We Definitely Aren't in Kansas Anymore - Fraud Wall Street Style
I was talking with our friend Dr. Byrne, and he told me a story that defies imagination. I honestly thought he was pulling my leg - had one of those double take moments, where you have to shake your head to confirm you're awake. Before I tell you the gist of this, let me send out a little tidbit to any regulators reading this - I urge you to contact Dr. Byrne for corroboration. I couldn't make this up if I tried - nobody would believe it.
First, there is the matter of Jack Byrne's 200K share purchase of OSTK, which is now closing in on 90 days since the order was executed.
Jack got 130K "registered in his name" with his broker (who knows what that means - I mean, who really knows what any of the arcane terminology really signifies at day's end?) recently, but he hasn't received the other 70K shares, and his broker is telling him they've been unsuccessful in getting the shares from JP Morgan (the seller's broker - and arguably the most venerated name on Wall Street), and that there is no ETA for their delivery.
That is seventy THOUSAND shares bought and paid for almost a quarter year ago, undelivered. And Byrne's broker hasn't bought in the offending seller. Just hasn't.
Before we continue, stop and reflect upon this set of circumstances - the Chairman of the Board of the company can't get $2.5 million worth of stock that he bought and paid for - and yet there is relentless selling pressure day after day. For months the stock price has been pummeled, and yet for months the buyer's broker can't get the product that was sold.
To add insult to injury, apparently Dr. Byrne's brother bought 50K shares almost a month ago, and he hasn't gotten his shares delivered either. So it isn't just dad. The performance of the system has been tested multiple times, and nobody can get any shares delivered to make good on the buys - but that hasn't stopped the brokers from relentlessly continuing to sell that which doesn't exist.
Aren't there laws against that? 17A? SHO? 10(b)5 - participating in a stock price manipulation scheme (by selling bogus shares to depress the price)?
You bet there are. It's just that so much money is being made by all the bad guys and their brokers, that nobody cares what the law says.
So much for Reg SHO.
So much for fair markets.
So much for the SEC.
So much for clamping down on criminal stock manipulation.
But as if that wasn't sufficiently outrageous so as to cause every major financial publication in the country to run full page, indignant articles on the collapse of the market system, here's where it goes off the reservation and into the twilight zone.
Jack Byrne apparently has inquired about buying another large slug of OSTK stock, as he presumably feels it is incredibly undervalued, and he wants to own more of it.
And he is the new Chairman of the Board. They tend to do that, those wealthy, successful COB's - buy stock in the companies they are stewarding (lest anyone think this is inside info, he hasn't to my knowledge placed any orders, nor filed any forms - but if Dr. Byrne is to be believed, his dad has made inquiries which his broker knows are as serious as a heart attack).
His broker informed him that he could buy the "shares", but only if he didn't request delivery. The broker - one of the largest in the nation - told him that "the order would not likely be filled if he insisted on delivery, BECAUSE NO BROKER WOULD SELL THEM ON THAT BASIS!!!!"
I am not making this up. Those were the words - you are reading this correctly. The brokers will only sell the COB of the company stock if they don't have to deliver what they took his money for - what they sold - presumably because they understand that every share being traded is bogus, and undeliverable, and nobody wants to feel Jack Byrne's heat.
If you are a retail buyer, they will be happy to lie to you and cheat you, but nobody wants to tackle heavyweight informed buyers with cash - because they know that every sale is a sham sale, and won't be delivered.
They know it.
They understand it.
They are clear on it. They are booking transactions designed to methodically reduce the price of the company's stock, accepting cash in return for the transactions, but have no ability nor interest in delivering the product being paid for.
It's called fraud, Wall Street style.
Sheer unbridled stock manipulation and fraud, overt, with no attempt at concealment.
(NOTE: We are not even talking about getting paper certificates here, just confirmation of delivery of the goods that were paid for, which is the most basic part of the brokerage contract and the contract between buyer and seller - and which contract, by the system's efficiently breaching thereof, renders the entire market system a sham - unreliable, larcenous, operated for the enrichment of the participants and their hedge fund customers at the expense of the companies and shareholders via obvious and wholesale fraud - in full view of lawmakers, regulators, elected officials, prosecutors, class action attorneys, and the international investing community - in other words as bad or worse as the environment that led up to the 1929 Crash and the subsequent creation of the SEC.)
So what else needs to be said? The broker in question knows that he is participating in a massive scam to run down the share price of the company (known to you and me as stock manipulation) - everyone in the industry apparently knows, and nobody wants any part of being made the test case by a guy with juice. Because they know there is no defense for their actions. And it isn't worth it.
Unless you are Joe investor, in which case you can be screwed at will, with nobody to stop the participants from doing so.
Does anyone have any questions? Nobody will accept a legitimate buy order from someone with big money and a desire to actually get what they paid for, on a large, NASDAQ traded stock, which is on the Reg SHO Threshold list of securities that MUST get shares delivered within a few trading days. Except nobody wants to accept an order for weight, because it is common knowledge that there aren't any shares. And nobody is doing anything about it, nobody is enforcing any regulations, and the brokers keep cranking out the IOUs on behalf of their hedge fund customers - only now only to people unable to call in the IOU, and force the brokers to make good on them.
Every day hundreds of thousands of "shares" are sold, surpassing demand and depressing the price. But only to rubes that don't know any better, or who don't have the juice to enforce delivery.
What can be said at this point? Exactly how bad and how blatant does this have to get before Congress calls hearings and appoints a special prosecutor? Or is it simply now the prevailing business wisdom in Washington and Wall Street that overt market manipulation and fraud are what you get if you are stupid enough to put a dime in the market?
How blatant does it have to be, when the COB can't get anyone to sell him shares unless he promises to accept bogus chits instead of shares, even as the price of the stock declines?
Are we seeing any articles in the Wall Street Journal on this?
Is Bethany writing about this? Seth? Floyd? Even Herb?
How about Alpert? Is Barron's deaf and dumb when it comes to provable fraud and collusion on a massive scale?
Where is Forbes? Where is the New York Times? The Washington Post?
The GD Chairman can't get delivery on almost half the shares he bought almost a quarter year ago, and now nobody wants to accept a buy order if they have to deliver anything.
Because who wants to actually have to deliver what clearly can't be delivered? THERE AREN'T ANY REAL SHARES TRADING. And the system knows it.
This sickens me. It really does. I can't conceive of words ugly and base enough to describe how low and foul this is - folks are losing their retirements, and the industry knows they are defrauding the investing public, and nobody wants to say a word, or do their frigging jobs and put a stop to it.
So how bad does it have to get?
How much worse can it get? At what point should we discard the conceit that we are living in a nation of laws, where the rule of law protects the individual, when Wall Street can break into your house, steal your wallet, and laugh at you when you call the cops?
I'd say we are at that point now. The law is not being enforced, the system is disintegrating on its first very public test by those with the resources to demand that it perform, and there is not a single regulator, agency, elected official, or lawmaker willing to stop the fraud.
This is a farce.
And I hang my head in shame that I was ever stupid enough to put one dime, much less one million, into the market. It is institutionalized fraud and theft, nothing more, and is as mean, base and crooked as anything I've ever witnessed in the most corrupt backwater banana republic.
And nobody is willing to do a thing about it.
What is left to say?