Competitive Companies Inc. (fka CCOP)

[LGL8054]

Z et/al
I think the SEC is complicit with the Brokers and needs a HOUSE CLEANING and We should all BOYCOTT the BROKERS for 6 Months.
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THE TIDES ARE TURNING.

This just in >>>>>>>>>

Overstock Ruling Favors Public Companies Across Nation
July 19, 2007
By David Patch

For nearly a decade the prime brokers of Wall Street have sat back in total comfort knowing that the Securities and Exchange Commission had no interest in going after their illegal enterprise of selling massive quantities of unregistered securities to the unsuspecting public. Yesterday, in the Superior Court of California, County of San Francisco Judge John Munter kicked out one of the legs in that comfortable chair sending Wall Street prime brokers crashing to the floor.

In a favorable ruling for Overstock.com, Judge Munter ruled that Overstock and it co-plaintiffs have stated viable claims for market manipulation by the prime brokerage firms under California securities law. With the ruling comes the opportunity for Overstock.com to peek into the records of the prime brokers as discovery is obtained in the case. Such discovery could bring transparency to an issue where the data, and possible evidence, has been tightly controlled by regulators and members of Wall Street for years. That is until Judge Munter made his ruling.

Considering that for the past 4 years the SEC has identified through public statements and published documents that trade settlement failures can be abusive and can be used as leverage to manipulate markets. Earlier this year the Chairman went so far as to call it [settlement failures] a serious problem. It is unfathomable then as to why this commentary has not been followed up with swift regulatory enforcements cases as the trade settlement failures continue to accrue to higher and higher levels.

Consider that in January 2005, when reforms were proposed to correct the settlement failure problem the level of aggregate daily fails were nearly 20% below where they were in March of 2007. In the case of teh market trading in Overstock.com the story is far more severe as the daily aggregate fails to deliver in that stock for the month of January 2005 were averaging around 130,000 shares but had grown to an aggregate daily average of over 3 Million shares by April 2006. The companies request for SEC support in rectifying this exponential growth fell on deaf ears with the agency willing to protect the prime brokers accumulating these failed trades.

Has the Chairman not yet understood that a serious problem with no regulatory enforcement is an even greater issue as it raises doubts about the overall safety and integrity of these markets.

In the operations of Wall Street the settlement failure accruals that have become such a serious problem are the responsibility of the prime brokers. These prime brokers are now sitting in the cross hairs of Overstock.com attorney’s outside the protections of the federal regulators and are now being forced to face a more impartial jury of 12 American citizens not so focused on politics and political contributions. Imagine the fear of knowing that spending millions of dollars in lobbying will have no impact on a jury of 12 that cannot be legally approached with the bribe money.

How significant was the ruling?

A spokesman for Merrill Lynch & Co. Inc. could only downplay the ruling by stating the judge's decision "was merely a procedural ruling that says nothing about the merits of the case." That has never been denied but, this is also the first ruling of it’s kind for a public company the size of Overstock.com and could be the precedent set for several pending cases in US courts across the country. That alone is huge and the tell signs that a shift is in play comes by way of the media silence that accompanied this decision.

It wasn’t the trivial nature of the court decision that silenced the media; it was the fear of the repercussions such a decision can have on the future of the nay Sayers who have long denied the public the right to a fair and impartial coverage of this market issue. If Overstock.com is successful in a trial it will expose the ethical conflicts of interest within a large subset of the financial media.

Overstock.com’s main cheerleaders of criticism Roddy Boyd of the NY Post, Herb Greenberg of Marketwatch.com, Joe Nocera of the NY Times, Carol Remond of Dow Jones Newswire, and Seth Jayson of the Motley Fool have long chastised CEO Patrick Byrne and his plight for market integrity and transparency. It is not how CEO’s survive in the US capital markets as the US markets work as much on favors and protection money as anything else in maintaining a successful business. Wall Street, if they want, can chew you up and spit you out despite your companies successes and these cheerleaders of Wall Street have protected that culture.

These critics have mocked and ridiculed Byrne for his actions despite court victory after court victory. Everything positive in the court system for Overstock.com was presented as a negative to the general population. Until now that is. There is nothing left to be even remotely negative about gaining the rights to discovery and the rights to go to trial to prove your case and thus the silence by the critics has been deafening. Silence has become a sign of fear; of a change coming that can no longer be denied. No cheerleading today from the girls, simply the eerie silence that comes from concern.

A court ruling such as this that allows a case to proceed to discovery has been rare, almost nonexistent. Wall Street has had the upper hand to nearly all previously filed cases of this nature as the “evidence” needed to move a Judge to proceed to discovery was trapped in the books of Wall Street and Wall Street was not about to give up the goods. It was a catch -22 that had been working for nearly 6 years. Today’s victory will force discovery and force the vaults to open and the books to be audited. Vaults that once opened will be difficult to close in the future.

Discovery will become the opening of Pandora’s box at the prime brokerage houses and such has been a fear each has lived with for many years. Each has spent literally millions of dollars to protect their secrets and a Judge in California just came in with the combination which provides Overstock.com the authority to peek inside.

Overstock.com CEO Patrick Byrne best describes such opportunity by simply stating, "We're going to crawl around in Wall Street's attic with flashlights and bolt cutters," he said. "I think there's a lot of dirty secrets from within Wall Street that are going to be revealed."

And what is wrong with that? Isn’t transparency a good thing? Won't transparency prevent the abuses leveraged off the ability to hide the fraud?

As I see it, the last hurdle I see that Overstock.com will face is that of the Securities and Exchange Commission. Will the SEC interfere in a civil case in state court?

In recent months we have heard of the threats imposed on state regulators and state legislature by members of the SEC. As state legislature watched closely what impact the inactions of the SEC had on their constituency several drafted and voted for state level reforms to reign in market abuses. The SEC and the premiere Wall Street lobbying firm of the Securities Industry and Financial Markets Associations (SIFMA) hit the state congressman quick and hard. Threats of future repercussions should the bills proceed into law were as regular as an old man on Muselex.

Concerned about how the SEC would respond to Judge Munter’s decision, I posed several questions to the SEC Chairman and the Commission staff. The questions were presented to each by E-Mail after SEC spokesman John Heine had indicated that the SEC had comment on the day of the decision. I asked each specifically,

1. Do you have any general comments regarding this decision?

2. Have the prime brokers been in contact with the SEC seeking Commission support in their defense?

3. Does the SEC plan on participating in the defense of the prime brokers in their actions and/or does the SEC plan on submitting a brief to the court whereby the Commission challenges the courts legal standing in hearing this case as it has done in the past?

4. What possible market concerns does the Commission staff have to a possible victory for Overstock.com in this case?

5. Does the Commission have any concerns that the credibility of the agency will be diminished should discovery prove that abuse was taking place while the Commission turned the other way and what the Congressional Oversight Committees and Judiciary might do with such insight?

6. Will this ruling change the approach the Agency takes in this matter so as to get in front of the issue instead of holding back as has been the case in other more recent regulatory scandals?

Unfortunately neither Chairman Cox nor any of the Commission staff were willing to comment on or off record to these questions. On a case that could leave repercussions across the industry the management team of the federal regulator responsible for these markets has gone underground to regroup. Maybe they are simply waiting for a call from the cheerleading crew to propose these same questions in a more favorable light.

Trust me, this is only the beginning of what will be a long story. Expect the pushback, the politics, and the denials of Wall Street and Wall Street mouthpieces. As you listen to it all simply ask yourself what fear there is in taking your case to a trial in front of 12 jurors. Why fear the battle if you believe your Armour is impenetrable, unless or course your Armour is really all pomp and circumstance of course. Only those in fear of losing are afraid to fight the battle and Wall Street is now in fear.

This ruling was not just a victory for Overstock.com, it was a victory for the public companies and their investors being abused by the system.

For more on this issue please visit the Host site at www.investigatethesec.com

Copyright 2007
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud

http://www.investigatethesec.com/20070719.htm