Tuesday, June 17, 2008

Return of the Phantom Menace

Byrne: still pushing the '1,000 companies' fairy tale

Yep, the "imaginary thousands" are back.

In an interview with the Wall Street Transcript, America's premier blame-shifting CEO, Overstock.com's self-confessed crook Patrick Byrne, trotted out the old line that you could fill a good-sized auditorium with the CEOs of companies destroyed by the nefarious forces of naked short selling.

There are hundreds, maybe 1,000 or more companies that have been destroyed by hedge funds using an illegal technique. It's a perfect crime because nobody even sees there is a crime. A typical citizen just sees that her stock portfolio goes down, and she doesn't understand that behind the scenes the game has been rigged.
Texas lawyer John O'Quinn said pretty much the same thing on Dateline NBC three years ago. As I recounted in Wall Street Versus America, I called him to ask for the names of some specific companies, and am still waiting, hand on phone, for a callback. More of O'Quinn's baloney here. Notice that in five years not a single "victim" has been named, and the poor dear has been unable to squeeze a single nickel out of the junk lawsuits he has filed on this non-issue.

One even loonier estimate that circulated a few years ago, pushed by a stock promoter named "Bud" Burrell, was that "7,500 companies have been bankrupted since November, 2000, by illegal naked shortselling and conspiratorial manipulations, resulting in a loss of $17 trillion in market cap, 'greater than all the losses in the 1929 market crash.'"

The word for this, coined by Fortune three years ago, is "phantom menace."

"Phantom" as in "not happening."

The interviewer for Wall Street Transcript, no doubt mindful of Byrne's habit of personally attacking journalists who ask annoying questions, didn't trouble him by asking for specifics.

Still, I'd have expected that the comments section of the Seeking Alpha excerpt of the interview would have contained some specific names of companies destroyed by naked shorting, along with proof that naked shorting was the cause.

Not a one. (Though there was an interesting comment from an apparent Overstock insider, describing Byrne's mismanagement of the company.)

Ditto for Tracy Coenen's item on the subject. Tracy asked, "Can any of the NSS crusaders name even one and support their allegations with real proof?"

Tracy said:

There is supposedly this vast conspiracy of hedge funds to carry out this Naked Short Selling, yet no one can come up with any real proof of it? No one can prove that even one company was destroyed because of NSS?

Sorry kiddos, you’ve done nothing to convince me. All you’ve done is stalk and terrorize people. You’ve smeared journalists. You’ve raved about conspiracies and Sith Lords and secret fax machines. You’ve come forward with no actual proof.

The Baloney Brigade, always swift to yammer away on their conspiracy theories, greeted this post with silence.

Byrne himself appeared on the Investor Village message board last night, posting under his favorite pseudonym "Hannibal," and ducked the question. Compare his sneering evasion with this cogent post by a rare message board skeptic. (He posted again some hours later. Still can't name a single one. Surprise surprise.)

It's funny how the deluded knuckleheads of the stock market conspiracy campaign -- mostly stock promoters, paid corporate shills and assorted nutcases -- are struck with laryngitis when asked for the names of companies actually destroyed by naked shorting. They bombard the SEC with reams of statistics on "fails to deliver," but can't seem to cough up the name of a single company actually destroyed by naked short selling.

Cause there ain't any. The SEC and other regulators have occasionally found that naked shorting takes place, but has never found that it has "destroyed" any companies. Except, of course, for Enron -- a victim of naked shorting according to a glassy-eyed corporate shill named Dave Patch (right).

The shame is that our market regulators, knowing this, continue to appease these creeps -- knowing that it is easier to placate crackpots than to face them down. Particularly when the leader of the crackpots is a major donor to Republican causes, and is the top political contributor in the state of Utah.

The word for this is "cowardice."

© 2008 Gary Weiss. All rights reserved.

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