Veteran Bloomberg reporter Susan Antilla wonders in her latest column whether Securities and Exchange Commission (SEC) chair Mary Schapiro is the right person to have at the helm of the SEC.

Back in 2006, Schapiro was the head of the National Association of Securities Dealers when the organization decided to merge its regulatory functions with the NYSE to create Finra -- the Financial Industry Regulatory Authority. Now a pair of Finra-member firms are suing Finra and Schapiro, alleging breach of fiduciary duty, misleading statements and unjust enrichment.

Continue reading SEC Chair on the Hot Seat? Finra Scandal Could Put Her There

SEC Chair on the Hot Seat? Finra Scandal Could Put Her There originally appeared on BloggingStocks on Mon, 21 Dec 2009 12:30:00 EST. Please see our terms for use of feeds.

Overstock.com (NASDAQ: OSTK) announced on Thursday that it received a notice from the SEC stating that the company was under investigation concerning its "previously-announced restatements of its financial statements in 2006 and 2008 and other matters."

CEO Patrick Byrne noted in the press release that "All of the matters that are the subject of the subpoena have been thoroughly disclosed and we are disappointed, given the extensive public disclosures Overstock has previously made, that the SEC, given all of the challenges it faces, has apparently chosen to expend time and resources on another investigation of Overstock. Rest assured, I will continue to speak out as I have on the shortcomings of our financial regulatory system."

Continue reading Overstock announces 'another' SEC subpoena

Overstock announces 'another' SEC subpoena originally appeared on BloggingStocks on Sat, 19 Sep 2009 15:10:00 EST. Please see our terms for use of feeds.

While Madoff's victims are out billions, his wife Ruth Madoff will get to keep a nice chunk of his unjust winnings.

The Wall Street Journal (subscription required) reports that "Ruth Madoff, the wife of one of the most reviled swindlers in history, has agreed to give up her potential claim to more than $80 million worth of assets, keeping just $2.5 million in cash in an agreement reached with federal prosecutors."

Financial journalist Gary Weiss is having none of it:

Continue reading Ruth Madoff cuts a deal: Let the outrage begin

Ruth Madoff cuts a deal: Let the outrage begin originally appeared on BloggingStocks on Sun, 28 Jun 2009 10:10:00 EST. Please see our terms for use of feeds.

A new study published by Matthew Magilke of the University of Utah and Jeffrey T. Doyle of Utah State University suggests that public companies don't time their earnings releases based on how favorable or unfavorable the numbers might be.

This flies in the face of what most observers -- myself included --- have noticed. Unless there's some very rigid schedule for earnings releases, most companies prefer to dump bad news on Friday afternoons -- and if there's a three-day weekend coming up, then that's even better.

Continue reading Study says companies don't time their earnings releases. Oh, really?

Study says companies don't time their earnings releases. Oh, really? originally appeared on BloggingStocks on Tue, 09 Jun 2009 12:00:00 EST. Please see our terms for use of feeds.

Overstock.com (NASDAQ: OSTK) reported impressive numbers yesterday -- and by impressive numbers, I mean another loss years after projections of profitability -- and its shares shot up more than 30%.

Gary Weiss reported on the less optimistic part of the press release that the company issued, but I'd like to take a second to point out something to investors. Even if the company's fundamentals are improving, this is still one of the creepiest public companies on the planet and it's wasting shareholder money on its creepy stalking campaigns.

If you go to DeepCapture.com -- CEO Patrick Byrne's website for trashing critics including Gary Weiss, Jim Cramer, Eliot Spitzer, and a couple of message board posters you've probably never heard of -- in the upper right hand corner of the site, you'll see a little ad: "Click here to shop Overstock.com. 5% of your purchase will go to support this effort." That link brings you to http://www.overstock.com/?TID=deepcapture where, presumably, any order you make will be tagged by the company to funnel 5% of the sale to the "effort."

What exactly is the money being used for? Former white-collar criminal and Overstock-critic Sam E. Antar received an email from former journalist Mark Mitchell: "I am writing a story about short-selllers (sic) and their relationships with independent researchers and the media. I would like to give you the opportunity to respond to various allegations regarding your work." He goes on to say that the article will be published on DeepCapture.com.

So here's the question I have: Why is Overstock.com's board of directors allowing Patrick Byrne to funnel money from the company's sales to a pet project aimed at pseudo-investigative pieces on short-sellers and their relationships with independent researches and the media?

If Patrick Byrne wants to use his own money to wage his self-proclaimed jihad, that's his business. But he should leave corporate assets out of it.

Shop at Overstock, support cyberstalking! originally appeared on BloggingStocks on Sat, 19 Apr 2008 17:40:00 EST. Please see our terms for use of feeds.

Biovail settles charges with SEC originally appeared on BloggingStocks on Mon, 24 Mar 2008 16:41:00 EST. Please see our terms for use of feeds.

Although they might have messed up Bear Stearns (NYSE: BSC) far worse than anyone could have imagined such a venerable institution could be messed up, you'll happy to know that current CEO Alan Schwartz and chairman and former CEO James Cayne are staying on top of their real estate holdings.

Back in February -- while his company was in the midst of imploding -- James Cayne spent $27.4 million on two adjacent apartments at New York City's Plaza.

Something is badly wrong with corporate governance/executive compensation when a guy can sit by -- or in Cayne's case, play bridge and smoke doobies -- while one of the financial world's most revered institutions collapses under his watch -- and still have enough left to spend $27 million on two condos.

Meanwhile, Mr. Schwartz had pulled his $4.5 million property off the market and is renting it out.

Thankfully, these guys aren't out of the woods yet. They'll likely spend years dealing with a slew of class-action lawsuits stemming from the collapse of the company they destroyed. As Gary Weiss recently reported, Bear Stearns is no stranger to lawsuits.

Bear Stearns executives change real estate plans originally appeared on BloggingStocks on Sun, 23 Mar 2008 12:40:00 EST. Please see our terms for use of feeds.

Overstock.com (NASDAQ: OSTK), the world's largest supplier of goofy and downright bizarre press releases, has issued a new gem for our amusement/amazement.

According to one issued this morning, "on December 27, 2007, the California First District Court of Appeal summarily denied an Application for a Writ of Mandate sought by defendant prime brokers in the case of Overstock.com, Inc., et al. v. Morgan Stanley & Co., Incorporated, et al., pending in the Superior Court of the State of California, City and County of San Francisco, Civil Action No. CGC-07-460147."

You have to admire a company that finds it necessary to put out press releases trumpeting each new development in its legal wranglings involving a bizarre conspiracy theory. Gary Weiss does, as usual, an excellent job dissecting the press release and tells us what Overstock didn't mention -- and it's big.

But here's my question -- Why is Overstock PR'ing legal "developments" a month after the fact? It looks like a pretty feeble attempt to stop the share price's death spiral which has shaved about three-quarters of its value in the past few months. But with the stock down about 5% as of 1:30 PM ET, I think we can declare this one a failure. The saga continues.

Overstock.com continues an unprecedented run of loopy press releases originally appeared on BloggingStocks on Wed, 23 Jan 2008 19:00:00 EST. Please see our terms for use of feeds.

As Tracy Coenen discussed earlier, Overstock.com (NASDAQ: OSTK), co-founder, president and chief operating officer Jason Lindsey resigned and left the company's board of directors.

Lindsey had already retired once but came back, in CEO Patrick Byrne's own words, "when I screwed it up a couple years ago". Byrne added that "He's done a superb job. Now that it is back in a solid trailing twelve month cash-flow-positive position, he wishes to return to our previous arrangement. While Jason won't be as involved in the day-to-day operations of the company, he will still oversee special projects in a part-time capacity."

After Byrne's pat on the back and attaboys, the stock hit a new multi-year low in this morning's trading.

There are a few things to keep in mind here. As Gary Weiss wrote on his blog,

Lindsey says he is leaving because he is "ready to take a less active role in order to spend time on some outside ventures." Baloney. Note that he is leaving as director -- a position that surely requires no major heavy lifting in a board as supine as this one.

Sam Antar is also suspicious of the resignation that comes in the midst of an SEC investigation: "Was the SEC investigation of Overstock.com an undisclosed factor in Jason C. Lindsey's resignation?" Antar also discusses accounting questions surrounding Overstock.com, and comments from Mr. Lindsey on conference calls that raise questions about his involvement.

One thing's for sure: The market's reaction to Lindsey leaving doesn't suggest that traders buy Byrne's "everything is hunky dory" assertion that Lindsey left because he has restored the company to such great condition he is no longer needed in a full-time role.

Why did Overstock's president and COO really resign? originally appeared on BloggingStocks on Thu, 03 Jan 2008 14:45:00 EST. Please see our terms for use of feeds.

Continue reading Traders charged in stock-lending scheme: Is short-selling too difficult?

Traders charged in stock-lending scheme: Is short-selling too difficult? originally appeared on BloggingStocks on Fri, 21 Sep 2007 12:39:00 EST. Please see our terms for use of feeds.

One of my heroes of tell-it-like-it-is business journalism (which is something I aspire to) is Gary Weiss. He covers the seedier side of Wall Street, and one of his favorite topics is the naked short scandal which he believes, as do I, is a red herring designed to distract investors from the real issue at the companies crying fail to deliver: their own failure to deliver profits.

When it was announced that the SEC was cracking down on naked short selling on Thursday, Weiss responded with (SEC head) Chris Cox OD's on Bologna. Never one to mince words, Weiss wrote that "As I pointed out a few days ago, the SEC's meeting yesterday resembled a cheaply stocked delicatessen more than it did a regulatory agency, with half the agenda devoted to baloney -- the nonexistent "naked short selling" scandal, promoted by a handful of crackpots and corporate losers in the Baloney Brigade."

He went on to say "OK, so where's all the punishment? Where are all the SEC enforcement actions? Where are all the customer complaints of genuine harm committed by genuine naked shorting of genuine, sound, non-money losing companies?"

I'm extending a challenge on BloggingStocks. If anyone can send me the name of a genuine, sound, non-money losing company along with evidence of how the company has been damaged by naked short-selling, I will post a detailed apology.

Gary Weiss on the Baloney Brigade originally appeared on BloggingStocks on Fri, 15 Jun 2007 15:45:00 EST. Please see our terms for use of feeds.

According to a study recently published in the Journal of Accounting Research, journalists are a lot better, or at least faster, at spotting signs of accounting fraud and corporate shenanigans than the SEC. Harvard Professor Gregory Miller measured the frequency of reporters beating the SEC to the punch in uncovering fraud and found that in roughly one-third of the 263 cases of accounting fraud confirmed by the SEC between 1987 and 2002, members of the press alleged wrongdoing before the SEC or the company announced any investigation.

The Columbia Journalism Review sums up the findings nicely: "And while beating the SEC to an investigation is like beating Porky the Pig in a bicycle race up the Alps, we concede it's not nothing."

I e-mailed Marketwatch columnist Herb Greenberg (Full disclosure: He's one of my heroes.) about the findings, because he was the only journalist to have proactively uncovered a case of accounting fraud before the SEC more than once; he's done that five times.

Given the relative speed with which journalists uncover fraud, I asked him whether the SEC could learn anything from the methods employed by journalist-gumshoes. Greenberg dismissed that idea saying that "There's a difference between reporting a story and formally investigating and finding legal fault .... No, nothing they can learn."

He added that that much-maligned band of investors known as short-sellers are often sources for investigative reporters, calling them the "first line of defense for investors because they're putting their own money on the line." But he said that really good information usually comes from "former employees, analysts, and mutual fund managers who have SOLD stocks for reasons other than valuation."

Continue reading Press beats regulators to the punch in uncovering fraud

Press beats regulators to the punch in uncovering fraud originally appeared on BloggingStocks on Sat, 02 Jun 2007 12:10:00 EST. Please see our terms for use of feeds.

If you enjoy following the nakedshort-selling "scandal," you absolutely must bookmark Gary Weiss's blog. He tracks the ongoing shenanigans surrounding Overstock.com Inc. (NASDAQ: OSTK), which he referred to this morning as a "fascinating slow-mo corporate train wreck." You can also read his commentary on lesser-known but still interesting market scandals.

On Monday he wrote about CMKM Diamonds, a little-known penny stock that blamed its precipitous decline on naked short-selling. Its shareholders bought the explanation wholesale, and some even went to New York and Washington to stage loony protests against the evils of naked short-selling. Turns out it wasn't naked shorts after all. It was the company's dishonest management, which is currently being sued by new management for fraud and "looting" the company. They sold over $200 million in stock to the public, but almost none of it went to the company.

This is a great example of the tactic of diversion in action. Corporate criminals will often toss red herrings to divert the public's attention from their own misdeeds and poor management. Blaming naked short-selling seems to be the diversionary tactic du jour, and investors should probably head for the hills anytime a company complains about it.

Bookmark this blog: Gary Weiss originally appeared on BloggingStocks on Thu, 03 May 2007 20:35:00 EST. Please see our terms for use of feeds.