Thursday, August 31, 2006

More Baloney Debunking

The Depository Trust and Clearing Corp. issued a statement today debunking the latest anti-shorting misinformation campaign. This one involves a crummy little penny stock called Global Links, which has been the subject of hysteria on various "stock counterfeiting" websites, and had gotten some media play.

The SEC, showing its usual yelllow streak on this issue, has cowered under its desk while the anti-shorting nuts spread drivel concerning this company. Their thesis is that this stock is the subject of an immense "naked shorting conspiracy." In fact, as the DTCC points out today, the total amount of "fails to deliver" involved $38,000 in stock, which "hardly constitutes the threat to the capital markets" that has been alleged.

The DTCC said:
The available information at this point seems to confirm what Global Links itself stated, this was "a simple error" - likely the result of information about the reverse split not having reached the marketplace- and did not involve naked short selling.

The statement noted that the complex array of stock-restructuring activity carried out by Global Links, which resulted in stocks failing to deliver, "is quite rare and unusual for mainstream securities. However, among sub-penny stocks, these activities may occur more often to try and artificially raise the stock’s price."

The naked shorting nuts will, of course, view this clear rebuttal as yet another link of a long chain of conspiracy, stretching from the boardrooms of the Fed to the Grassy Knoll.

The DTCC statement demonstrates how all this nonsense over "fails to deliver" has submerged real issues for investors. In this case it is a penny stock trying to push up its share price by a reverse split. Reverse splits are the investor issue here, not "fails to deliver" or wild naked shorting conspiracies, no matter how much smoke the naked shorting nuts keep blowing.

It's nice the DTCC has set the record straight. Time for the SEC to show some guts on this issue too.

© 2006 Gary Weiss. All rights reserved.


Wall Street Versus America was published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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