Deja Vu in Times Reporter Banned From Real Estate Event

The New York Observer reports that New York Times reporter Christine Haughney was denied a ticket to the annual ball of the Real Estate Board of New York. Apparently thr REBNY didn't like her coverage. (H/T, Talking Biz News.)

“As one of the most sought-after tickets, there are always more requests than can be accommodated,” said a REBNY spokesman in a statement. ”We therefore limit complimentary tickets to those members of the media who are assigned to the real estate beat." Translation: the REBNY didn't like her actually covering the last ball, unlike reporters from the trade press who used the opportunity to kiss butt.

I had a remarkable sense of deja vu reading this article, as it reminded me of what the New York Stock Exchange used to do in the imperial heyday of its former chairman, Dick Grasso. Before Grasso was pushed out for being overpaid (flimsy grounds, I must admit), he was noted for using the exchange's annual media soiree as a way of punishing reporters who had crossed him. I was on the no-invite list after running stories on the way the NYSE was manipulating program trading statistics.

It's a shame that little acts of pettiness like this by Grasso didn't leak out at the time. It did reflect on the character of the man, who ultimately embarrassed the exchange and permanently damaged its franchise. There was no Internet in those days, but there was a New York Observer. Which raises another issue, how did the Observer find out? The article says that the reporter and her editor "declined to comment." Hmmmmm........

© 2010 Gary Weiss. All rights reserved.

New York Times Gets Stiffed For Baloney Brigade Ad

Commenting on a loopy, lying New York Times ad last June by Richard Altomare of the naked shorting poster child Universal Express, Times correspondent Floyd Norris quipped, "Speaking as a [Times] shareholder, I hope The Times got payment for the ad before it ran."

Apparently it didn't and that was no joke. As Zac Bissonnette points out today, the Times was stiffed for the ad.

Zac notes that a report by receiver Jane Moscowitz lists "the newspaper is listed as a creditor in the amount of $173,416.32." Floyd confirms in a follow-up that that the Times and other media outlets were among the hapless Universal Express creditors, who apparently didn't pay too close attention to the company's financial condition before extending credit.

Since the Times should not have accepted this slimy ad in the first place, I am not doubled over in grief over the hit to Floyd's shareholder equity.

Meanwhile, more details are coming out every day about how Altomare used this company as a personal piggybank, while he illegally sold unregistered stock.


The Baloney Brigade anti-naked-shorting nutcases, who clasped this cockroach of a company to their manly breasts, are predictably strangely silent on the Universal disaster, as it begins to a resemble a rape case more than securities fraud.

The shareholders of this company contain the usual deluded crackpots, as indicated by the threatening emails Moscowitz has received, but I note that one baloney brigadier has come to his senses. An"online petition" on behalf of this crooked company was withdrawn, its sponsor saying:

****NOTICE**** As author of this petition, in good conscience I can longer support Mr. Altomare or Universal Express, or any of the other defendants. I have sadly come to the conclusion, based upon what I have read from the court appointed Receiver in this matter, that shareholders were abused. I withdraw this petition. My intentions were good, but I feel betrayed.

No s--t, Sherlock.

The stench of penny stock fraud has long permeated this fraudulent movement. If you didn't notice, don't expect anyone to feel any sympathy for your bad choices.

P.S. One silver lining is that the U.S. Chamber of Commerce, a leading Baloney Brigade supporter that appointed Altomare to three committees, was stiffed for $10,000. Floyd reports "A Chamber spokesman confirmed to me that Mr. Altomare was invited to join the committees, but said that he is not now associated with the chamber."

© 2007 Gary Weiss. All rights reserved.



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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

NASD Members Bestow Gift Upon Themselves

Hot news over the wire this afternoon, for those eager for their Sunday regulatory news fix: NASD members have overwhelmingly approved merging their regulatory oversight with the New York Stock Exchange.

The NASD press release is entitled "NASD Member Firms Embrace Streamlined, More Efficient Regulation," and quotes NASD chief exec Mary Schapiro as saying "The securities industry has embraced replacing an outdated regulatory structure with one that better serves firms and investors in a fast-changing marketplace."

A Wall Street Journal online article (subscription required) observes that smaller firms opposed the merger, in the view that it would "weaken the voice of smaller firms within NASD." OK, but what benefits, if any, will this merger bring from an investor perspective?

As the mutual fund scandals proved, competition among regulators is a good thing. With some exceptions, such as this Bloomberg column that I mentioned some weeks back, the media has generally skipped over the negative impact of the merger on investors. Hopefully the coverage overnight will be more skeptical than we've seen in the past.

UPDATE: In an interview for the Journal edition that appeared the next day, Schapiro said "This is a great thing for our industry and investors." She did not even bother to explain how reducing the number of regulators could possibly benefit investors. The New York Times ran a brief Bloomberg story that also did not mention investor impact, which was not mentioned in the Reuters coverage eithr.

However, the AP managed to squeeze in a few words on the subject. It quoted the president of the Public Investors Arbitration Bar Association as opining that "combining the two regulators is 'anti-investor' because it eliminates choice." Well, I guess a dozen words is better than nothing, which has been the norm in media coverage of the merger.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

Euronext as Euronothing

The media is rhapsodizing over the impending New York Stock Exchange-Euronext merger, which NYSE Group CEO John Thain describes as creating "the world's most liquid and truly global financial marketplace." A New York Times editorial noted approvingly:

Most important to investors in the exchange companies themselves is the $375 million in potential savings that NYSE Group predicts for a combined entity.
If a combined company can pass the fruits of those savings on to the average investor — not to mention added ease in buying shares of foreign companies — we're all for it.

OK. If the company passes on the savings to the "average investor," who trades maybe three or four times a month, if he's very busy, that would mean savings of ..... goodness. My calculator can't quite count that low. He might be able to buy one more ham sandwich a week, maybe?

And as for the "ease of buying shares of foreign companies," let's just assume for a moment that that's true. Is that really a good thing?

Investors do a remarkably poor job of picking individual stocks, and are usually better off buying index funds, as has been demonstrated repeatedly and as was just pointed out in a fine new book. Overseas stocks are also major subjects of stock fraud. Heck, just look at the spams I get in my inbox every day, mainly from sure-thing Chinese companies.

No, there are plenty of closed end funds that are much better bets for investors than individual foreign stocks -- if bought at below-par premiums to NAV or, preferably, discounts.

Besides, it's anything but clear that the merger would do that. Business Week Online put it best: "In theory, at least, someday investors from any country could readily trade any security listed on any exchange." So in theory, maybe, someday investors will be able to invest poorly everywhere, and not just in the United States.

And then, of course, there is the issue of the trading floor. It may be abolished. Or maybe it won't be abolished. Who cares? As that book (which shall go nameless) described, such "market structure" issues have long been overemphasized by the media.

In summary I am theoretically, maybe, someday, underwhelmed by the whole thing. I sure wish that the media would show a bit less enthusiasm for a merger that is, from an investor standpoint, a total nonevent.

© 2006 Gary Weiss

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

Are Regulators Coming to Their Senses?

Last week I gave a talk to several dozen attorneys in the regulatory and enforcement staff of the New York Stock Exchange. It was a very flattering invitation when you consider that I am not exactly favorable toward the NYSE, to say the least, in my book.

The topic of my talk was the anti-naked shorting campaign.

I can't say what questions I was asked, but my message was pretty much what I said in the book. That is, that a small group of crackpots and conspiracy theorists, serving the interests of stock promoters and unprofitable companies like Overstock.com, are monopolizing and diverting regulatory attention. It's time for regulators to stop kowtowing to these people and start investigating.

I hope they were listening.

Word emerged today that at least some regulators may be getting the message. The Securities and Exchange Commission has issued a subpoena to Overstock.com. It's not clear exactly what the SEC is probing, but Overstock CEO Patrick Byrne issued a press release saying that he "celebrates" the subpoena -- which I read as "laments," translating Byrne-speak into the English language.

A tipping point? I hope so.

UPDATE: Here's what the SEC wants from Overstock, which was appended to Byrne's spin-a-gram:

"The subpoena requests a broad range of documents, including, all documents relating to the Company's accounting policies, targets, projections, estimates, recent restatement, new technology systems and their implementation, and communications with and regarding analysts. In addition, the subpoena requests all information relating to the filing of its complaint against Gradient Analytics, Inc., communications regarding shareholders who did not receive the Company's proxy statement in April 2006, communications with shareholders, and communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares. The Company intends to review the subpoena and respond in due course." (emphasis added)

Hopefully the SEC is probing Byrne's aggressive effort to shift blame to short-sellers for his company's misfortunes, and in particular his tactics and promotion of the anonymously run "sanitycheck" website.

P.S. As my talk before the NYSE enforcement staff indicates, I'm more than happy to chat with any group, anywhere, about the subjects explored in the book. Just drop me a line.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

News from the World of Time-Wasting

Today the wires are burning up with news that a federal appeals court -- oh no! -- overturned Securities and Exchange Commission mutual fund governance rules. Why, I'm horrified! Outraged! Or I would be, if these rules meant a damn thing.

"Good governance" is one of those self-evident good things, sort of the regulatory equivalent of a high-fiber diet. The rules would have required that all funds have independent chairmen. That is nice idea, I guess. Hey, I suppose it would be even great if everyone on a mutual fund board were independent. Or maybe even that everyone in the world be independent because, hey, independence is a good thing.

But as I describe in Wall Street Versus America, there is no connection at all between a fund's "governance" and whether the fund has been screwing investors.

So, in other words, here we have yet another example of the SEC wasting time.

Meanwhile, for other tidings from the world of time-wasting, we have Eliot Spitzer's ongoing get-Grasso campaign, also in the news today. Apparently some New York Stock Exchange official altered Grasso pay figures submitted to the NYSE board. I am shocked! Shocked! But it still doesn't make his suit against Grasso and the NYSE any less silly.

The judge overseeing the case suggested today that Spitzer and Grasso settle the case. Good idea. Then Spitzer can, hopefully, pursue his political ambitions in a manner that would actually benefit the public.

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Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

Probe the NYSE (again)?

New York Post columnist John Crudele, reacting to Dick Grasso taking the Fifth, suggests today that prosecutors initiate a criminal investigation of the New York Stock Exchange.

"Let's see whether illegal activity was condoned under Grasso's watch," says Crudele, who has been doggedly following NYSE floor-trading improprieties for some years.

Actually the operative term is "re-initiate," as there have been both civil and criminal proceedings involving the NYSE in recent years. The paper trail is pretty clear on just what happened, as I describe in Wall Street Versus America, and that means only one thing: Absolutely nothing is going to happen.

Still, as long as we're talking about stuff that isn't going to happen, why limit such a theoretical criminal probe to the Grasso era?

There's considerable evidence that floor trading improprieties go back quite a few years, and occurred during the administration of his predecessor, ex-SEC chairman Bill Donaldson. Why not probe the Donaldson era? Or his predecessors? (I know, I know... statute of limitations and all that.... Still, I can ask, can't I?)

Meanwhile I really wish Spitzer would stop wasting state resources with this silly Grasso litigation. There are so many other investor and consumer issues of greater importance, as anyone who has ever rented an apartment in New York City can attest.

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Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

"Spitzer vs. the Little Guys"

That's the title of a terrific op-ed piece today in the Wall Street Journal by Jacob Zamansky, the noted plaintiff's lawyer. Zamansky points out that despite all the hype over Eliot Spitzer's settlement with Wall Street firms over their tainted research, "it has become apparent that Wall Street successfully played Mr. Spitzer as a sucker."

Zamansky puts his finger on the reasons for that, one of which was that Spitzer did not require the firms to admit liability. That put small investors at a disadvantage when they pursued their claims in the stacked-deck arbitration system.

Frankly I'm not sure investors would have had a slam dunk even if the firms had admitted liability. However, I think his point concerning arbitration is correct. The unfairness of mandatory arbitration is one of the issues that I explore in Wall Street Versus America. If the system is as fair as the Street says it is, why not make it voluntary?

Zamansky goes on to make some pointed comments about Spitzer's Grasso litigation, noting that it benefits the millionaire owners of the NYSE: "If Mr. Spitzer were truly committed to reform, he'd insist the NYSE become more responsive to individual shareholders's needs as a condition of his involvement in the pursuit of Mr. Grasso."

Great piece. Here's a link.

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Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

Dick Grasso and the Constitution

The Wall Street Journal and Washington Post reported yesterday that Dick Grasso is getting some more bad publicity. Oh my. Seems he cited his Fifth Amendment right against self-incrimination during an SEC investigation into alleged trading improprieties at the New York Stock Exchange several years ago.

Now, what in heaven's name is the relevancy of this? After all, Grasso was never charged by the SEC or anything like that. Also, as one SEC Law blog points out, "taking the Fifth" could mean a variety of things other than "I'm hiding something."

So dragging Grasso's name through the mud over this seems to be overreaching at best. What makes it worse is that it's being done to make a "point." Which is that Grasso's not answering those question somehow indicates whether or not he was a "good market regulator" and thus maybe should pay back some of the bucks he received.

I'm serious. There are people out there who really think -- or at least say with a straight face -- that Grasso was paid $140 million to keep NYSE floor traders in line!

Is that or is that not the funniest thing you've ever heard?

The Post quoted a Spitzer deputy as saying: "The question here is whether the compensation [Grasso] received was reasonable. The stock exchange is first and foremost a regulator. . . He was questioned about his performance of his regulatory role." [Emphasis added.]

I placed one of the sentences in italics because it captuires one of the many misconceptions about the NYSE. The Big Board's principal function, as I describe in Wall Street Versus America, is self-perpetuation for the benefit of its members.

Dick did an outstanding job in that capacity, so I really wish they'd leave the man alone.

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Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

The NYSE (yawn) Goes Public

Tomorrow, for the first time in its 200-something-year history, the New York Stock Exchange becomes a publicly traded company! Isn't that exciting? Isn't that terrific? Isn't that ...zzzzzzzzzz....

I'm just mentioning this NYSE-going-public thing because it is an example of the kind of story of which I would like to see less in the financial press, in favor of stuff that really matters to people.

I know, it has to be covered. Here's one good piece in Marketwatch, for example, and I am sure tomorrow there will be a lot of other nice stories on the subject. Can we give it a rest after that, guys?

The financial media spends far too much of its limited resources pursuing inside-baseball stuff of little interest to anyone north of Chambers Street. After Dick Grasso's self-destruction in September 2003, you couldn't grab a sheet of newspaper to line a litterbox without finding a story with "NYSE" or "Grasso" somewhere. It was ridiculous.

As I say in you-know-what, the actual location where a stock is traded -- whether it is a "trading floor" or a "trading ceiling" or a computer network or whatever -- is a matter of little consequence to most investors. True, it matters greatly to high-volume institutional traders. The rest of us couldn't, and shouldn't, care less.

The same thing goes for the "governance" of the NYSE. Again, who cares? If the NYSE wants to be a paragon of lousy management, that is of little concern to anyone except the NYSE's owners, who are currently 3,000 or so retired millionaire seatholders.

Meanwhile, I read in the Wall Street Journal law blog that Dick Grasso is being deposed by Eliot Spitzer today as part of that ridiculous lawsuit that was filed against him. Good gawd. So Grasso was paid a lot of money. Again, who the hell cares? As I say in you-know-what, he earned every penny of what he was paid (though not exactly for the reasons outlined in NYSE press releases).

If he hadn't been overpaid he wouldn't have lost his job, and if he hadn't have lost his job the NYSE would not be going public, and those 3,000 retired millionaires wouldn't be getting a nice hunk of change. They're making out nicely, so who's got a reason to complain? Or perhaps I should say, "Who's got a reason to complain who's not running for governor?"

At least Spitzer isn't doing something even less useful, like being led around by the nose by the anti-naked-shorting cultists of the Baloney Brigade. Perhaps he could have a word with the ones who are, at the SEC and other state regulatory agencies.

P.S. I'd like to welcome all the very nice (I am sure) people who have signed up via Notifylist to get updates when this blog is updated. Among them are a grand total of 23 people with email addresses from our financial regulatory agencies! A extra-special welcome to y'all.

A prime number. How lucky!


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Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.