Monday, November 14, 2005

A "Viral" Email To Distribute To Your Contact List

I have been asked to create a "viral" email (NOTE: Viral refers to its ability to propagate in a logarithmic fashion, not to its containing any sort of virus) which can be used to raise awareness of the Naked Short Selling/Fail To Deliver crisis. A poster on the NFI message boards created a good model. I have taken the spirit of his email and used it to create my own. The art is in offering enough information to be credible and provide a basis for concern, but not overwhelm the reader. Hopefully I have struck the right balance. After reading some comments, I've created two revs - the short version and the longer version. Please send this to every person you know, and ask them to do the same:

Short Version:

Please immediately forward this email to everyone you know.

As you may have seen in this week's Time Magazine, Wall Street has been ripping off investors by selling them counterfeit shares of stock - and I'm mad as hell that it's been kept secret until now, and that the average shareholder has never heard of the practice.

Here's a link to Time's expose:

http://www.time.com/time/insidebiz/article/0,9171,1126706,00.html

You and I are being robbed daily by a well coordinated fraud, perpetrated by hedge funds and brokers, called naked short selling, or "failing to deliver". It's stolen hundreds of billions from investors, and is Wall Street's biggest dirty secret.

It's important that you forward this email NOW, so that we can get the word out, as much of the financial press won't cover this story. You can learn more at:

http://www.ncans.net
http://www.faulkingtruth.com/
http://www.buyins.net/stockgate10-27-05.pdf
http://www.unm.edu/~boni/RPAWP/FailsPaperJun25.pdf
http://bobosrevenge.blogspot.com
http://www.Investigatethesec.com



And the long version:

This week, Time Magazine ran an expose on a practice that I am very concerned about, which represents the theft of hundreds of billions of dollars of America's savings and retirement dollars by unscrupulous Wall Street operators. To view this landmark article, enter the following URL into your browser:

http://www.time.com/time/insidebiz/article/0,9171,1126706,00.html

The practice, known as Naked Short Selling, or Failing to Deliver, occurs when brokers process trades for sellers, who subsequently fail to deliver the stock they sold. Because of the way Wall Street compensates itself, all involved get paid before any stock is delivered - leaving actual delivery of the goods as an afterthought, and the buyer holding a brokerage statement that is a fiction - oftentimes it represents IOUs for shares, rather than the genuine article.

In any other business this is called fraud.

On Wall Street it's business as usual.

Obviously, if you can sell as many shares as you like without having to deliver them, you can drive stock prices down in targeted companies, reaping huge profits on short sales.

A legal short sale occurs when a short seller borrows a share before the sale transaction, delivering to the new buyer the share he borrowed - the short seller hopes to buy it back in the market at a lower price in the future, when he returns it to the lender, with his profit being the difference between the sale price and the later purchase price - sell high, buy low - a legal bet on a price decline.

A naked short sale is identical in that the short seller hopes to profit from the price decline, only he never bothers to borrow or deliver the stock - his broker just Fails to Deliver, and the buyer's broker accepts an IOU without ever telling the buyer. The naked short seller's profit comes when he has run the stock into the ground, and he buys shares for pennies and finally delivers, months or years later. This practice has the effect of creating counterfeit shares of stock (by allowing the IOU/markers to trade like genuine stock), which results in an unlimited supply of shares, inevitably depressing prices (fixed demand meets unlimited selling = price drop, and eventually disgusted investors will sell and move on).

There have been laws against Naked Short Selling/Failing To Deliver since 1934, when the SEC was formed. The reason it is rampant now is that the SEC has not enforced rules barring the practice, which creates a dangerous situation for investors, as well as for victimized companies. Billions of transactions have been processed, depressing the prices of hundreds of companies, and no shares have been delivered to the investors who bought the "stock". Investors like me, and like you, who naively believe we got what we paid for.

There is no way of knowing whether the shares you think you own, that are represented as yours on your brokerage statement, are genuine and have been delivered, or are IOUs, falsely represented to you as being real. You are left having to take your broker's word for it.

The same broker who may be misrepresenting the shares as being in your account in the first place.

Naked short selling represents the single largest threat to the American financial system in our lifetime - bigger than the S&L crisis, bigger than the mutual fund or analyst scandals. Until recently, the financial press has ignored it, hoping that the average investor will remain ignorant of the scope of the problem. Wall Street and the financial press have a lot to lose by the average person understanding this deliberate fraud - a public demand for justice could upset Wall Street's very lucrative apple cart, and that could cost the big players much of the money they have stolen from investors using this fraudulent practice over the last decade. The SEC refuses to divulge the total size of the problem, and won't discuss the number of failed deliveries - the information is a closely held secret, which should alarm even the most cynical observer.

I am writing this email to request that you do several simple, effective things:

First, read the referenced Time Magazine article - this is not some crackpot notion or conspiracy theory, it is very, very real.

Second, go to:

http://www.ncans.net/intro%20to%20naked%20short%20selling.htm

Read the Primer there, which offers a good overview of the crisis

Third, please send a copy of this message to every person you know, and encourage them to spread the word about this damaging and illegal practice.

As Naked Short Selling/Failure to Deliver becomes better understood by the investing public, Wall Street and Washington will have a difficult time pretending that it doesn't exist, or isn't a big problem. My goal in sending this message to you is one of attempting to educate as many people as I can to an insidious threat that could well result in another 1929-level crash, and ensuing meltdown. The only thing standing between that catastrophic scenario and our retirement savings is you and I, and our ability to interest others in understanding what is being perpetrated on our nation by a thin sliver of New York, with assistance from co-opted politicians, and compromised regulators in Washington.

I have not worked my entire life to watch it all disappear into the pockets of Wall Street, nor to watch our children's' futures jeopardized by the greed and larceny of a financial system run amok. Knowledge is power, and if enough people understand the extent of the problem, the outcry will force a solution before it is too late.

Once you have read the Time Magazine article and NCANS Primer, here are some suggestions as to what you can do:

1) Educate yourself. Take a look at the list of links below and browse at your leisure. If you should become as concerned as I am, then;
2) Educate others. Send this email to friends, contacts who you think might become interested or have a reason to care.
3) Turn up the heat. Complain to those in charge of keeping the system honest: Follow some of the links below for lists of regulators, legislators, and agencies.
4) Donate to, or volunteer for those fighting this fight on your behalf.

www.ncans.net
www.faulkingtruth.com/
www.buyins.net/stockgate10-27-05.pdf
www.unm.edu/~boni/RPAWP/FailsPaperJun25.pdf
http://bobosrevenge.blogspot.com
www.Investigatethesec.com

Please take the few minutes to replicate this email and send it to everyone you know. The Web creates phenomenal power to inform and to communicate - this is your chance to use it for positive change.

Thank you for your time, and please, distribute this to your email list. Individuals can make a difference. You can make a difference.

Please do.

10 Comments:

Anonymous Anonymous said...

This comment has been removed by a blog administrator.

3:19 PM  
Anonymous Anonymous said...

Woops, that should be:

We need to get the word out NOW!, so please immediately forward this email to everyone you know.

As you may have seen in this week's Time Magazine, Wall Street has been ripping off investors by selling them counterfeit shares of stock - and I'm mad as hell that it's been covered up until now, and that the average shareholder has never heard of the practice.

www.time.com/time/insidebiz/article/0,9171,1126706,00.html

You and I are being robbed daily by a well coordinated fraud, perpetrated by hedge funds and brokers, called naked short selling, or "failing to deliver. It's stolen hundreds of billions from investors, and is Wall Street's biggest dirty secret.

It is important that you forward this email NOW! so that we can get the word out as much of the financial press won't cover this story.

You can learn more at:

http://www.ncans.net
http://www.faulkingtruth.com/
http://www.buyins.net/stockgate10-27-05.pdf
http://www.unm.edu/~boni/RPAWP/FailsPaperJun25.pdf
http://bobosrevenge.blogspot.com
http://www.Investigatethesec.com

3:20 PM  
Anonymous smuopr8r said...

My version:

Subject: A PSA re: Illegal Short Selling of Stocks

Dear Friends,

After many months of involvement in this issue, several investors have decided to inform as many people as possible about a very concerning Wall Street practice which represents the theft of hundreds of billions of dollars of America's savings and retirement dollars by unscrupulous Wall Street operators. The illegal practice, known as "Naked Short Selling" was finally exposed in this week's issue of Time Magazine. To view this landmark article, enter the following URL into your browser:

http://www.time.com/time/insidebiz/article/0,9171,1126706,00.html

Naked Short Selling, or Failing to Deliver shares transacted, occurs when brokers process trades for sellers who illegally fail to deliver the stock they've sold. In a legal short sale, sellers must first "borrow" the shares before they sell them (usually from a stockpile of shares each brokerage has for it's depositors), with the promise to buy them back at a later date. Because of the way Wall Street compensates itself, all involved gets paid before any borrowed stock is delivered - leaving actual delivery of the shares as an afterthought, and the buyer of the stock holding a brokerage statement that is fiction. Oftentimes it represents IOUs for shares, rather than the genuine article. There is no way of knowing whether the shares you think you own, that are represented as yours on your brokerage statement, are genuine and have been delivered, or are just IOUs, falsely represented to you as being real. You are left having to take your broker's word for it.

In any other business this is called fraud. On Wall Street, it's business as usual.

This practice has the effect of creating counterfeit shares of stock (by allowing the IOU/markers to trade like genuine stock), which results in an unlimited supply of shares, inevitably depressing prices (fixed demand meets unlimited selling = price drop, and eventually disgusted investors sell and move on). Obviously, if you can sell as many shares as you like without having to deliver them, you can drive stock prices down in targeted companies, reaping huge profits on short sales. The naked short seller's profit comes when he has run the stock into the ground, and he buys shares for pennies and finally delivers, months or even years later.

There have been laws against Naked Short Selling/Failing To Deliver since 1934, when the SEC was formed. The reason it is rampant now is that the SEC has not enforced rules barring the practice, which creates a dangerous situation for investors, as well as for victimized companies. While the SEC refuses to divulge the total size of the problem, and won't discuss the number of failed deliveries specifically - the information is a closely held secret, which should alarm even the most cynical observer - there are, at least, lists of the names of companies for which more shares have been shorted than are available in the market to borrow, which are known colletively as the Regulation SHO list:

Nasdaq: http://www.nasdaqtrader.com/aspx/regsho.aspx (includes Nasdaq issues, OTCBB, and other OTC issues)
NYSE: http://www.nyse.com/Frameset.html?displayPage=/threshold/
AMEX: http://www.amex.com/amextrader/tradingData/RegSHO/TrDa_RegSHO.jsp (Amex listed securities only)
CSE: http://www.chx.com/publications/reg_sho.htm
ArcaEx: http://www.tradearca.com/traders/regsho_th.asp

Naked short selling represents the single largest threat to the American financial system in our lifetime - bigger than the S&L crisis, bigger than the mutual fund or analyst scandals. Billions of transactions have been processed, depressing the prices of hundreds of companies, and no shares have been delivered to the investors, like me and you, who naively believe we got the "stock" we paid for. Until recently, the financial press has ignored it, hoping that the average investor will remain ignorant of the scope of the problem. Wall Street and the financial press have a lot to lose by the average person understanding this deliberate fraud - a public demand for justice could upset Wall Street's very lucrative apple cart, and that could cost the big players much of the money they have stolen from investors using this fraudulent practice over the last decade.

I am writing this email to request that you do several simple, effective things:

First, read the referenced Time Magazine article - this is not some crackpot notion or conspiracy theory, it is very, very real.

Second, go to:

http://www.ncans.net/intro%20to%20naked%20short%20selling.htm

Read the primer there, which offers a good overview of the crisis.

Third, please send a copy of this message to every person you know, and encourage them to spread the word about this damaging and illegal practice.

As Naked Short Selling/Failure to Deliver becomes better understood by the investing public, Wall Street and Washington will have a difficult time pretending that it doesn't exist, or isn't a big problem. My goal in sending this message to you is one of attempting to educate as many people as I can to an insidious threat that could well result in another 1929-level crash, and ensuing meltdown. The only thing standing between that catastrophic scenario and our retirement savings is you and I, and our ability to interest others in understanding what is being perpetrated on our nation by a thin sliver of New York, with assistance from co-opted politicians, and compromised regulators in Washington.

Knowledge is power, and if enough people understand the extent of the problem, the outcry will hopefully force a solution before it is too late.

Once you have read the Time article and NCANS Primer, here are some suggestions as to what you can do:

1) Educate yourself. Take a look at the list of links below and browse at your leisure. If you should become as concerned as I am, then;
2) Educate others. Send this email to friends, contacts who you think might become interested or have a reason to care.
3) Turn up the heat. Complain to those in charge of keeping the system honest: Follow some of the links below for lists of regulators, legislators, and agencies.
4) Donate to, or volunteer for those fighting this fight on your behalf.

www.ncans.net
www.faulkingtruth.com/
www.buyins.net/stockgate10-27-05.pdf
www.unm.edu/~boni/RPAWP/FailsPaperJun25.pdf
http://bobosrevenge.blogspot.com
www.Investigatethesec.com

Thank you for your time, and please, distribute this to those you believe may find it important, interesting, relavent, or may be in a position to hopefully do something more about it.

The Web creates phenomenal power to inform and communicate - this is your chance to use it for positive change. Individually, we can each make a difference. Together, we can move Wall Street to intersect with both ends of Pennsylvania Avenue.

Thank you.

7:15 PM  
Blogger Its_strange said...

Should someone create a email for distribution that looks at OSTK's recent earnings report and the 10Q ?

12:53 AM  
Anonymous Anonymous said...

While you make distribution of thie e-mail, I would also request that you submit a comment letter to the SEC pertaining to the new NASD rule that is being proposed on Short selling

http://www.sec.gov/rules/sro/nasd.shtml

The standard line that we must all request is that the rule to be incorporated not be this particular revision but the original submission that was submitted back in March of 2004 that never went out for public comment.

The only fool proof way to insure safe trading practices is to define a firm limit on settlement failures that can be easily auditable. With DTCC data sheets defing fail position, firm, and days in fail status, by incorporating a fixed date will allow regulators to easily review the list and go after the abusers.

The grandfather cluase allows for errors as the regulators must take each event and evaluate it against whether it was a pre-SHO or post SHO event.

The SEC and Congress must review these comments and...it puts into public record what the people [investors] have to say on this subject matter.

There is 21 days to submit a comment letter. Please do so today.

6:32 AM  
Anonymous Anonymous said...

Only two comments on this one so far.

http://www.sec.gov/rules/sro/nasd/nasd2005112.shtml

7:01 AM  
Anonymous Anonymous said...

Only two comments on this one so far.

http://www.sec.gov/rules/sro/nasd/nasd2005112.shtml

7:01 AM  
Blogger bob obrien said...

its_strange:

I'll allow your most recent off-topic post as an example of the sorts of dross I am forced to delete - I'm sure that the folks following along at home are curious to see whether I, like your good friend Mr. Matthews, just arbitrarily delete posts which disagree with me. The answer is I don't. I delete posts that are intended to disrupt the thread, or which try to take it off on a tangent, or are just stupid.

Yours qualifies in every way. This thread is not about OSTK - the company isn't mentioned anywhere. Seeing as OSTK has about as much in common with this thread as spaghetti does with nuclear fission, your post also qualifies as stupid.

If you want to troll on blogs and attempt to pursue your little hedge fund anti-OSTK jihad, I would suggest that you put a modicum of effort into originality. Something like "I note that you use OSTK as a poster boy for this illegal and indefensible practice, and while I can't condone the illegal naked short selling activity, I do wonder whether as much scrutiny should be leveled at the company's financial filings. They are indubitably victims of FTDs, as the Reg SHO list clearly shows, but my feeling is that there might be an additional compounding facts buried in their 10Qs - just a thought."

That would have been allowed, ad it was at least somewhat on point, and framed your banal agenda in a relevant manner.

My intro to this blog says that the only offenses that will get you barred include being dim. I know you aren't accustomed to stretching your intellectual muscles while suckling at Jeff's milk tit, but do try to keep up if you are going to post here, dear boy.

Thank you in advance.

9:55 AM  
Blogger ikarus47 said...

I like it, both versions, and I am happy you used the idea. The more it gets out the better.
IK

10:21 AM  
Anonymous Anonymous said...

Is anyone keeping track of stats. at NCANS to see if the number of viewers is growing each day? It would be interesting to track whether the email is increasing traffic?

I think this is an excellent idea and the copy from the emails should be posted far and wide.

OT: Bob's comment on the hedgie post made me laugh. I think the hedgies are quite nervous and they don't know what to do. I wonder how they will make out at redemption time (isn't that December)?

10:35 AM  

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