Annals of Astroturf
A useful phrase has emerged in the world of political discourse -- the "astroturf" organization. Astroturf is fake grass, so the term neatly depicts fake organizations that describe themselves as "grassroots" to hide a corporate agenda. (Here's one example: an alleged front group for big telcos.)
Running a phony grassroots organization is problematic, because one must hide one's backing and corporate agenda. Wall Street's version of the astroturf organization, the NCANS ("National Coalition Against Naked Shortselling") had found a solution! This self-described "grassroots organization" discloses absolutely nada about itself, other than its name.
Take this Securities and Exchange Commission rulemaking comment letter, filed the other day by the NCANS. Interesting letterhead, isn't it? No address. No phone number. Unlike a previous NCANS comment letter, it wasn't even signed by the NCANS's paranoid minister of propaganda, the pseudonymous sicko "Bob O'Brien." And if you are unwise enough to give 'em money, you've got to send it to a lawyer's escrow account.
Why the secrecy? Since the NCANS fights the good fight for CEOs of money-losing companies and penny stock cons who want to shift blame for their failures -- well, I think it's pretty obvious. But it's not so obvious to the SEC, which has diverted its scarce resources from real fraud to pander to these anonymous screwballs. Or to the more vacuous members of Congress and state regulators who have done the same.
A good example is the SEC rulemaking in which the NCANS filed its recent missive. That involved revisions to the SEC's rules on "fails to deliver," which the NCANS has been anxious to use as a red herring to preoccupy investors in failed companies. The clueless SEC has played along.
If you browse through the comment letters on the SEC site, you will find not a single instance of a real investor being hurt by naked short-selling, not from the naked shorting movement's paid shills and, of course, not from the "small investors" posting comments (some of whom are no doubt real people). What you see is a lot of meaningless statistics and some people trying to find a scapegoat for their own poor judgment.
One thing I find interesting is how the naked-shorting goofballs describe themselves as attempting to "protect the investor." They remind me of some malware that recently infected a friend's computer, disguised as a "spyware defense." It showed up on his desktop and was hard to get rid off. Persistent, annoying and dishonest -- just like the anti-shorting nuts. It's a shame that some decent people are swallowing whole their baloney.
The SEC should take a lead role in putting an end to this nonsense, and not perpetuating it. If the good people of that agency want an idea of how ludicrous the naked shorting hysteria has become, I have a suggestion: They should read those comment letters.
Don't just write them off as crackpots, folks. If just one investor makes a bad decision because of the naked shorting campaign, that's one too many.
UPDATE: For an example of how state governments are pandering to the naked shorting astroturfers, see this SEC comment from the state of Utah -- always working hard to protect its crummier public companies at the expense of people who buy their stock.
A week after this item appeared, the embarassed baloney brigadiers sent in the letter with an actual person's signature -- but still no address. The NCANS website's "whois" information, likewise, contains no address information. Makes you wonder why an "organization" would go to such lengths to avoid people knocking on its door.
© 2006 Gary Weiss. All rights reserved.
Wall Street Versus America was published by Penguin USA on April 6.
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