Wednesday, June 15, 2011

Some Investor Bulletins the SEC Forgot ; The Economist is Suckered

In my Street.com column today I offer up some ideas for long-overdue "investor bulletins," in light of the SEC's recent issuance of a warning against reverse mergers--an investor danger since at the 1980s. Nice of them to get around to it.

I deal with other long-neglected dangers such as reverse stock splits, Apple mania, and, of course, naked shorting hysteria.

Speaking of which, The Economist this week has the stock market conspiracy set salivating because of an article on the danger of unsettled trades. It's innocuous enough until you get to the portion dealing with naked shorting, and then it flits off into outer space. The Economist repeats the old conspiracy-theorist canard that naked shorting creates "phantom shares." Not true -- see this SEC fact sheet, at 7.1, which was published in one of the agency's rare efforts to counteract the massive NSS disinformation campaign.

How did The Economist get suckered? Just look at who's quoted, John Wellborn of the Haverford Group, "an investment firm." But actually it's an astroturf operation run by Patrick Byrne, the conspiracymongering CEO of Overstock.com, and its sole mission is to push Byrne's conspiracy theories.

As disclosed whenever Overstock issues a proxy, most recently last March, "From 1994 to the present, Dr. Byrne has served as a Manager of the Haverford Group, an investment company and an affiliate of Overstock."

In a rational world, the naked shorting hysteria that commenced during the financial crisis would have subsided, given how every study of the crisis, including the Financial Crisis Inquiry Commission, has laid the blame where it belongs -- on the actions of the banks. NSS conspiracy tales are so irrelevant they are hardly mentioned at all. But thanks to Byrne's astroturfing "investment firm," the unwary will continue to be suckered.

So SEC, get cracking with those investor bulletins! (I'm not holding my breath.)

© 2011 Gary Weiss. All rights reserved.

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