Friday, October 14, 2005

Herb Fires Back at Byrne - Sort Of

(NOTE: See the comments section for this piece for Dr. Byrne's correspondence with Herb. Very genuinely funny stuff. Speaks for itself. If only we could get Herb and Matthews into a wrestling ring, maybe some mud, and have them take on Patrick and Patch in a tag team...now that would be something you could sell seats to. There would of course have to be rules against inappropriate touching and the like, given their fascination with Dr. Byrne, but still, it would be a hoot. "And in this corrrrrnerrrrrr, Lickspittle and Wormlips....")

(SECOND NOTE: I've gotten a few angry emails, and I want to apologize. I meant no disrespect, it was supposed to be funny. I have nothing against honest invertebrates, and didn't mean to denigrate the Annelida phylum. I also understand that worms don't technically possess lips, and thus my comment was inaccurate. I hope that this clears the air, and again, shall keep my comments vis a vis anything remotely labile or Lumbricidae-centric to a minimum. Thank you for your patience.)



Now it is getting interesting. Herb just fired back at Dr. Byrne over the affidavits that are part of the OSTK lawsuit. I'm tired, so very tired, so instead of going into a long exploration of all the nuance of Herb's retort, and without wanting to get into trouble by copying it here, I'll offer the Reader's Digest version of the response:

1) The claims that Harris worked at Gradient in the Fall of 2004 are true. So data point number one to test the affidavits for truthfulness came back a strong positive. He did work there, while working for Thestreet.com, and further did share editorial credits with Herb at StreetInsights, the subscription site published by TSCM for short sellers and other interested speculators.

2) There is a longwinded explanation as to why it is all innocent, and Herb and Harris and Rocker are all being persecuted as part of a delusional conspiracy theory cult involvement.

That's about it, along with some expected name calling and catty snipes. There is a convoluted timeline attempt wherein Herb claims that even though Harris did work for TSCM at the time that he was working for Gradient and at the time that Herb was commencing his bashes of OSTK, and further about the time that OSTK was being treated to Gradient's renewed attentions, that it is all a big mistake, and that he essentially doesn't have any idea about any of that, and that it all just HAPPENS to look ugly and bad, made so by ugly and bad people with ugly bad little minds.

As I mentioned in the very recent commentary on the OSTK suit, we should keep an open mind, and require that the affidavits be tested for truthfulness by collecting data. Our first data point has now come back affirmative, and we now know that Harris did work for Gradient at the time the affidavits claim, and did work at TSCM as the affidavits claim. The rest is he said, she said, with a lengthy rationalization as to why you can't believe the affidavits. It will be another good data point if Gradient did pay someone in Seattle for office space/expenses, as that would again corroborate the affidavits. No doubt that will come out in discovery.

But on the first test, we have the truthfullness of the facts confirmed by Herb, but with a disclaimer that it isn't what it seems.

Sort of predicted.

11 Comments:

Blogger bob obrien said...

From Sanity Check, two days ago - The Easter Bunny correctly predicts the future again:

4) The fact that Herb Greenberg's associate editor Harris is mentioned in the affidavits seems particularly damaging. Now, I'm sure that there is some plausible explanation for why a TSCM associate editor who works closely with a financial journalist known to invariably take the hedge fund's perspective to heart in his articles (witness the 30-something he penned in one year on an obscure MREIT in the boonies called NFI) would be penning research reports for an independent research firm - that seems to stink to high heavens as well, if true. Which again, we don't know, but which is the allegation made in the affidavit. Should be simple enough to check as well, although I'm sure that if true, there will be an elaborate explanation as to why it isn't what it appears to be. Because it never is, now is it?

5:08 PM  
Blogger mfairview said...

Odd that MarketWatch would print an article on Rocker's response from the amended lawsuit but not cover the original lawsuit 2 days prior. Did I just miss it?

5:32 PM  
Blogger bob obrien said...

Odd indeed.

And still not a mention to be found anywhere about the Byrnes not receiving the shares.

I think that it is starting to look increasingly like there is a cone of silence that has enveloped any negative mention of the clearing and settling system - the Byrne story is really huge news.

And not a word.

Is anyone else getting this creepy feeling that the money here is so big that it can literally shut down the entire media? That the interests that have been perpetrating this fraud are so entrenched that they have inroads at the 5 or 6 major editors in the NY financial press that literally control what the country hears?

Sure is starting to seem that way to me.

This limpwristed bitchslap from Herb barely qualifies as pap and yet is published with breathless credulity, and hard news like the CEO and potential COB of a major corporation getting exactly none of the shares they purchased for 49 days can't get the time of day.

Do they really think that we are all that stupid, like maybe if they just pretend none of this is happening it will all just go away?

Psst. Fellas. Cat's out of the bag. REFCO blew up - it really did, and everyone knows it. Hedge funds are imploding every day. People understand that the SEC is complicit in allowing a company go public while their senior management negotiates on illegal stock manipulation on a collosal scale.

Wow. Who could have predicted that guys who were crooked enough to be involved in the only major naked short selling case ever brought by the DOJ and SEC would be crooked enough to cheat on their IPO, and loot the financial system?

We have FBR, we have REFCO, and guess what? These are the gnats. These are the small fish. The big larceny is going on at a larger level. This is noise.

But still, important enough, billion dollar fraud-type news to warrant following.

And the Byrne stock experiment shows that it extends to large, publicly traded companies, and that there is exactly zero reason to believe that a single share trading in OSTK, or any of the other SHO list companies, are being delivered - ergo they are fraudulently created non-shares.

But not a word from anyone.

Guess what guys? Everyone now reads the web. Honest, they do. In every country, across even the most impoverished areas. People get their info elsewhere than the mainstream media because they understand that they are lied to, regularly, by cynics that believe that everyone is the lowest common denominator. They get their info on the web.

Thousands and thousands of hits, every day, disseminating the good news of a corrupt system.

Isn't it a trifle incongruent that communist countries are decried for their iron-fisted control over the media, and yet our financial press is so tightly reined in that the largest issue since the S&L scandal is being broken and followed by a few amateurs on blogs?

What does that say as to the quality of the country? What does it say about our intellectual honesty? Land of the free, unless of course you happen to object to being robbed by some guys in Greenwich, CT, in which case you are effectively silenced to the extent that an archaic bureaucracy can.

It sickens me.

Truly.

6:56 PM  
Blogger rvac106 said...

So, is it time for a new ncans ad? How about a new PSA? You could really have a good time with a new one, dontcha think? Hardest thing now would be keeping it under, oh, let's say, an hour?

I know, I know, you're busy with your writing. Well, you could write the new one. Be good practice for any future screenplays. Who did you say you wanted to play you?

Anyway, I'd say it was a good time to up the ante. Patrick wouldn't be shy, and maybe some others. Prolly a couple o' folks over at NFI would be pleased to chip in, after the month they've (we've) had. Mr. Patch might be able to help out, the camera seems to like him just fine. Oh, and perhaps Mr. Faulk would like to participate. (He seems angry enough.) We've got the personnel, and we've definitely got the storyline. There are so many things we can allege now, so many things that need airing. They're not the only ones who can smarm. (I think I just made up a verb.)

"So, __________, is it true that you've been seen having relations with an underage bottle of vino? No? Well, then, I'm sorry I brought it up. Just forget I asked, OK? Can we still be friends?"

Oh, that's right, we don't need the smarm. (Noun?) We have the facts. Hope you agree!

1:02 AM  
Blogger mfairview said...

Bob, The Star-Tribune in Jackson Hole Wyoming has made mention of Patrick's Failed to clear issue. I was going to write something witty as a lark but it truly is a sad affair.

http://www.jacksonholestartrib.com/articles/2005/10/14/news/business/996144709612242587257099007b29ac.txt

3:57 AM  
Blogger Jer. 9:24 said...

It is interesting to contrast the Commodity Futures Trading Commission ("CFTC") against the SEC. The CFTC-regulated Refco, LLC (a futures commission merchant) is, according to all the news I have seen, financially stable and out of danger as a "stand-alone" entity (see, e.g., Friday's HedgeWorld.com). Refco must have respected this regulator's authority, at least.

The SEC, on the other hand, (i) allowed Refco's brokerage, market making and clearing operations to become the disaster they appear to be through regulatory neglect or worse, and (ii) allowed Refco to go public and thus as Bob speculated try to throw the mess into the lap of the investing public while enriching its owners (for a time) beyond belief, while (iii) knowing all the time that Refco's securities operations had been involved in patently illegal behavior in at least one (originally NASDAQ listed) public company (Sedona Corp.). But does anyone believe that the manipulation of SDNA was an isolated incident for Refco's securities/clearing divisions? Or that the SEC didn't know about other victims?

Is it really possible that, just this one time, the Badian brothers who ran Rhino Advisors (allegedly) called their brokers at Refco and said, "Of course this is a one-off thing, we have never asked before and will never ask again, but will you, on behalf of our offshore hedge fund clients, destroy just this one company for us by illegally shorting it to death?"

If SDNA was not a one-time manipulation, oh, just as a favor to those friendly Badian brothers or their offshore masters, then how many other NASDAQ and OTC victims did the scum at Refco help rape and murder?

A quick search of the offshore funds (from Panama, Switzerland, etc.) that the Badians "represented" on the SDNA deal and then a cross-referencing with the other companies these funds "invested" in over the years might--just might--give a glimpse as to some of what resides in that off balance sheet debt that has caused Refco and Mr. Bennett so much trouble. Considering also that Thomas Badian was associated with disgraced investment bank Ladenburg Thalmann ("L-T"), it could open a wider potential group.

Then, if sources are correct that L-T has some convoluted cross-ownership with Berliner Freiverkehr (the Berlin market maker that listed--without their knowledge or consent--all those companies on the Berlin-Bremen Stock Exchange in 2004 when the NASD attempted to shut down the Canadian naked shorting loophole), then the list of possible companies grows by at least 1,000.

Refco said in its prospectus it had set aside $5m to settle any SEC charges regarding the SDNA manipulation scam. The SEC by approving their registration statement and allowing Refco to begin trading on the NYSE obviously accepted this as a sufficient penalty, in my mind indicating the SEC had no intention of probing further than--or even more deeply into--SDNA. Meanwhile the Texas-based attorneys for SNDA have sued the manipulators for over $2 billion in damages.

To my knowledge, no indication has been given that the SEC was or is looking at any other illegal shorting-related activities by Refco Securities et al. Maybe there were none. But one must ask, how could the SEC not have known about the unsettled trades allegedly hiding out there in special purpose entities and other "off the books" machinations? Doesn't the SEC regulate the brokerage industry and the clearing firms? Was there no one at the SEC to connect the dots?

Then again, perhaps the SEC just figured, like everyone else in the game, that eventually this little bad debt would go away--eventually all these little victim companies will die off, their shares canceled or de-registered by an ever-helpful SEC (the saga of EagleTech Communications comes to mind); then the potential liability for settling these illegal trades will vanish--like magic! That may be what Mr. Bennett et al. (including the regulators) had planned and expected.

Would it not be interesting to see how many Refco unsettled short positions involve companies that did death spiral financings, Badian-connected and otherwise, that were either bankrupted or that the SEC has or is trying to de-register? (again EagleTech comes to mind.) Does anyone think the SEC will allow such information to become public knowledge?

Of course, if the bad debt has nothing to do with unsettled short sales, of SDNA or otherwise, then all the above is moot. But the coffee that accompanied this post was great.

Another thing, was the NYSE asleep on this, too? Or did they simply rely on their government not to let a company in an SEC regulated business go public—not on the NYSE, never!—with rotting corpses in the closet?

If inclined to feel sorry for Mr. Bennett, as I was there for a while when I first saw his photo in the WSJ, remember, the Apostle Paul said (on behalf of the ultimate Regulator) "whatsoever a man sows, that shall he also reap." An unimaginable amount of money has been stolen from the United States--its companies, their shareholders, the investing public, the federal and state revenue departments; untold jobs have been lost (or were never created); and technological, scientific, medical, etc., advances have been stopped in their tracks, all by those who have perpetrated and aided and abetted this scam. Not that they give a damn, of course. But EVERYONE involved in this market-wide scam, from corrupt government or SRO regulators on down to the weasels who "bash" companies (for a few scraps from the manipulators' tables) on Raging Bull and the like, will ultimately reap what they have sown. For their own sakes I hope their reaping comes in this life, rather than the next.....

9:31 AM  
Blogger n-tres-ted said...

Did you see this indictment of a couple of Knight Securities guys for defrauding institutional investors by failing to provide best execution on trades, back in August?

http://www.sec.gov/litigation/litreleases/lr19329.htm

9:13 PM  
Blogger bob obrien said...

This comment has been removed by a blog administrator.

7:39 AM  
Blogger bob obrien said...

Patrick posted this on the Motley Fool board - apparently Herb sent him a love letter, and unrequited though it may be, Patrick responded with compassion and a certain charm. As a sidenote, the use of gratuitous exclamations, as with the use of lots of ALL CAPS, is a literacy no-no, of which most first year lit students are keenly aware, and which The Elements of Style (the bible for writers) condemns. For a professional "journalist" to be committing this sort of faux pas is, to borrow a hackneyed phrase from the hedge fund jabber phalanx, baffling. Herb is certainly marginal in his gift, I'll be the first to acknowledge, but he has not, to date, been obviously illiterate. What does it mean? A little drinky drinky to wash down the Klonopin, take the edge off the panic attacks? Some Anejo for an eye opener? Are the voices screaming in his head, thus the requisite frequent and inexplicable exclamations Byrne notes with wry amusement?

Are the tiles coming off the shuttle on this hedge fund booster rocket? Sounds like it.

---------------------

Got a nice note from Herb this morning. I will give you a sample of Herb's blather:

"Patrick,

1) The only person long-winded here is you!!!!!!!

2) You are correct: one sentence was awkwardly written and is being clarified; I've received several emails regarding it!!!!!!!!!

3) Actually, the implication of two affidavits is that I was involved in a conflict-of-interest WHILE employed by TheStreet.com. You can attempt to spin this any way you like, but the affidavits showed a reckless disregard of the truth, just as you did when you went on CNBC and mentioned my name on multiple occasions. There is no law barring reporters from talking to investors, hedge fund managers and/or private research services...."

4) Believe what you will or won't. You live in your own strange world, Patrick. Oh, if only there had been one fraud. Give Paul Jain a call. Or is he still in jail? Are you a fraud? Only you can answer that.

5) Rattled? Oh, please! This is more fun than all of them put together. .....

Herb

PS Are you under the care of a psychiatrist and/or are you taking any anti-psychotic, anti-depressive or any other psychiatric-related medication?"
=============================================================
Where does one begin to try to help Herb?

First, the exclamation points have to go: it makes your stuff read like bad poetry, Herb.

Second, I'm glad to know that others pointed out to you your infelicitous grammar. I was simply drawing your attention to the fact that your writing, which is normally simply mundane, has recently become incoherent. Under unusual amounts of stress lately?

Third: implication, what implication? The affiant mentioned that you call Vickrey a lot and that it appeared to him that you coordinate your attacks with Vickrey and Rocker. Nothing in that observation rests on what seat you are selling out at the time, Herb. Nothing in the affidavits suggests you were selling out while at THESTREET.COM: just that you were selling out. There may have been a whole string of journalistic positions you sold out: Dimitry's observation is simply that you did. (I have cottoned on to your debating style: bore readers with unrelated observations and hope that they don't take the time to see that they add up to little.)

And yes, while there is no law "barring reporters from talking to investors, hedge fund managers and/or private research services..." there are regs governing such investor/reporter coordination. In any case, is the "There's no law barring reporters from talking to investors" stuff going to be the defense? Good luck with that.

By the way, there is also no law against a CEO going on TV and talking about a reporter, even on multiple occasions. Or even pointing out the wondrous coincidence of the companies he chooses to attack, and positions of certain hedge funds. It sounds like being accused on national TV of being a hedge fund shill is making you a little edgy Herb. Of course, you can always sue me: call collect baby.

Lastly, I pasted Herb's "psychiatric" blather into an email reply and suggested I would answer it if he does. His email response said simply:

"You can answer the question or decline to answer the question."

It seems Herb won't answer a question he puts to others. Hmmm. I hope that was not another sore point, Herb. You seem to have so many.

Of course, Herb is asking so that he can say, "Byrne declined to comment on whether or not...." Or, "Byrne denied that......"

The answer is, No, Herb, never have, as I have never been too fond of shrinks or their work. I came to follow the line of the great libertarian shrink Thomas Szasz regarding modern psychiatry.

Now come back with something banal, and tell yourself it is witty because you remembered to put in lots of exclamation points!!!!

I'm glad that we had this time to get to know each other Herb.

Sincerely,
Patrick

7:44 AM  
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