...and selling us down the river?
Here is an excellent overview of a situation getting almost no media coverage, but which down the road will surely impact our global competitiveness. If you have any money invested in small and medium-sized public companies, you ought to read this.
Are the crooks operating with impunity? Or is the SEC doing everything it can to create a level playing field? Or are we just better off going down to A.C. or Vegas?
The equities markets are a bit different [than casinos]. And yet there are similarities. There is the possibility that one can get wealthy through good fortune, or at least without having to go to work. There is a marketing effort that encourages us to put our money onto the gaming table, that it's the prudent thing to do - to be an "investor." There are pundits and talking heads and media personalities and analysts and advisors and brokers and fund managers and facilitators at every level to enliven and reinforce our decision to invest. There are plentiful studies that advance the wisdom that having money in the market makes good sense.
We have a regulatory net that is supposed to police the playing field, and we are told with regularity that they are doing so with diligence. We have the tacit imprimatur that all is well at a macro level, and that we can buy a piece of a company, invest in its future, with an assurance that criminals cannot simply steal our money with impunity.
It seems hundreds of small public companies, over the past 5 years or so, appear to have been getting hammered by organized groups, such as offshore hedge funds, short selling them into oblivion. There are many facets to this complicated story, but the bottom line is this - possible future Genentechs and Microsofts, start-up companies, who go public seeking capitalization to commercialize new intellectual properties and innovations run the risk of being destroyed before getting anywhere. Why? There is oodles of money to be made in manipulating and shorting them to death.
So here we are. Nation-state sized dollars are being used to short companies, some of which are no doubt scams and shams, but the majority of which are simply vulnerable due to their stage in the development cycle. Abundant evidence exists to support the theory that a substantial amount of illegal short selling is being conducted in a strategic manner, to destroy smaller public companies. Links between the media, class action attorneys, regulators, analysts, market participants, banks, politicians and the phenomenally wealthy hedge funds are easy to spot in the recurring attacks containing all the same elements and players.
Where are the regulators? They're pretending this situation doesn't exist. Meanwhile one of America's genuine strengths - its intellectual capital - is being stifled. Is this another example of the walmartization of our economy?
The business of serial-killing companies in order to benefit from the decline in their stock price has become a mainstream industry, and there seems to be no appetite from the regulators to stop it - the extent of the problem is likely so large that a systemic collapse could be in the offing were all facts known. Hence a push to ensure opacity in a system that should be transparent, and a breezy desire to "just put things behind us and move forward" by our regulators. If they had been doing their job the current state of affairs would have been impossible to arrive at, and they are eager to avoid examination of their collective failings.
Disclosure: I still hold some shares in a company that appears to have been victimized by these organized criminals. I just want to know what the hell really happened.