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 An"online petition" on behalf of this crooked company was withdrawn, its sponsor saying: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.

Sayonara, Universal Express

A naked shorting poster child is no more.

The South Florida Business Journal reports that court-appointed receiver Jane Moscowitz has sent home the employees of Universal Express and shut the doors. So ends what had been a prime example of bad companies using naked shorting to excuse their own failures. According to court rulings, this company was little more than a vehicle for issuing unregistered stock and false public disclosures.

It will be interesting to see what Moscowitz finds when she unpeels the layers of this onion.

One of her first steps should be to wrest control of the Universal Express website, which had served as a platform for the company's blowhard CEO Richard Altomare, and perform a delousing operation. I must say, though, that I will miss Altomare's press releases.

All this poses a dilemma for the U.S. Chamber of Commerce, which appointed Altomare to three committees. What do you call a CEO who just got booted out by a trustee? I know what you call an organization that appoints such a CEO: just plain dumb.

The judge who appointed Moscowitze, at the behest of the SEC, is considering contempt penalties against Altomare and the company's general counsel. Stay tuned.

© 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.

The U.S. Chamber of Commerce Has Some Explaining to Do

A reader brings to my attention a May 2007 press release from the naked shorting poster child Universal Express. The release says that Universal Express CEO Richard Altomare has been appointed to three committees of the United States Chamber of Commerce.

Yup, that's the same Universal Express that has been found by a federal court to be a multiple securities law violator, in cases stretching back to 2004. Its received some publicity in recent days for its tussle with New York Times columnist Floyd Norris.

In a recent court filing requesting that a receiver be appointed to manage the company, the SEC said:

As has been found by Court, Universal Express has since 2001 existed primarily as a vehicle to flood unregistered stock into the public market at values fraudulently inflated by the dissemination of false and misleading statements by Universal Express, Altomare and [general counsel Chris] Gunderson. Recent public statements by the company and Altomare demonstrate that this conduct is continuing unabated. Altomare’s public statements demonstrate that, absent the imposition of a receivership, additional illegal conduct that is harmful to public investors will occur.

According to the Universal Express press release, "Altomare was invited to serve as a member of Homeland Security Policy and Task Force, the Regulatory Affairs committee and the Transportation and Logistics Committee."

The Chamber has a history of opposing investor and consumer interests, and is essentially a mouthpiece for big business interests in Washington. In keeping with that record, it has supported efforts by inept corporate chieftains to shift blame to "naked short selling." Altomare, of course, has been flapping his big mouth about that non-issue for years, making him a leading troubadour of the Baloney Brigade of penny stock merchants and crackpots.

But even for the Chamber, appointing an Altomare to three committees is over the top.

I'd say the Chamber has some explaining to do.

UPDATE: The SEC on Friday asked a federal court judge in New York to find Altomare, general counsel Chris Gunderson, and Universal Express in civil contempt to prevent further violations of the securities laws. If the SEC gambit is successful, the two will wind up in a place where baloney sandwiches are common fare -- jail.

Read the blood-curdling details in the court documents linked here.

Universal Express responded, as it always does, by issuing a press release. Apparently the SEC sent the company a subpoena demanding that it prove its naked shorting jibberish. The nerve!

". . . . This continuing attempt at abuse of power against our Company and many other 'whistleblowers' on 'naked shorting' is ironic coming from an agency that has permitted trillions of unregistered and counterfeit shares to be issued in the names of smaller public companies, putting over 6,000 of such companies out of business and destroying the investments and jobs of hundreds of thousands of Americans," continued Mr. Altomare.

"The SEC simply misunderstands the facts about our shares, which have been properly issued and clearly recorded in our published reports; while the SEC has illegally permitted marketmakers, broker-dealers and hedge funds to secretly issue trillions of counterfeit shares in companies' names in violation of the Counterfeiting Statutes of the United States. They have committed and continue to allow trillions of crimes to occur daily."

The Baloney Brigade marches on.

© 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.

SEC Economists Debunk 'Fails to Deliver' Baloney

A devastating study, released today, knocks out the underpinnings of anti-naked-short selling hysteria -- the myth that "failure to deliver" securities is evidence of evil traders seeking to run down the price of worthy stocks.

This myth has been advanced by executives of red-ink machines-- such as Overstock.com CEO Patrick Byrne in a press release today -- in an effort to divert attention from their own incompetence. Members of Congress, some state legislatures, a smattering of state regulators and some in the media have lapped up this baloney. The SEC itself has spent far too much time and energy on this subject.

The terms "failure to deliver" and "naked short selling" are used interchangeably by anti-naked-shorting crackpots, in their effort to divert regulatory attention from real issues. A "fail" simply means that the shares required to settle the transaction have not been transferred from one brokerage to another. That can happen for a host of reasons. Whether a transaction has "failed" or not has no effect whatsoever on buyers or sellers of shares.

This highly technical aspect of the securities business has been turned into a conspiracy theory, and promoted on the Internet by CEOs of small companies and shills ranging from illiterate psychos to the U.S. Chamber of Commerce. It was recently the subject of a stunningly moronic segment on Bloomberg TV.

The SEC economists' study -- not conducted officially for the commission, but distributed to the media today by the SEC -- "documents the use of short selling in IPO’s and provides evidence of the relation between short-selling and failures to deliver." It was posted today on the Social Science Research Network. The full text can be downloaded from the SSRN site.

"Despite finding that settlement failures ('failures to deliver') occur regularly in IPOs, our results do not support the conjecture that naked short selling is to blame. In fact, we show that failures to deliver are uncorrelated with short selling [emphasis added] and for many IPOs, the level of failures to deliver exceed the level of short selling," the economists say in their abstract of the study.

"Uncorrelated" means "they ain't got nothing to do with each other." Remember that whenever you read a polemic on "fails to deliver" by one of the advocates of this cause. It's really amazing how much regulatory attention has been devoted to this nonissue.

I'll quote here from an SEC summary of the study:

The study finds that short selling is prevalent in IPOs and on average, more than 7% of the shares offered are sold short on the first day that the IPO trades. The study also documents that failures to deliver are common in IPOs. Failures to deliver in IPOs amount to more than 4% of shares offered, on average, and 36% of IPOs qualify for the Regulation SHO threshold list on the first day possible. In a number of cases, failures to deliver significantly exceed the amount of short selling.

However, the study finds no evidence that the magnitude of failures to deliver is correlated with amount of short selling in IPOs. Moreover, the factors associated with the amount of short selling in IPOs are not the same as the factors associated with the level of failures to deliver. The results of the study suggest that short sellers are more active in IPOs with price increases on the first day of trading. In contrast, failures to deliver are more prevalent in offers that either have no price change or a decline in value on the first trading day.

Additional empirical tests on failures to deliver indicate that IPOs in which the underwriter is more likely to be engaging in price support tend to have higher failures to deliver. This result, coupled with the observation that many IPOs have greater failures to deliver than short sales, suggests that failures to deliver may not be a good measure of naked short selling.

The study makes clear that its findings are not just restricted to IPOs:

The results presented in this paper also inform a public debate surrounding the role of short selling and fails to deliver in price formation. We find no evidence that short selling is related to either fails to deliver or to the inclusion of an IPO on the threshold list. More specifically, we present clear evidence questioning the use of fails to deliver to measure naked short selling, even outside the context of an IPO.

A recent study by Canadian regulators had similarly debunked the "fails to deliver" hysteria.

None of this, of course, will put a stop to the Baloney Brigade, which is fueled by the money and PR machinery of Byrne and the penny stock crowd, and the volunteer efforts of retired medical equipment salesmen and off-duty dentists. But hopefully the SEC will stop pandering to anti-shorting crackpots long enough to behave rationally on this issue. For a change.

However, I do expect that the authors of the study will be a target of the usual threats, intimidation and smears that come from contradicting the anti-naked-shorting crackpots.

© 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.