Statement
Universal Express, Inc., its President and its General Counsel, proved that naked short selling existed upon the attack by the naked shorter sellers on the Company’s shares. The General Counsel showed by statistics that the volume of the Company’s shares traded was 11 times the Company’s then outstanding shares and more than 68 times its average daily volume.
State court juries in Florida in 2001 and 2003 awarded the Company verdicts exceeding a total of $700,000,000 against naked shorters. In a press release issued in September, 2003, the Company stated that if ordinary people (jurors) understand that “you can’t sell what you don’t own and never deliver,” which is naked shorting, or counterfeiting of shares, “why can’t the SEC understand” this national problem.
Within a month after the Company’s second jury verdict against the naked shorters and the very wide publicity attending the Company’s verdicts, an embarrassed SEC through its Denver office commenced a program of harassment against the Company, with more than 13 subpoenas for documents. The Company initially volunteered to provide information on contracts for proposed acquisitions and funding sources for those acquisitions. Before these documents were even received by the attorneys at the Denver office of the SEC, they were calling those acquisition candidates’ and funders’ senior officers, threatening them with reprisals so that they would move away from the Company. This pattern of intimidation on the Company was in full swing and successful since several large proposed acquisitions were terminated. The harassment of the Company as a whistleblower on naked shorting, and the harassment of its business partners and potential business partners and supporters, continued unabated thereafter.
The Company, its President and General Counsel were determined not to be bullied by a conflicted regulatory agency which has failed the investing public on this national naked shorting scandal in favor of Wall Street interest, in a clear violation of its Charter to protect investors.
The Company, its President and General Counsel did not violate the Federal Securities Acts by causing the Company to issue shares of stock which had not been registered with the SEC. To the contrary, those shares had been issued pursuant to a Chapter 11, Bankruptcy Code, Plan of Reorganization, which Plan had been confirmed by the Bankruptcy Court and the shares were exempt from the registration requirements of the Federal Securities Acts.
The SEC’s essential misstatement in the civil action against the Company and its officers is its description of Universal’s common stock issuance to certain persons as “illegal, unregistered... shares”. In support of its complaint the SEC represented that a search of its databases disclosed no registrations for the shares in question. What the SEC did not inform the lower court is that the subject Universal shares were duly and legally issued and sufficiently registered pursuant to law. The law involved was not and is not the normal domain of the SEC, the Securities Act of 1933 and Securities Exchange Act of 1934, but the United States Bankruptcy Code, 11 U.S.C. 101 et seq., particularly §§ 1123, 1125 and 1145.
The daily recapitalization of the Company caused by the naked shorting of the Company’s shares gave the Company the clear right under the Reorganization Plan , the Bankruptcy Court’s Orders and the Bankruptcy Code to cover those counterfeit and unregistered naked shorted shares with of the Company properly issued under its Reorganization Plan and the provisions of the Bankruptcy Code.
Universal Express was almost completely destroyed by Wall Street financial interests naked short-selling its shares in the name of the Company. The Company has been under unrelenting attack for over ten years by naked shorters, who sold into the market in the name of the Company billions of unregistered and counterfeit shares, collapsing the Company’s stock price from $2 per share to 2 cents per share and, thereafter, keeping the Company’s stock price for years well below fractions of a cent a share. This national scandal of naked short selling has sucked the market capitalization from smaller public companies, putting thousands of such companies out of business and destroying the investments and jobs of hundreds of thousands of Americans. This national scandal is evidenced by the collection of published articles appearing in the attached Exhibit A and the Company’s public announcements complaining against naked shorting appear in Exhibit B.
It should be noted that Chairman Cox has recently, though quite belatedly, made a number of public statements to the effect that “naked short selling” and “fails to deliver” is a national problem of abuse and fraud in the trading markets and has adversely affected the capital formation process, particularly for small public companies. The Commission has announced that it is drafting ant-fraud rules with respect to naked shorting.
