Wednesday, September 26, 2007

A Blast From the Past

The SEC took action the other day-- a link to it is here -- against a company called Solv-Ex. It's a typical SEC close-the-barn-door-after-the-cows-have-left action, and then some.

As you can see from perusing the link and the other SEC actions concerning Solv-Ex, this crummy little company declared bankruptcy years ago and has not been a viable business for most of the past decade.

In its day, Solv-Ex was a kind of proto-Overstock.com, constantly bellowing about being targeted by short-sellers. (This was the pre-baloney era, so "naked short selling" was not hauled out as a phony excuse as it is today.)

In fact, as is usually the case in such situations, the shorts were right and the company sank. My reporting found at the time that its stock was being manipulated by organized crime.

Here is a Motley Fool article from 1996 that summed up the issues. The article turned out to be correct, but the SEC did not get around to throwing the book at Solv-Ex until two years later. And as you can see, the litigation is continuing to this day, long after the company is kaput.

The wheels of justice turn slowly, but this is ridiculous. The SEC's intervention is needed when a fraud is underway, not long after it has happened. The agency was set up in the New Deal era to protect investors, and not to give people like me a reason to chuckle a decade later and say "I told you so."

© 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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