CMKM Diamonds Inc. (fka CMKX)

[DiamondTrader1]

Here Janice...

I'll make it easy for you.

It turns out, plaintiff lawyers say, that Badian had been making some of his Sedona trades through Refco, which has acknowledged an SEC investigation.

Looking the other way while clients manipulated the shares of small companies through what's known as naked short selling appears to have been yet another questionable way of doing business at Refco.

In naked short selling, you execute the sale without borrowing the stock. The SEC noted in a report last year the "pervasiveness" of the practice.

When not caught, this kind of selling has no limits and allows a seller to drive down a stock.

"I have seen evidence that links Badian and/or Refco to more than 50 stocks that were driven into the ground," says Wes Christian, part of a legal team headed by billionaire Texas tobacco litigator John O'Quinn, who is amassing a case against Badian, other hedge funds and now possibly Refco.

Refco declined to comment.