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Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue

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Posted by:   bobo 1/20/2006 10:31 AM

Dr. Patrick Byrne, CEO of Overstock.com, has released the fourth installment of his “Dark Side of the Looking Glass” slideshow, which is linked from the Slideshow section of this website - hosted at the Businessjive.com website - Judd's great corporate profile site.

The final installment is remarkable listening, as it breaks down, in simple, easy terms, how Austria works as a money-laundering center, and how it factors into the story of REFCO, and the well-documented manipulation of Sedona Corporation.

He covers REFCO’s “toxic waste” of undisclosed liabilities, and the secrecy surrounding the $430 million liability of “unknown liabilities” that are widely thought of as naked short sales, and of the systemic collapse issue that is being bandied about as a real concern should that $430 million liability be bought in, if it is in fact naked shorted shares that haven’t been covered.

He discusses the US media’s coverage of REFCO, versus the international coverage, focusing on Barron’s jaw-dropping non-coverage - Wall Street's classic "pretend it doesn't exist and don't talk about it" gameplan in action.

He also discusses the secrecy surrounding the ongoing REFCO matter, and the presence in their scheme of NJ and Moscow hedge funds, a small agricultural bank in Austria making half billion dollar loans to obfuscate the presence of that $430 million barrel of “toxic waste”, Phil Bennett's last minute trip to Austria plans which were interrupted by his arrest, Thomas Badian's flight to Austria...

He concludes by running the numbers on the liability that $6 billion of FTDs actually poses for the system, and the conclusion is chilling.

Frightening.

And he makes the absolutely terrifying observation about why the SEC is working so hard to shut the entire story up, and things like the REFCO civil trial are ordered closed to the public and the records sealed.

Everyone needs to listen to this. Everyone. And then write your elected official a brief note pointing them to this slideshow presentation, as well as demanding accountability and transparency in REFCO – the company defrauded investors in the public markets. Doesn’t it seem a little odd that the nature of the liability that sank the firm and cost shareholders billions is being kept secret? Who is served by that? Who is protected?

View and listen to the slideshow, write a letter, send it to us at letters@NCANS.net - and come back here and comment on it.

 
Copyright ©2006 Bob O'Brien
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Comments (16)
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By jo on 1/20/2006 2:40 PM
http://www.pionline.com/login.cms?pub=
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By mfairview on 1/21/2006 4:30 AM
From Thompson's inhouse interview:

@dtcc: Does DTCC have a regulatory role in naked short selling? What authority does it have to force companies to settle a fail?

Thompson: Naked short selling, or short selling, is a trading activity. We don’t have any power or legal authority to regulate or stop short selling, naked or otherwise. We also have no power to force member firms to close out or resolve fails to deliver. That power is reserved for the SEC and the markets, be it the NYSE, Nasdaq, Amex, or any of the other markets. The fact is, we don’t even see whether a sale is short or not. That’s something only the markets see. NSCC just gets “buys” and “sells,” and it’s our job to try and clear and settle those trades.

@dtcc: How does DTCC respond to claims that shares from cash accounts and/or retirement accounts and/or institutional accounts are being put into the lending pool of the Stock Borrow program?

Thompson: It is our broker and bank members who control their DTC accounts. They can and do segregate shares that they are not permitted to lend out. Neither NSCC nor DTC monitor or regulate that activity. It is done by the SROs and the SEC. However, there is no requirement that brokers or banks participate in the Stock Borrow program, and neither DTC nor NSCC can take shares from an account unless those shares are voluntarily offered by the broker or bank member.

----

Statement: DTCC provides a service to the B/D. They claim it is not their responsibility to regulate inappropriate behavior by their participants (they simply don't know!).
Question: How does their position differ from, say, Napster?
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By mfairview on 1/21/2006 4:39 AM
Does either Vicarious Liability or Contributory Infrigement apply here?

Question: What is vicarious liability?

Answer: Vicarious liability, a form of indirect copyright infringement, is found where an operator has (1) the right and ability to control users and (2) a direct financial benefit from allowing their acts of piracy. User agreements or Acceptable Use Policies may be evidence of an operator's authority over users. The financial benefit may include a subscription fee, advertising revenues, or even a bartered exchange for other copyrighted. Under the doctrine of vicarious liability, you may be found liable even if you do not have specific knowledge of infringing acts occurring on your site.


Question: What is contributory infringement?

Answer: The other form of indirect infringement, contributory infringement, requires (1) knowledge of the infringing activity and (2) a material contribution -- actual assistance or inducement -- to the alleged piracy.

Posting access codes from authorized copies of software, serial numbers, or other tools to assist in accessing such software may subject you to liability. Providing a forum for uploading and downloading any copyrighted file or cracker utility may also be contributory infringement. Even though you may not actually make software directly available on your site, providing assistance (or supporting a forum in which others may provide assistance) in locating unauthorized copies of software, links to download sites, server space, or support for sites that do the above may contributorily infringe.

To succeed on a contributory infringement claim, the copyright owner must show that the webmaster or service provider actually knew or should have known of the infringing activity.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By mhelburn on 1/21/2006 7:10 AM
Patrick did another splendid interview!

The SEC is funded with a percentage of all sales. If they are collecting monies from illegal trades, they are complicit. I asked if they get paid for trades that are done ex-clearing and haven't heard back. If all the shares that have been sold of OSTK have been counterfeit for sometime, it appears that the SEC has collected about 1.5 million in fees for the trades for the last year. The Brokerages and SEC would make no money if there were no shares to trade.. amazing concept where people buy and hold their shares as if they are investing.

The liquidity is necessary so that the brokers can get daytraders to pay fees. They don't care about ownership.. As long as there are enough counterfeit shares in the system, the brokers make money. There would be more shares to trade if companies weren't bankrupted and driven out of the markets. The BD's kill off a company every so often and it is replaced with another new entity. Without the naked shorting, the entire market would trade higher. Without shorting, companies would rise and fall on their own merit, not suffer a demise devised by hedge fund managers and complicit brokers and media. Without shorting, the volatility in the market would lessen...but that would hurt the BD's and daytraders. It would help companies maintain access to capital markets. New companies might last longer than an SEC investigation.. and certainly would be worth more than an SEC fine.

These people are collecting fees on trading non-existant shares. These IOU's are just creations of the BD's and keep the market "liquid".. even when owners of the companies have 100% of the stock. Liquidity is another term for Wall Street Fraud. If stocks were not shorted, they would trade higher, be split and create liquidity on their own merit. The capitalization would stay with the shareholders and the companies.. not raiders.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By bobo on 1/21/2006 10:17 AM
For the NSCC to guarantee delivery and payment, acting as the contra party, they have legally taken on the role of guarantor - thus they DO have the legal obligation to make good on deliveries.

Their line of reasoning is specious and self-serving.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By rtway1 on 1/21/2006 11:35 AM
What if they get hit with a ton FOIA at one time and a press release saying the FOIA,s have been submitted. Would they be forced into revealing whats in the documents and if we put pressure on the pols to ask for the documents would they do it.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By mfairview on 1/21/2006 11:41 AM
Hey bunny, how about setting up a page to allow people to post their interview questions and responses so we can hold these journalists to their writing? Perhaps post the article followed up by the Q&A. If more and more people keep a record of the Q&A, the creative liberties these journalists take will be rendered impotent.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By rtway1 on 1/22/2006 1:17 PM
I feel that as a tax payer I have certain rights that many people have fought and died for, and it seems that our government has completely forgotten us,you know, the rubes, joe six pack, the grunts, the middle class, the under educated, but more important"THE TAKEN FOR GRANTED". I don,t know how you other folks feel about this situation, but I am enraged. When they point blank catch one of these Ferrari driving, tax evading, arrongant and pompous, awashed in ill gotten money, slime ball yuppy,s dead ass wrong and trying to flee the country, my government thinks that I am so illiterate and irrational that I may draw from this the wrong conclusion and thus may upset the business community and cause chaos. So as to avoid all this discomfort you might put on the investment community, we are going to do this investigation behind close doors, as well as any civil suits, and all evidence will be unavailable to us, the rubes, joe six packs and grunts. Well SCREW YOU and all your WALL ST. friends. The next time you send a envelope, whatever party, dem or rep. I put in a hand written note with this web site address and a short letter saying , when you clear up NAKED SHORT SELLING, OPEN UP THE BOOKS at DTCC and SEC. LET ME SEE REFCO EVIDENCE, until that time no money and no vote. For all the work and taxes I put into this country that is the least you can do for me. When you get hedge funds offshore to pay taxes and prove they are not aiding our enemies you might get me back, but right now I am mad ass hell and not going to take it no more.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By PhantomCertificates on 1/22/2006 3:05 PM
Considering that it is very evident that we are not getting represented by our elected officials from the actions that we've seen over the past few years such as the Abromoff case, the lack of enforcement for NSS, the ballooning national debt (now over $8.2 trillion), and the general usage of disinformation tactics from both politicians and the media, I think the most appropriate action is an all out assault to tell our politicians that there meal ticket is about to end. What I'm proposing is a campaign to vote "VACATE THE OFFICE" in our next election. If the elected officials get re-elected but in actuallity the "VACATE THE OFFICE" vote wins the election, I think they will find it very hard to ignore an increasingly disgusted public. Voting for the lesser of the two evils doesn't change anything. Voting that you are totally disgusted will get votes from even those that don't vote now. Could you imagine a 90% turnout rate for an election where "VACATE THE OFFICE" wins in over 50% of the elections? Now THAT would send a message.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By piddly_sum on 1/22/2006 5:00 PM
Here are the Banking Committee memebers, I put ** next to the ones whose Senate term is up (seems like most of them were elected last time around). I am sure the other party would like to put all of them out of a job, but guys like Santorum in particular. If you live in one of these states how about letting the opposing party at the state level know about this to give them some ammo to attack these guys, cc the business and political reporters at the newspapers there too. At least make them say why they won't act, co-opted or incompetent? Nothing like fighting to keep your job to spur a little action.


Majority Members (Republicans)
Richard C. Shelby (R-AL) [Chairman]
Robert F. Bennett (R-UT)
Wayne Allard (R-CO)
Michael Enzi (R-WY)
Chuck Hagel (R-NE)
**Rick Santorum (R-PA)
Jim Bunning (R-KY)
Mike Crapo (R-ID)
John Sununu (R-NH)
**Elizabeth Dole (R-NC)
Mel Martinez (R-FL)

Minority Members (Democrats)
**Paul S. Sarbanes (D-MD) [Ranking Member]
Christopher J. Dodd (D-CT)
Tim Johnson (D-SD)
Jack Reed (D-RI)
Charles Schumer (D-NY)
Evan Bayh (D-IN)
**Thomas R. Carper (D-DE)
**Debbie A. Stabenow (D-MI)



And here are the members of the Housr Financial Services Committee. Of course, all of their terms are ending, and guys like Harold Ford are trying to move up to the Senate.

Majority Members (Republicans)
Michael G. Oxley (R-OH) [Chairman]
James A. Leach (R-IA)
Richard H. Baker (R-LA)
Deborah Pryce (R-OH)
Spencer Bachus (R-AL)
Michael N. Castle (R-DE)
Peter T. King (R-NY)
Edward R. Royce (R-CA)
Frank D. Lucas (R-OK)
Bob Ney (R-OH)
Sue W. Kelly (R-NY)
Ron Paul (R-TX)
Paul E. Gillmor (R-OH)
Jim Ryun (R-KS)
Steve C. LaTourette (R-OH)
Donald A. Manzullo (R-IL)
Walter B. Jones, Jr. (R-NC)
Judy Biggert (R-IL)
Christopher Shays (R-CT)
Vito Fossella (R-NY)
Gary Miller (R-CA)
Patrick J. Tiberi (R-OH)
Mark Kennedy (R-MN)
Tom Feeney (R-FL)
Jeb Hensarling (R-TX)
E. Scott Garrett (R-NJ)
Ginny Brown-Waite (R-FL)
Gresham Barrett (R-SC)
Katherine Harris (R-FL)
Rick Renzi (R-AZ)
Jim Gerlach (R-PA)
Randy Neugebauer (R-TX)
Tom Price (R-GA)
Michael Fitzpatrick (R-PA)
Geoff Davis (R-KY)
Patrick McHenry (R-NC)
Steve Pearce (R-NM)

Minority Members (Democrats)
Barney Frank (D-MA) [Ranking Minority Member]
Paul E. Kanjorski (D-PA)
Maxine Waters (D-CA)
Bernard Sanders (I-VT)
Carolyn B. Maloney (D-NY)
Luis V. Gutierrez (D-IL)
Nydia M. Velazquez (D-NY)
Melvin L. Watt (D-NC)
Gary L. Ackerman (D-NY)
Darlene Hooley (D-OR)
Julia Carson (D-IN)
Brad Sherman (D-CA)
Gregory W. Meeks (D-NY)
Barbara Lee (D-CA)
Dennis Moore (D-KS)
Michael Capuano (D-MA)
Harold E. Ford, Jr. (D-TN)
Ruben Hinojosa (D-TX)
Joseph Crowley (D-NY)
William Lacy (Bill) Clay, Jr. (D-MO)
Steve J. Israel (D-NY)
Carolyn McCarthy (D-NY)
Joe Baca (D-CA)
James D. Matheson (D-UT)
Stephen Lynch (D-MA)
Brad Miller (D-NC)
David Scott (D-GA)
Artur Davis (D-AL)
Gene Green (D-TX)
Emanuel Cleaver, II (D-MO)
Melissa Bean (D-IL)
Debbie Wasserman Schultz (D-FL)
Gwen Moore (D-WI)
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By rtway1 on 1/22/2006 5:40 PM
Phantom I think that idea is superb. Start the rumblings now and it won,t take long before the press picks up on it, they love the garbage can. I think you are right, we have been abandoned like a orphan dog. Remember when Ross Perot gave them a wake up call. Time is here again.Piddly thanks for your help, great idea there also. You just saved us a ton of work.How many people have to be screwed before you get the ear of Shelby and Bennet. I watched that comedy on T.V. where Bennet is grilling Donaldson on naked short sales and Donaldson only answer is that short selling is not illegal. Duh, that is not the question that was asked, you idiot. Then Bennet said to get back with him because he had to go vote on something. That was it. Anothger fine piece of government representation.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By flincing on 1/23/2006 11:47 AM
Dear Congressman Paul,
I have been a fan of your principles for years, mainly through blogs, publications, etc of the LvMI.

I would like to plead with you to go to the following website to learn about naked shorting. The 4 podcasts were put together by the CEO of Overstock.com and are VERY informative. We need someone like you to get to the bottom of this, for all Americans.
http://www.businessjive.com/nss.aspx

On another topic, please go to the following website and read the reviews of this book. If a person such as you could be as well versed on this approach to religion, then maybe civilization has a chance.
http://samharris.org/
flincing
Denver
citizen concerned for our future
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By anon on 1/23/2006 1:53 PM
flincing,

no offense, but as soon as the congressman's aide reads "If a person such as you could be as well versed on this approach to religion", your email went into the spam bin.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By piddly_sum on 1/23/2006 3:44 PM
I think what we need is a bottlenose whale to swim into the lobby of the DTCC and then die right there.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By anon on 1/23/2006 7:03 PM
Nope, just need a modern day Ralph Nader of contingency/publicity seeking young lawyer looking to make a name for himself to take them on with a big ol sloppy suit.

Or just enjoy what Byrne is doing.

Be patient.
Re: Dr. Byrne’s “Dark Side of the Looking Glass” – Epilogue By Paul on 1/29/2006 7:29 AM
Something I'm missing (and maybe the answer is posted somewhere) is an explaination of the cost of short selling on the short seller. Surely there must be a cost, otherwise stock loan desks would not exist ? If there is an FTD and the seller does not cover by borrowing stock is there not some penalty applied ?

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