Tuesday, August 19, 2008

More Glowing Reviews for the SEC's Naked Shorting Publicity Stunt

The praise is coming in thick and strong for the SEC's naked shorting publicity stunt. Not.

The Economist : "The SEC’s action was not only pointless; it may have had a perverse impact. ,. . The SEC has promised a post mortem of its experiment. At this stage the conclusion looks pretty clear: the regulator picked the wrong target."

Dow Jones News Service: "An emergency order that temporarily restricted short sales in the shares of Fannie Mae (FNM), Freddie Mac (FRE) and 17 other financial companies raised borrowing costs significantly and increased volatility in the stock-loan market, a new study concluded." This is in addition to a study by a European economist released the other day.

The response to the near-unanimous thumbs-down judgment has been flailing from conspiracy theorists, embodied by the wailing at the Patrick Byrne-financed Deep Capture website. There, the oddball journalist-turned-shill Mark Mitchell recently launched a vicious attack on Carol Remond, an award-winning investigative reporter and scam-buster. Remond hasn't written much about naked shorting, but she's been critical of Byrne and has exposed scams, which put her in the sights of this washed-up ex-CJR editor.

Last but not least, in the realm of comic relief, comes word that Harvey Pitt, the worst SEC chairman in recent history, is trying to cash in on the naked shorting hysteria with something called RegSHO.com. Pitt has teamed up with a former boiler room employee named Tom Ronk, who was banned from the securities industry in 1999 for not paying a 50K fine. (Here's a link to his FINRA record.)

Pitt was so horrible as SEC chairman, so downright tin-eared and clueless, that even the most far-right Republicans despised him. Time magazine opined at the time: "Pitt is running out of admirers in Washington, with the possible exception of folks at the Mine Safety and Health Administration. He's the only one in the Capital who gets into deeper holes than they do."

I'd say that Ronk and Pitt make for a terrific fit. Hey, that even rhymes!

© 2008 Gary Weiss. All rights reserved.

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