Hot on the heels for naked short poster child of the week is Pegasus Wireless (NasdaqGM:PGWC). How this company ever was allowed on the Nasdaq is beyond me given CEO Jasper Knabb's shady penny stock past with Biofiltration Systems (BIFS/BIFT).
Here's a link to all the recent Pegasus PRs and news articles detailing a crazy "property dividend" that is a thinly veiled attempt to squeeze the evil shorts: http://www.siliconinvestor.com/r...?
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Chris Byron's article does the best job of detailing the history of BIFT. Back then, Jasper called himself Jay Knabb. Reminds me of how shady CSHD CEO Rufus Paul Harris used to call himself Paul R. Harris when he headed BBAN. Click on the referring post to the link above to see how BIFT's #1 supporter finally saw the light about Knabb back in 2001 ( or go to http://www.siliconinvestor.com/r...?
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- Jeff
Whether a company or its management are good or bad has no bearing on whether or not trading rules should be followed. Whether investors were right or wrong to buy a certain stock has no bearing on whether or not trading rules should be followed. Millions of shares have been created out of thin air by unscrupulous short sellers who never borrowed the shares they shorted. A feeble rule was instituted to address what the SEC agreed was a problem, but the millions of fictitious shares were grandfathered into existence. Now we have a list that shows us that some stocks are still subject to illegal naked shorting. The data does not lie, in spite of the lack of transparency on the part of those running the show. Why is this OK in anyone's book? Dislike and disparage whomever you want, but the powers that be are not living up to their responsibilities to keep the markets fair and transparent, and money is being collected by folks violating the rules. Not good.
Been reading Faulk's garbage, have ya Scott?
"Naked short selling" does not create shares out of thin air. That is a persistent lie that scammers like "O'Brien", Faulk, Patch, and Burrell have told over and over again and, unfortunately, like so many lies that get repeated over and over, sooner or later suckers like you will believe it.
I can only presume that you've been jammed by one of these candy-makers and now have nothing but portfolio losses to show for it. Let me offer you a bit of unsolicited advice:
The next time you get an email or a fax sheet touting a hot stock, before you log on to your broker's website to piss away more of your hard-earned money, go to EDGAR first and read their most recent 10Q or 10K. And if they're non-compliant with their filings, walk away.
Mr. Brownfield,
Your reply to my post on Mr. Weiss’s blog is a perfect example of what I am referring to. You don’t discuss the issue, you just call me names, mock other people, and give me investing advice. Resorting to such behavior suggests that you don’t have anything of substance to say about the issue. You don’t have to reinvent the wheel. If there is any information out there that credibly answers the many questions surrounding the history of long-term fails and their continuing occurrence, I’m all ears. All I can find are evasive non-answers from the regulatory bodies and arguments relying on disparaging the character of critics of the SEC and the DTCC.
I’m not claiming that the sky is falling. I’m simply stating that the facts indicate regulatory mismanagement and that this weak oversight opens the door for unscrupulous actors to make money, never a good thing in the financial markets. If you want to communicate effectively with others, address the issues.
You're dead wrong, Scott. I AM addressing the issue.
The issue is the persistent, ongoing transfer of wealth from the hands of starry-eyed, misinformed stock investors into the hands of inept, and in some cases downright criminal, managers and promoters. The cry of "naked short selling" has never been anything other than an act of misdirection to get people with no understanding whatsoever of corporate finance to look away from where the REAL action is taking place.
Scott, I don't know how to get this across to you. A fail to deliver neither creates nor destroys value at the corporate level. Ever. Your apparent obliviousness to this fact simply marks you as a candidate for additional victimization by these candy-makers.
Your decision to eschew sound investment advice is certainly a decision that you have the right to make. However, I will exercise my right to mock and ridicule you for failing to exercise due diligence before you throw away more of your hard-earned money on companies that claim to be victimized by "naked short sellers".
Mr. Brownfield - You are trying to make a point about something that we are not even discussing. The question of whether or not any particular company is poorly run is irrelevant to whether or not the SEC is allowing unscrupulous folks to abuse--no flat out flout--trading rules put in place to prevent stock manipulation.
You seem to be repeating a rote argument about a pet peeve or yours, as in your presumption that I am a sour grapes investor in “bad” stocks. The fact is I do not own or trade in individual stocks. I was just curious enough to look into this issue and then genuinely surprised to see just how poorly it appears to have been handled. I can’t find any decent explanation for the mass-grandfathering of fails, nor any reasonable explanation for the persistence of long-term fails on a large scale. All evidence points to shady dealings or gross mismanagement--or a mix of the two.
You state that “people with no understanding whatsoever of corporate finance … look away from where the REAL action is taking place.” You seem to have the mistaken impression that the existence of other “REAL” action (some other illegal behavior I presume) excludes the possibility that NSS is a genuine cause for concern. This is like saying shoplifting is not worth discussing because bank robbers are so much more dangerous.
As for your claim that folks who are bothered by the failure of regulatory bodies to enforce their own rules are just ignorant, why does former SEC chairman Harvey Pitt agree that NSS is a real problem needing attention? I could fill this post with links to level-headed analysis of the issue, all of which supports my impression that NSS, be it pre-mediated or just irresponsible, is a real problem and a terrific tool for those looking for an illegal edge. Once again, provide or reference facts that refute my impression if you have them, but spare me the insults that seem to be your preferred mode of expression.
Scott,
This is no rote argument. This is what's at the very core of the "naked short seller" scam. You insist that "NSS" or "FTD's" are a cause for concern? Why do you feel they're a cause for concern?
Is it not because you've been lead to believe that "NSS" or "FTD's" are, somehow, a "cause" of corporate demise? or of investor losses? Because that is what so many of these crooks insist is taking place.
Once you come to understand that "FTD's" or "NSS" play no role whatsoever in the creation or destruction of value at the corporate level, you begin to see this movement for what it truly is: a distraction. And you see those people who remain focused on this distraction for what they truly are: crooked... or stupid.
There is but one fact that should be enough to refute your impression that "FTD's" or "NSS" is a problem. A company's cash flow, income, and balance sheet all remain unaffected by an "FTD" or a "naked short" position.
I could fill this post with the financials of scores of companies that claim to have been harmed by "naked short seller" when in fact what we'll find in their financials will be nothing but evidence of managerial ineptitude or misconduct. But like a little boy who's been shown that there is no ghost in any particular room, you'll respond, "but that doesn't mean there's not a ghost in the next room." However, if you really need to see this exercised performed, where would you like to start?
Sedona?
Global Links?
Pegasus Wireless?
Viragen?
Nanopierce?
Jag Media?
Circle Group Holdings?
Eagletech?
Start where ever you like. Or maybe you have another little pet stock that you feel has been harmed by this phenomenon. By all means, let's take a look at it. I know what we'll find.
There will be no ghost.
Scott you have to admit that it's notable that FTDs and NSS never cause problems to money making companies.
Your remark - "You insist that "NSS" or "FTD's" are a cause for concern? Why do you feel they're a cause for concern?"
From the SEC in July of this year:
“Regulation SHO is intended to address those situations where the level of fails to deliver for the particular stock is so substantial that it might harm the market for that security.”
“The grandfather provision of Regulation SHO was adopted because the Commission was concerned about creating volatility from short squeezes where there were large pre-existing fail to deliver positions.” (as in, if we enforced the rules, irresponsible or devious brokers could get hurt).
“Allowing these persistent fails to deliver to continue runs counter to one of Regulation SHO’s primary goals of reducing fails to deliver in threshold securities. While some delays in closing out may be understandable and necessary, a seller should deliver shares to the buyer within a reasonable time period.”
“… we continue to observe a small number of threshold securities with substantial and persistent fail to deliver positions that are not being closed out under existing delivery and settlement guidelines.”
“… we are concerned that large and persistent fails to deliver may have a negative effect on the market in these securities. First, large and persistent fails to deliver can deprive shareholders of the benefits of ownership, such as voting and lending. Second, they can be indicative of manipulative naked short selling, which could be used as a tool to drive down a company’s stock price. …”
“When Regulation SHO was proposed, commenters noted difficulties tracking individual accounts in determining fails to deliver … We understand that some sources may be providing multiple locates using the same shares to multiple broker-dealers.”
And these quotes are from the folks who let this issue slide for quite some time and have an interest in quietly clearing this up now that enough attention has been generated by critics. It is also my understanding that, due to very loose and unmonitored accounting for fails, it is likely that only fails in thinly traded companies will make the Reg SHO list, and that only a fraction of the actual fails appear. The SEC also insists that they know of no specific large-scale fraud related to NSS (for now), but this is a clever way of saying, "we saw a LOT of smoke, but we decided to stay away from the scene for fear of discovering a fire.”
So abusive NSS is bad on several levels, it has clearly gone on in a big way in at least several companies, and those doing it know full well that it is against the spirit and the letter of the law. As I said in my first post, dislike and disparage whomever you want, but the powers that be are not living up to their responsibilities to keep the markets fair and transparent, and money is being collected by folks violating the rules. Not good. I’ll leave it at that.
Scott,
Which company did you wish to cite as an example?
If this "NSS" phenomena was as pervasive, and destructive, as you insist it must be, then surely you can cite as an example just ONE company that has been victimized by this process.
Just one?
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