Thursday, June 28, 2007

A Naked Shorting 'Victim' Strikes Back

Readers of the New York Times business section today are in for a special treat -- a full-page ad from the "naked short selling victim" Universal Express, responding to an article in the Times on Friday by columnist Floyd Norris.

Here's a link to the obligatory press release -- the company's premier product -- which includes a link to the ad.

The article described how the SEC has been unable to take effective action against this miserable little company, despite years of litigation. Universal Express is also notable as a leader of the phony anti-naked-shorting stock market conspiracy cult, and was prominently featured in Wall Street Versus America.

The ad does not, of course, respond the points Floyd raised in his piece, because there really isn't much to say. Everything is in the public record. What the ad does, however, is repeat the usual Baloney Brigade swill, such as that "6,000 companies" -- which Floyd has noted would comprise the majority of publicly traded companies -- are victims of this awful if nonexistent scandal.

Similar figures were thrown around a few years ago by John O'Quinn, the class action lawyer. As I point out in WSVA, I phoned O'Quinn to see if he could substantiate them and never heard back from him. Big surprise.

The ad also makes reference to "hundreds of employees." Apparently the company has expanded greatly from the time of its last Form 10KSB/A, in which it reported 37 employees. Which reminds me of something. As one reader points out, doesn't the Times vet ads such as this for factual accuracy? Or will it print any old crap if it comes from a seemingly respectable company?

The Baloney Brigade, whether it be embodied by Richard Altomare or Patrick Byrne, is doing more than marching on. It is thumbing its nose at the SEC.

UPDATE: Floyd responds in his blog:

The ad’s connection to reality is a strained one. There is no evidence that this company is being targeted by naked short sellers, and for good reason. The company sells billions of new shares every month, in blatant defiance of securities laws. (When I wrote last week, you could get 25 shares for a penny; now the price is 50 for a penny.)
He concludes: "Speaking as a shareholder, I hope The Times got payment for the ad before it ran."

© 2007 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, gary-weiss.com.

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