(NOTE: It was correctly pointed out to me that FinancialWire confirmed the story before the NY Post came out with it. publishing their story yesterday morning. Apologies to FinancialWire for that sin of omission.)
The NY Post just released an article by Roddy Boyd, that confirms what I wrote about on Sunday Evening – the DTCC has been served with subpoenas by two states, in the developing naked short selling crisis.
Here is a portion of the article, cited under fair use, with attribution, which can be viewed at the NYPost.com website with a free membership:
“NAKED SHORTING TARGETED
By RODDY BOYD
February 16, 2006 -- Two state securities regulators have issued subpoenas to get at the trading records of Wall Street's largest firms in a quest to stamp out the controversial practice of naked short-selling, sources said.
Naked shorting — the tactic of selling shares short without properly borrowing them first in order to bet on a stock's fall — has been a concern of state securities regulators during the past year.
Utah and Connecticut regulators' first line of attack will be to get Wall Street firms' trading records via the Depository Trust & Clearing Corporation, which tracks and settles all stock trades. Regulators will be looking for the trading and customer ledgers of Bear Stearns, Morgan Stanley and Goldman Sachs, which all have large and highly lucrative clearance operations.
Connecticut's subpoena asked for information on four companies "with a strong connection to the state," sources said.
Utah, on the other hand, requested a large amount of market-wide data regarding alleged naked short sales. “
It should be noted that Roddy and I do not see eye to eye on many things, and I have been critical of him, and he of me. I’ve been called sloppy, lazy, dishonest…and that was when he still liked me. The story, however, is the story. And it is now confirmed. I wouldn't have described naked short selling the way Roddy did - I tend to say, "Naked short selling is an illegal manipulative trading sheme - the process of defrauding investors out of their money by taking their cash, and failing to deliver the product - shares." But everyone's a critic, and opinions are like...well...
This is especially amusing as Weiss has now publicly embarrassed himself twice, when he ignored that TheStreet.com denied knowing about a formal SEC investigation into Rocker and Gradient at the time of the article which he claims broke the story (and which he claims I was rehashing with my breaking of the actual formal investigation blog from yesterday), and where he also derided me as a lunatic who prints fantasies, when I broke the DTCC story here on Sunday night. Gary, honey, you are in the deep end of the pool without a floatie. I, a rank amateur, got the story right 3 full days ahead of the nearest news source, while you garbled it, claimed it was all a lie and an invention, and insulted me as a fraud and a charlatan. And now we have confirmation that it was true. You are looking like a huge putz, my friend, so I would quit while you are behind – nobody is fooled at this point.
Online, the message boards have had full time crews posting that I was a liar and a cheat, a nut, krazeeee as the day is long, for making the claim about the DTCC being subpoenaed by the states.
Just as they have also been saying I was lying about Rocker Partners, while touting Weiss' blog every third post.
So now we have the confirmation on the DTCC, which ends this little vignette, and trashes Weiss’ minimal credibility, while substantiating mine. Say what you will about the bunny, but so far, he’s called these plays correctly.
Next, I would expect we will see a “soft” breaking of the Rocker news over the next few days, something like, “We received a standard, computer generated form, nothing to worry about, blah blah blah…”
Which will be the second part of this week’s news confirmed.
But it still leaves the question unanswered, which is, did he tell his investors, and his network of bankers and other hedge funds? I don’t know if he legally has to, but I would sure want to know, if I was in bed with him. I would also be thinking long and hard about Byrne being the guy who turned over his affidavits and other material to 7 state and federal agencies, and the new revelations about subpoenas – wanna bet that is just the prologue to what will happen after March 1? I think that it is safe to say that the brokers involved in this are going to be getting proctology exams, along with the hedge funds. Couldn’t happen to nicer fellas.
Now as to the story of the mobbed up guys doing a number on a journalist acquaintance, which was told to me by Dr. Byrne and later confirmed in writing, that happened, and is not a fiction, any more than the rest of these stories are fictions. They aren’t. They are the truth, and there has been a tremendous effort to attack the messenger, and paint me as an unreliable source of info.
But if you had read this blog, you would have heard about all of this 3 business days before the mainstream media got to it.
So the bad guys have a little problem now – credibility has been shredded for their current mouthpiece, and these stories are turning out to be accurate. That is not good for them. Traffic is setting records here at The Sanity Check, people are talking, and the news is getting out.
And you heard it here first.
If I had to guess their next move, it would be another attack on my credibility, although they are out of time on that one, methinks. I am working on another piece titled, “O’Brien is an Asshole” which will seek to summarize their arguments and thinking, and will hopefully have it out by the weekend. I also have a piece from inside Businessweek, also provided by Byrne, which is pretty big news in terms of good dirt on Mullaney, as well as their alleged nifty little mechanism for creating click inflation for their online site – but who has the time to break all of this at once? That piece could well cause heads to roll bigtime at BusinessWeek – Weiss’ alma mater, and Tim’s current roost. My hunch is that Terry McGraw is going to hemorrhage when he reads it, as he is an honorable man, and will freak at what is going on under his watch. And which will further serve to demonstrate that I am an asshole, at least in the eyes of the NY financial press.
Being the bunny is a full time job these days.
And as to the apologists who maintain that the naked short selling crisis is all in our heads, they have a little problem too - the states are now convinced enough that this is an issue to subpoena the DTCC - that is not a small move. And some of the largest houses on Wall Street are now part of the investigation. Next will come a hurried SEC response, if history is a guide - the states ALWAYS get there first, with the SEC gloming on once a blowup is inevitable.
Folks, it's been a long week, and it is only Thursday. I'm beat, and want to get some shuteye, and consider the events of the last 72 hours.
There isn't much more to say, but I think it's safe to close with a line that has become somewhat of a cliche for me on the message boards: this time it's different.
It is.
And I only have to be right about that once.