A rant for RamjetWe Definitely Aren't in Kansas Anymore - Fraud Wall Street Style
By Bob O'Brien
Nov. 3, 2005
Folks, it couldn't get any weirder.
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.
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 bad?
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?