Saturday, September 19, 2009

Byrne: SEC Enforcement Division Takes Orders From Short-Sellers


The White House isn't the only building in Washington with a hotline

Patrick Byrne has a new conspiracy theory to explain why his corporate crime petri dish Overstock.com is under investigation by the SEC. Seems that short sellers, in addition to having a fax machine at CNBC, also have a hotline to the SEC, in which they bark out orders to start investigations against innocent CEOs like Byrne.

Byrne made that comment on Fox Business News, where he is trotted out as an "internet retailing expert," no doubt because of the skill at which he has eased Overstock into negative shareholder equity. He was brought out this time for a ritual denunciation of new bank compensation rules.

Byrne obviously expected a question about the SEC investigation and cranked out his scripted explanation--saying that the investigation was retaliation for his speaking out against the scourge of naked short selling, and that the SEC was inexplicably picking on him over innocent restatements--not an effort to turn losses into earnings, as Sam Antar has spelled in detail out on his blog.

The host then said, "Bottom line, this is a problem that has not gone away and is an issue that you have to deal with."

That seemed to catch him unawares, so Byrne departed from script and the "old Dick Nixon" emerged: "You know how it turned out that Bernie Madoff could basically call the SEC and get them to stop an investigation. It's also turned out that there are short sellers who can pick up the phone and get the SEC to start an investigation."

His rant starts toward the latter part of the video below:



Byrne knows perfectly well what this SEC investigation is about--not an inexplicable examination of innocent restatements, but a probe into his management of earnings. He also knows the SEC was tipped to his manipulation of financial statements not by "short sellers" but by Antar, in emails that were copied to one of his somnolent directors, Joseph Tabacco--and to Byrne.

Say, isn't it against the securities laws for the CEO of a public company to lie about a federal investigation in a public forum?

UPDATE: Byrne's hatchet man Judd Bagley made a point of linking to this same video on his "deep capture" smear site, so this was no slip of the tongue. "The SEC Enforcement Division Takes Orders From Short Sellers" is now part of the official Patrick Byrne Excuse Narrative.

© 2009 Gary Weiss. All rights reserved.

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