Crackpot Victory in Utah
The crackpot anti-naked-shorting conspiracy campaign scored a major victory yesterday, one that will be cheered by every incompetent CEO, stock promoter and boiler-room thief in the country. Boys, Utah is in your corner!
The Salt Lake City Tribune reported today that the Utah state legislature passed a bill that takes aim at naked short-sellers -- a "menace" that, for the most part, exists mainly in the press releases of crummy companies and the imagination of conspiracy theorists. Note the delicious irony -- a state notorious for real stock fraud passed a bill aimed at curbing nonexistent stock fraud.
Not surprisingly, this bill was heavily pushed by Overstock.com CEO Patrick Byrne, who has feverishly sought to divert attention from his company's poor performance by whining about the supposed naked-shorting of his company's shares.
The problem with the bill is that it doesn't target naked shorting per se. It targets "fails to deliver" securities, which can occur for many reasons unrelated to short-selling. However, the legislature apparently felt that was of no importance in its eagerness to please Byrne and the "counterfeit securities" loons.
The legislation itself -- you can look at it here -- has all the usual loopholes, and I'm not really sure how much it matters or whether it will withstand court review.
Incidentally, I'm not sure if the above link shows the complete legislative history, but if so it would seem that this bill was rushed into law in all of two days.
The important thing is not the bill -- or even that the Utah state legislature has made a fool of itself -- but rather that a campaign that is seeking to misinform America's investors has scored a major victory.
Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.