Friday, September 12, 2008

Since 'Phantom Shares' Don't Exist, Make 'Em Up

Floyd Norris of the New York Times yesterday addressed one of the central tenets of the anti-naked-shorting movement, which has been to portray every financial scandal out there -- even when there is zero evidence-- as "proof" of "naked short selling."

Conspiracy theorist/fantasist Mark Mitchell, Deep Capture blog

Floyd's column concerned the latest rant emanating from that camp, this time from the delusional ex-journalist Mark Mitchell, who is employed by Overstock.com CEO Patrick Byrne. Floyd points out that there is no evidence whatsoever that, as Mitchell suggested, an NYSE action against Deutsche Bank demonstrated issuance of "phanton shares." Floyd diplomatically suggests that Mitchell was being "nutty or prescient." Nothing prescient about it, of course. (Times style discourages use of the word "lie," I guess.)

Mitchell has similarly woven out of thin air a "naked shorting conspiracy" in the arrest of a Jonathan Curshen the other day. Curshen was not, however, charged with anything of the kind. See the SEC complaint, which shows that Curshen was involved in the popular late-nineties practice of paying brokers to push stocks. Those were known as "cash deals" back in the day, and I see that (surprise surprise) they are still apparently alive and well.

Nothing new here. As I described in Wall Street Versus America, the naked shorting conspiracy nuts turned the Eagletech stock swindle into a naked shorting conspiracy. There' s a kind of rough logic to that, because microcap scamsters have been screaming "naked shorting" for decades. Before being replaced by Byrne, the standard-bearer of the naked shorting conspiracy cultists was imprisoned fraudster Richard Altomare of the Universal Express stock fraud, and to this day devotees of a pump and dump called CMKM Diamonds lionize the crooked management of the company and condemn the SEC for taking action against the firm.

Byrne complains loudly that nobody will take him seriously, but he hardly helps his case by hiring lowlifes like Mitchell, who left CJR Online under a cloud after a bizarre tenure writing a financial column, to fabricate naked shorting his conspiracy theories. Byrne's increasingly loony public statements -- get a load of this whopper -- don't help much either.

© 2008 Gary Weiss. All rights reserved.

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