Investing 101 - Oct 5, 2004 - Printable Version
- Is Time Running Short in StockGate Scandal?
by Mark Faulk For the past eight months, The Faulking Truth has reported on the massive naked short selling scandal that has plagued the stock market for years. It has been called by many "the biggest financial scandal in the history of the world". During that time, dozens of lawsuits have been filed by both companies and stockholders who claim that their companies have been systematically destroyed by the practice of naked short selling. They claim that brokers, through their wholly owned clearing house system, the Depository Trust Corporation (DTCC), have effectively been creating counterfeit shares of stock through their "Stock Borrow Program", which allows brokers to "borrow" the same shares over and over again, artificially inflating the share count and driving the price of the stock down. They also claim that the governing body that has been entrusted with the task of protecting the individual investors, the self-proclaimed "Investor's Advocate", the SEC, has failed to protect investors, and has succumbed to pressure from the brokers who profit from the naked short selling scandal.
The major media has been slow to cover this scandal, and until now, except for a few random articles from publications such as The Wall Street Journal, Forbes Magazine, and Dow Jones Newswire, this story has been left to independent publications such as The Faulking Truth and Financialwire.net. On June 11, in a Faulking Truth exclusive, we reported that NBC's Dateline was planning a major expose on the stock market scandal, filming over 100 hours of interviews and footage while putting together a segment that our inside sources said would "blow the roof off of this scandal". Originally scheduled to air in January or early February, rescheduled for August, and then postponed yet again, many critics and bashers claimed the segment was shelved for good, especially after a case brought by JagMedia, and filed by an attorney in the Houston law firm of O’Quinn, Laminack, and Pirtle, was dismissed earlier this month by Houston Judge Vanessa Gilmore, citing "repeated filing deficiencies". It was fodder for the message boards and the numerous websites that have recently sprung up in an effort to negate the progress made by this publication and others who have continued to report on the scandal. Even those activists who have continually pushed for major stock market reform and a full congressional investigation into the SEC were disheartened by both the lawsuit dismissal and Dateline's refusal to air the segment or even confirm that they were still planning to air it.
Dateline Confirms StockGate Segment
It seems that both concerns are unfounded. One source close to the Dateline story told us this week that the segment would air "in the next two to three weeks", and that there is a "90% chance that it will air before the Presidential election on November 2nd." According to this source, who is heavily involved with the segment, "the Dateline story is imminent". Another source told us that while they would "be surprised if it aired before the election", that the segment was nearing completion.
I've been emailing and calling Dateline for months with no response (not even a courtesy "no comment"), so I decided to try a different approach. I emailed Sharon Hoffman, the producer who is in charge of the stock market scandal segment for Dateline, and phrased my question like this:
Sharon,
I have information that you are planning to air the segment on the stock market scandal "sometime in the next three weeks". My sources, which are extremely credible, have told me that they are "90% certain that it will air before the election on Nov. 2".
As always, I would love to have some kind of confirmation from you that this is accurate. In fact, let me phrase it this way: If you do not respond to this email, I will assume that my information is accurate and that you have no comment on the story I am writing.
Low and behold, Sharon Hoffman sent me this email a couple of hours later:
Mr. Faulk:
Thanks for your email. We are, in fact, still shooting interviews for the story, and it does not yet have a scheduled air date. I will definitely email you to alert you to the air date as soon as I know what it is, since I know you and your readers have a strong interest in the subject.
Regards,
Sharon Hoffman
In answer to my followup question about whether the segment will air before the election, Hoffman told me that "there is a chance we'll air before the election, but also a chance that we won't. I'll let you know when I know."
It's finally "official". The Dateline stock market scandal segment is still on, and our readers will know the scheduled air date as soon as we do. (Thanks, Sharon, we need all the help we can get.)
Lawsuits Still Being Filed
So, what about the JagMedia lawsuit dismissal, and the others still pending? In an article just released by www.financialwire.net , O'Quinn partner Tom Pirtle commented on the case. "'We are obviously disappointed with Judge Gilmore's ruling,' said Pirtle, a partner at O'Quinn, Laminack & Pirtle. 'While this is a setback, we firmly believe JAG Media and its stockholders have been victimized and damaged by the seemingly never ending daisy-chain of failed settlements in the company's stock. We have met with the Company to review Judge Gilmore's ruling and are currently working closely with the Company to determine the best strategy for re-initiating claims against responsible parties in light of the court's ruling,' added Pirtle."
However, according to Wes Christian of Christian, Smith, Wukoson and Jewell, who is partnering with John O'Quinn in the naked short selling lawsuits, the JagMedia case was filed independently by an associate attorney with O'Quinn, Laminack, and Pirtle, and not by O'Quinn himself, so the attorney didn't have access to the 100 person investigative and research team that O'Quinn and Christian have assembled to put together their cases. In fact, O'Quinn and Christian have a total of 20 cases currently pending, with five more scheduled to be filed in the next thirty days. According to our sources, they intend to eventually file a total of 50 to 100 lawsuits involving the naked shorting scandal. In one case, involving Nanopierce, they have won a favorable ruling to have the case tried in state court (instead of federal), and have received "favorable rulings and begun the deposition and discovery process" on another case.
While the O'Quinn/Christian cases have received the most publicity, many others have begun springing up around the country. One, filed by a majority stockholder with Trident Systems, Inc., is suing the DTCC, Knight Securities, ETrade, Morgan Stanley, Waterhouse, Bear Stearns, and Goldman Sachs, claiming that they utilized the "Stock Borrow Program" to defraud stockholders of that company. Another lawsuit has been filed by NanoSignal Corp. shareholder Gary Walters against the DTCC and Knight Securities, claiming that they "shorted 447 million shares of our stock", more than double the total outstanding shares, and have failed to deliver those shares.
States Getting Involved
We have also confirmed that several states have opened investigations into the naked short selling scandal, including Nevada , Washington, California, Florida, and Louisiana. In fact, Louisiana has filed a criminal subpoena against Paine Webber for failure to deliver shares of Nutek, a Las Vegas, Nevada holding company. According to our sources, several other states are considering similar investigations.
This is a story that just won't go away. Judging by the numerous lawsuits already filed, the steady stream still being filed, the state investigations just getting under way across the country, and the publicity certain to follow the Dateline story, this issue is picking up speed. It's just a matter of time before the real facts are revealed. For those who are involved in the massive fraud that's been perpetuated upon the stockholders of America, time is truly running "short".
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Investing 101 Archives:
Financial Terrorism in America (Mark Faulk, Mar 19, 2004)
Pump and Dump or Short and Distort? (Mark Faulk, Apr 18, 2004)
Response From Berliner Freiverkehr and The Berlin-Bremen Stock Exchange (The Faulking Truth, Jun 3, 2004)
The Berlin Connection? SEC and NASD to Meet With German Brokerage Firm Tomorrow (Mark Faulk, Jun 3, 2004)
Is Dateline Losing Credibility Over StockGate Story Delays? (Mark Faulk, Jun 11, 2004)
Who's Looking Out For You? SEC Critics Seeking Investigation (Mark Faulk, Jun 27, 2004)
He Said, She Said: SEC, NASD At Odds Over Status of Proposal (Mark Faulk, Aug 5, 2004)
The Berlin Connection: 250 Companies Out (And Counting) (Mark Faulk, Aug 30, 2004)
Jag Media Case Dismissed by Judge, Citing Filing Deficiencies (Dave Patch, Sep 9, 2004)
A Twelve Step Program to Clean up the OTC Stock Market (Mark Faulk, Sep 14, 2004)
Is Time Running Short in StockGate Scandal? (Mark Faulk, Oct 5, 2004)
Dateline: The Waiting is the Hardest Part (Mark Faulk, Nov 16, 2004)
Death of an Investment Class (Dave Patch, Dec 30, 2004)
Elgindy Trial Illustrates Incompetence at the Federal Levels (Dave Patch, Jan 4, 2005)
The Year of the Investor (Mark Faulk, Jan 5, 2005)
Regulation SHO’s Threshold Lists Leave More Questions than Answers (Dave Patch, Jan 11, 2005)
Feeding the Stock Market Beast (Mark Faulk, Jan 11, 2005)
Economic Corruption US Style (Joel S. Hirschhorn, Feb 27, 2005)
Stockgate Goes to Congress (Mark Faulk, Mar 10, 2005)
The Old Shell Game (Bob O'Brien, Mar 25, 2005)
FINALLY! Dateline to Air Stockgate Segment April 10th (Mark Faulk, Mar 28, 2005)
Dateline Stockgate Update: POSTPONED YET AGAIN! (Mark Faulk, Apr 6, 2005)
Time to Boycott GE, Dateline, and NBC? (Mark Faulk, Apr 6, 2005)
Pink Sheets CEO Calls for Reform in OTC Stock Market (Mark Faulk, May 2, 2005)
National Counterfeit Conspiracy Days, June 6th and 7th! (Mark Faulk, May 15, 2005)
Ninety-Four Trade Days and Counting (Dave Patch, May 25, 2005)
Stockgate: Turning up the Heat (Mark Faulk, May 31, 2005)
Stockgate: Donaldson out......Cox in (Mark Faulk, Jun 2, 2005)
SEC's Donaldson out, Cox in: One Step Forward, Two Steps Back (Mark Faulk, Jun 13, 2005)
President Bush’s Social Security Agenda - Steal your Money the Easy Way (Dave Patch, Jun 17, 2005)
Global Links Corp: The Real Story (Mark Faulk, Jun 26, 2005)
Forget SEC "Regulations".... This is Good Old-Fashioned Fraud (Mark Faulk, Jul 13, 2005)
Common Cause Joins Fight to "Stop Corporate Takeover of the SEC" (Mark Faulk, Jul 22, 2005)
Dateline Stockgate: We're on, we're off, we're on, we're off.....WE'RE ON AGAIN: July 31st!!! (Mark Faulk, Jul 25, 2005)
Dateline to Air Stockgate Segment in 2-Hour Show, Sunday, July 31st (Mark Faulk, Jul 29, 2005)
From Dateline to Overstock....The Plot Thickens (Mark Faulk, Aug 16, 2005)
Congress Sells America Short (Mark Faulk, Sep 20, 2005)
Stockgate: The Big Picture (Mark Faulk, Oct 10, 2005)
Stockgate: Rallying the Troops (Mark Faulk, Oct 16, 2005)
The $10.5 Billion REFCO Smoking Gun? (Bob O'Brien, Oct 23, 2005)
We Definitely Aren't in Kansas Anymore - Fraud Wall Street Style (Bob O'Brien, Nov 3, 2005)
Start Spreading the News: Stockgate Goes Nationwide (Mark Faulk, Nov 8, 2005)
Stockgate: "Can We Talk?" (Mark Faulk, Nov 27, 2005)
It's Money That Matters (Mark Faulk, Dec 11, 2005)
Regulation SHO; Results Leave Questions More than Answers (Dave Patch, Dec 29, 2005)
Faulking Truth Editor to Write CMKX Story (The Faulking Truth, Jan 5, 2006)
It Takes an Army (Mark Faulk, Jan 11, 2006)
The Circle of Greed: The Only Bull in this Stock Market is a Cash Cow (Mark Faulk, Jan 17, 2006)
A Silent Lynch Mob - An Open Letter From Rod Young (Rodney Young, Feb 2, 2006)
The Circle of Greed: A Voice in the Wilderness (Mark Faulk, Feb 13, 2006)
The Circle of Greed: Who Wants to be a Congressman? (Mark Faulk, Feb 26, 2006)
Freedom of the Press? (Mark Faulk, Mar 12, 2006)
The Parallel Universe of the DTCC: “Bits and bytes in book-entry form.” (Mark Faulk, Mar 24, 2006)
Finally...the Truth About Patrick Byrne (An open letter to Colin Kelly, Jr.) (Mark Faulk, Apr 19, 2006)
Faulking Truth recommends abolishing the SEC (Mark Faulk, Apr 27, 2006)
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