Milberg Weiss is in the news lately, and not in a positive way - we have covered their recent travails as their professional plaintiff scheme comes unraveled.
It is interesting to look back and get a historical perspective on this, and see the clues in the press - hints that all was not well.
One of my favorites was this article from 2004's Marketwatch:
"Probe sought in short-selling plan
Law firm, plaintiff in class-action suit scrutinized
By Leticia Williams, CBS.MarketWatch.com
Last Update: 6:00 PM ET Mar 10, 2004
WASHINGTON (CBS.MW) -- A private business group has asked the Securities and Exchange Commission to investigate law firm Milberg Weiss and one of its class-action clients for possibly colluding to depress Terayon stock.
The U.S. Chamber of Commerce's Institute for Legal Reform sent a letter Wednesday to SEC Chairman William Donaldson urging a regulatory probe of the nation's leading class-action law firm for possible securities fraud.
The call to investigate came after a federal judge in California removed Milberg's client, Cardinal Partners, as lead plaintiff on a class-action suit against broadband equipment manufacturer Terayon (TERN),
Judge Marilyn Hall Patel said Cardinal, facing millions of dollars in losses after taking a significant position to short-sell Terayon's stock, devised a "game plan" to drive down Terayon's stock price.
According to Patel's order, Cardinal executives engaged in a smear campaign aimed at depressing Terayon stock by discrediting the company with regulators, analysts and reporters between October 1999 and May 2000.
In addition, Patel questioned Milberg Weiss' role in the lawsuit.
"The court has concerns not only on the appropriateness of Cardinal Partners and Marshall Payne as lead plaintiffs but also about the role of lead counsel," Patel wrote.
Patel questioned whether Milberg Weiss "actively participated in or provided advice to plaintiffs regarding their scheme to cause a fall in Terayon's stock price."
"The court has serious concerns about potential conflicts of
interest," Patel wrote.
The judge ordered the law firm to provide more information about its contact with the plaintiffs prior to the lawsuit, including the number of cases or actions in which the firm represents Cardinal and certain executives."
It is unknown whether the SEC ever did anything.
In this articles in the NY Sun, we see campaign contribution concerns raised.
And in this article, we heard from ALD, a company that was targeted by none other than Milberg, after being targeted by short sellers. Huh. Just as many other short picks of the group mentioned by Dr. Byrne in his Miscreant's Ball presentation have been slammed by Milberg, as well as the same group of 10 or so journalists allegedly beholden to that cabal. One that comes to mind is NFI - a favorite of mine, which was slammed by the firm 48 hours after the hatchet job in the WSJ appeared that cut that company's stock price in half, back in the week of April 12, 2004 - and which made David Rocker's very first large Put option purchase in that same company serendipitously worth many millions, instead of expiring worthless in a few weeks.
It would seem NFI isn't alone.
I always wondered when Milberg was retained, and by whom. That will likely be something that comes out in discovery, but I never could quite buy the notion that they had their case drafted and ready to go within 48 hours. My hunch is that they were retained in advance of the WSJ hatchet job, which would be proof of a hand in manipulation, if true. But what do I know? I mean, it isn't as though I predicted a massive lawsuit and regulatory probe on bogus grounds 6 full months before it took place with NFI, or went on to the OSTK CC in January, 2005 and detailed a conspiracy of short selling market manipulators who targeted smaller companies, and used naked short selling, international arbitrage and jurisdiction shopping, class action suits, quisling journalists hatchet jobs, frivolous SEC probes, collusive related party trading and the like - all to depress their targets' stock prices.
I mean, what are the odds of precisely that being the outline of the SEC investigation into hedge funds and journalists, and now class action attorneys? Shocking, I say.
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In other news, Warren Buffett told Karen Richardson that he isn't bothered by short selling, or naked short selling, while discussing Berkshire's stock.
I don't imagine he is. Neither is Bill Gates, I'd bet.
His position, which is that anyone stupid enough to want to short Berkshire, legally or otherwise, deserved the can of whup-ass he delivered, is not unexpected. I can appreciate his perspective.
I don't think I would be concerned about it either.
What he didn't say is that it wasn't a problem in the markets, or that it didn't take place, or that it wasn't a potential systemic problem, as the lawsuits brought by the hedge funds, against their prime brokers, allege.
That wouldn't be the context of the discussion, as it was never asked by Richardson, at least that I can tell - it was more Buffett commenting on legal short sellers, and sort of rolling his eyes at anyone that wanted to take him on.
Although he did give OSTK a bit of an endorsement, by indicating that it wasn't a fraud, and by extension, boosting Dr. Byrne's visibility.
So what do we know?
That Karen Richardson easily mixes illegal stock manipulation via failing to deliver (naked short selling) and legal short selling, seamlessly moving between the two while making no real distinctions, and that Buffett couldn't give a hoot about any of it.
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I will be on the road today and tomorrow, so won't be able to stop in much, but will be checking in when I can.
Have a good one, all, and be nice to each other....