they are getting sucked into a black hole they created themselves. If you call “Bazoomba!” for them now, I am going to use this website to vaporize you with information I give the public. I am 100% confident that at least one of you knows to what I am referring.

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thx for the link/read

4kids

The latest from Patrick Byrne

https://www.deepcapture.com/2019/09/the-deep-state-cries-bazoomba/