I told you so. I know chicken salad from chicken shit. Patrick Byrne is the real deal. Do you know what discovery means????? 10:54 OSTK Overstock.com wins ruling in prime brokerage litigation (19.75 +0.15) Co announces a favorable ruling in the lawsuit pending in the Superior Court of California, County of San Francisco against most of the largest prime brokerage firms in the country. On July 17, 2007, Judge John Munter of the California Superior Court for the City and County of San Francisco ruled that Overstock and it co-plaintiffs have stated viable claims for market manipulation under California securities law, for common law claims for conversion and trespass to chattels, as well as for injunctive relief under California's Unfair Business Practices Act against the defendant prime brokerage firms based on those defendants allegedly executing naked short sales of the stock of Overstock with the intent of manipulating the market price for the shares of those companies' stocks. In addition, the Court granted Overstock leave to amend other of their claims for restitution under the Unfair Business Practices Act and for the common law claim of interference with advantage, to more specifically plead the factual basis of these claims. Patrick Byrne, Overstock Chairman and Chief Executive Officer, "I was reminded on Abraham Lincoln's favorite joke: 'If you call a tail a leg, how many legs does a dog have?' 'Five?' 'No, four -- because calling a tail a leg doesn't make it a leg.' Defendants create phantom shares by facilitating naked short selling and other types of trades which result in failures-to-deliver. This is manipulative and illegal -- regardless of what the industry's all-too-cozy regulatory agency says. The battle to clean up Wall Street is only going to be won when it is brought to a jury of 12 Americans. Today was a giant step towards that goal." The co is seeking damages of $3.48 bln.
Here's a phenomenon you can use with any of these naked shorted stocks. We really found this out by looking at pennies, because you can see it better. It could be very telling now, because the liquidity in the Street cannot be anywhere near what it was July 15. Take a look at OSTK today. Big spike, big volume. Pullback to a Fib level on lower volume. What next? One thing that happens on days like today is that the upside must be controlled by those who have a substantial position on the downside. Any market making activities, etc...that took place today to protect other liabilities will come to settlement in another few days. If the buy side dries up they will have it knocked down to points where today's hold back will be covered for a profit. On the flip side, if the buy side can maintain momentum, the fails most likely created today will drive buyers out in 3-days that will drive it higher still. Buyers average down and short sellers average up. Market makers, short sellers, etc...have a vested interest in making this a small one day/two day event if they carry a short liability. Monday will be a real tell to as whatever was sold today has to settle. As opposed to a real trade, where the shares are delivered, shares have to be purchased. We've seen this in many different situations. I point this out because it's visable. The news was significant; discovery is poison.
Latest News: (Only in California !) Overstock Case Proceeds BY JAMES ARMSTRONG | A judge has allowed money-losing Internet retailer Overstock.com to proceed in a court case that might as well be called Overstock vs. The Entire Financial Services Industry. Overstock is suing essentially every major prime broker in the country, including Bank of America, Bank of New York, Bear Stearns, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Pierce Fenner & Smith and UBS. Overstock claims they are a part of a vast conspiracy to drive down the companyâs stock price so hedge funds can profit by short selling. On Tuesday, a California Superior Court ruled Overstock can proceed with its complaint alleging the prime brokers engaged in market manipulation. The defendants had argued federal law preempted state regulations on the matter. While Overstock quickly issued a press release calling the ruling âa huge win,â the company is still a long way from proving its case, which states the most trusted names in the financial world participated in a massive, illegal stock market manipulation scheme. Patrick Byrne, chief executive officer of Overstock, has accused hedge fund firm Rocker Partners of sabotaging his company, with a long list of accomplices that includes stock analysts, journalists and even prominent politicians. The conspiracy is overseen, Byrne says, by an unnamed mastermind he has referred to only as the âSith Lord,â a reference to the popular Star Wars films. Salt Lake City-based Overstock is seeking $3.48 billion in damages.
Wall Street is visited by a friendly educational mascot, Patrick the naked short Harassment Panda (who, apparently plays himself), attempts to teach the kids about naked shorting so as to prevent it on Wall Street. During the visit, Patrick calls Prime brokers "ass-suckers", and Bryne, inspired by the Sith Lords teaching, sues Prime brokers for naked shorting harassment. Patrick is litigating the biggest naked shorting harassment lawsuit ever, Everyone v. Everyone, where he represents everyone who hires him to take on everyone else. Stay tuned.... http://www.spscriptorium.com/Season3/E306script.htm
What kind of bullshit post is that? We have the Senate finally lashing out, you have a decision in the California Court of Appeals that says there is merit, go get the records, and you come up with this? Go back to the masturbation thread. Good God.
very good chance of OSTK finishing higher today. All the Longs from last Wednesday are under water. Naked shorters from that day, there cannot be legit borrows no matter what you hear, now can cover those trades before they can become fails. 18.48 at this writing.
Earnings just out. EBITDA positive. This is death for the naked shorts. They operate on the premise that, if they can force the company to the well, they can kill it with stock. That's over. I've heard estimates 60mm are naked short. Take half of that. With leverage being pulled back on desks everywhere, this is tremendous news in our bid to stop this heinous practice.
Check this out. I think it's been out long enough so Dow doesn't care. BTW. Carol is no friend to us. i find it remarkable she not only wrote something favorable, but researched something we wanted to know. =DJ IN THE MONEY:AMEX Nabs 2 For Reg SHO Abuse; 1 Traded Overstock By Carol S. Remond A Dow Jones Newswires Column Struggling Internet retailer Overstock.com Inc. (OSTK) just got some new ammunition in its quixotic fight against short-sellers, those investors who bet against a company. Turns out that one guy did, in fact, illegally trade shares of the company sometimes between August and December 2005. Some details about those trades surfaced Tuesday in an American Stock Exchange's disciplinary decision against Scott Arenstein and his options trading firm, SBA Trading LLC. While SBA's improper trading doesn't come close to amount to the massive conspiracy alleged by Overstock, it's likely that Chief Executive Patrick Byrne and his lawyers will use the information to continue building their case against short sellers and brokerage firms through which they trade. Arenstein and SBA, without admitting or denying liability, agreed to disgorge $1.4 million in trading profits and pay a $3.6 million fine. Arenstein also consented to a five-year ban. Overstock isn't named in the regulatory decision against Arenstein and SBA, but an example of their trading activities included in the document provides tantalizing clues that company ABCD with Dec 45 calls at $3.70, Dec 45 puts at $6.40 and a stock price of $43.70 a share is in fact Salt Lake City-based Overstock. Arenstein's brother Brian Arenstein and his firm ALA Trading LLC also separately settled, without admitting or denying liability, similar charges and agreed to disgorge $1.8 million in trading profits and pay a $1.2 million fine for trading between Nov. 16 and Dec. 17, 2006. Brian Arenstein also agreed to a five-year ban. In Brian's case, the example provided by AMEX indicates that he was improperly selling short NYSE Euronext (NYX). A lawyer for the Arensteins declined to comment. Those were the largest fines ever levied by AMEX. AMEX said in a press release that the improper trading was detected and investigated by the Financial Industry Regulatory Authority, or FINRA. AMEX found that the Arensteins and their firms violated the so-called Reg SHO, a regulation enacted by the U.S. Securities and Exchange Commission in 2005 to modernize short-selling rules and address failures to deliver stock on settlement date. The firms had no customer and only traded for their own accounts. Under Reg SHO, exchanges provide daily lists of securities with large amounts of failure to deliver. Once a security gets on one of these threshold lists, it becomes harder and more expansive to short the stock. The SEC recently decided to strengthen its rules by doing away with a clause that "grandfathered" pre-existing failures to deliver into the system. The SEC is also considering eliminating some exemptions contained in Reg SHO, including one that allows options market makers providing liquidity to the market to avoid having to locate stock prior to selling the underlying equity short. The regulatory decisions against Scott and Brian Arenstein show that they failed to meet requirements to be classified as a market maker. In both cases, AMEX found that the Arensteins and their firms effected a number of complex synthetic transactions to circumvent the delivery requirements of Reg SHO. The exchange found that to avoid buy-ins that would have forced them to close out transactions after they failed to deliver stock on time, the firms executed one-day Flex option transactions, in effect resetting the clock on their failed trades. In a short sale, a security not owned by the seller is sold in anticipation of a decrease in the stock price. Under Reg SHO, brokers who fail to deliver a security for 13 consecutive settlement days have to execute mandatory buy-in to clean the fails. Overstock is one of a handful of companies under regulatory scrutiny that over the last two years have launched massive legal and public relations campaigns against bearish hedge funds and research firms. Overstock's CEO Byrne claims that the entire financial system is bent against his company and others and that failures to deliver are so pervasive that the entire system is in danger of collapsing. While acknowledging that failures to deliver must be addressed and cleaned up, securities regulators insist that the problem is minimal. Byrne started a very vocal crusade against short sellers in late 2004 after his company's performance and stock price started to take a turn for the worse. The SEC began an informal inquiry into Overstock in 2005. The Commission also looked into Overstock's claims that its stock price had been manipulated by short sellers and a research firm called Gradient Analytics Inc. But the SEC said in February that it had closed its probe into Gradient without bringing charges against the Arizona research firm. Meanwhile, a lawsuit brought by Overstock against hedge fund Rocker Partners LP and Gradient is ongoing in California state court. The company is also suing a group of brokerage firms in the Superior Court of California in San Francisco County, alleging that the brokers participated in a massive illegal stock market manipulation scheme involving illegal short selling. Reg SHO's threshold lists gave investors a new criterion by which to gauge the value of a company's stock when they first appeared in late 2004. Once a stock gets on one of these lists, it becomes harder to borrow and short and resulting forced buy-ins of short positions can lead to stock appreciation. But those lists had a particularly drastic impact in the options market where put options for hard to borrow stocks started trading at a premium to call options because of higher borrowing costs and the risk of buy-ins. In those two cases, Scott and Brian Arenstein were essentially trying to capture that premium without baring any of the added risk. A call option provides the holder the right to purchase the underlying stock at a specified price, while a put option gives him the right to sell the stock at a specified price. (Carol S. Remond is an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with "Exposing Small-Cap fraud," a series of articles that described how three small companies unscrupulously pumped up their stocks.) -By Carol S. Remond, Dow Jones Newswires; 303-997-5783; carol.remond@dowjones.com (END) Dow Jones Newswires 01-08-07 1903GMT Copyright (c) 2007 Dow Jones & Company, Inc.