Wednesday, December 19, 2007

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.

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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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