Thursday, December 27, 2007

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 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.", 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 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.

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