Bhutto and Gregoris Lambrakis

I'm surprised that the media hasn't (to my knowledge) picked up on obvious parallels between the assassination of Benazir Bhutto and the 1963 slaying of Greek politician Gregoris Lambrakis, which inspired the novel and movie "Z."

Here's a summary of the Lambrakis murder. Note the similarities: a murder by extremists with the complicity of the government.

The difference is that the Lambrakis story had a happy ending, eventually, with the overthrow of the Greek junta.

Nothing like that is going to happen in Pakistan, needless to say. No Hollywood endings in that part of the world.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

For You List Watchers Out There

More news from the "Reg. SHO" front, proving again that naked shorting conspiracy theories are a load of ca-ca.

Seems that naked shorting poster child Overstock.com just reappeared on the latest Regulation SHO "threshold" list, for Dec. 26. It had dropped off the list on Dec. 17. So, what does this mean for the naked shorting conspiracy theories? If appearing on the list means a stock has been a subject of rampant naked shorting, share prices should go down.

In fact, between Dec. 17 and Dec. 26, the stock rose from 15.11 to 16.17, a gain of 7%.

As I observed at the time, when Overstock shares dropped off the list on Dec. 17, it was after an immense "Byrne rally" -- a huge share share price decline.

That makes sense. After all, there are plenty of reasons why a stock can appear on the list apart from naked shorting, as the SEC itself points out: "A security's appearance on a threshold list does not necessarily mean that any improper activity has occurred or is occurring."

Overstock.com, as previously, issued a delusional press release that sought to mislead Overstock investors into believing that some kind of non-company-related chicanery was involved. It was replete with the usual hysterics, including this typically nutty quote from telegenic CEO Patrick Byrne:

"We're back on the list," said Overstock chairman and chief executive officer Patrick Byrne, "but I'm not surprised given the manipulation that has occurred for nearly three years. Here we are on the eve of the third anniversary of Regulation SHO (January 3) and hundreds of companies continue to be manipulated -- right under the SEC's watchful eye."

Note the absence of the caveats noted on the SEC's website. If that is not an intentional effort to mislead shareholders, I don't know what is.

Speaking of manipulation and the SEC's "watchful eye," what has become of the formal SEC investigation of Overstock.com and Byrne? Time for the SEC to stop watching and start acting, and bring Overstock to justice for its serial deceptions -- of which the naked shorting baloney is just one.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Bringing Justice to Richard Widmark

OK, it's not a world-class injustice, but it's unjust nevertheless, and it all has to do with the gentleman on the left.

Yup, Richard Widmark, victim of injustice. This icon of 1950s Hollywood is still alive and living in Connecticut. He celebrates his 93rd birthday on Dec. 26.

Richard Widmark has never received an Academy Award, honorary or otherwise, no Kennedy Center Honor, nor any other recognition that he so richly deserves for his decades in motion pictures. It is high time for that injustice to be corrected.

Widmark was nominated for an Oscar way back in 1947, for his amazing portrayal of Tommy Udo in Kiss of Death, but that's it as far as the Academy Awards is concerned. I think he received a Golden Globe back there somewhere.

It really amazes me that so many far younger and, frankly, less accomplished performers receive "lifetime" recognition, while this brilliant actor is ignored. He brought an integrity to his performances that was unique, even when he portrayed lowlifes like Udo, or Harry Fabian (right) in Night and the City.

The authenticity of his performances was amazing. I've read that Joey Gallo patterned his real-life gangster persona on Widmark's fictional, throw-old-lady-down stairs portrayal. Yet he could be just as convincing as a public health officer in Panic in the Streets or as Jim Bowie in The Alamo. (Here's a fun fact: Mildred Dunnock was younger than Madonna is now when she played the old lady in the wheelchair.)

Mind you, I have nothing against, for instance, Dolly Parton or Van Cliburn getting Kennedy Center honors (the honorees of the honorary Oscars are a bit more elite bunch). But to me, the glaring omission of Widmark makes the whole "lifetime honors" exercise a bit empty.

So, that is my cause today. Richard Widmark! Justice for Widmark. A happy birthday, too.

UPDATE: Here's a profile. Note that Widmark lost the 1947 Oscar to (gulp) Santa Claus.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

How Quickly We Forget

It's hard to think of an international controversy today that didn't have its origins, in one way or another, in World War I. That becomes perfectly clear in reading A Shattered Peace, David Andelman's excellent new book.

Andelman outlines the stupidity and shortsightedness of the conferees of the Versailles peace conference, and how it set the tone for the remainder of the 20th Century. It particularly resonates today, because a little country called Iraq was created at Versailles. Yet I doubt that most people nowadays have ever even heard of Versailles, or, if they have, had thought of it only in the context of Germany.

Andelman is a former New York Times and CBS News foreign correspondent, now executive editor at Forbes.com, and his writing is breezy and informative in the tradition of Cornelius Ryan. It would be a great last-minute Christmas gift.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

An Intriguing Lawsuit Dismissed

I've always been a bit intrigued by the lawsuit that was filed against Wall Street brokerages last year by Electronic Trading Group LLC. This suit was dismissed yesterday, which is a shame.

Unlike most of the suits that have been filed in the general realm of naked short selling -- mostly by companies seeking to shift blame for their own failures -- this suit alleged behavior that was actually quite plausible. ETG claimed, in essence, that it engaged in trading that it thought was ordinary shorting, but that the firms actually didn't borrow the stocks--but charged borrowing-related fees anyway. It also said that the firms conspired to fix the rates they could charge short sellers for borrowing stock.

That's a far cry from the nutty conspiracy theories and "stock counterfeiting" nonsense that is usually alleged in naked shorting suits, such as the junk lawsuit filed by Overstock.com's telegenic CEO Patrick Byrne (left).

The ETG suit says that the big firms were engaged in a bit of back-office chicanery, and that happens to be an area that has been troublesome for years. At their worst, some prime brokers gave financial backing to some of the cruddiest penny stock firms of the 1990s, a phenomenon that was never fully dealt with by law enforcement and Arthur Levitt's SEC. (Note the piddling fine imposed on Bear Stearns in this very serious case.)

The judge's reasoning was also a bit weird:

"The threat of a 'nonexpert jury' mistaking lawful conduct under the securities laws as evidence of a conspiracy under the antitrust laws and exacerbated by the prospect of trebled damages, would place immense pressure on defendants to curtail the open exchange of information," the judge said. "Such antitrust suits would likely chill a broad range of activities that the securities laws permit and encourage, and would likely inhibit the short selling activity that provides market liquidity and pricing efficiency."

I think that's a pretty strange reason for not letting the case go forward. Prime brokers are notoriously underrregulated by the SEC, and this kind of litigation is necessary to let the truth come out. Juries aren't that dumb. I think they can tell the difference between baloney and the real thing, even if some CEOs can't make that distinction.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

A Tireless Voice for Bad Companies is No More

"Investigatethesec.com" in its glory days. Note the advertiser.

I've always felt that the name of the loony website "investigatethesec.com" perfectly captured the Orwellian character of the anti-naked-shorting movement.

After all, it advocated a cause pushed by penny stock promoters and CEOs who are themselves being investigated by the SEC -- charlatans like Patrick Byrne of Overstock.com and the effervescent Richard Altomare of Universal Express.

Similarly, its adherents like to call themselves a "market reform movement," when in fact they are not interested in genuine market issues, such as punishing bad brokers and changing the mandatory arbitration system. Their one and only interest is in giving bad companies a ready excuse for stock prices caused by mismanagement. That is why it is pushed by the anti-investor, anti-consumer U.S. Chamber of Commerce.

Anti-naked-shorting types, which include a number of bad-stock holders, always harp on how horrible Wall Street is. For the most part they are right. But how this lessens the lousiness of the stocks they own is beyond me.

Exploiting the fears and paranoia of gullible small-cap bagholders are sites like "Investigatethesec.com." The site was run by someone named Dave Patch, best known for positing that Enron was a victim of naked short-selling. Its "sponsor" was a Vancouver-based penny stock promoter, and the inevitable Overstock.com advertisement added to the site's creepy patina.

Note my use of the past tense. "Investigatethesec.com" announced its passing today, joining ncans.net, which represented a nonexistent "organization" devoted to fighting the nonexistent problem, and nfi-info.net, in that great padded cell in the sky.

Today the crackpots who ran "investigatethesec.xom" said they were closing their site because "We've accomplished our goals."

Nonsense. There are plenty of bad companies, plenty of future Richard Altomares and Patrick Byrnes out there, happy to cynically use conspiracy theories to excuse their own incompetence. And there are plenty of stupid small investors ready to suck up that trash.

I'd say the work of these phonies is only just beginning.

UPDATE: Taking pity on the rotten companies and inept CEOs who benefit from his crusade, Mr. Patch has reopened his website. Bravo! Here's what I wonder: It takes $20 or so to maintain a website every year. Did he received an infusion of cash from Overstock.com's telegenic CEO Patrick Byrne?










© 2007 Gary Weiss. All rights reserved.



-----------

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.

Is This a Forward-Looking Statement?

Novastar Financial announced this afternoon, about 14 seconds after the market closed, that its CEO, CFO and general counsel were all.... er...... resigning.

All seeking more time to spend with their families, I trust? Well, it is that time of year.

But here is what I thought was interesting about the Novastar press release announcing this entirely coincidental departure of three rather senior people from the company. At the bottom it reads as follows:

Forward Looking Statements

Statements in this report regarding NovaStar Financial, Inc. and its business, which are not historical facts, are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. . . .

This is legally mandated boilerplate I know, but the very use of the phrase "forward looking" seemed a bit odd. Doesn't that only apply to companies with a future?

© 2007 Gary Weiss. All rights reserved.



-----------

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.

The 'Criminal Justice' System of Russia Strikes Again

The trial of the accused triggermen in the murder of Paul Klebnikov has been put off, again, and for the same absurd reason -- one of the defendants did not show up.

I'm serious. In Russia, if you kill a journalist, you can avoid trial by simply absconding.

Reuters reports:

"The court decided to send Klebnikov's murder case back to the prosecutors until (Kazbek) Dukuzov has been tracked down," Anna Usachyova, spokeswoman for the Moscow City Court told journalists after a hearing held behind closed doors.

Usachyova declined to give any further detail about the retrial, from which reporters have been barred because some of the evidence had been classified as secret.

Sound familiar? Here's what happened last March:

“This criminal case has been delayed indefinitely, and it won’t proceed until Dukuzov has been found and arrested,” court spokeswoman Anna Usachyova told reporters outside the courtroom in the Preobrazhensky district.

The reason all this has happened is that the two defendants were not rearrested when Russia's Supreme Court ordered a new trial. So, surprise surprise, one of them absconded. I'm surprised either one showed up.

I guess the other accused gunman wasn't expecting anything bad would happen.

UPDATE: Reporters Without Borders weighs in.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

'Doing Them Slow' Redux

Why is that man smiling (as if we didn't know)?

Overstock.com CEO Patrick Byrne once famously issued a vague, typically nutty threat to his "opponents" (by which I assume he did not mean "the truth" and "common sense"):

"I plan on doing these guys slow. "

It seems that this revenge fantasy has backfired on Byrne in recent days, with a spectacular decline in Overstock shares.

The decline began on Dec. 10. Since then, and counting today's 6.2% drop, the shares have declined from 23.84 to 15.11.

That's a 37% decline in a little over one week, much of it attributable to Byrne blurting out bad news on margins while preening on CNBC (left) and his lawyers hyperventilating as a result. But the shares have been spectacularly weak even after his latest big-mouth imbroglio.

Since Oct. 31, the shares of this naked shorting poster child are down 61%. Could it be that a conspiracy of nefarious forces, such as the ones that have beset Byrne's brethren at Universal Express, are to blame?

Or could it be.... wait a minute. I think I just figured out who those "opponents" were that Byrne was talking about. Of course! (Sound of hand slapping forehead.) He was talking about his shareholders!

Hey, he's not a perennial on "worst CEO" lists for nothing.

Meanwhile, Zac Bissonnette points out in Bloggingstocks that on Monday Overstock dropped off the "Reg SHO threshold" list, which is commonly twisted by crummy companies to claim victimization by the scourge of "naked short selling."

Zac suggests that "with Overstock off the list, perhaps Dr. Byrne will end his self-proclaimed "jihad" and go back to doing a lousy job running his terrible company."

Here's more food for thought: Overstock dropped off the Reg. SHO list after a period in which the stock was down substantially. If the stock was an actual victim of naked shorting, and dropped off the list as a result of short covering, the stock should have gone up, and not fallen off a cliff.

In other words, Byrne's claims of naked shorting were a load of bull -- something the SEC, if it is not brain dead, will be sure to notice in its ongoing investigation of Byrne and Overstock.

Byrne rationalized the obvious disparity between myth and reality with a press release in which he repeated a screwy theory advanced earlier this year by Universal Express ex-CEO Richard Altomare. A comment about the SEC ("displaying its customary deference to criminal elites") would seem to indicate that the formal SEC investigation of Byrne and Overstock is not going to his liking.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

About Those Ads

I just saw a similar item in Talking Biz News, so I decided to do the same thing: On Jan. 1 this humble bloggie joins the Forbes.com network of business and financial blogs. That explains the two handsome ads, referring to same, that you see on this blog.

Apparently there is some ad revenue sharing that goes along with this. Presumably this will improve my current advertising revenues, which are well up into the two figures a month. I have always said that blogging would have been an excellent source of income in the 17th Century.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Donald Trump and the Penny Stock Kingpin

There's an intriguing article in the New York Times today about the "tangled past" of Felix Sater, who is partnering with the Trump organization in real estate deals.

"At 24 he was a successful Wall Street broker, at 27 he was in prison after a bloody bar fight, and at 32 he was accused of conspiring with the Mafia to launder money and defraud investors," the Times reports.

Sater has every right to turn his life around, as apparently he has done. Good for him. But what I find interesting are the expressions of "shock" that came from Sater's business associates, including Trump.

But Alex Sapir, president of the Sapir Organization, a partner in Trump SoHo, said he was “not happy” to have just learned of Mr. Sater’s past on Thursday. “This is all news to me,” he said.

Mr. Trump also said he was surprised to learn of Mr. Sater’s past. “We never knew that,” he said of Mr. Sater. “We do as much of a background check as we can on the principals. I didn’t really know him very well.”

Some background check. If you put Sater's name in Google, the first two results are a press release and disciplinary proceeding from NASD Regulation (now FINRA) laying out a snippet of salient facts. (True, he added a "t" to his name, but that should not have fooled a good white collar investigator.)

The press release says:

Doukas violated NASD rules by permitting Felix Sater, a statutorily disqualified individual, to play a significant role in the firm’s securities-related activities. Doukas allowed Sater to conduct meetings with the firm’s brokers, hold sales contests, and award cash to brokers who sold the firm’s securities despite the fact that Sater was disqualified from the securities industry as a result of a prior felony conviction.

I presume that the phrase "prior felony conviction" might have raised eyebrows in the Trump organization. Why ignore Sater's background? The reason might have to do with this quote in the Times story:

“They seemed to get along just fine,” said Justin Henderson, a Denver developer who worked with Mr. Trump and Mr. Sater on an ultimately unsuccessful deal to build the tallest towers in Colorado. “It seemed that Mr. Trump relied heavily on Mr. Sater’s opinion on certain markets.”

Don't ask, don't tell, I guess. Or as Sergeant Schultz used to say on Hogan's Heroes: "I know nothing!"

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Sam Antar in Fortune

The issue hasn't hit the stands yet or the web (officially) yet, but there is a long and very good takeout in the latest Fortune magazine on white collar crime fighter Sam Antar. A link to an unofficial download of the article can be found here.

UPDATE: The article is now online.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Patrick Byrne's New Job: Editing Wikipedia

Overstock.com's dipsy doodle CEO Patrick Byrne, obviously tiring of his hobby--the dull task of running a money-losing, SEC-investigated retailer--is working overtime at his new full-time occupation: editing Wikipedia and providing unsolicited advice to Wiki founder Jimbo Wales.

Yup, Byrne has just joined Wikipedia as an editor, and received a cheerful "welcome" from the online encyclopedia, giving him tips on how to be a good Wikipedia editor. (And yes, according to posts on that page, his identity as Byrne has been confirmed.) So far he has mainly devoted his energies to criticizing Wales for failing to allow full vent to his conspiracy theories and personal vendettas in the pages of Wikipedia.

Anyway, perhaps Byrne can put those "how to write an article" recommendations to good use at his hobby, Overstock.com. OMuse, the Wikipedia wanna-be that Byrne created to provide a feeble excuse for hiring a full-time cyberstalker, Judd Bagley, has become an even more conspicuous embarrassment than usual recently.

So far this month, enthusiastic OMuse users have created a grand total of two new articles, "Autobiography of a Regular Person" and "How to Grow Books."



Perhaps Byrne could use his experiences at his hobby to write an article entitled, "How to Run Your Company Into the Ground." Judging from his company's recent share price decline--it has dropped 50% since the end of October--he is amply qualified to write such an article and it would be fascinating reading I am sure. He could include a passage on the formal SEC investigation of his company and himself, and perhaps include the full text of his subpoena.

Byrne expounded on his latest conspiracy theory in an interview with a local Utah newspaper, saying:

"The people who run Wikipedia are using Wikipedia to perpetuate a cover-up," he said. "(Wales is) at the top of Wikipedia, and he's either hijacking these articles or has his stooges hijacking these articles."

Hey, what more can I say? Patrick Byrne is not a perennial on "Worst CEO" lists for nothing.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

'Who's Bud Burrell?' and Other Questions Richard Altomare Won't Answer

Altomare is suddenly speechless on naked shorting

Naked shorting poster child Universal Express is a prime example of how corporate executives use stock market conspiracy theories to cover up their own sleaziness and, sometimes, criminality. Just take a look at the court documents on the company's web site, and particularly the latest filing -- a fascinating deposition by CEO Richard Altomare on Nov. 27.

You really should read through that deposition -- it is a hoot. It reads like something out of a Kefauver Committee hearing on organized crime in the early fifties, with Altomare refusing to answer most of the questions posed by the court-appointed receiver, Jane Moscowitz, on Fifth Amendment grounds.

While I'm sure that prosecutors will be most interested in persistent questions by Moscowitz implying that Altomare looted the company, my favorite was this:

Q. Did you ever seek to have any records analyzed that would determine whether, in fact, there had been naked short selling of the stock of Universal Express, Inc.?

A. I respectfully decline to answer that question based upon my constitutional rights as guaranteed to me by the 5th Amendment of the United States Constitution and the same rights provided to me in the Constitution of the State of Florida.

Q. In fact, you don't really know whether there has been any naked short selling of the shares of Universal Express, do you?

A. I respectfully decline to answer that question based upon my constitutional rights as guaranteed to me by the 5th Amendment of the United States Constitution and the same rights provided to me in the Constitution of the State of Florida.

Q. It's merely been a convenient thing that you could tell shareholders while their shares went down to an amount that I don't even know how to express what point .00001 is?

A. I respectfully decline to answer that question based upon my constitutional rights as guaranteed to me by the 5th Amendment of the United States Constitution and the same rights provided to me in the Constitution of the State of Florida.

So in other words, a CEO who had once been a leading troubadour of the Baloney Brigade anti-naked-shorting movement -- he has a prominent role in Wall Street Versus America -- is now not only clamming up on the subject, but says that talking about it may incriminate him in a criminal act. In what criminal act, I wonder. Lying to shareholders, perhaps?

It will be interesting to see how Patrick Byrne, who has made similar claims about naked shorting and stock market conspiracies, will fare when his chance comes to provide a deposition to the SEC, which is investigating him and Overstock.com on a variety of things. Naked shorting claims are mentioned in the subpoenas, according to Overstock SEC filings.

As I suggested (see update to this item) some weeks ago, Moscowitz also bore down on Altomare about his links to the crackpot Bud Burrell, a penny stock operator and regular on the now almost-defunct "thesanitycheck" stock market conspiracy website. The result was more stonewalling:

Q. Who's Bud Burrell?

A. I respectfully decline to answer that question based upon my constitutional rights as guaranteed to me by the 5th Amendment of the United States Constitution and the same rights provided to me in the Constitution of the State of Florida.

Q. Is Bud Burrell on the Universal Express payroll?

A. I respectfully decline to answer that question based upon my constitutional rights as guaranteed to me by the 5th Amendment of the United States Constitution and the same rights provided to me in the Constitution of the State of Florida.

Q. Didn't Bud Burrell have a company called Quantum Matrix that you were paying $4,000 to every so often?

A. I respectfully decline to answer that question based upon my constitutional rights as guaranteed to me by the 5th Amendment of the United States Constitution and the same rights provided to me in the Constitution of the State of Florida.

Burrell has already said publicly that he was on the payroll and was a "significant" unsecured creditor, and also made vague threats against no one in particular that, if I were Ms. Moscowitz, I would take seriously.

Altomare can run from these questions, but he can't hide. The company is under FBI investigation, and Moscowitz indicated that still more subpoenas are flying.

She's particularly interested in jewelry purchases for Altomare at corporate expense, which Altomare--in one of the few questions he did answer--lamely claimed had come from "salary" directly sent to the jewelers.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

More on the BW Bloodletting

A list of the people laid off and bought out at Business Week has just appeared on Talking Biz News, and I must admit that I am shocked.

The casualties include some of the best biz journalists around, people I've worked with in the past and admire: Tony Bianco, Jeff Laderman, Gail Edmonson, Larry Lippman and Amy Dunkin. (No offense to the rest, but I'm just mentioning the ones I've worked with directly on stories.)

This is on top of previous waves of layoffs that shed experienced journalists such as, in the last purge, labor writer Aaron Bernstein and Bill Symonds of the Boston bureau.

I realize these names don't matter to most people (except maybe Tony, the author of several well-received books), but these people are the heart and soul of Business Week. Jeff orchestrated BW's excellent mutual fund and personal finance coverage for two and a half decades, Gail is an ace foreign correspondent, and Amy is a mainstay of the personal finance section. Larry is the highly regarded photo editor who'd been at BW since the Stone Age.

These are all long-time people, in fact, and I assume that their salaries might have been a reason for their being so suddenly expendable.

I really am beginning to wonder what BW's management is thinking as it gets rid of these people while retaining, inter alia, "celebrity" columnists of questionable value to the reader. What direction is BW taking?

This is not excess flab being trimmed. Some of the early layoffs shed middle managers who had long outlived their usefulness. But these latest layoffs/buyouts are cutting into meat.

This does not bode well for BW. In fact, I'll take the thought one step further: there is something terribly wrong afoot at that magazine.

UPDATE: A pithy comment to the Talking Biz News item is worth repeating:

Adler was given the task of “fixing” a high-quality magazine that really wasn’t broken. It needed to adapt itself to the Web and address advertisers’ discomfort. But those issues are industrywide, and instead of tailoring the changes to meet those concerns in a measured way, he overhauled the magazine. I’ll say as a journalist based in D.C., one of the saddest end-results has been to its Washington coverage, which is almost non-existent. The “money and politics” beat remains open despite — I am certain — applications from many qualified candidates in recent months.

The comment above that one, which I'll not replicate as it is a bit nasty, reflects a lot of the feedback I've informally gotten from people I know at the magazine.

When I joined Business Week in 1986, Barron's and Forbes were renowned for their low staff morale. But that was offset by the excellent quality of the magazines and their stunning commercial success. But here we have poor morale and concerns about the viability of magazine and criticism of its redesign and direction. That's a bad combination.


© 2007 Gary Weiss. All rights reserved.



-----------

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.

CJR's Audit on ParkerVision Coverage

CJR's Audit section has a smart item today on a short Reuters article that otherwise would have drawn little attention. But Audit writer Elinore Longobardi correctly notes that "it displays two unfortunate tendencies of the business press: to sell short-sellers short and, sometimes, to short-arm warranted criticism of business leaders."

At issue is a tough, sharp article on a company called ParkerVision by an equally tough and sharper reporter at Barron's, my old colleague Bill Alpert. Reuters picked up on the article and, in so doing, slanted its piece in favor of the company.

The Audit observed:

Shorts play a useful and important role in rooting around for, and sometimes detecting, fraud—or at least over-hyped shares among the 10,000 or so publicly traded firms, especially the smaller ones. That’s why some business reporters, especially those with an investigative bent, use them regularly as sources, often with journalistically profitable results.

To be sure, short-sellers are outside the mainstream, and the field has attracted at least its fair share of quick-buck artists and sleaze bags. But an ethical short-seller is on the same moral plane as an ethical long investor.

This is further indication of the change of direction of CJR Audit, which produced a number of strange articles under its previous editor -- sometimes showing a lack of understanding of financial journalism, and a hostility to tough reporting. But this Audit item indicates that the website is being reinvigorated, and quite dramatically, by new editor Dean Starkman. Bravo.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Scary Times at BW

Massive (and a bit scary) news out of Business Week, which announced a top-to-bottom reorganization and bloodletting, according to Talking Biz News. One especially glum tidbit is yet another round of year-end layoffs. A dozen staffers gone.

That's the second--or is it third? fourth?--consecutive year of layoffs at BW, and it indicates to me that BW editor Steve Adler, whatever his other virtues, is simply not doing a good job of protecting his staff from being pummeled. Of course, he may have no choice, with ad sales being as gloomy as apparently they have been.

The good news is that I'm familiar with a lot of the people being moved to higher posts, and they're all top notch.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Patrick Byrne Speaks, Lawyers Salivate

Oops!

Overstock.com's dipsy-doodle CEO Patrick Byrne, appearing on CNBC on Friday, painted a glorious picture of Overstock's Christmas season, but let something slip: everything was going well except "gross margins."

Oops!

Henry Blodget picks up the story:

If Byrne planned to mention the margin compression before the CNBC shoot, he apparently didn't tell his lawyers, because the company rushed to release an after-the-fact Reg FD press release this morning reiterating the comments.

Overstock was down 21% today, on heavy volume, as a result.

The Overstock press release was a real piece of work. Get the title: "Overstock.com Comments on Patrick Byrne's CNBC Interview." When was the last time you heard about a company "commenting" on its own CEO's interviews?

Blodget's piece was entitled,"CEO Byrne Speaks, Lawyers Panic." His lawyers, perhaps, but the lawyers suing him, at the SEC and elsewhere, are salivating.

In another appearance on Friday, on Fox, Byrne suggested that people not buy his stock, and said that it was being "manipulated."

That's for sure.

© 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.

Something New and Naughty in Hedge Fund-land

Just when you think that hedge funds have figured out every possible way of stock market grifting, a new method comes to the fore. Today comes word that six persons have been indicted in a scheme in which they tried to bribe a "hedge fund" (really an FBI agent) to buy shares of stock.

While no hedge fund was named, obviously the FBI is on to a new and creepy form of nastiness in hedge fund-land.

The SEC litigation release gives the tawdry details:

The defendants are insiders or promoters of publicly traded companies who made stock sales to a hedge fund in exchange for illegal kickbacks to an individual whom they believed to be the hedge fund manager, but who was in reality an undercover FBI agent. In related criminal prosecutions, the United States Attorney’s Office for the Southern District of Florida today announced the criminal indictments of 6 individuals involved in the schemes.

This is a variation of (and, I daresay, an improvement on) the old boiler room practice of paying off brokers under the table to sell stocks. Except in this case you have the buyer getting kickbacks.

Pretty neat, huh? Here's more:

The Commission’s complaints allege that, in each case, the undercover FBI agent purporting to be a hedge fund manager told the seller or promoter that the kickback had to be kept secret, because buying stock in exchange for kickbacks would violate his fiduciary obligations to the hedge fund. The FBI agent also told the seller or promoter that he had created a phony consulting company to which the kickback could be paid pursuant to a consulting agreement. The sellers or promoters were told that the consulting entity did not exist, that no actual consulting work would be performed, and that the phony consulting arrangement was simply a means to secretly funnel a kickback to the purported hedge fund manager. All of the defendants agreed to pay a kickback. With one exception, the defendants actually paid the promised kickback after the hedge fund bought the stock defendants were promoting.

This could be an isolated incident or the tip of the iceberg. My bet would be on the latter.

UPDATE: A new and intriguing blog called "Crazyman's Economics" weighs in on this.

© 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.

The Ma Barker of Securities Fraud?

Here's a securities fraud scheme that just caught my eye. Seems that a 63-year-old lady in a Seattle suburb has been indicted, along with her son, on 21 counts of securities fraud and other offenses.

The family and (alleged) Ma Barker aspect of this thing is something that you don't see every day. According to the AP story of the indictment, this was no small time operation:

Beverlee Kamerling, 63, and her son, Nicholas Alexander, 22, allegedly got control of four small companies, caused shares of those companies to be issued unlawfully and promoted the sale of those shares through hyperbolic news releases and unsolicited faxes. . . .

For example, they claimed that the managers of Kamerling's America Asia Energy Corp. -- Alexander and Kamerling's boyfriend -- had experience in coal mining, when in fact they had none, according to the indictment.

Those false claims were made on the Pink Sheets Web site, which publishes information and stock prices about small companies, says the indictment.

Users of the "Pink Sheets Web site" should be forced to read about the virtues of index funds, exchange-traded products, or anything other than pink sheets before being allowed to venture into that sewer.

No, strike that. On second thought, anyone who'd buy a pink sheet stock deserves what he gets.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Ron Paul: Friend of Wall Street?

Presidential candidate Ron Paul of Texas, a would-be populist, said as follows to Maria Bartiromo in Business Week:

Q. Do you consider yourself a friend or a foe of Wall Street?

A. If they believe in freedom, free markets, and sound money, they'll love me. But if they like creating credit out of thin air, they'll see me as a threat. I was one of three people who voted against Sarbanes-Oxley because I thought it was detrimental to Wall Street. I'd repeal it.

Dealbreaker conducted a straw poll today: is Ron Paul a friend or foe of Wall Street? The results so far from the mainly Street readership: 88.8% friend, 11.2% foe.

Some populist.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

They Don't Call Patrick Byrne 'America's Worst CEO' For Nothing

Overstock.com CEO Patrick Byrne reemerged on the Investor Village message board today after an absence of some weeks, to discuss a subject that is obsessing him day and night.

Now, before you peek at the link, see if you can guess what it is from the following choices:

1. His company's struggle to avoid bankruptcy;
2. His company's recent share price free-fall;
3. The SEC investigation of his company and himself;
4. Wikipedia.

The answer is, of course, No. 4.

Responding to a puzzled query in the Motley Fool message board, analyst Seth Jayson commented: "It proves Patrick is still a conspiracy theorist who believes that anyone who doesn't agree with him is plotting against him: investors, message board posters, wikipedia, whatever. And he is simply unable to leave it alone."

I think the reason he's off in la-la land has to do with the nagging issues surrounding Overstock's accounting, as recently highlighted in Sam Antar's blog. EBITDA and Regulation G are dense stuff, but they could prove difficult in the days ahead, as Tracy Coenen explains.

If you're the CEO of a company that has used questionable accounting, and is struggling to survive, wouldn't you focus on the Sith Lord, or school vouchers, or Wikipedia?

Hey, they don't call him "the worst CEO in America" for nothing.

© 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.

Insider Trading in ParkerVision?

This post on a stock message board makes one wonder.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Chris Cox Succumbs on Shareholder Rights

Commenting today on the SEC's vote preventing shareholders from nominating corporate directors, The New York Times's Gretchen Morgenson says that "shareholders lost the only shot they had at firing incompetent directors."

Apart from Gretchen and AOL blogger Zac Bissonnette, the media has been comparatively silent over the SEC's capitulation to corporate lobbyists, such as the Business Roundtable and U.S. Chamber of Commerce. The latter recently embraced another anti-investor initiative, clutching to its bosom the "naked short selling" issue that is used by corporate execs to excuse their poor stock performance.

Chris Cox, very much a "politician" as Gretchen points out, is blowing with the wind -- which is an utter indifference to investor rights in the Bush administration.

© 2007 Gary Weiss. All rights reserved.



-----------

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.

Ed Zander Goes Home

 

Ed Zander enjoying a quiet meal with the family 

Jeff Matthews reports that Ed Zander, CEO of Motorola, has stepped down because he was "anxious to spend time with his family." Such was the initial Bloomberg headline on Friday, believe it or not. 

The New York Times reports, with a straight face, that "Mr. Zander insisted Friday that the decision to leave now was his own, and that he was looking forward to time with his family." Yet the same article describes his departure as an "ouster." 

This is not necessarily a contradiction. When one has been publicly ousted from a high-profile job, there is nothing like the family to provide solace. And yes, the decision to leave "was his own." Again, if one is being ousted, one can either barricade oneself in one's office or leave. Zander chose to go home. 

© 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.

Ordinary Perople Versus Corporate Bullies

The Overstock.com slo-mo train wreck continued last night, with its resident stalker, the so-called "director of social media" Judd Bagley, reiterating a threat he had made a week ago to contact the employers of people criticizing this disgusting company. 

It's interesting how Bagley and his boss Patrick Byrne have focused their venom on ordinary Internet users, as well as gutsy reporters who have taken them on (such as Susan Antilla of Bloomberg and Joe Nocera of the New York Times). This is a new and disturbing element of Overstock's "campaign of menace," as it was so accurately described by Nocera.

While it is unclear whether Bagley can actually do any damage by his tactics -- replaying his smear campaign against a Florida reporter when he was a flack in the Jeb Bush administration -- there's no doubt that this slimeball would love to destroy his boss's critics. 

 After all, that is what Bagley is paid to do. His cover story, a joke called "Omuse, was revealed last week to have been outsourced, and another fairy tale, that Bagley was put in charge of a "cars" project, disintegrated today with a routine announcement referring to a "vice president for cars." It ain't Bagley.

It's clear that he and Byrne are hell-bent on diverting attention from Overstock's miserable financial condition, as in Byrne's moronic "hold up the sign" stunt on CNBC last March (right). Overstock's finances have become so awful that it has begun liquidating assets. See Jeff Matthews's analysis of Byrne's sale of a once-hyped travel subsidiary, and a Seth Jayson article in Motley Fool describing the O-Meltdown. 

The number one target on Overstock's enemies list is a software engineer who runs the excellent O-Smear blog, who was instrumental in revealing that the antisocialmedia.net smear site was run by Overstock. 

 O-Smear recently deconstructed Bagley's smear campaign against Antilla, commenced after she wrote a column excoriating Bagley and Byrne. Bagley, typically, centered an entire item around a fiction -- Antilla's "marriage to a hedge fund magnate," constructing a brand new conspiracy theory. A few minutes of checking records on the Internet-- or, God forbid, a phone call to Antilla -- could have ascertained that they are divorced. 

Bagley and Byrne are also terrified of Sam E. Antar, former CFO of Crazy Eddie's, who devotes his life to exposing the Overstocks of this world. They worked hard to get him kicked off the Investor Village Overstock message board, where he was removed for "clogging" the board with smart questions. 

Sam's analysis of Overstock's accounting, through sharp questions such as this, provides a road map for regulators in the months ahead. 

David Carr talked about "citizen journalists" in the New York Times today. But these aren't journalists. They are just citizens. 

What I don't understand is why regulators and law enforcement (who are fully aware of Overstock's actions, believe me), haven't stepped in by now, particularly since Overstock's strange share price behavior is sucking in still more "dumb money." 

 All regulators need to do is follow the trail of bread crumbs -- left for them by citizen sleuths who have already done much of the spadework. 

Meanwhile I wonder what's next on Bagley's agenda. Drowning puppies? 

UPDATE: Nope, looks like the next item on his agenda was covering his tracks. All of Bagley's posts on the Yahoo Overstock message board, where he is "antsaresocialinsects," abruptly vanished on March 20. The puppies will come later. 

© 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.