Monday, December 11, 2006

More From Antar on the Naked Shorting Con Game

Reformed scam artist Sam Antar, who was mastermind of the Crazy Eddie stock fraud, has been making some astute comments about the naked short selling con game and its mouthpiece, Overstock.com CEO/conspiracy theorist/journalist-taunter/short-and-analyst-suer/"miscreant"-blamer/Worst CEO-wannabe Patrick Byrne.

I sent Sam an email asking "whether you guys at Crazy Eddie would have screamed 'naked shorting' if that excuse had been as widely accepted then as it is today."

With Sam's permission, I've excerpted his emailed response below:

"It should be obvious from my posts and my web sites – YES! As the admitted heartless criminal that I was, I would have followed the rules of spinning included in your commentary.As the admitted heartless criminal that I was, I would have followed the rules of spinning included in your commentary. . .

He then made some rather emphatically unflattering comments concerning Byrne that I will omit for reasons of taste. He continued:

"Many people do not understand that white collar crime is basically a crime of persuasion. A white collar felon (due to the nature of the crime) uses the victim’s good personal traits like inherent trust in others as a weakness to be exploited. When I see guys like Byrne spinning and distracting the public from the real underlying issues of his business I see in many ways my former self in the mirror. I admire the fact that still many people 'trust' and defend him.

"I just cannot understand how anyone would put their money with Byrne given his past actions."

Sam further noted in his email, and in a phone conversation, that con men seek to build up a "wall of integrity" -- something that investors need to keep in mind when companies and CEOs seek to shift blame or divert attention from their actions.

"Remember, being that white collar crime is a crime of persuasion the criminal will always look for weaknesses in the humanity of his victims to exploit. The favorite tool of the criminal is spinning information. If there is any excuse that may seem the slightest bit plausible, the criminal will use it for his advantage. Just the name 'naked short sellers' is a great starting point to attack them."

Sam's comments on this blog and in his website should be required reading not just for investors, but for regulators. Especially for regulators.

More recent comments from Sam can be found on Herb Greenberg's blog and Floyd Norris's blog. The recent exchange between Herb and Sam on the Overstock audit committee is particularly good.

I'm glad Sam has weighed in on this issue and hope he continues to do so. It will certainly be a major step toward in paying back his debt to society.

© 2006 Gary Weiss. All rights reserved.

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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.

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