Currently, I’m working on a post about funding and how it’s led to employment problem in science….
Meanwhile, this bit about illegal short selling is jaw dropping. I have no idea of this very long article (pdf) is in tinfoil helmet territory or not, but, if it’s at all accurate, it looks like Jim Cramer of CNBC is using his media perch to help friends profit from short selling stocks:
The story begins when a very highly respected journalist and business editor for the Columbia Journalism Review, Mark Mitchell, decides to look into allegations made by the CEO of Overstock.com, that some top hedge fund managers, in cahoots with a circle of financial analyst and reporters, had conspired to make a lot of money by betting short on companies and then systematically destroying those companies by spreading false negative information about them and employing other tactics such as flooding the market with “phantom shares” to drive down a stock’s value.
I have no idea if it’s true, but, if it is, it puts the lie to all of that “we earned it” bullshit coming from Wall Street. It is long, but reads really well. Here’s a taste:
The reporters should also have known that Elgindy’s information was suspect – and that his target companies were often victims of short-seller crimes. Data obtained under the Freedom of Information Act shows that massive amounts of phantom stock were sold in the companies that Elgindy and his cohort shorted. As Carol Remond and others surely knew, Elgindy was also among the dubious clients of Pacific International, the Canadian brokerage that has catered to Wall Street operators connected to the Genovese crime family. “Let’s remember,” says one member of Elgindy’s website, “because of CANADA we can NAKED SHORT!”
Elgindy also brags on his website of having supplied the SEC and other government agencies with negative information. The SEC, especially, would helpfully open investigations into the companies targeted by Elgindy, precipitating huge declines in their stocks. One former SEC official interviewed by Deep Capture admits to having worked often with Elgindy. “I’d send his information up my up-line,” he says. “My superiors would tell me to open an investigation.” In most cases, the SEC never filed charges against the targeted companies.
But the investigations left the companies’ stock and reputations in tatters. Contributing to this, Herb and the rest of the Media Mob would write multiple negative stories about the companies Elgindy shorted. “These were good companies. A lot of them were pharmaceutical companies that had made important medical advances,” says the former SEC investigator. “Elgindy hurt them badly. He stopped new cures. And the SEC helped. The media helped.”
And that’s not even the crazy stuff. If Carl Hiaasen, Stephen King, and Elmore Leonard were to co-author a book, it couldn’t be this bizarre. I’ll certainly never read Joe Nocera or Floyd Norris the same way ever again…