Jeff says:
March 29, 2011 at 8:11 am
For those of you who are new to Deep Capture, the crime that Patrick is describing works basically like this (my interpretation of the information I’ve received from DeepCapture.com):
1. A cabal of criminals including, from the bottom up, “reporters”, “analysts”, brokers, large brokerage companies, hedge fund managers, and organized crime kingpins target a company.
2. The hedge funds naked short sell the company. Short selling, of course, allows you to sell stock you don’t have, and you do it because you think the stock price is going to drop, at which point you’ll be able to buy it back cheaper, using just a portion of the money you received from the sale, and keeping the rest as profit. Perfectly legal, but only if you, as required by law, have access to some real shares to sell, which you borrow and pay interest on. In NAKED short selling on the other hand, no shares are located or borrowed, and the very act of selling non-existent shares artificially increases the supply, thereby having a depressing effect on the stock price. When MILLIONs of shares are naked shorted, the effect on the stock price can be significant.
3. Not content with that (illegal) advantage, the “analysts” write reports critical of the company by either exaggerating known weaknesses in the company, or by just making things up.
4. The “reporters” disseminate the results of the “analysis” by writing major media stories critical of the company.
5. Somehow, the cabal is able to convince the SEC that the company needs to be investigated, the news of which further shakes the confidence of legitimate investors in the company.
6. The company stock, now being attacked on multiple fronts, drops precipitously. The company, oftentimes a young tech company that needs capital to survive, is no longer able to issue stock to generate that capital because the stock price is so low, and is often forced out of business.
7. The cabal keeps the profits, for which they invested nothing other than payments for the services of the various miscreants in the scheme.
Meanwhile, the captured government regulators do nothing to stem the flood, and the captured financial press does nothing to report on the crimes exposed by Deep Capture.
You can read all about it in Mark Mitchell’s lengthy, but VERY interesting piece, “The Story of Deep Capture” (see link in header bar at top of page). You’ll learn that this process has been repeated many hundreds, perhaps in excess of a thousand, times. The sums of money being stolen through this scheme is mind-boggling.
Imagine if you could sell 5 million shares of a $10 stock that you don’t own, receiving $50M, and then the company going out of business (with your help) so you never have to buy the stock back. Pure profit. Company gone. Major CRIME. And then do this over and over and over. You do the math.
I don’t think it’s a stretch to say these greedy, organized, amoral weasels are stealing a large chunk of America’s wealth, hitting millions of individual investors, retirement funds, university funds, etc. in the process. It has to be a major factor in the state of our economy.
Much appreciation and many thanks are due to the Deep Capture team, Patrick Byrne, Mark Mitchell, and Judd Bagley for their courage and thoroughness in bringing this story to light.
By the way, when you finish The Story of Deep Capture, Mark Mitchell’s second major article, “Michael Milken and Dendreon” (also linked above), goes into exquisite detail about the coordinate attack on a single company, Dendreon. And we are anxiously awaiting a third Mitchell piece due out in the near future, so stay tuned!
March 29, 2011 at 8:11 am
For those of you who are new to Deep Capture, the crime that Patrick is describing works basically like this (my interpretation of the information I’ve received from DeepCapture.com):
1. A cabal of criminals including, from the bottom up, “reporters”, “analysts”, brokers, large brokerage companies, hedge fund managers, and organized crime kingpins target a company.
2. The hedge funds naked short sell the company. Short selling, of course, allows you to sell stock you don’t have, and you do it because you think the stock price is going to drop, at which point you’ll be able to buy it back cheaper, using just a portion of the money you received from the sale, and keeping the rest as profit. Perfectly legal, but only if you, as required by law, have access to some real shares to sell, which you borrow and pay interest on. In NAKED short selling on the other hand, no shares are located or borrowed, and the very act of selling non-existent shares artificially increases the supply, thereby having a depressing effect on the stock price. When MILLIONs of shares are naked shorted, the effect on the stock price can be significant.
3. Not content with that (illegal) advantage, the “analysts” write reports critical of the company by either exaggerating known weaknesses in the company, or by just making things up.
4. The “reporters” disseminate the results of the “analysis” by writing major media stories critical of the company.
5. Somehow, the cabal is able to convince the SEC that the company needs to be investigated, the news of which further shakes the confidence of legitimate investors in the company.
6. The company stock, now being attacked on multiple fronts, drops precipitously. The company, oftentimes a young tech company that needs capital to survive, is no longer able to issue stock to generate that capital because the stock price is so low, and is often forced out of business.
7. The cabal keeps the profits, for which they invested nothing other than payments for the services of the various miscreants in the scheme.
Meanwhile, the captured government regulators do nothing to stem the flood, and the captured financial press does nothing to report on the crimes exposed by Deep Capture.
You can read all about it in Mark Mitchell’s lengthy, but VERY interesting piece, “The Story of Deep Capture” (see link in header bar at top of page). You’ll learn that this process has been repeated many hundreds, perhaps in excess of a thousand, times. The sums of money being stolen through this scheme is mind-boggling.
Imagine if you could sell 5 million shares of a $10 stock that you don’t own, receiving $50M, and then the company going out of business (with your help) so you never have to buy the stock back. Pure profit. Company gone. Major CRIME. And then do this over and over and over. You do the math.
I don’t think it’s a stretch to say these greedy, organized, amoral weasels are stealing a large chunk of America’s wealth, hitting millions of individual investors, retirement funds, university funds, etc. in the process. It has to be a major factor in the state of our economy.
Much appreciation and many thanks are due to the Deep Capture team, Patrick Byrne, Mark Mitchell, and Judd Bagley for their courage and thoroughness in bringing this story to light.
By the way, when you finish The Story of Deep Capture, Mark Mitchell’s second major article, “Michael Milken and Dendreon” (also linked above), goes into exquisite detail about the coordinate attack on a single company, Dendreon. And we are anxiously awaiting a third Mitchell piece due out in the near future, so stay tuned!
