Roddy Boyd had an interesting article in the NY Post about the latest SEC subpoenas issued to Gradient in the Rocker/Gradient investigation. The net net of it was captured in this snippet:
“The new subpoena asks for Gradient's communications with Bethany McLean of Fortune Magazine, Jesse Eisinger of the Wall Street Journal, Elizabeth MacDonald of Forbes Magazine, former Barron's editor Cheryl Strauss Einhorn and this reporter from The Post.
In February, subpoenas went out to three financial columnists: Jim Cramer of CNBC's "Mad Money," Herb Greenberg of Dow Jones' MarketWatch and Carol Remond of Dow Jones Newswires.
Financial news site The Street.com - partially owned by Rocker Partners - also received a subpoena.
An individual familiar with the situation said Gradient planned on seeking the permission of the reporters' news organizations before complying with the order. “
So the SEC has requested all communications involving the usual names – usual, as anyone following this story knows them all too well. Jesse plays poker with hedge fund guys - and was apparently in possession of bank records and cell phone records that could only have been illegally obtained. He is also the guy who was thrown off the retirement home property after being cited for trespassing, while spending a good month or two trying to guess my identity. When he was exposed, Carol was handed the job of tracking the Easter Bunny, before Roddy mysteriously surfaced with the assignment (Carol never really warmed to the task). Cheryl is the wife of hedge fund mogul David Einhorn, and co-worker with Bill Alpert, another well known journalist and bud of Cohodes and Rocker. Herb is always writing about the Rocker and company short plays from the negative, Bethany and Liz MacDonald are also known to have unusually coincidental communiqués about Rocker and Einhorn and SAC shorts, and Roddy is, well, Roddy.
So the whole gang is being looked into, apparently. The part I felt was the most fun was how Gradient seemed to believe that complying with SEC subpoenas was an elective – that they needed to seek out “permission” to comply with the legally binding mandate to supply the data to the SEC.
Did I miss the part in the law where you got to decide whether you felt like complying with investigations into a ring of possible stock manipulators, whose use of the press is well understood by many who have been treated to their negative attentions? Did I miss the part that said “You need to provide X and Y and Z, unless the perps or their potentially culpable publishers decide they don’t want the SEC to know certain things?”
I guess that part of the subpoena process is new to me. I bet Dorfman and some of the other well known media crooks wished they could have stonewalled the SEC as effectively - maybe they would still be at it today if they had been able to.
Remember how CNBC defended Dorfman, insisting on his innocence? Try this gem from the past:
?8:43 PM 8/29/1996
CNBC says its review exonerates Dorfman
NEW YORK (AP) -- CNBC says a network-sponsored review of commentator Dan Dorfman unearthed no evidence that he broke any laws amid allegations he was under investigation regarding his market-moving reports.
Dorfman, published reports said, was the target of a federal investigation into his relationship with a stock promoter and into whether he profited from his commentaries by either trading on them or tipping others in exchange for favors.
"Dan will continue working for CNBC with the complete and ongoing support of the network," Jack Reilly, vice president and managing editor of CNBC Business News, said in the announcement Thursday. "
Fast forward 10 years...
This has really been an exciting month for me in terms of learning all about how special and favored the press are, and how virtually anything associated with them should be above investigation, on account of they are so honest and all.
So far I’ve learned that if you have a TV show you can write Bull across a subpoena instead of honoring it, that you can go on TV every day and declare that you are a victim, while simultaneously refusing to supply any info that would demonstrate your guilt or innocence - and now I am treated to the notion that if you are the centerpiece of multiple suits alleging stock manipulation, along with a formal SEC investigation, you can elect to ignore subpoenas until you are good and ready to comply, if at all.
That’s quite a world we live in, huh? I can't help but think old Dan Dorfman wishes he was living in 2006 rather than in 1996 - hell, he was one of CNBC's big stars back then. Isn't history strange...?
WRT this current round of subpoenas, Dr. Byrne said it best yesterday in a post at the Motley Fool, when he asked why someone would pay to have a research report published that contained info they had fed the research company? Pretty obvious – to drive the price of the target down. If you do that in conjunction with select cronies in the media, isn't that stock manipulation? 10b5? If done repetitively, isn't it RICO?
I've got an idea. Why not also subpoena the records of Rocker and SAC and see who they told, and when - assuming that they did in fact do what the suits allege. And let's all find out whether the affiants are lying when they indicated that Herb and some of these other folks were on the phones colluding with Gradient and the hedge funds on a virtually daily basis during the big short attacks. Why are all these people so intent on keeping the facts secret? Let in the sun, I say.
The SEC is now looking hard at the little ring of sycophants that have written suspiciously convenient articles on a regular basis, and is, in my mind, justifiably trying to see if these are unbiased journalists, or part of an elaborate stock manipulation scheme, as I first laid out in the January OSTK conference call over a year ago. And Gradient, who Roddy terms Forensic Accountants, but who as far as I can tell wouldn’t be able to balance my checkbook, wants to simultaneously avail itself of 1st Amendment privilege once removed, while stonewalling discovery to the SEC.
Is anyone buying this crap? I mean, when is enough enough?
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I'll start with a translation of Herb's piece, for the folks unaccustomed to reading between the lines. And we can end with the strident whining of the ever perplexed and unaware of anything going on around him Jeff Mathews. That is a nice light meal for those with strong stomachs…
Here are some quotes from Herb's latest masterpiece, and my opinion as to what he's really trying to say.
The whole thing can be read here.
"Meanwhile, back at the ranch: In light of the "60 Minutes" report Sunday on Biovail Corp's (BVF : BVF24.43, -0.07, -0.3% ) lawsuit against SAC Capital and Gradient Analytics -- and Overstock's (OSTK : OSTK32.46, +2.04, +6.7% ) war against critics -- I can't help but wonder what it would be like if Media Vision were happening today."
Translation: A clumsy attempt to recast 60 Minute's special on alleged stock manipulation, and Dr. Byrne's battle against stock manipulation, as a war against critics.
Babe. Sweety. It isn't about critics. It is about potentially criminal front-running of doctored research reports and stock manipulation, not criticism. Criticism is, "Byrne needs to get a haircut" or, "Biovail's accounting makes my head hurt." Criminal front-running goes something like, "Print this combination of libel and lies, but only once I've gotten my short position established - and then let's get our lapdog journalists to cite the report to really do some damage - those suckups are always good for some hatchet jobs." See the difference? A) Company bad. B) Let's influence stock price for financial gain using our web of cronies.
Most of the rest of the world gets the distinction, but Herb seems confused about it.
And then we get a self-serving trip down memory lane, about another company Herb exposed around 15 years ago. Of course, he's written negatively about at least several hundred in that period, and guess what? A few have been scams or frauds. Astounding. Only Cramer, and sperm, have worse success ratios than that, but hey, everyone's a critic, right?
"That was the big fraud I exposed in the pre-Internet early 1990s. Starting with a tip from short-sellers about funky financials, the Silicon Valley maker of multimedia kits became a near-daily fixture of my column in the San Francisco Chronicle. The more I wrote, the angrier CEO Paul Jain became.
He even complained to my editor that I was ripping apart the fabric of everything that made Silicon Valley great -- and that I was destroying jobs.
That was before Media Vision was deemed a major fraud, after I disclosed the company was booking revenue on completed products while parts for those supposedly completed products were (literally) on a slow boat from China. Jain and his CFO, Steven Allan, subsequently went to jail.
If this were today, would Jain have started an Internet-based campaign to intimidate the press, short-sellers and other critics -- claiming a conspiracy? Would message boards be buzzing with "Get Herb Fired" posts? Would the company either by itself or with other companies be spinning the story every which way and suing its critics out of business and into silence?
Probably. But thankfully in those pre-Internet days, right beat financial might. "
I always enjoy the strawman arguments about what someone might have done. Here, again, rather heavy-handedly, Herb is trying to say that crooked companies would be doing what Patrick and Biovail are doing, that is to say suing hedge funds and research companies. Why they would do that is unknown - here Herb appears to be confusing the legal battle against Rocker, SAC and Gradient, and Herb's writing nasty articles about companies. Why he so easily blends his columns with the malfeasance and stock manipulation that is alleged in the suits is unknown, but presumably one of the things the SEC wants to chat about - could it be that Herb is admitting that he writes his ugly columns to support the short positions of his hedge fund buddies? Herb, babe, say it isn’t so. Tell us all that was just a little slip.
I’m also fond of the hypothetical game. Maybe if Paul Jains was around he wouldn't be running a crooked company, but instead would be running a crooked hedge fund engaged in stock manipulation! That is bigger money. And maybe, if caught red-handed, he would then be mounting a big media campaign using all his bought-and-paid-for media quislings to try to paint his crookery as something else!
I do like hypotheticals.
Maybe he would have bloggers that are other suckling hedge fund managers that worked with him, and crooked sycophant media hacks, and has-been authors, all declaring that he is a victim of whoever caught him red-handed? If that were so, the only thing we would know for sure that is if he was guilty, he would try to avoid discovery at all costs, and delay it till eternity.
Sound familiar?
Aren't hypotheticals fun?
That's about the best Herb could muster today - a “what if” hypothetical and a feeble attempt to misconstrue events as something they are clearly not. Herb, honey, nobody is buying a word of it. Figure it out. Wasted space. And a trifle desperate and rambling, IMO.
Moving on, we find with the ever-acrimonious and venomous Jeff Mathews, who's tag line is something like "I wouldn't know the truth if it bit me on the ass" or some such...I forget the actual bit, and frankly couldn't much care. My loss, I'm sure.
Not surprisingly, Jeff, who used to work with David Rocker, thinks the 60 Minutes piece on Biovail is garbage - of course, he is named on page 72 of Biovail's complaint (RAM Partners, although nobody ever has been able to figure out who his partners are), which he doesn't disclose anywhere, so it is no wonder that he didn't like the piece. I wouldn't like a piece where the affiants come off as credible and truthful, either, if I was on the other side of the table.
Fortunately, Jeff's reach is considerably shorter than 60 Minutes, having never broken anything bigger than a sweat in his disastrous CNBC appearance opposite Dr. Patrick Byrne, where he looked oddly plastic - sort of like a stuttering animatronic head that blurted "that's incoherent" interchangeably with "how bizarre" and "I don't know anything about any of that.".
Here, Jeff seems oddly fixated on appearance, and spends much of his time denigrating the way the hosts look, and insulting the program's audience - apparently they aren't attractive enough or young enough to suit the worldly Mr. Mathews.
"I watched the highly anticipated 60 Minutes segment on hedge funds last night, and my first question is why would anybody in their right mind ever watch 60 Minutes?
The way I grasp the show is this: a bunch of extremely old, infirm, out-of-touch people—all white with the exception of the ridiculous looking, earring-wearing Ed Bradley—pretend to ask tough questions while the camera tries to make them look somewhat younger than Keith Richards.
Is that about it?
And to paraphrase Andy Rooney (who strikes me as not so much a humorist but just a really bitter old guy), I don't know about you but Leslie Stahl seemed to me so financially illiterate she'd have trouble making a withdrawal from an ATM machine."
So let me get this straight, Jeff. You like your African-American men young and sans piercings, you have contempt for anyone that watches the program, and you feel you are superior to every one of the professionals who have been attracting 11 million viewers for decades. OK, fair enough.
One could wonder aloud at what achievements Mr. Mathews could compare with their performance, but we all sort of know there isn't any - unless one believes that shrinking one's hedge fund from around $65 million to less than $25 million an accomplishment worth celebrating (everyone remember that, where we placed his 2001 or so fund size at $65 million and in an appearance in the last 12 months he said it was less than $25 million? I recall the questions about why his fund has shrunk so radically went unanswered by Mr. Mathews, and lost interest when it became clear he wouldn't tell us whether it was because of horrendous performance or his investors pulling their money out...but presume there's a fun explanation - or maybe not. Whatever. Yawn. Makes me want to clip my toenails.). I wonder if Leslie Stahl, with her amazing lack of financial acumen, could do better or worse than that performance? If she just put it in a CD her investors would at least have their principal left. Huh. Then again, what do I know…?
Anyway, after Jeff’s insightful initial impressions, we got to the meat of his shpiel, which was:
"It is, apparently, terribly suspicious behavior when a person arranges a conference call with analysts and then provides those analysts with information, especially when the person arranging the call has a financial stake in the company and hopes to benefit from a movement in the stock.
If this is so—and since Leslie Stahl thinks it's so, who am I to quibble—then this country is in big trouble.
Because the arranging of conference calls by interested parties with analysts, in order to influence those analysts and the reports they write to clients, is (it seems to me) precisely what all CEOs and CFOs do each time they hold an earnings call with Wall Street analysts.
So if Ms. Stahl is to be believed, all those CEOs and CFOs attempting to influence analyst opinion every quarter are doing something terribly terribly evil."
Here again we have an inability to differentiate between a conference call, which is public, and where all information is disseminated at the same time, and a collusive scheme to doctor research reports, front-run them, and then cause maximum damage to a company’s stock. Maybe to Jeff they are the same thing. Seems like he thinks they are.
Why are all these people trying to paint something that, if true, clearly in my mind constitutes inappropriate and probably illegal stock manipulation, as innocent and virtuous? I don’t get it. Oh, that’s right, one of the guys doing that is named in the suit, and the other is being subpoenaed in connection with the suits. Huh. Quite a mystery, that. How unexpected that they would all declare it to be akin to sitting on Santa’s lap, rather than a stock manipulation scheme.
Mark Cuban also came out with something, but frankly it was not really anything new or different, the usual “CEOs that whine about their stocks deserve what they get” pap that is his favorite bromide, thus doesn’t warrant any comment here. I would say that the Herb and Jeff show are more than enough fun for one evening.
And that is the bunny’s take today. All in all, a lot of blather, but not much substance.