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Convicted Felon Anthony Elgindy, serving 11-years for securities fraud and racketeering drafted a memo and had one of his legion post it on Silicon Investor where Elgindy moderates the message board dedicated to short sellers from the prison cell.
UPDATE:
Elgindy has likewise responded to this blog with a follow up message posted by this very same "associate" here is the response: http://siliconinvestor.advfn.com/readmsg.aspx?msgid=24166032
Looks to me like this whack-job has lost his mind.
An Open Letter to Convicted felon Anthony Elgindy
Mr Elgindy,
I find it absolutely repulsive that you would take such a spiritual day as Christmas to incite your followers on the issues of short selling and more specifically, naked short selling. It is clear by your commentary that your right to cheat the investing public is a priority of yours and that repentance has never crossed your criminal mind.
How is it that despite a federal conviction for securities fraud you continue to incite the legions of followers to fight back on the simple protections created for the well being of the larger investing public? Your Christmas memo suggests that we not shoot the messenger but instead listen carefully to the message despite the fact that your message fails to properly disclose the realities or admittance of your past actions.
For example, where you say, “When a trader sees a company making a claim, and he investigates that claim and that claim turns out to be false or grossly misrepresented there is currently NO mechanism in place that allows that investor any opportunity to profit by doing that research and due-diligence.” Sure there is, you follow the legal short sale laws including the borrowing of shares until such time as no additional shares are available. If the penny stock market is not available to short due to tighter market restrictions on shorting, simply focus your energies on the other thousands of companies where short sales exist more freely.
More so, why do you fail to disclose the irrefutable evidence that you did not conduct proper research or due diligence on several stocks shorted, you instead bribed an FBI agent or threatened a company officer to provide you access to non-public information? It started when you worked for a boiler room operation and continued as you ventured out on your own. Worse, how about the awareness you had that such information was illegal to begin with which is why you informed members of your former site to keep such information confidential, later erasing the tapes of the site to hide where the issues were openly discussed?
Do you not think that if you are to sell “phantom” shares to an unsuspecting investor that the public should have the same access to the non-public information you obtained or is your right to profit through illegal means above that of the purchaser of your naked short? How does extortion and bribery justify your right to profit through a well orchestrated team effort to short a stock?
While you equally dismiss the “phantom” share ideology I took notice that you also neglected to identify in your thesis why such an investor who puts up the cash has no right to receipt of the goods for which they paid? Why should the purchaser follow the contractual obligations but not the seller? If a share is sold naked short, should the investor not have continued access to that money spent until such time as the transfer of ownership has taken place? Why is it that only the short seller should be provided the right to sell what does not exist and the right to the cash for such a sale so that it can be leveraged elsewhere? Corporations can’t book revenues until the goods are shipped, why should a naked short seller benefit from a sale before delivery is made?
Certainly the naked short seller should be providing the purchaser of such a trade the rebate on the failed delivery as an interest payment of the loan the purchaser provided don’t you think. That way both buyer and seller are operating on an equal playing field.
Furthermore, why does the short seller not have to disclose their positions in a similar fashion as the long shareholder including all trade limitations large investors may encounter? By your consternation over differing laws for the short vs. long investor you never identify those opportunities a short seller is afforded over the long seller.
“The proper logic should be that if a share exists, it should be shortable by anyone, regardless of how shareholders or corporate officers might feel.” I think you are gravely mistaken.
Such biased commentary comes from a short sighted individual with a criminal mindset, a mindset devoid of individual rights under the US Constitution.
Under the 5th Amendment of the Constitution every purchaser of property has a right to that property to which they purchase and the right to protect that property. Generations long ago fought with their lives for such rights and it is a right every US citizen including yourself and your family now appreciates. So, who are you to deny others the right to protect their property because it is not in your or your peers best interests?
Clearly, an investor with stock ownership in a company has every right to protect that investment to the best of their abilities which includes the right to deny it from being loaned out if it is not in their best interest. A security is a personal asset like any other asset we own in life. As such we can protect that asset or leverage that asset as we each personally decide.
Each investor must have the right to decide how such property is handled otherwise the markets become uncontrolled chaos. That includes the right to refuse to have shares taken without permission.
Prior to your conviction on fraud and extortion you most likely used your personal portfolio as collateral in taking out a home mortgage. Your market account was listed as an asset and until such time as that financial asset was no longer accessible to pay the mortgage that house was the property of your family. Would you likewise be willing to provide every individual that wanted a place to stay or a car to drive access to that personal property of yours since everybody should have a right to a roof over their heads or a vehicle for transportation?
No, you have protected your personal property from all violations of theft or abuse because it is your personal property. It is appalling then that you see the need to take from others what they wish not to freely give.
The fact that such rights to personal property are only considered by you when it has the potential to benefit your personal wealth, putting such rights above all others is not lost in your commentary. It goes along with your historical criminal past where laws; federal, state, and securities were often ignored when you found the potential to gain personally from such violations.
Clearly there is a reason why our federal securities laws regarding short selling have evolved as they have and it comes via historical abuses by unscrupulous individuals such as yourself.
Greed corrupted the market and thus protections from greed became necessary. The SEC’s focus on pump and dump scams became a priority when the shady executives scammed investors. Shady executives like the much heralded convicted felon Sam Antar for which your peers now ring in as a hero and who now speaks loudly on your moderated message board. While the SEC remains focused on this area of fraud they likewise became aware of the equally abusive illegal short sale activities that have now made it an area of interest.
Laws initiated after the bear raids of 1929 provided insight on how ethically challenged individuals could prey on people and destroy lives. Those same ethical challenges exist today as predators have once again found a venue ripe for the taking.
For decades, after the Securities Act of 1934 was drafted into law the public was protected from abuse. Bouts of abuse cropped up from time to time since the act was released but never to the magnitude reached over the past decade or so. Flaws in the securities settlement system and through US abusers such as yourself who ventured into Canada to circumvent US Laws, the issue of naked shorting exacerbated itself beyond control. The issue evolved to the point that US Organized Crime families using the Canadian loophole to lauder their illegal funds. Thus the sleeping issue of naked shorting required intervention.
Your greed and that of your peers helped initiate the process of change. You helped to expose the problem through your illegal activities, and you helped with the changes in short sale laws simply because the laws before you were not to be accepted or followed. Fellow associate John Fiero had been engaging in such illegal acts in the early 1990’s and you fed off his success.
You also state, “Furthermore, the current "political climate" criticizes and demonizes anyone else who wants or seeks to short a stock without first borrowing it.”
Of course they do the public typically demonizes fraud in the market. It is illegal and has been illegal to short a stock without borrowing it. Because as an individual you disagree with the laws does not give you the right to simply ignore them against the rights of another who abides by the laws. If you want the laws changed fight legally for the market reforms and show cause for such reforms as those who you now fight have done.
You claim that a pump and dump is detrimental to the marketplace yet you have never spoken out on the concerted short attacks your team of short sellers imposed on companies. Are they not one and the same? Both required a short duration of attack and both moved markets. If manipulating a natural market is illegal, why is it acceptable for short sellers to raid a thin market while pumping a similarly thin market is illegal? Could it be that you only trade on one side of that market?
You and your peers have long demonized the pump and dump artists but by a parallel analogy to your line of reasoning, those individuals should be able to exercise their right to achieve profitability even at the expense of unsuspecting individuals. The pump and dump artist would have the access to illegal information and trade on that information similar to a short selling legion trading on illegal information.
I could continue to shred up your open memo that you have asked to be posted on your publicly controlled message boards such as I have already but what is the point? The fact that you are in a jail cell on Christmas drafting such a memo says it all. You have little repentance and little regard for the personal rights of others. Your focus isn’t about paying your dues and changing your ways, it is about getting back into the game once again.
Shameless!
I am personally appalled that our Federal government has provided you with such access to financial chat rooms based on your sordid history of illegal activities in the financial markets but that is one of the quirks of our US Constitution. Everybody, good and evil are to be afforded a right to speak and unlike the bans that you impose on others whose right it is to speak freely, the US Government has never taken such an equal action against you.
I would urge you, should you choose to live under the umbrella of the US Constitution that you spend more time reading the rights such privilege provides and less time orchestrating new methods of cheating others. If you dislike the US constitution and the US securities laws you are free to leave this country once you are freed from prison.
In closing, a rap sheet that includes bribery and manipulation while operating in a boiler room operation, insurance fraud, attempts to flee the country under false papers, and 11 counts of racketeering and securities fraud is not a resume most US citizens can muster up. It is a resume of an individual who puts his own personal well being above that of all others within this country. It is your personal resume and one that would appall all but the legion of thieves you have created. Instead of embarrassed by your actions you justify them.
I welcome your continued memo’s and retorts as they merely become the fodder federal authorities will use in ridding individuals such as yourself from our public markets in a similar fashion to what they do to recidivist stock promoters.
Regards,
Dave Patch
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