Wednesday, May 28, 2008

Taser Shareholders Blame the Boogeyman

The real villain

UPDATE: See correction update at bottom.

Word comes cascading over the wires today that shareholders in yet another company whose stock is in the doldrums, Taser International, has filed a junk lawsuit against that all-purpose villain, the phantom menace known as naked short selling. Forty Taser shareholders are suing a bunch of Wall Street firms, which are responsible for the company's shares decreasing. Not Taser!

The suit was filed by the Texas law firm of John O'Quinn, who has filed a bunch of other junk lawsuits on the same subject and has yet to get a nickel from anybody. This is the same O'Quinn who told Dateline NBC that naked shorting has "put as many as a thousand companies into bankruptcy" resulting in "market losses of more than four hundred billion dollars."

O'Quinn said that back in 2005 (when I was writing Wall Street Versus America) and, since NBC didn't bother to do so, I called him to ask if he could name some of those companies. I'm still waiting patiently, hand on the phone, but he hasn't called back. Gee, you'd think that if there was even one such company, maybe he would say what it is. (Another lawyer in the O'Quinn anti-shorting legal consortium, Wes Christian, turned out to be a big seller of his clients' stocks.)

Taser has been a regular on the naked shorting conspiracy circuit for such a long time that I'm surprised we had to wait so long for this junk lawsuit. It is not an Overstock-style train wreck by any means, but its shares are down 50% year to date.

Correction: Taser is not a party to the suit, as I erroneously said in an earlier version of this item! My apologies to Taser management for identifying them with the Baloney Brigade, which in my book is one of the worst things one can say about a company.

UPDATE: Taser joined the lawsuit in June 2008 (see p. 44 of its 10-K).

© 2008 Gary Weiss. All rights reserved.

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