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From: StockDung3/6/2006 10:15:50 AM
   of 1821
 
StockGate: Here?s What You Can Do With My Restaurant Check; And Shove My Cleaning Bill While You?re At It / FinancialWire®
March 6, 2006 (FinancialWire) ?(By Gayle Essary) ? As the U.S. Securities and Exchange Commission ponders the fate of journalists it has subpoenaed over an investigation into the manipulative trading scandal known as StockGate, and as SEC Enforcement Chief Linda Thomsen awaits new guidelines before proceeding, there is one enduring image that will be difficult for any of them to ignore

March 6, 2006 (FinancialWire) (By Gayle Essary) As the U.S. Securities and Exchange Commission ponders the fate of journalists it has subpoenaed over an investigation into the manipulative trading scandal known as StockGate, and as SEC Enforcement Chief Linda Thomsen awaits new guidelines before proceeding, there is one enduring image that will be difficult for any of them to ignore; that of media star James Cramer writing ?BULL? on his subpoena on live TV and arrogantly tossing it to the floor.

Cramer, founder of TheStreet.com (NASDAQ: TSCM) and host of General Electric (NYSE: GE) unit CNBC?s ?Mad Money,? shocked the financial world and most legal observers with his action while interviewing Herb Greenberg, formerly of TheStreet.com, and now a columnist for Dow Jones? (NYSE: DJ) MarketWatch unit, who along with Dow Jones reporter Carol Remond had also received subpoenas. It was part of a rant against Overstock.com (NASDAQ: OSTK) and others he believes to be behind a ?conspiracy? out to get him and ?journalists.?

FinancialWire has seen some ?interesting? live emails between Overstock CEO Patrick Byrne and Cramer, and the irrepressible Cramer recently wrote FinancialWire a dozen times in a single session over various perceived wrongs He is unabashedly a flash point.

Neither General Electric nor CNBC have so far commented on the Cramer ?performance,? nor said whether they believe it is appropriate for a public person and show host to use their airwaves to ?disrespect? an enforcement proceeding.

One thing is certain. When it was over, CNBC?s own poll for Kudlow and Company surprised Larry Kudlow, the host, when over 80% solidly supported the ?journalists?? subponenas, and possibly SEC Chair Christopher Cox, who afterwards did at least a 90-degree turn from his previous reaction to the subpoenas. A poll at FinancialWire went further, saying an almost unanimous 96% of investors who voted believed Cox should be ?rebuked? for failing to support the subpoenas and his enforcement division.

This whole episode was discussed in the line at lunch this past week at the Wall Street Analyst Forum, co-sponsored by Investrend Forums (http://www.investrendforums.com), a sister division to Investrend Information (http://www.investrendinformation.com), which publishes this newswire.

The comments from attendees had by then long passed serious tone.

One money manager said he planned to pull a ?Cramer? with his restaurant check. ?I?m going to write ?BULL? on it and throw it on the floor,? he laughed. An analyst said she was expecting a pretty large cleaning bill, ?and I hope it?ll work there.?

A merchant banker, who preferred to be anonymous, said ?doing a Cramer? with his IRS form is ?certainly a preferable action over the alternative,? which would be paying his taxes.

There were plenty of emails flying around over the subject, as well.

Mark Faulk, of faulkingtruth.com, a site that is opposed to illegal market manipulation, clinched the argument: ?Yeah well, I started throwing EVERYTHING on the floor after I saw Cramer ... dishes, food wrappers from Taco Bell, dirty clothes, it's liberating as he(ck), but I keep tripping over (stuff).?

No one suggested, however, doing it with a subpoena. ?At least not while they?re (regulators) watching,? one said.

For up-to-the-minute news, features and links click on financialwire.net

FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on investrend.com

For a free annual report on a company mentioned in the news, please click on investrend.ar.wilink.com

The FinancialWire NewsFeed is now available in multiple formats to your site or desktop, free. Click on: investrend.com

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From: StockDung3/7/2006 11:06:01 AM
   of 1821
 
ROBTV. PATRICK BYRNE CALLS CRAMER A LIAR. DTC RUN BY CRIMINALS AND BYRNE SAYS HE HOPES THEY SUE HIM FOR SAYING THAT. "Byrne's War on Analysts and Naked Short Sellers"
robtv.com!robVideo/robtv0726.20060306.00037000-00037531-clip1/h/220asf///

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From: StockDung3/13/2006 9:52:38 PM
   of 1821
 
Is word out? Is Cramer going to jail?
thesanitycheck.com

Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 3/13/2006 2:22 PM

What I found funny was that Imus couldn't distance himself fast enough from Cramer, pronouncing the show "unwatchable" and asking several times, in a mocking tone, "Isn't Cramer going to jail?"

Bo sounds like the Jersey wiseguy plumber, with all the "your" and "dats" and double negatives one could wish for.

Here's a transcript - I wonder what the word on the street is - I mean, this sounded like a really bad character witness shtick from before the perp gets sentenced. Or maybe that is just me? And why today, and more importantly why Imus, who is part of the great GE family, bagging on Cramer, who is also a part of that family? Interesting times we live in, no?

Anyway....

"Imus: It's an unbelievable American business story.

Bo: Well you know who eyeballed that? My friend Jim Cramer. He eyeballed that bank a long time ago. Jimmy Cramer, the guy who bites the heads off the bulls. Wonderful guy. Smart as a whip. Good friend of mine, too. Big heart guy; big, big heart.

Imus: He's given lots of money to the Ranch.

Bo: Let me tell you something.

Imus: Lots of money. Almost a hundred grand.

Bo: Seriously?

Imus: Yeah.

Bo: Let me tell you something. One of the biggest heart guys--Jimmy Cramer--in the world.

Imus. He's going to jail, isn't he?

Bo: He ain't goin' to no jail! He's the...He's the epitomotatious
[sic] guy. You watch his show, you watch his show, you start bankin' on him, on those stocks...

Imus: .. The show is unwatchable...

Bo: You gonna make money.

Imus: It's unwatchable.

Bo: "Ba-ooyah!" What does he say? "Ba-ooyah!"

Imus: What does he say, Lou?

Lou: "Boo-yah!"

Bo: "Boo-yah!" No, he's the man, I tell you what. I've had him up at Rejo's (sp?). He's just one funny guy but he's a big-hearted guy. You know he used to live in his car? He came outta livin' in his car 'cause he went down on hard times so bad, and he picks himself up, and he's successful, and he loves his country, loves the little children, everything. He's a good man, good man.

Imus: Well he's going to the slammer, right?

Bo: (laughs) No he ain't going to no slammer.

Imus: Well that's what I heard.

Bo: No!. What are you talkin' about?

Imus: Well I hope not. I like the guy, too.

Bo: He's number one on the MSNBC.. He's number one on CNBC ..uhh.. He's number one. He's number one."

Wow. Loves his country, God, the flag, children, puppies, apple pie, you name it.

Does anyone else wonder just how patently obvious this can get? Jim Cramer - vicitm? And saint! Man of the people. Philanthropist. And a man whose pulled himself up from the streets. A regular guy.

My gag reflex keeps tripping. Urp. Urrrrgggnnnhhhpp.

You know, one o those Harvard grad lawyer Wall Street deci-millionaires that are so sympathetic....Hey, if Milken can paint himself as a political prisoner, why not Cramer as American hero?

Urrrrrp. Mfffhhh....mffffffhhhh....uuurrrggghhhp.

Here's my fun little mental image of how the next interview could go:








Copyright ©2006 Bob O'Brien
Permalink | Trackback

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Comments (28) Add Comment
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Re: Is word out? Is Cramer going to jail? By n-tres-ted on 3/13/2006 3:03 PM
Have you seen the street.com "cover story" (pun intended) on OSTK? New valuation says OSTK very undervalued.

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Re: Is word out? Is Cramer going to jail? By n-tres-ted on 3/13/2006 3:04 PM
thestreet.com

Here's the link.

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Re: Is word out? Is Cramer going to jail? By jcline on 3/13/2006 6:16 PM
If the rumor is true....I can see it now.... a bright orange suit with "BULL" written on the back. Maybe the numbers can match the OSTK short position???

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Re: Is word out? Is Cramer going to jail? By rtway1 on 3/13/2006 6:29 PM
The only shame that Cramer knows is when it has cost him money.I really think he would be an actor than a whatever he is supposed to be. He loves the camera and can,t get enough of himself. I woudn,t beleive him or any of his friends as far as I could throw this computer.He made his bed and now let him sleep in it.(With Bubba)

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Re: Is word out? Is Cramer going to jail? By robelita on 3/13/2006 3:07 PM
Psssssssshhhhhhhhbbbbbbbbbtttttttttttt!

E i E i OWE

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Re: Is word out? Is Cramer going to jail? By hemingway811 on 3/13/2006 3:24 PM
I believe Imus works for Viacom. Viacom owns WFAN. Imus's radio show is broadcast on WFAN and began simulcasting on MSNBC in Sept. 1996.

Don regularly skewers top executives at MSNBC.

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Re: Is word out? Is Cramer going to jail? By BobbyC on 3/13/2006 3:27 PM
I just saw that Street.com article on Overstock..... they are now saying that the stock is undervalued..... man if this wasn't actually happening, I would never frigin believe it..... so now that Overstock has these guys by the gonads, they are trying to suck up to them and play nice.... if Bryne is the man we think and hope he is, then he should be doubling over in laughter then in the same instant double his legal efforts to put these bastards in jail....

the only way I would approve seeing Cramer not go to Jail, is if he rats out every last one of the higher ups that are involved.... to tell you the truth, a reduced sentence will be enough....

Oh man that new report on Overstock is just too much..... my cousin is a screen writer.... this could be one great movie....

I really am still in utter disbelief at the nerve of street.com to now put out a favorable report on overstock..... I don't know whether to laugh or be pissed b/c they think they have an easy way out....

anyways let the truth be told....upwards and onwards...
BobbyC

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Re: Is word out? Is Cramer going to jail? By Granny on 3/13/2006 3:49 PM
He gave my money to charity. Isn't he thoughtful.

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Re: Is word out? Is Cramer going to jail? By Granny on 3/13/2006 3:51 PM
And I didn't even get the tax write off.

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Re: Is word out? Is Cramer going to jail? By Granny's Accountant on 3/13/2006 4:08 PM
Granny,
You should be writing off those losses causing by Jimmy's backrunning to the tune of up to $3K a year on your taxes. Booyah.

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Re: Is word out? Is Cramer going to jail? By RubeWaddell on 3/13/2006 4:09 PM
Your Honor, I present James Cramer, Man of the (haha) People, A giving, charitable man, Friend of the small investor(hahahahoo-hah),stop. I can't go on. hahahahaha, I'm gonna resign like Gradient's lawyers did, Judge, hahahahahaha

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Re: Is word out? Is Cramer going to jail? By hwh on 3/13/2006 4:22 PM
Sum a cum loudly...hwh

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Re: Is word out? Is Cramer going to jail? By ginger on 3/13/2006 4:32 PM
Summer come you say ?


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Re: Is word out? Is Cramer going to jail? By Tony Ryals on 3/13/2006 4:33 PM
Is it true that this is one of the most popular websites in the UAE ?

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Re: Is word out? Is Cramer going to jail? By mfairview on 3/13/2006 4:39 PM
Getting tired of posting on Weiss's board to yourself Ryals? Maybe Cuban will take you back.

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Re: Is word out? Is Cramer going to jail? By Tony I thought Bobo was JDD? on 3/13/2006 4:43 PM
Tony,
Why'd you make Carol say those bad bad things about the bunny and make her call him "James Dale Davidson" in the funny papers? Bunny wants some free coffee to make it up.

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Re: Is word out? Is Cramer going to jail? By lenofus on 3/13/2006 5:05 PM
I love these bastards giving my money to charity, after they steal it from me.

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Re: Is word out? Is Cramer going to jail? By mfairview on 3/13/2006 5:07 PM
At least they could give you the tax deduction (and maybe a tv dinner)!

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Re: Is word out? Is Cramer going to jail? By Y on 3/13/2006 5:14 PM
I remember Cramer saying his daughters would rather go to the dentist than Walmart.

That was right up there with Greenberg saying his kids hate the lady in the red dress on the Overstock commercials. Then he smirked and said but he himself would not say anything about Overstock.

Hey it wasn't me, my kids said it.

Shop till the miscreants drop. I said that.

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Re: Is word out? Is Cramer going to jail? By Browntrout on 3/13/2006 5:14 PM
Tony- I thought you were locked up in Guatemala?

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Re: Is word out? Is Cramer going to jail? By dave on 3/13/2006 5:21 PM
Bobo, you should post the "bull subpoena" picture again. You can't give that pic too much publicity.

That pic is worth a million words.


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Re: Is word out? Is Cramer going to jail? By RubeWaddell on 3/13/2006 5:26 PM
Hey TonyBoy,

Hows the Beans n' Lice diet?
I hear Nicotene is a good substitute for food. Wanna invest in my start-up to market this brilliant discovery? I've got a janitor that works in the Chemistry Labs at Stanford on my staff in the evenings conducting research. He says $60,000 should be enough.
Gotta run, I hear a fire engine.

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Re: Is word out? Is Cramer going to jail? By aries on 3/13/2006 5:27 PM
Here is a copy of the Street.com article
thestreet.com
Overstock Shares Are on Discount

By Arne Alsin
RealMoney.com Contributor
3/13/2006 4:22 PM EST
Click here for more stories by Arne Alsin

This column was originally published on RealMoney on March 13 at 11:16 a.m. EST. It's being republished as a bonus for TheStreet.com readers.
Over the past year there has been an avalanche of negativity about Overstock (OSTK:Nasdaq - commentary - research - Cramer's Take). The company has been criticized for underperforming analyst expectations in 2005, and there has been a swirl of controversy surrounding Patrick Byrne, CEO of Overstock, and his legal battle over alleged front-running by certain hedge funds.

My review of the financial statements and operating history of Overstock indicates that the negativity is overdone. This is a severely undervalued company.

As I'll explain below, my minimum prospective value for Overstock shares is $92 in 2010; it currently trades at about $23.

Overstock's business is not complicated -- it's the online equivalent of an outlet mall. The excess inventory segment of the retail market is ideally suited for the Internet. Brand-name manufacturers can avoid the inefficiencies of supplying and staffing retail outlet stores by partnering with an online aggregator like Overstock.

Also, excess inventory levels are notoriously irregular and difficult for manufacturers to manage. They have to deal with unpredictable change in both the nominal level and across product categories. Using a single distribution partner, like Overstock, requires no capital outlay by manufacturers and results in fast conversion of excess inventory to cash.

Here's the key analytical point for this particular model: The online space that Overstock competes in is a winner-take-all category. Like with eBay (EBAY:Nasdaq - commentary - research - Cramer's Take) in the online auction space, there's a self-reinforcing dynamic at work here. Buyers naturally migrate to the inventory liquidation site that has the most product, and sellers want to sell on the site that has the most buyers. It's a mistake to underestimate the importance of this dynamic -- or its potential long-term value.

Financial Statements Paint the Picture
The financial statements of Overstock tell an impressive story. Annual revenue has grown from $92 million in 2002 to $239 million in 2003, to $494 million in 2004, and to $804 million last year. Most remarkable is that this robust revenue growth -- soon to be over $1 billion per year -- has been accomplished using a minimal amount of capital.
Go to NEXT PAGE
Page 2
Despite having a comparable operating structure (e.g., gross margins) to Amazon (AMZN:Nasdaq - commentary - research - Cramer's Take), Overstock has used a tiny fraction of the capital that Amazon used, to build a comparable amount of business. During the past four years of rapid growth, operating losses have averaged about 3% of sales at Overstock. During the rapid growth phase at Amazon, operating losses averaged well over 20%.

When Amazon was nearing $1 billion in sales a few years ago (as Overstock is today), it took on well over $1.4 billion in debt to fund its expansion. Overstock has built a comparable base of business, with a comparable operating structure, with long-term debt of only $75 million. Long after the controversy over the hedge fund lawsuit dies down, business students will be studying this story. They can call it "Building a Billion Dollar Business on a Shoestring."

Critics of Overstock harp on the fact that the company is not making a profit. This criticism is misplaced. There's more to business value than short-term earnings. Companies with low P/E ratios can be expensive, and companies with no earnings at all can be cheap.

Consider Ford, which was being called "a steal" and "the ultimate no-brainer of an investment" in 2000 because it was selling at less than eight times earnings. Since that time, Ford shares have declined by 70%.

Certainly, the value of Overstock will eventually turn on its ability to generate cash earnings. Although the earnings leverage in this model is considerable, the near-term imperative should be maintaining and building on its dominant market position in this winner-take-all category.

Valuation of Overstock Shares
Since Amazon came public in 1998, it has never traded below one times sales, with the exception of 2001, when it was hit by a wave of negativity. At the time, the company was losing 12% at the operating line and had disappointing sales growth. It briefly traded at $5.50 per share, or 0.75 times sales. Currently, Amazon trades at over $36 per share, or 1.8 times sales.
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Page 3
Look for shares of Overstock to perform quite well over the next several years. While Amazon's "trough" was at 0.75 times sales, Overstock's recent low represents a much heavier discount, at less than 0.50 times sales. (Market cap of $440 million divided by $900 million in current year sales.) Using one times sales as a conservative metric, my calculations indicate that Overstock will be worth $92 per share by 2010.

I wouldn't be surprised if the long-term cash earnings power of the Overstock model eventually merits a 1.25 to 1.5 times sales valuation, which would still be a discount to Amazon's 1.8 times sales valuation. This implies a 2010 value of $115 to $139 per share. It's interesting to note that gross margins at Overstock are slightly better and expanding faster than at Amazon.

As discussed above, Overstock is much more capital efficient than Amazon. That is reflected in Overstock's balance sheet, which is in vastly better shape than the balance sheet of Amazon at a comparable point in its history. Also, growth in partner fulfillment (product shipped direct from manufacturer to customer), now at about 60% of revenue, gives Overstock both capital and margin advantages over the Amazon model.

P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our free trial offer to TheStreet.com's RealMoney premium Web site, where you'll get in-depth commentary and money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice -- try it now.

Go to THESTREET.COM HOME PAGE | Go to BEGINNING OF STORY


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Re: Is word out? Is Cramer going to jail? By z3peru on 3/13/2006 5:35 PM
Bobo, the cartoon was hilarious! Your best yet. Here on the East Coast, it is "night." Just waiting for the news.

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Re: Is word out? Is Cramer going to jail? By gregcable2002 on 3/13/2006 5:42 PM
The negativity is overdone? What's up with that statement? these guilty ####s need jail time,for real.

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Re: Is word out? Is Cramer going to jail? By they left out the UFO's today on 3/13/2006 5:46 PM
What? No picture of UFO's today in TSCM's OSTK piece?

Too late, jerks. The "King of Wall Street" screwed the SEC pooch with that "Bull" schtick.

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Re: Is word out? Is Cramer going to jail? By InTheKnow on 3/13/2006 5:49 PM
Waiting patiently...

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Re: Is word out? Is Cramer going to jail? By mhelburn on 3/13/2006 5:49 PM
It is so wrong to try Jim Cramer in the press. So, he and the Enterprise tried a few companies in the press, but he is such a wonderful guy. He loves our country and respects the law as demonstrated by the humble and respectful way he treated the subpoena from the SEC on national television. He probably can't get a fair trial in the U.S. because of the ass that he has made of himself. Where could he go to get a fair trial.. like you could find 12 of his peers. Oz...you could get 12 Flying Monkeys for a jury. I just love you Jimmy, you are such a stand-up guy. Bo loves you, too.

My brother-in-law keeps saying, "Cramer is too rich to be crooked!" That is proof to me. There is a cut off point where a person gets enough money and they become honest. Yup.. that's it. What is that number?

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From: StockDung3/27/2006 10:46:30 AM
   of 1821
 
StockGate: Former DTC Executive Paints Nation’s Clearing House As Out Of Control / FinancialWire®

March 27, 2006 (FinancialWire) The Depository Trust and Clearing Corp.’s backlog of grandfathered fails-to-deliver is “big enough to give me nightmares,” says Dr. Susanne Trimbath, a former Director of Transfer Agent Services at the DTC, in an exclusive Q&A session with “The Sanity Check” at thesanitycheck.com

March 27, 2006 (FinancialWire) The Depository Trust and Clearing Corp.’s backlog of grandfathered fails-to-deliver is “big enough to give me nightmares,” says Dr. Susanne Trimbath, a former Director of Transfer Agent Services at the DTC, in an exclusive Q&A session with “The Sanity Check” at thesanitycheck.com She also states the program may stimulate money laundering and provides a blueprint as to how anyone, including terrorists, could use that system, at thesanitycheck.com

Trimbath states that the current backlog, which is exemplified by huge fails to deliver on the U.S. Security and Exchange Commission’s mandated Regulation SHO list for such high-profile companies as Overstock.com (NASDAQ: OSTK), Biovail (NYSE: BVF) Novastar Financial (NYSE: NFI) and Martha Stewart Living Omnimedia (NYSE: MSO), is at least “three times as big as any one observer is willing to admit.”

Biovail was the subject Sunday of two major press events, including a lengthy article in the New York Times and a “60 Minutes” segment on CBS. Both press events described the Biovail lawsuits against SAC Capital and Gradient Analytics, including accusations they may have acted in concert to manipulate the price of Biovail’s stock. Overstock.com has a similar lawsuit in the courts.

The economist Dr. Trimbath testified at a fall forum sponsored by the North American Securities Administrators Association just before a multi-state NASAA task force began issuing subpoenas at the DTCC. The DTCC has since struck out hard, challenging any suggestion that it in any way facilitates illegal, manipulative, naked short sales with its “Stock Borrow” program, which Trimbath says is really a euphemism for a hugely profitable “Stock Lending” program.

The entire interview follows:

Q: ”tell us a little about your background at the DTCC.”

A: “Being an economist is my second career. I have 20 years experience in financial services, from Prudential Insurance, through the Federal Reserve Bank and 3 different depositories. I was with the Pacific Clearing Corporation and the Pacific Securities Depository Trust Company the last 2 years before they shut down (1985-1987). I was in operations there both as an analyst and as a manager. After the shutdown, Depository Trust Company (DTC) moved me to New York as Director of Transfer Agent Services, an industry liaison position. Since the same companies that ran transfer agencies (Chase, US Trust, BoNY, etc.) were also broker/dealer Participants at DTC, I was frequently called on to help them with problems that extended beyond my job description into reorganizations, dividends, proxies and even settlement.

“At DTC (now a subsidiary of DTCC), one of my more important accomplishments was to propose and then enhance a service for the direct mail of certificates by agents to shareholders at the request of participants. I also proposed, developed and tested automated direct withdrawals and deposits at custodians. Both programs are complementary services to Direct Registration offered by issuers, which the NYSE is trying to have made a listing requirement. After leaving DTC, and before entering the PhD program at NYU, I worked about a year in Russia helping them build clearing, settlement and depository operations.”

Q: “Some have expressed the sentiment that you are a whistleblower, and that it is high time a whistleblower came forward. Do you consider yourself a whistleblower? And, just for the record, are you being compensated for your statements about NSS?”

A: “Legal protection for whistleblowers is largely reserved for those who take on the government. Otherwise, you would at least be employed by the party you are decrying. I wouldn’t meet either of those qualifications. Since I’ve never left a share of stock with a broker (once you’ve seen how the sausage is being made, you never eat it again), I can’t claim to have been individually harmed by the activity. Of course, if DTCC attempts to withhold my pension because I talked about their role in this mess, then I might have a claim to ‘whistleblower.’ We’ll have to wait an undisclosed number of years before I’m eligible to test the matter.

“As I described earlier, I am on my second career, working full time as an independent researcher and consultant in economics and finance. Although capital markets and corporate finance are in my research portfolio, I first addressed the specific topic of NSS at the request of paying clients beginning in late 2003. Since that time, I have worked and will continue to work as an advisor and consultant on NSS for a variety of firms. What it comes down to is that someone pays me to give them direct advice on NSS; when I make public statements it’s usually not for hire but rather in the interest of civic education. Part of my marketing strategy is to be sure all the stakeholders in NSS know that I can help them. I apply a similar strategy to my other areas of specialization such as international finance and economic analysis of law.”

Q: “Given your background there, what do you make of the current FTD issue – let’s start with, why does the DTCC keep all the data secret?”

A: “As the saying goes, ‘Macy’s doesn’t tell Gimble’s.’ DTCC keeps certain data private so that Shearson won’t figure out Merrill’s business strategies. All the Participants compete with each other, so DTCC is careful about data that might reveal firm-specific holdings or transactions. That said, there is much aggregate data that the DTCC could release that would not reveal any trade secrets but that could reveal the real magnitude of the problem.”

Q: “Some refer to the SBP as a “self-replenishing, anonymous lending pool.” Would you agree with this characterization?”

A: “Yes. It is definitely anonymous (unless rules are being broken). And since nothing prevents the buyer who receives a borrowed share for settlement from depositing shares into the lending pool at the Depository, it is self-replenishing.”

Q: “The DTCC takes great pains to make it clear that the SBP doesn’t allow a broker to lend the same share twice via the SBP. My contention is that they certainly allow the same share to be lent by different brokers, thus their rhetoric is disingenuous. Do you agree, or disagree?”

A: “It’s a word game. The stock borrow program doesn’t track who lent the share (only who borrowed it). So the stock borrow program doesn’t allow ANY shares to be lent…only borrowed, get it? They play the same word game when they say they don’t make money on the stock borrow program.

“They don’t.

“What they DO make money on is the stock lending program.

“By the way, they also make money on fails to deliver. OK, so the same shares aren’t lent twice by the same broker because the lender’s account is reduced by the number of loaned shares until the loan is repaid. Fine. What they aren’t saying is that the shares are a “fungible mass,” and no one keeps track of which share was used to settle which trade. So, a Participant who receives 100 shares of OSTK at settlement could be getting 50 borrowed shares. And it is those 50 shares that can be loaned a second time since all settlement is considered to be ‘final’.”

Q: “I believe that most of the current FTD issue is caused by two things – the de-linking of clearing and settling, and the allowing of access to the proceeds from a failed delivery over and above collateralization requirements. Would you agree, or disagree, and care to comment on any other issues you feel are contributors to this?”

A: “It depends on what the meaning of ‘is’ is…. No, wait, that was something else.

“It depends on how you define ‘(T)he current FTD issue’. Regarding ‘the allowing of access to the proceeds from a failed delivery over and above collateralization requirements’ this is a very convoluted statement. Are you referring to the release of collateral on borrowed stock as the price of shares is driven into the ground? Are you referring to the fact that the seller gets paid for a failed delivery because of net settlement and the ever present “fungible mass”? I see the FTD issue as additive to the NSS issue and the stock lending issue. In other words, I see the problem as being at least 3 times as big as any one observer is willing to admit.

“The over-arching problem actually got much worse when clearing and settlement (in the form of NSCC and DTC) were connected under DTCC. Think blue-suited brokers at NSCC and grey-suited bankers at DTC. NSCC was run by the trading side where net settlement minimized the number of cash and share deliveries to one per day (basically). DTC on the other hand is like a bank for brokers; it’s where they keep the shares they need to effect settlement. DTC’s status as a quasi-bank provided more regulators and more oversight. Both NSCC and DTC had different Boards, populated from different sides of the houses, with different interests. When they brought them together, it appears that the blue suits won and their Wall Street Cowboy mentality is dominating the organization.

“That said, I always believed that they should not have been separated at birth. It is my opinion that there were two dominant personalities at the time and each aggressively sought to have their own area of authority. After those guys retired, the door was open to reunite the two sides. Unfortunately, by then they had grown to be very different. Perhaps because of weak understanding on the part of the Federal Reserve and the SEC about what these two do, the clearing side was allowed to dominate and with that, ‘trust’ was no longer the middle name.”

Q: “Do you have any opinion as to how large the ‘ex-clearing’ FTD situation is versus the ‘in-system’ FTDs? A ratio?”

A: “The by-the-rules version of market infrastructure dictates that the ex-clearing portion should be very small, maybe 15% of the whole problem. In fact, since the clearing system enables NSS, FTD and stock loan, there’s no reason to go ex-clearing with the dirty deeds. Here’s a simple example of how to engage in money laundering and counterfeiting using the Stock Borrow Program and the ‘in-system’ mechanisms (see link above).

“In a future response, I’ll show a diagram where the entire operation can be accelerated if there is at least 1 ex-clearing transaction. It basically shows that things move much faster if you can get at least 1/3 of the transactions processed ex-DTCC.”

Q: “Any opinion as to how large the total grandfathered position of FTDs was?”

A: “Big enough to give me nightmares.”

For up-to-the-minute news, features and links click on financialwire.net

FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on investrend.com

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From: StockDung3/29/2006 11:02:26 AM
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StockGate: Is The Biggest Financial Media Bust In American History In The Offing? / FinancialWire®

March 29, 2006 (FinancialWire) Financial journalists are quick to yell ?fire? whenever a public company is slow with disclosures that would provide full public transparency, but there has been a dirty little secret among a wide swath of the media, many of whom have written and published indignant pieces about the broadening Gradient Analytics ? Rocker Partners ? SAC Capital ? Overstock.com (NASDAQ: OSTK) ? Biovail (NYSE: BVF) scandal for weeks.

March 29, 2006 (FinancialWire) Financial journalists are quick to yell ?fire? whenever a public company is slow with disclosures that would provide full public transparency, but there has been a dirty little secret among a wide swath of the media, many of whom have written and published indignant pieces about the broadening Gradient Analytics ? Rocker Partners ? SAC Capital ? Overstock.com (NASDAQ: OSTK) ? Biovail (NYSE: BVF) scandal for weeks.

It turns out that the U.S. Securities and Exchange Commission is not interested in the emails of just three journalists, Herb Greenberg and Carol Remond of Dow Jones (NYSE: DJ) and CNBC commentator James Cramer, co-founder of TheStreet.com (NASDAQ: TSCM), which was also subpoenaed, but also for five other well-known writers, most of whom have long celebrated the usefulness of short-selling in the marketplace without distinguishing from the ?naked? kind that is manipulative and illegal, and almost all of whom appear to have drawn much of their content from a previously little-known research outfit in Arizona.

Roddy Boyd, writer for News Corp.?s (NYSE: NWS) New York Post, revealed somewhat belatedly, after previously failing to disclose the SEC?s potential interest in him in previous articles supporting the initial three named journalists, that he is one of those ?persons of interest? by SEC investigators, in their requests for emails from Gradient.

Others, he revealed, are Bethany McLean of Fortune Magazine, Jesse Eisinger of the Wall Street Journal, Elizabeth MacDonald of Forbes Magazine, and former Barron?s editor Cheryl Strauss Einhorn, who is married to a hedge fund head David Einhorn.

The scandal could produce a journalist haul before justice that could dwarf the Dan Dorfman ? CNBC affair ten years ago.

Boyd noted that the SEC investigation is into ?alleged collusion,? but did not say if the SEC believes the journalists themselves colluded.

Despite their otherwise positions on public transparency ? for others ? none of those nor their media outlets have disclosed the SEC?s interest in their emails, although Boyd said Gradient is first seeking ?permission? from the reporters? news organizations.

Meanwhile, Gradient Analystics, the subject of an expose on Viacom?s (NYSE: VIA) CBS network?s ?60 Minutes? Sunday night, for alleged biased research produced on Biovail, has now admitted that giant hedge fund SAC Capital Management paid it for its research, and there were no required U.S. Securities and Exchange Commission disclosures, according to Charles Gasparino, reporting on CNBC.

At the same time, a $4 billion class action lawsuit has been filed on behalf of Biovail shareholders against SAC, its founder Steven A. Cohen, Gradient and Banc of America Securities (NYSE: BAC) and one of its analysts, David Maris.

It has also been disclosed that the SEC has subpoenaed Gradient for its own copies of communications it may have had with journalists whose own subpoenas are on hold pending new SEC guidelines. These journalists include Herb Greenberg, now with Dow Jones (NYSE: DJ) Marketwatch, but formerly with TheStreet.com (NASDAQ: TSCM), whose own co-founder and CNBC personality James Cramer was subpoenaed, as well as Carol Remond, a writer for Dow Jones.

Despite these developments, Greenberg appeared on CNBC to defend the ?independence? of Gradient?s reports, saying its research is distributed to subscribing mutual funds and others, and not to the public. He called the new developments ?spin.?

Greenberg did not address allegations that a reporter working for Greenberg and Cramer actually ?ghost-wrote? reports for Gradient, or whether his own subsequent ?news reporting? on Gradient?s research wittingly or unwittingly effectively moved the ?findings? of Gradient on Biovail and Overstock.com (NASDAQ: OSTK) and several others into the ?public? arena.

Michael Mayhew, CEO of Integrity Research Associates, appearing on the network shortly afterwards, disagreed, saying that disclosure of compensation in any commissioned research project is imperative, ?whether produced for retail or for institutional subscribers.?

Sponsored research is not new. For example, Investrend Research, a division of the company that publishes FinancialWire, produces ?sponsored research,? but it follows both the law and the ?Standards For Independent Research Providers? in full disclosures regarding not only who commissions the research but how much is paid.

U.S. Securities and Exchange Commission Regulation 17(b) states:

?It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.?

Gradient is a member of the subscriber-based research organization, InvestorSide, which had previously told FinancialWire that it would consider terminating the company?s membership if an impropriety is found to exist.

On May 1, Greenberg will welcome U.S. Securities and Exchange Commission Chair Chris Cox into a lion?s den of supporters when both speak at the annual conference of the Society of American Business Editors and Writers. The announcement is at sabew.com

Greenberg will discuss the subpoenas himself on a panel with Joseph Nocera, a New York Times (NYSE: NYT) columnist, Dan Colarusso, business editor for the New York Post, and Dave Beal, columnist for the St. Paul Pioneer Press, who will moderate the panel.

Greenberg, who has been alleged in affidavits as having close ties with Gradient Analytics and whose reporter has been accused of having ghost-written some of the research firm?s reports, was more recently famously associated with Cramer in a joint TV appearance where Cramer wrote ?BULL? on his subpoena and tossed it ceremoniously on the floor.

Also, Myron Kandel, the retired TV business news reporter, will moderate the annual Gary Klott Ethics Symposium, focusing on hedge funds, short sellers, regulators and the ethical challenges for journalists and editors working in that realm. Participating will be Dave Kansas, Money & Investing Editor of The Wall Street Journal; Jane Kirtley, Silha Professor for Media Ethics and Law University of Minnesota, and Ed Wasserman, Knight Chair of Ethics at Washington and Lee University.

Sponsored research is common practice among smaller public companies for which no other analytics would generally be available to shareholders, and it has now drawn the endorsement of a U.S. Securities and Exchange Commission advisory committee.

The endorsement by the SEC committee, however, comes with a proviso, that such providers and their covered companies reveal the compensation and act according to a published set of standards designed to eliminate conflict.

The ?Standards For Independent Research Providers? at firstresearchconsortium.com was the model the SEC advisory committee had available as their sole reference when promulgating their new recommendations to the Commission.

In an email to FinancialWire), John J. Nester, a spokesperson for the U.S. Securities and Exchange Commission, confirmed that regulators interpret 17(b) to mean that specific compensation information must be contained in press releases, and that a link to a disclosure somewhere else, for example, is a violation of the regulation. He further stated that the compensation disclosure required by the SEC includes ?amounts and sources in any press release mentioning the company under research coverage?.?

The SEC had previously told FinancialWire that it intends to enforce its provisions so that investors may have a fully transparent understanding of any potential agenda or lack thereof.

The CFA Institute and National Investor Relations Institute ?Analyst / Issuer Guidelines? requires that analysts:

?Accept only cash for their work and to decline any compensation that is ?contingent on the content or conclusions of the research or the resulting impact on share price?;

?Disclose the nature and extent of their compensation, along with any relationship they may have with the issuer or an affiliate, their credentials and professional background, and any matters that might reasonably be expected to impair their objectivity; and

?Certify that analysts and recommendations contained in the report represent their true opinion.?

The NIRI-CFAI joint panel now requires public company issuers to insure that reports issued about it for a fee contains the appropriate fee disclosures, as well as require that analysts have proper, disclosed credentials.

The following ?Standards for Independent Research Providers,? initially promulgated three years ago were updated May 9, 2005, and are posted at firstresearchconsortium.com . They include the CFAI-NIRI and other ethics programs by reference:

The FIRST Research Consortium, founded in May, 2003 as an Association of Standards-Based Research Providers, recognizing that surveys indicate that three out of every four investors are ?most influenced? by an analyst report, that nearly nine out of ten investors believe ?legitimate fee-based research is objective and useful,? and that ?Enrollment in standards-based research is an important measure of a company?s commitment to transparency and Good Governance,? has promulgated these ?Standards for Independent Research Providers,? to serve as an ethical bond between enrolled companies and their shareholders.

1. Ethical precepts are an essential element of professional independent research, establishing the credibility necessary to understanding and accepting the research provider?s analytical output. Thus:

a. These Standards incorporate by inference the analyst ?Standards and Ethics? of the CFA Institute, the ?Issuer / Analyst Guidelines? jointly adopted by the CFA Institute and National Investor Relations Institute, and the appropriate language in NASD Rule 2711, Regulation AC, as well as other recognized industry guides; and

b. Once a company has enrolled for coverage, the responsibility of the fee-based independent research provider and its assigned analyst(s) is to the public and to a company?s shareholders and investors, and not to any company or to management.

2. Qualified analysts are fundamental to the production of valid analytics. Thus:

a. Only analysts credentialed by professional peer-reviewed organizations, or otherwise qualified by several years of supervised or supervisory research reporting for recognized financial institutions, and only adherents to the ?Standards and Ethics? of the CFA Institute should be allowed to produce research published by fee-based independent research providers;

b. The names and credentials of analysts producing the research should be included in reports published by independent research providers, along with an attestment thereto that the analyst?s work product is purely his or her own without influence or interference; and

c. Only qualified analysts should determine what to publish and when to publish. Independent research providers are obligated to distribute the qualified analyst?s report upon publication.

3. Transparency is vital to the publication and dissemination of investment data and fundamental analysis, and is an ethical responsibility of the fee-based independent research provider. Thus:

a. Fee-based independent research providers should disclose all amounts of compensation received or to be received for the preparation, publication and dissemination of research, research summaries or other announcements not only in the reports but also in whatever form such material is disseminated;

b. All such communications should include the names and identities of the payers, and if a third-party or third-parties, their names and identities, as well as their relationship(s) to the issuer;

c. All such communications should also meet both the letter and the spirit of U.S. Securities and Exchange Commission Regulation 17(b);

d. If communications come from the issuer, it is the responsibility of the provider to advise the issuer that its reports or summaries may not be issued without the inclusion of these full disclosures, and if the provider is ignored, it is the responsibility of the provider to so inform the public; and further,

e. Ratings and targets should not be issued as recommendations or stock price predictors, and should not be issued or published in the absence of a full, publicly-accessible report. Where a report has been issued previous to a public announcement, the research provider has a responsibility to notice the investing public as to the date the report was previously issued, as well as who received the report.

4. Conflicts are inimical to credible professional research. Shareholders and investors need to feel comfortable that research is produced and published in an environment that is as free of analyst influences as possible. Thus:

a. Analysts should not own a stake in their ratings. Neither they nor principals of independent research providers should own or trade any form of equities of companies under coverage;

b. Analysts should be paid for their initial reports in advance, or if salaried, the analysts? incomes should not be dependent on the outcome of their reports; and

c. Independent research should not be under the control of an investment banking department, investor relations or promotional firm or department or executive, and should not be produced or published under the auspices of an investment bank, investor relations or promotional firm or brokerage.

5. The Mission of the Standards-based independent research provider is to provide the investing public with an ethical, qualified, transparent and conflict-lessened fundamental analysis of public companies and their equities. Thus:

a. Adopters of these ?Standards for Independent Research Providers? agree to review by the FIRST Research Consortium Independent Research Standards Task Force, and agree that the Consortium may, at its sole determination, suspend, terminate or expel a Provider found to be in violation of these Standards.

For up-to-the-minute news, features and links click on financialwire.net

FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on investrend.com

For a free annual report on a company mentioned in the news, please click on investrend.ar.wilink.com

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From: StockDung3/30/2006 11:59:25 AM
   of 1821
 
StockGate II: Gradient Analytics, Cramer Don?t See Eye-To-Eye on Rackable Systems / FinancialWire®

March 30, 2006 (FinancialWire) TheStreet.com (NASDAQ: TSCM) and Gradient Analytics may have had similar negative views on Biovail (NYSE: BVF) and Overstock.com (NASDAQ: OSTK) in the past, but the two seem to be going their separate ways lately.

March 30, 2006 (FinancialWire) TheStreet.com (NASDAQ: TSCM) and Gradient Analytics may have had similar negative views on Biovail (NYSE: BVF) and Overstock.com (NASDAQ: OSTK) in the past, but the two seem to be going their separate ways lately.

Gradient reportedly issued questions about ?quality of earnings? for Rackable Systems (NASDAQ: RACK) while TheStreet.com co-founder CNBC personality James Cramer countered that he is ?bullish? on the company?s prospects, comparing it with Dell?s (NYSE: DELL) ?build-to-order? model.

Gradient, bit by the widespread dissemination of its views by various media, some, including Cramer, under subpoena by the U.S. Securities and Exchange Commission, is no longer talking to the press. It would confirm only that a research report has been published to its subscriber base but would not ?elaborate? on the content of the report.

Under the new regime, it?s Gradient 1, Cramer 0. The shares of Rackable were down 3.72% on volume of 3,298,046, five times its average volume of 673,141 at Wednesday?s close. However, Cramer was gaining in after hours trading, with shares up 1.07% to $49.14.

For up-to-the-minute news, features and links click on financialwire.net

FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on investrend.com

For a free annual report on a company mentioned in the news, please click on investrend.ar.wilink.com

The FinancialWire NewsFeed is now available in multiple formats to your site or desktop, free. Click on: investrend.com


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From: StockDung3/31/2006 9:56:22 AM
   of 1821
 
Overstock And Patrick Byrne Continue Naked Short Selling Jihad / FinancialWire®

March 31, 2006. (FinancialWire) (By Ant & Sons) Overstock.com (NASDAQ: OSTK) president, Dr. Patrick Byrne, has continued a vocal public battle against a coordinated campaign of short sellers who have allegedly targeted his company?s shares.

March 31, 2006. (FinancialWire) (By Ant & Sons) Overstock.com (NASDAQ: OSTK) president, Dr. Patrick Byrne, has continued a vocal public battle against a coordinated campaign of short sellers who have allegedly targeted his company?s shares.

Beginning with a summer appearance on a CNBC ?Street Signs? segment with anchor Ron Insana, where Byrne claimed that his ?company has been attacked and I?m not going to take this lying down,? Overstock?s battle has continually stirred up controversy.

Overstock.com, which launched its website in 1999 to sell products at wholesale prices, now has annual revenues of approximately $500 million. In the financial world, however, the company is not as well known for its business as it is for the controversy surrounding an alleged campaign to denigrate the company.

During August 2005, Overstock filed suit against Rocker Partners and Gradient Analytics, alleging that the hedge fund and research company conspired to drive down the company's stock in a scheme known as naked short selling. Generally speaking, naked short selling is defined as selling a security short without borrowing the necessary securities to make a delivery, thus resulting in a failure to deliver the securities to the rightful owner. The main goal of naked shorting is to engage in harmfully affecting the stock price of a company in order to manipulate and create downward pressure on the security, affecting a company?s ability to raise money on the open market and ultimately profit from the downward movement in the company?s shares.

While the vast majority of the financial press has only recently started to document this, media coverage of this scandal has gained momentum. Late last year, on Fox News? ?Your World Today,? with market veteran Neil Cavuto, Byrne claimed that there were ?at least twelve Refco's buried in the system? that could result due to this ongoing problem of continuing fails to deliver, or naked short sales. According to the ?Financial Times,? Refco has over $10 billion worth of securities sold that have not yet been purchased. It is rumored that these dollar amounts represent massive naked short sales, currently under review by major regulatory bodies.

Why the Securities and Exchange Commission fails to take any enforcement action against those failures to deliver remains puzzling. In a November interview that Ant & Sons conducted with the Byrne, he said he wholeheartedly believed that ?this is not a hard problem to solve,? yet ?it is just a hard problem to solve without a couple hundred guys on Wall Street getting their asses handed to them.? While this may be considered blunt and extreme, it is Byrne?s way of calling things as he sees them. However, intelligent investors could argue that Byrne?s opinion on the lack of enforcement is quite accurate and is often seen as the unspoken truth on Wall Street. When asked about a potential solution to the problem, Byrne said in his plain spoken style that all that needed to be done was to ?force settlements.?

Naysayers tend to believe that Overstock?s share price troubles are its own fault, due in part to disappointing earnings results and its lack of a successful business model. Overstock has had many critics on Wall Street, including Jeff Matthews, an Internet blogger and general partner at Ram Partner Capital. He contends, like numerous other critics, that Overstock's allegations of a naked short selling conspiracy is only a cover up for the fact that Overstock's financial performance has not gotten better.

In response, Byrne says he acknowledges the criticism ?for taking my eye off the ball to pursue a jihad? with the deluge of complaints and lawsuits against Rocker Partners and Gradient Analytics. Some financial journalists have targeted Byrne for going off into the deep end. In a past conference call, he stated that he started to realize that ??there was actually some more orchestration here being provided, by what I am calling here the Sith Lord, or mastermind? that was a part of a conspiracy to manipulate Overstock shares. The lawsuit moving forward, however, is evidence that Byrne and company have confidence in their ability to expose the short selling ?Sith Lord? and might even prove this is not just another not just another stock market conspiracy.

The Overstock Naked Short Selling Jihad Timeline

March 24, 2006

Overstock.com reported that per the DTCC's March 10 Security Position Listing, there are 8,970,394 Overstock.com shares on deposit at the DTCC and that the NASDAQ reported short interest in Overstock.com of 9,578,481 shares for the same week. Therefore, Overstock's short interest is now 107% of the shares available to be shorted. Overstock CEO Patrick Byrne said that ?the decimal is not misplaced; we have cracked the speed of light.? In a knock to the Depository Trust Company, Byrne commented that the ?DTCC continues to maintain that their stock borrow program does not permit the creation of new or counterfeit shares: I think that's good, because otherwise this situation could be getting out of control.? These numbers released could add some more credibility to Overstock's lawsuit in which it argues that it has been the victim of Rocker Partners and Gradient Analytics, alleging that the hedge fund and research company conspired to drive down the company's stock.

March 13, 2006

In an article by TheStreet.com (NASDAQ: TSCM) columnist Arne Alsin, he commented that his ?review of the financial statements and operating history of Overstock indicates that the negativity is overdone. This is a severely undervalued company. As I'll explain below, my minimum prospective value for Overstock shares is $92 in 2010; it currently trades at about $23.? The timing of this news is coincidental as TheStreet.com recently disclosed that it had received a subpoena along with Jim Cramer, host of CNBC's ?Mad Money,? co-founder and shareholder of TheStreet.com in relation to the Overstock lawsuit against Gradient Analytics. It is especially unique because Jim Cramer has often trashed the company and has advised many people to sell Overstock shares. Investors have to wonder why there is a change of tune from TheStreet.com. In reaction to the article, and as a result of an apparent short squeeze (note that 82% of Overstock?s float is short), shares surged $2.70 to $25.55 on heavy volume of 2.47 million shares.

March 17, 2006

Overstock.com announced a significant development in its ongoing lawsuit against Gradient Analytics and Rocker Partners and their respective principals: The Honorable Vernon F. Smith of the California Superior Court of Marin County issued a final ruling denying the defendants' demurrers and motions to dismiss under California's Anti-SLAPP law. Judge Smith wrote in the ruling, ?Rocker's alleged misconduct in conspiring with Gradient to issue negative investment reports is not, on its face, promotional in nature,? and that, ?The case law leading to the adoption of ?425.17 [California's Anti-SLAPP law] was addressed to commercial speech such as labeling, advertising and other 'marketing-related activities.'? Additionally, Judge Smith ruled that, ?The Anifantis declaration is sufficient prima facie evidence demonstrating Gradient's predecessor (Camelback) published 'special reports' in reckless disregard of the truth (i.e. with actual malice).? Jonathan Johnson, Overstock.com's senior vice president, legal, said, ?This is a big win for Overstock, but not an unexpected one. We have said all along that the Defendants' motions were nothing more than a desperate attempt to prevent the case from ever reaching discovery.?

February 28, 2006

In response to the Overstock related subpoena, Jim Cramer, founder of TheStreet.com, said on CNBC?s ?Mad Money? that the Securities and Exchange Commission took the action because, ?I said the stock was going lower. I didn't get the subpoena because I'm corrupt, I got it because I tried to get people out of a stock that we said was going lower, and went lower.? In addition to that, Cramer wrote ?bull? on what appeared to be the subpoena and then threw it on the ground as if to show he was above the law. Earlier on CNBC?s ?Kudlow & Co.,? Patrick Byrne, President of Overstock.com, made a guest appearance where he tried to explain his side of the argument. However, he was blasted by other guests and Larry Kudlow who believed Byrne was diverting attention from Overstock?s poor financial performance to focus on a short selling conspiracy. Finally though, Charles Gasparino finally got it when he tried to point out that the Overstock subpoenas ?are after evidence that the reporters are involved in the illegal scheme to manipulate stock prices.? While Byrne congratulated Gasparino for being the first CNBC reporter to ?get it,? the panelists went on to characterize the subpoenas as violations of freedom of speech, rather than focusing on how the individuals subpoenas are targeting a stock manipulation scheme.

February 27, 2006

TheStreet.com disclosed that it had received a subpoena along with Jim Cramer, host of CNBC's ?Mad Money,? and co-founder and shareholder of TheStreet.com. In an article by Matthew Goldstein, senior writer of TheStreet.com, he said that ?the subpoenas are related to a Securities and Exchange Commission investigation into allegations that Gradient Analytics, an Arizona stock-research firm, published bearish research reports at the behest of a group of short-sellers, including Rocker Partners, a minority owner of TheStreet.com.? Goldstein said that TheStreet.com will not comply with parts of the subpoena that demand communications between journalists and sources. This news comes on the heels of last week's subpoenas that were issued to Herb Greenberg of MarketWatch and Carol Remond of Dow Jones Newswires. That subpoena also sought telephone records, e-mails and other documents related to the online retailer Overstock.com, which filed a lawsuit against Gradient Analytics alleging a conspiracy to manipulate the company?s shares. Greenberg and Remond have written columns about Overstock. While investors who have followed the Overstock story are not surprised by these developments, Christopher Cox, Securities and Exchange Commissioner was apparently blindsided by the subpoenas. Today, he said that he had only learned of the subpoenas through news reports and that before it proceeds further, ?the sensitive issues that such a subpoena raises are of sufficient importance that they should, and will be, considered and decided by the commission.?

January 3, 2006

Overstock filed its responses to the demurrers and Anti-SLAPP motions which defendants Gradient Analytics and Rocker Partners filed. ?We alleged that the Rocker Defendants paid for and edited false and libelous reports from Gradient, pre-positioning themselves to profit from the expected downturn in Overstock's share price,? said Patrick Byrne, president of Overstock.com. ?We do not believe the legislature of California, in passing the Anti-SLAPP statute, had in mind protecting libelous speech -- bought and paid for by those who stood to profit handsomely from this type of activity. We believe the case law is on our side and are confident we have adequately answered the motions to move this case forward.?

November 15, 2005

Gradient Analytics and Rocker Partners file motions to seek to dismiss Overstock?s complaint or strike the complaint alleging that the negative reports Gradient published on Overstock.com amounted to protected free speech under California's Anti-SLAPP statute.

August 11, 2005

Overstock.com announced that it has filed an unfair business practices lawsuit against Gradient Analytics, Inc., and Rocker Partners LP. In the civil complaint against Gradient Analytics, Inc., Rocker Partners LP., David Rocker, Marc Cohodes, and others, Overstock filed on the basis of unfair business practices. It was filed by John O'Quinn and his legal consortium, which has been instrumental in helping other naked short embattled companies in the past. The complaint alleges that Gradient Analytics, Inc., an influential company that sells reports and analyses on publicly traded companies to hedge funds, traditional mutual funds, and provides them to financial commentators such as MSNBC, is closely aligned with various stock hedge funds. The complaint goes on further by alleging that the Gradient and Rocker Partners LP, which is owned and controlled by David Rocker and Michael Cohodes, individually or through Rocker Offshore or Rocker Management, conspired to denigrate Overstock?s business in order to reap personal profits for themselves.

Ant & Sons LLC is an independent provider of investment commentary, research, news and analysis. Founded in 2003, the company produces a suite of free membership based services for use by professionals and individual investors. This includes monthly columns such as Face Off, The Real Deal, Takes a Look and Trader?s Corner. Other services include a weekly newsletter and analytic news related services through Analyst Scorecard, Ahead of the Ticker, Chart of the Week and Word on the Street. More information about the company, which partners with FinancialWire, can be found at antandsons.com.

For up-to-the-minute news, features and links click on financialwire.net

FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on investrend.com

For a free annual report on a company mentioned in the news, please click on investrend.ar.wilink.com

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From: StockDung4/9/2006 3:20:17 PM
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StockGate: Sifting Media Overload On Research Transgressions, Short Selling For Truths Is No Small Feat / Home
(By Gayle Essary) With independent research transgressions and naked short selling ?enjoying? 24/7 attention on CNBC and every major financial print media these days it?s sometimes hard even for us to remember when this newswire, over the past three years, was basically the sole source of news on these subjects.

It has taken the dust-up regarding questionable research that Gradient Analytics is no longer able to spin the same way twice in the same half hour, and the resulting legal and regulatory flap regarding it, the Bank of America (NYSE: BAC), Biovail (NYSE: BVF), Overstock.com (NASDAQ: OSTK), TheStreet.com (NASDAQ: TSCM), a gaggle of reporters and two giant hedge funds, SAC Capital and Rocker Partners, to bring these subjects front and center.

The resulting noise has all but obfuscated many of the underlying issues, and while much of the subsequent media, blogger and message board coverages have had some seeds of accuracy, almost all of it mixes in fact and rumor and even inaccuracies, that need to be addressed, clarified and corrected. This is our objective here, and we will try to cover as much of the waterfront as possible to accomplish that.

Even this writer appeared on CNBC this past week in his capacity as head of Investrend Research (http://www.investrendresearch.com), a sister company to Investrend Information (http://www.investrendinformation.com), publishers of FinancialWire, separate divisions of Investrend Communications, Inc. (http://www.investrend.com).

The upshot of that appearance: whether or not Gradient may have been complicit in any other misdeeds, its multiplicity of ?explanations? as to why it did not need to comply with U.S. Securities and Exchange Commission Regulation 17(b) or otherwise follow industry ethical standards in providing full transparency to its subscribers and the public regarding its ?custom,? or ?sponsored? research reports, was, and remains, as this writer stated, ?not only disingenuous, but hogwash.?

Lost in the uproar is the fact that ?sponsored? research, by legitimate and credible ethical providers following standards such as those disclosed and practiced by ethical providers such as Investrend Research and more than a dozen of its peers at firstresearchconsortium.com, and specifically which do in fact incorporate Regulation 17(b) as a cornerstone of transparency, is in fact favored by the SEC, via the positioning of its advisory committee on smaller public companies.

U.S. Securities and Exchange Commission Regulation 17(b) states:

?It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.?

The SEC advisory committee in its Final Report at sec.gov notes that thousands, in fact more than half of all smaller public companies have no analytical coverage at all, which the SEC committee says has these resulting impediments to markets liquidity:

?Companies with no independent analyst coverage have a reduced market capitalization in comparison with companies that do have such coverage, and are subject to higher financing costs when compared with their analyst-covered peers;

?A lack of coverage by independent analysts limits shareholders? and prospective shareholders? ability to obtain an informed outsider?s perspective on identifying strengths and weaknesses and areas for improvement;

?The lack of coverage lessens the entire ?mix of information? made available to investment bankers, fund managers and individual investors, which makes markets less efficient; and

?Because analyst reports trigger the buying and selling of shares, the lack of such reports frustrates the formation of a robust trading market.?

?Sponsored research? has institutional and regulatory support, but the challenge is to keep the public and the marketplace educated to be able to tell the difference, and to know precisely what to look for in terms of conflict, disclosure and transparency.

While much of the media, bloggers and message boards have subsequently seized on Gradient?s failure to provide either the full transparency required by the law of the land, or the full transparency dictated by a recognized ethical standard, such as the ?Standards For Independent Research Providers,? however, sources tell FinancialWire that the SEC staff may not bring an enforcement action against Gradient for this transgression, because it is a ?new? issue, and the SEC appears to be fixated only on potential wrong-doings associated with its original investigation.

?How many 17(b) enforcement actions do you see in general?? an SEC enforcer involved in the Gradient case reportedly asked our source, noting it is not the highest priority at the agency. The last major 17(b) enforcement action was taken a year ago against research provider Dutton Associates, for its admitted failures to provide full compensation disclosures for research issued about Easylink Services (NASDAQ: EASY) while former SEC Commission Chair William McDonough was serving on Easylink?s board of directors.

That enforcement action was agitated by revelations in Newsweek by former investigative reporter Gary Weiss, who has since left Newsweek to write a book, ?Wall Street Versus America? (http://www.gary-weiss.com), due to be published this week.

There have been a sprinkling of other enforcement actions, and despite the fact that a ?Site Search? of the term ?17(b)? at FinancialWire (http://www.financialwire.net) brings up some 386 articles about similar alleged transgressions in a two year period since May 18, 2004, and despite representations by spokespersons at the SEC that its enforcement division has been ?aggressively? looking seriously at this issue, and despite unanimous support from participants in the two most recent SEC Forums to tighten 17(b), and the most recent inclusion of 17(b) as a cornerstone of the transparency expected by the SEC in an advisory committee?s recommendation that the SEC endorse standards-based, transparent sponsored research by credible providers, the reported lack of enthusiasm to provide investors with a level playing field at the staff level represents, from this view, a serious lack of tone at the top.

The financial marketplace, as this writer demonstrated in his own testimony to the SEC last year, when he brought stacks of junkfaxes as evidence of massive distributions of reputed, and often scam ?research reports,? is inundated with research that not only provides little or no transparency, but often fails to provide a name of any analyst, much less a ?credentialed? one, suspect ?ratings? and ?target prices,? and often a raft of conflicts big enough to drive a Mack truck through.

The most prevalent conflict in the industry, as this writer has described to Charles Gasparino, the reporter covering the current ?independent research scandal,? is the practice, although not illegal, of analysts and providers owning a ?stake? in their ratings and targets through stock, warrant or options ownership.

While both the ?Standards for Independent Research Providers? and the ?Issuer / Analyst Guidelines? promulgated by the CFA Institute and National Investor Relations Institute? oppose research providers owning stock in companies under coverage, only the ?Standards? provide an outright ban on the more serious concerns regarding individual analysts owning stock in the companies they cover.

There are two types of ?independent research providers,? a term in the industry generally meant to indicate ?independence? from the tainted research provided by investment banks that was the subject of the $1.4 billion ?global research settlement? negotiated two years ago by the SEC and the New York State attorney general, Eliot Spitzer, now a candidate for governor. The media has recently been discussing ?independence? in the meaning that it is free from conflict or potential conflicts are fully disclosed.

One type is the ?sponsored? research provider, represented by ethical firms that are members of the FIRST Research Consortium, and the other type is the ?subscriber-based? research provider, represented by ethical firms that are members of InvestorSide (http://www.investorside.com).

?Sponsored research? is generally distributed directly to the general public, and when via Investrend Research Syndicate for just over a half dozen standards-based providers, to all classes of investors at the same time. ?Subscriber research? is generally privately-distributed, to institutions that are looking for investment ideas and diligence. Traditionally such subscribers have not wanted the general public to see that research, because it is part of the mix of data relied upon by the hedge fund, money and portfolio managers in their own investment decisions, in which they are seeking an edge.

Recently, however, these lines are being crossed, and it may be in some part due to the ?research settlement? which deemed that the ten or eleven investment banks involved in that settlement have had to find at least two other reports from sources other than their own research departments on each company for which a report is made available to their retail clients. Aggregators such as BNY Jaywalk have sprung up to find and provide additional research. Generally these now come from subscriber providers that previously did not make their research available to anyone other than their institutional subscribers. The subscribers have allowed this because the research is being ?cherry-picked;? that is, only samplings of the research on a per-project basis is being distributed to the public via the regulator monitors set up for each investment bank in the research settlements, and acquired from the aggregators.

Generally, ?sponsored? research is not included in this mix because it is too expensive. Whereas an existing ?subscriber?-based report can be had for a few hundred dollars, because it has already been produced, a ?sponsored? research report, built from scratch, could run $30,000 to $50,000, depending on the complexity of the assignment.

Investrend Research, for example, does not provide reports directly, but is an intermediary, or facilitator, accepting enrollments from or for public companies with no other or little coverage, and then itself pre-paying contracting analysts to produce the reports. This separates the analysts from any pecuniary interest in the outcome of a report and then Investrend Research is obligated to the analyst to publish and distribute the report when the analyst is ready to publish, again removing Investrend Research from any oversight or decision-capacity regarding the finished report. This process was pioneered by the firm over ten years ago, and many of its long-established procedures form the foundation of those practiced by many of its ?competitors,? and are incorporated into the ?Standards? adopted and practiced by over a dozen of its peers.

Recently the standards-based ?sponsored? research providers have gained support from the not-for-profit Shareholders Research Alliance, Inc. (http://www.shareholdersresearch.com), which was formed to provide outside investor monitoring of research providers? procedures and ?independence? from conflict. The Shareholders Research Alliance, Inc., plans a national membership and monitor push during April.

InvestorSide has published its own code of ethics at

investorside.com, designed to ?maintain highest standards of integrity and professionalism,? ?promote truth and fair representation in investment research,? and ?serve investors forthrightly.?

Gradient was listed as a member when the initial lawsuit, by Overstock.com, was filed, charging collusion with Rocker Partners in producing research alleging, among other things, that Rocker Partners was allowed to ?front-run? positioning that disadvantaged other Gradient subscribers, and then distributed those findings to the public through ?friendly reporters? such as Herb Greenberg, then a columnist for TheStreet.com and it its co-founder, CNBC media personality James Cramer.

Greenberg is now with Dow Jones, but remains, like Cramer, a regular talking head at CNBC. Both were among the three ?journalists? subpoenaed by the SEC in its own regulatory investigation of Gradient, Rocker, SAC, Overstock.com, Biovail and a half-dozen other companies purportedly followed by Gradient, including but possibly not limited to AstraZeneca, (NYSE: AZN) Avon Products (NYSE: AVP), Baxter International (NYSE: BAX), Netflix (NASDAQ: NFLX), Novastar (NYSE: NFI), Celgene (NASDAQ: CELG), Cardinal Healthcare (NYSE: CAH), Intermune (NASDAQ: ITMN), Biolase (NASDAQ: BLTI) Take-Two Entertainment (NASDAQ: TTWO), King Pharmaceuticals (NYSE: KG), Swift Transportation (NASDAQ: SWFT) and Taser (NASDAQ: TASR).

The InvestorSide website does not currently list Gradient among its members. There has been no announcement or explanation for its absence.

The key question remaining for the ?subscriber? community, represented to some degree by InvestorSide, is how many other ?subscriber-based? members are producing ?custom? reports, essentially crossing over to the different set of ethics required of ?sponsored-based? members of the FIRST Research Consortium, and are they making the compensation disclosures required by SEC Regulation 17(b).

The secondary question has to do with policies, disclosures or outright ban on members and their analysts investing in the stocks of companies under coverage in ?subscriber? environments.

The CFA Institute, which credentials analysts working in all research environments, including institutional, subscriber, sponsored, investment banking and in individual, contractural relationships, does not ban stock ownership by analysts in companies they cover. The CFA Institute?s ethics and standards describe a rather convoluted formula for such ownership, but does not address the central conflict. In banning ownership by ?sponsored? providers, however, in its ?Issuer/Analsyt Guidelines,? there is an implicent admittance that it is a conflictural practice.

In discussions with FinancialWire, ethicists for the CFA Institute have admitted such a ban could prove a problem for the CFA Institute because it could result in massive membership drops.

Spitzer, interviewed earlier this year by FinancialWire, was caught off guard by the issue. ?I think a lot of investment banks do individually ban stock ownership by its analysts,? he stated.

Told that is true, and asked whether that is not in itself a prima facie case for universal bans on stock ownership by analysts covering companies, Spitzer, then beginning his run for Governor, told FinancialWire he?d have to ?get back to you on that.?

Greenberg and Cramer have each, in their own way, acted in what many observers believe to have been relatively outrageous, and both have appeared together on the air to discuss their SEC subpoenas issued as part of the formal regulatory investigation.

Sitting with Greenberg, Cramer wrote ?BULL? across the face of his subpoena and tossed it on the floor, giving rise to speculation that CNBC?s parent, General Electric (NYSE: GE), might not long tolerate an on-air personality that showed open disrespect to an official government subpoena and investigation, although his show, ?Mad Money,? continues to have strong ratings among a niche, boisterous audience.

About ten years ago, CNBC?s equally renowned personality, Dan Dorfman, in the midst of a similar investigaton, was first found ?not guilty? by an internal CNBC investigation, and press releases supporting him were issued by the station before truth emerged and the hammer fell.

Greenberg?s seeming outrageousness has emerged in his subsequent all-out support for Gradient, even in the face of changing explanations of its procedures and intentions that has left no doubt it had any set or thought-out policy to begin with, and inexplicably, his on-air disdain for the kind of investor transparency contained in Regulation 17(b), arguing it is not ?applicable,? despite the underlying ethical issues regarding disclosure.

?The bugaboo, according to those attempting to turn this molehill into a mountain, is that Gradient's reports didn't disclose when a report was the result of a request by another client,? Greenberg stated Wednesday. ?That is not a run-of-the-mill legal matter but a First Amendment issue.

?Never mind that private research firms without brokerage or trading arms aren't considered investment advisers and therefore aren't regulated by the Securities and Exchange Commission. My take on this, as I've been saying on CNBC in recent days, has been: So what??

In a break with CNBC tradition, Greenberg?s odd positionings on the subject have been continuously questioned and even challenged in on the air exchanges between himself and Gasparino.

Greenberg was not asked and did not explain whether he had come upon advance copies of Gradient?s reports at a time when Gradient claims he did not see them for two to four weeks afterwards, and neither he nor Gradient were asked to explain how negative reports ?sponsored? by subscribers such as SAC Capital juxtapositioned to the positive reports, as has been alleged, on the same company by its vaulted ?quality of earnings? research available at the same time, and as CNBC quickly disclosed, are part of the data used by the network via MSN Money, a division of Microsoft Corp. (NASDAQ: MSFT), and where its network website is currently parked.

Despite the various charges, there is some apparent misinformation floating around. Some of it has to do with what the SEC is looking for. Informed sources tell Investrend that the SEC, which has not yet ruled on whether the ?journalist? subpoenas will be enforced after an initial media-inspired flap between SEC Chair Christopher Cox and his chief of enforcement, Linda Thomsen, is being very specific about its investigation.

The SEC investigation purportedly is about insider trading, and secondly, collusion. Collusion is more difficult to prosecute, since the parties involved will have to have ?knowingly? and maliciously and ?intentionally? colluded.

One of the disconnects seems to be that Gradient is claiming that reporters such as Greenberg received their reports two to four weeks after they produced them, yet some online detractors have alleged that Greenberg actually disseminated certain Gradient reports to the general public rather instantly after they were produced, even perhaps having them in his possession before they were distributed to subscribers.

The questions are then raised as to whether Greenberg?s and TheStreet.com?s distributions were part of a wider public campaign to manipulate the stock downward in either ?lockstep,? ?collaboration with? or in ?collusion? with Gradient, and possibly SAC Capital or Rocker Partners, which ?incidentally? was apparently the second largest shareholder in TheStreet.com, behind only the founders, including Cramer. Recently Cramer and other insiders have been exercising options and otherwise selling stock in the company, which was at least temporarily being shopped around.

Rocker appears also to have recently substantially decreased its holdings in TheStreet.com, which separately from Cramer received its own SEC subpoena. Presumably the company is responding, as there has been no public display of the company?s subpoena being marked up with ?BULL? and tossed on the floor.

The SEC investigation does not necessarily involve the same objectives as the civil lawsuits filed by Overstock.com and Biovail, meaning many of the discovery issues may be expanded in the civil lawsuits.

One charge floating around has to do with Pinnacle, a hedge fund operated separately from Gradient but in the same offices, during the period of these inquiries and lawsuits, and by the same principles, when Gradient was operating under its previous incarnation as Camelback Research.

However, sources tell FinancialWire that despite the appearances, Pinnacle was a relatively small fund and did not trade in the stocks of companies covered by Camelback / Gradient. Sources also say that Camelback / Gradient had received a ?no-action letter? from the SEC regarding Pinnacle, although that has not been independently confirmed. If so, of course, as is said in Texas, despite the appearances, ?that dog won?t hunt.?

Another allegation contained in some of the affidavits connected to the Overstock.com and Biovail lawsuits is that Brian Harris, a copy editor for TheStreet.com who worked under Greenberg, was provided office space by Camelback / Gradient and ?ghost-wrote? reports for them while still working for TheStreet.com, or immediately afterwards. Adding to the perception of impropriety is the fact that Harris?s name ?mysteriously? disappeared from TheStreet.com masthead about the same time the allegations surfaced.

Sources say that once again proprieties may have been unnecessarily compromised by perceptions, and that there is scant evidence Harris was provided office space. Also, it appears that Harris came upon Gradient through Greenberg?s writings about the company, and inquired about a possible change of careers. Sources say that Greenberg helped to facilitate an introduction, but that after Harris was given some opportunities to do some work, Gradient decided it wasn?t a fit, and discontinued using him. At the same time, TheStreet.com appears to have removed his name because he could not be employed by both. While improprieties may have existed elsewhere, and that will be determined either through the civil courts or the SEC investigation, that part of the ?conspiracy? plot thins.

Whether the SEC will continue to press for the subpoenas at this time issued to the three reporters is a matter of conjecture. Former enforcement officers who have served as sources to FinancialWire say the ?subpoenas will stand.?

However, the SEC has ?backdoored? its email and communications collection efforts by including the same request to Gradient, not only for the three named reporters, but several others, such as Roddy Boyd, reporter for the New York Post, Bethany McLean of Fortune Magazine, Jesse Eisinger of the Wall Stret Journal, Elizabeth MacDonald of Forbes Magazine, and former Barron?s editor Cheryl Strauss Einhorn, who is married to a hedge fund head David Einhorn.

Even FinancialWire has had some inaccuracies related to at least one of these reporters. Boyd said he had never heard of or contacted Gradient before the lawsuits, and if so, would not have much of interest related to public ?dissemination? of reports meant for ?subscribers? to provide the SEC, as say, might Greenberg. Also FinancialWire had idenfified Boyd as being among the media coming to the defense of the ?journalists? who were subpoenaed, without having revealed the SEC had asked for his communications. First, Boyd may have been confused with a New York Post columnist, Christopher Byron, and secondly, Boyd said he had learned of the SEC?s interests in his communications with Gradient only recently after seeing it in the Wall Street Journal.

In a sound-bite world, the issue of how powerful hedge funds, largely unregulated, have come to dominate the financial markets not only in the U.S. but abroad, has been somewhat shunted aside; however, this is no doubt the key question facing regulators today, and the key factor associated with the unevenness of the playing field that may be keeping smaller investment capital on the sidelines.

Trust comes only with disclosure and transparency, and the ever-more secretive hedge funds, with little or no disclosure and little or no transparency, are easy prey for conspiracy theories. Whether some or much of that is deserved will never be known as long as they are allowed to operate in the shadows and often out of the range of regulators in their offshore havens.

In its ?60 Minutes? coverage of the Biovail ? SAC controversy, for example, an image of founder Steve Cohen, whose secretive $8 billion hedge fund made him half a billion dollars this past year, and who lives in a palatial estate in Greenwich, where many of the other top hedge fund operators reside, was portrayed only as a face in a crowd.

The hedge fund is said to have already attracted over $2.5 billion to another $3 billion fund, requiring investors to invest for three years, while paying a 3% management fee and a 35% incentive fee. There appears to be no shortage of takers.

As to Rocker Partners, that hedge fund, which specializes in short selling, has from time to time been said to be short on as many as 2/3rds of the companies listed on the New York Stock Exchange that have been listed on Regulation SHO, meant to provide some transparency to the issue of ?naked? short selling, which unlike the venerable practice of short selling that helps bring balance to valuations in the marketplace, is manipulative and illegal.

Regulation SHO has indeed brought transparency, but not corrections, to the marketplace, as many of the fails to deliver, required by law to settle within a few days, have existed for the entire year that Regulation SHO has been published, with nary an SEC enforcement action connected to Regulation SHO.

There have been isolated SEC and NASD charges against naked short sellers, including some connected to the largest investment banks, but the fines and penalties associated with those actions have been so minute as to serve as little more than a ?cost of doing business illegally? penalty. Few of these actions put anyone except those manipulating the system at the lower level out of business, and even then, rarely on a permanent basis.

Beginning in February, hedge funds advisers have had to register with the SEC.if they have under $25 million in under management and money not locked up for more than two years. That would appear, for example, to exempt the new SAC Capital Management hedge fund, despite its immensity and impending power in the marketplace.

Defending a case against Biovail or some other small company would also be ?chump change? to a fund of this size.

According to the New York Times, the advisers whose funds are not exempt are subject to random audits, strict requirements about books and records, the designation of a chief compliance officer, and inquiries about where the advisors live, how much money he or she manages, and whether there is any criminal history. They must also now follow the same rules as mutual fund advisors, but not performance fees, such as the seemingly exhorbitant fees charged by SAC Capital.

Unlike mutual funds, hedge funds will not have to file quarterly reports listing the securities they own, file semiannual reports to shareholders, disclose voting on proxies, an independent chair and majority of independent directors, or a requirement allowing only one class of stock to be issued.

Even New York Times columnist Joseph Nocera, who is scheduled on a panel with Greenberg at the May 1 annual conference of the Society of American Business Editors and Writers (http://www.wwwsabew.com), where SEC Chair Cox has also committed to appear, is backing away from his previous over-the-top take on what he has not considered more diligently may be going on.

Sunday, his column stated, ?It is certainly possible that something bad happened among SAC, Gradient and the other so-called conspirators. If Gradient knowingly disseminated false information (which it denies), that's a problem. The accusation I find most troubling is that Gradient held off releasing a tough report on Biovail at the request of SAC, which was still building its short position. If that actually happened ? and again, Gradient vehemently denies it ? it would, at the least, be extremely sleazy, if not illegal. In The New York Times that Sunday, Jenny Anderson examined the complicated issues raised by the Biovail-SAC lawsuit and pointed out the problem areas.?

Nocera continued, however, to obfuscate the difference between short sellers, which he said he felt the necessity to ?defend,? and manipulative, illegal ?naked? short sellers, which once more he ?forgot to mention,? once more leaving his readers thinking the flap is over legitimate market forces.

Naked short sellers, whose actions create unfathomable fails to deliver, huge net deficiencies at cooperativing brokerages, counterfeit shares that obscure the one-share, one-vote rules on Wall Street (votes are already secretely ?rounded? to resolve the resulting mathematical challenge) many believe, are at the root of a coming calamity in the marketplace.

In an increasingly investor proactive world, these dilutions of investors? voting rights can be the difference in many corporate reforms as well as the election of directors. A court challenge could turn into a mess, and put many of those engaged in this band-aid solution at legal risk as well.

Dr. Susanne Trimbath, a former Director of Transfer Agent Services at the Depository Trust and Clearing Corp. and former regulators at the SEC, say the size of naked short positions are sufficient to implode the financial markets. Dr. Trimbath says those naked short positions ?grandfathered? last year, and now in the fails-to-deliver backlog at the DTCC, are enough to ?give me nightmares.?

The problem with the DTCC, which is actively seeking to entirely do away with paper in favor of computerized shares, is that there is little or no accountability whatsoever, and it has resisted every effort to provide transparency, even in the number and placement of shares held for any public company.

Dr. Trimbath, who recently testified a a forum on naked short selling sponsored by the North American Securities Administrators Association, which currently has a task force armed with subpoenas trying to extract information from the DTCC, even says, effectively, that the DTCC is not being ?honest? with its ?stock borrow? program?s books.

?Since nothing prevents the buyer who receives a borrowed share for settlement from depositing shares into the lending pool at the Depository, it is self-replenishing,? she states.

?The stock borrow program doesn?t track who lent the share (only who borrowed it). So the stock borrow program doesn?t allow ANY shares to be lent?only borrowed, get it? They play the same word game when they say they don?t make money on the stock borrow program.

?They don?t.

?What they DO make money on is the stock lending program.

?By the way, they also make money on fails to deliver. OK, so the same shares aren?t lent twice by the same broker because the lender?s account is reduced by the number of loaned shares until the loan is repaid. Fine. What they aren?t saying is that the shares are a ?fungible mass,? and no one keeps track of which share was used to settle which trade. So, a Participant who receives 100 shares of OSTK at settlement could be getting 50 borrowed shares. And it is those 50 shares that can be loaned a second time since all settlement is considered to be ?final?.?

This is despite the fact that the DTCC is a quasi-government entity, owned by two SROs, the NASD and the New York Stock Exchange. Its board of directors is a who?s who of conflicts, with almost no one representing the public or anyone outside a tight-knit group of brokerages and institutions.

Many view the whole enterprise as a house of cards, and no wonder. While the regulators rightly require transparency on the part of public companies, they not only show little interest in enforcing the transparencies required by laws already on the books, they have taken very few initiatives to require their biggest institutions to tell shareholders whether they even own a share, or a whole share, of a company they believe they are invested in.

Congress has shown interest, but not enough to date to call their regulators and SROs on the carpet to explain any of this, much less change it.

[Gayle Essary is President and CEO of Investrend Communications, Inc., parent to both Investrend Research and Investrend Research Syndicate, and has actively supported indepdendent research reforms. Investrend is also parent to Investrend Information, which publishes FinancialWire. He has long been a practicing journalist as well, and his journalism credentials are at investrend.com }.


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Congress To Cox On His ?Drop Dead!? Message To Small Public Companies: ?Fix The Sarbanes 404 Problem Or We Will? / FinancialWire®

April 10, 2006 (FinancialWire) U.S. Securities and Exchange Commission Chair Christopher Cox?s unexpected message to smaller public companies, headlined ?Cox To Small Public Companies: Drop Dead!,? and his own advisory committee not only has not only not sat well public, which so far has voted 73% in the latest Investrend Poll that he should ?resign? over continued interferences in the SEC processes, but he also received in a sharp and pointed retort from Congress.

April 10, 2006 (FinancialWire) U.S. Securities and Exchange Commission Chair Christopher Cox?s unexpected message to smaller public companies, headlined ?Cox To Small Public Companies: Drop Dead!,? and his own advisory committee not only has not only not sat well public, which so far has voted 73% in the latest Investrend Poll that he should ?resign? over continued interferences in the SEC processes, but he also received in a sharp and pointed retort from Congress.

?The Congress does intend to take some action if the SEC (and the PCAOB) doesn?t,? said Rep. Candace S. Miller (R-Mich), chair of the House Government Affairs Regulatory Affairs Subcommittee,? regarding the exhorbitant costs of compliance under Sarbanes-Oxley 404, which was a response to the ?blue chip scandals? at Enron (OTC: ECTPQ), Worldcom, now a part of Verizon (NYSE: VZ), HealthSouth (OTC: HLSH) and Tyco International (NYSE: TYC), among others, and which were not afterwards ?right-sized.?

The Investrend Poll is at investrendinformation.com

The SEC Chair had spoken in a similar vein over the journalist subpoenas, after which he backtracked, and he may already be waffling on his comments regarding SarBox 404.

In a subsequent interview with the Associated Press, however, Cox said he will ?take into account the recommendations of a small business advisory panel, due out soon.?

That would be more in line with the position of the Congressman, Michael Oxley, whose name is on the law, who now says smaller public companies should have ?relief? from the onerous and costly provisions of 404, which some call the ?Auditors Windfall Act? because of the huge fees they are able to command, enough to entice many public companies to ?go dark,? a potential huge loss to many small public consumers and shareholders.

The Congressional rejoinder came after testimony from three congresspersons who had participated in a "listening tour" in which they heard the Section 404 concerns of smaller public companies, according to the Securities Law Daily Banner.

Republican Reps. Tom Feeney (Fla.) and Mark S. Kirk (Ill.) and Democratic Rep. Gregory W. Meeks (N.Y.) also said that there is broad-based bipartisan support in Congress for reform of Section 404 with respect to smaller companies. Kirk said that if the SEC and PCAOB do not act, "next year the listening tour will turn into a legislative tour."

The SLDB said Miller told reporters after the hearing, "There clearly is a feeling that there has to be some movement here." She said that "optimally," the SEC and PCAOB would act to address the current concerns. The question is whether or not they have the will to do so, she said, "and if they don't have the political will, obviously, we have the [political] will here."

Miller also said that Section 404 burdens are all the small- and mid-size auto suppliers in her congressional district want to talk about, and "they're all afraid they'll go to jail."

?Kirk said that the critical issue for Congress is whether the commission puts the full Section 404 compliance burden on smaller companies. So far, the SEC has delayed implementation of the provision for smaller public companies until July 2007. If the SEC adopted the recommendations of the SEC's Advisory Committee on Smaller Public Companies, giving Section 404 exemptive relief to companies with a market capitalization of $750 million and below, ?94 percent of the public markets? would meet full SOX requirements, Kirk said.

Under SOX Section 404, SEC rules require corporate management to include in the company's annual report an assessment of its internal control over financial reporting, along with an auditor's attestation. The external auditor must report on whether management's assessment of the effectiveness of internal control is fairly stated and provide a separate opinion on whether the company's internal control is effective.

Miller said that "while the SEC initially estimated the cost to comply with Section 404 to be $91,000 per company or $1.24 billion in the aggregate, multiple studies peg the actual compliance cost at $35 billion," or nearly 30 times the original estimates. Kirk, meanwhile, using AMR Research statistics, urged that SOX compliance is costing about 50 times more than estimated in 2002 and will exceed $6 billion in 2006.

"As a percentage of revenue, smaller issuers in 2004 spent eleven times more on SOX implementation than did larger companies," Miller said. Audit fees for microcap companies increased 84 percent; for smallcap companies, 92 percent; and for S&P 500 companies, 55 percent, the SLDP said she recounted.

Kirk also noted that the most dramatic effect of Section 404 implementation for larger public companies has been "almost a disappearance of foreign listings on U.S. markets." There has been a 90 percent drop in foreign listings coming to this country, he said. Meanwhile, a U.K. market--the London Stock Exchange's AIM market, which is specifically tailored to growing businesses--is being marketed as a "Sarbanes-Oxley-free market," he said. "Because of Section 404 compliance costs, American financial markets are rapidly falling behind," Kirk said. The lawmaker also maintained that an increasing number of public companies have gone private as a result of SOX.

Meeks argued strongly along these lines as well, citing statistics to illustrate a mass movement of foreign stock offerings offshore and the delisting of hundreds of small corporations. In addition, Meeks said that in the implementation of Section 404, there has been "no incentive to be reasonable." "It's protect yourself at all costs," he said, arguing that a standard of "zero doubt" is operative under the PCAOB's auditing standard (AS 2) and that it is too high.

Meeks said he was not offering any particular solutions, like Miller stressed the bipartisan nature of the congressional will to see change in this area. "This is not a Democrat or Republican issue. This is an American issue," he reportedly said.

Former staffers at the SEC have told FinancialWire that ?morale? at the SEC, in the light of Cox?s continuing premature interferences in the processes of the agency, ?has never been lower.?

A few weeks ago a Houston newspaper, calling Cox a ?politician,? called for his resignation.

The Los Angeles Times noted that studies show that the ?extra costs for smaller firms to comply with the rules can run as high as $1 million a year,? meaning not hiring employees or ?scrapping the launch of anew product.?

Scale matters, the Times opined, ?both to the economy, which is largely driven by small business, and to many publicly traded companies themselves, for which the costs of compliance with Sarbanes-xley are often burdensome.?

Also supporting the modifications is U.S. Representative Michael Oxley, whose name is on the Sarbanes-Oxley law, and the CEO of Nasdaq (NASDAQ: NDAQ), Bob Greifeld.

At issue is the Final Report of the SEC Advisory Committee on Smaller Public Companies, whose 21-member panel includes executives of several small public companies, including Bluefly, Inc. (NASDAQ: BFLY) and Calypte Biomedical Corp. (AMEX: HIV).

The movement, supported by the U.S. Securities and Exchange Commission Advisory Committee on Smaller Public Companies, including National Instruments Corp. (NASDAQ: NATI), Oil-Dri Corporation of America (NYSE: ODC) and Kimball International, Inc. (NASDAQ: KBALB), had already gained powerful allies in retiring U.S. Representative Michael Oxley, whose name is on the law, and U.S. Representative Richard Baker, chair of a financial services subcommittee.

Greifeld said he has been a ?consistent supporter of the principles of Sarbanes-Oxley, despite the crescendo of corporate criticism it has engendered,? saying it is a ?tough but essential step toward restoring investor confidence through greater transparency, accountability and improved corporate governance.?

He said he also expected anguish over the provisions to wear off but that has been proven wrong.

?If anything, sentiment has hardened and the perception gap abroad is now wider than ever. As the CEO of a U.S. stock market, I am in frequent contact with a broad spectrum of business leaders, many of whom list on our exchange. When it comes to SOX, their message is clear: The burden of compliance is onerous, the cost is significant, and it falls disproportionately on smaller companies that are least able to pay. Our research has shown that the burden on small companies, on a percentage of revenue basis, is 11 times that of large companies.

?That is only part of the problem. In my travels to countries like China, India and Israel, I meet with the new generation of international entrepreneurs who are building businesses and dreaming of the day they can take their companies public. The constant refrain I hear is that when it comes time to do an IPO, they will be reluctant to list on American markets. They will look elsewhere to raise capital, and the main reason they cite is SOX. Indeed, a recent piece in these pages suggested that 90% of international small companies intending to go public are choosing to list abroad because of SOX costs and concerns. Despite the compelling advantages of listing with the world's most efficient markets and having access to our vast pool of sophisticated investors, many of these companies are likely to follow the line of least resistance and list abroad.?

Ironically, he said, ?by setting the bar so high in the U.S., SOX has had the unintended consequence of triggering a ?race to the bottom? by stock markets and companies seeking advantage via less jeopardy, less regulation, less cost and less hassle. International business clearly perceives a ?problem? with U.S. markets today, and the perception of burdensome, costly regulation has become an article of faith. This entrenched perception exists outside the bounds of reality. It is a heavy, and unnecessary, price to pay for the important benefits and welcome reforms that have resulted from SOX.?

Griefeld said that SOX is important; by and large, it works. We have had three years to assess its strengths and problems. Perhaps 90% of complaints have their genesis in 20 lines of text. We lay the widespread misperception about the cost and difficulty of compliance at the feet of the famous Section 404.

?So the time has come to address those 404 concerns without diluting the essential investor protections that are the true legacy of SOX. Specifically, we should adopt the recommendations of the SEC's Advisory Committee on Smaller Public Companies, which has proposed an exemption from 404 for companies with less than $128 million in market cap and revenues under $125 million. Companies with up to $787 million in market cap, as long as they had revenues less than $250 million, would receive partial exemption. The companies exempted account for only 6% of U.S. market cap, which means 404 would still apply fully to 94% of equity market capitalization.

He concluded: ?Nasdaq strongly supports the committee proposals for smaller public companies. We believe they address the legitimate problems associated with Section 404 without diminishing the important reforms that have helped rebuild investor confidence and make American markets the envy of the world. A demonstrated willingness to be flexible, to make minor changes to solve major problems, will also give us a bully pulpit to respond to growing international perception about the cost and jeopardy of participation in American markets.?

In his letter to Cox, Oxley said, ?We write to support the view that the Commission currently possesses the authority to provide relief from the provisions of the Sarbanes-Oxley Act under the Securities and Exchange Act of 1934 as well as the Sarbanes-Oxley law.?

The new developments left several opposition groups, such as the Big Four accounting firms, who fear losing revenues, former SEC Chief Accountant Lynn Turner, and the Consumer Federation of America, scrambling to come up with new reasons why shareholders of America?s smallest public companies should be saddled with what some call a ?tax,? and others call a blatant attempt to run development stage companies out of business or cause them to ?go dark,? leaving their small shareholders with no exit.

Some of these shareholders find the Consumer Federation?s opposition particularly inexplicable, since most observers believe the existing provisions for the smallest public companies are anti-consumer.

At the same time, a coalition of chambers of commerce is developing under the leadership of Massachusetts, to exempt public companies with less than $125 million in revenue from having to implement Section 404, which requires extensive internal and external auditing procedures well beyond the means of most such companies.

While such companies represent 52.6% of the 13,094 public companies in the U.S., their combined market caps are only 1% of the entire universe. Sarbanes-Oxley was primarily targeted at the Enrons and Worldcoms. The 21.5% of of public companies with market caps above $748 million at that level represent 94% of all U.S. equity market capitalization.

An article regarding the developing coalition is at ecommercetimes.com

Paul Guzzi, president of the Greater Boston Chamber of commerce, said SarBox 404 ?disproportionately impacts the technology sector,? and is ?anti-competitive.?

Lyn Zurbrigg, a consultant who helped Abt Associates conduct the study, was quoted as saying the average first-year cost of implementing Sarbanes-Oxley was about US$4.5 million -- way more than the approximate $100,000 backers originally said it would cost.

It is also far more than the market cap or available cash to the smallest public companies.

The SEC advisory panel is asking the SEC to give a complete exemption from Section 404 requirements to micro-cap companies with less than $125 million in annual revenue, and to small-cap companies with less than $10 million in annual revenue.

The committee defines companies with market capitalization under $128 million as "micro-cap companies" and those with market capitalization between $128 million and $787 million as "small-cap companies,? said Reuters in a report.

?Small-cap companies with annual revenue between $10 million and $250 million would also be exempt from the external audit requirements of Section 404 under the recommendations.?

Until April 10, the public can comment. The SEC?s website for the committee is at sec.gov The committee?s ?final report? is at sec.gov

Information about commenting is at sec.gov

?These new developments are very helpful,? said James A. ?Drew? Connolly, a member of the advisory committee and Director of Corporate Development for Investrend Communications, Inc., parent of Investrend Information (http://www.investrendinformation.com), publisher of FinancialWire, ?but we are a long way from home. There are some powerful interested aligned against small companies and small investors, and it?s going to take all of us to make our plight understood and known.?

Leroy Dennis, representing a mid-sized accounting firm, McGladrey & Pullen, said he supports the recommendations, noting that ?Auditing Standard No. 2 has not worked well for small companies.?

He said that during the coming comment period, he?d like to hear from investors in microcap companies under $250 million, noting that in the intial comment periods, most investors had holdings in billion dollar companies. He suggested Section 404 should be ?voluntary? for smaller companies ?if they believe the costs are worth the benefits.?

SEC Today quoted Steven Bochner, a partner in Wilson Sonsini Goodrich & Rosati, as saying Section 404 is simply a ?regressive tax? on small businesses and their investors, and said committee members should ?keep their courage up.?

During the year-long series of meetings and public comment, the advisory committee learned that a large proportion of public company shareholders might suffer financial problems if companies that could not afford compliance were to delist, or ?go dark,? and the committee?s proposals are in part an attempt to prevent this from happening.

The members of the Advisory Committee are:

Patrick C. Barry, Chief Financial Officer and Chief Operating Officer, Bluefly, Inc. (NASDAQ: BFLY), New York, N.Y, Mr. Barry's company markets designer apparel and home accessories through the Internet at discount prices. BlueFly has a market capitalization of $20 million. Mr. Barry is a Certified Public Accountant with an M.B.A. from Columbia University. He will represent microcap, emerging technology and retailing companies.

Steven E. Bochner, Partner in the law firm of Wilson Sonsini Goodrich & Rosati, Palo Alto, Calif. Mr. Bochner has more than two decades of experience practicing corporate and securities law in Silicon Valley. He received his J.D. from Boalt Hall of the University of California, Berkeley. He will represent emerging growth companies, venture capital funds and lawyers working with these types of clients.

Richard D. Brounstein, Executive Vice President and Chief Financial Officer, Calypte Biomedical Corp. (Amex: HIV), Pleasanton, Calif. Mr. Brounstein's company has a market capitalization of $60 million and recently moved its primary trading market from the Over the Counter Bulletin Board to the American Stock Exchange. He is a Certified Public Accountant with an M.B.A from Michigan State University. He will represent microcap companies and companies in the life sciences industry.

C.R. "Rusty" Cloutier, President and Chief Executive Officer, MidSouth Bancorp, Inc. (Amex: MSL), Lafayette, Louisiana. Mr. Cloutier's bank has capital of $50 million and a market capitalization of $126 million. He will represent smaller public entities in the banking and thrift industries.

James A. "Drew" Connolly III, President, IBA Capital Funding, Perrineville, N.J. Mr. Connolly was a founding member of the CEO Council, an organization of executives of smaller public companies. He works as a capital formation specialist with smaller public companies whose securities are traded over the counter and private companies seeking to access the public capital markets. He also invests in these companies. He will represent smaller over the counter companies and professionals who work with them, as well as investors in these companies.

Connolly is also director of corporate development for Investrend Research (http://www.investrendresearch.com).

E. David Coolidge, III, Vice Chairman, William Blair & company, Chicago, Ill. Mr. Coolidge is the former CEO of William Blair and manager of its Corporate Finance Department. The firm has substantial investment banking experience advising small and mid-cap public companies. Mr. Coolidge will represent investment banking firms that advise smaller public companies, as well as the companies they advise.

Alex Davern, Chief Financial Officer and Senior Vice President of Manufacturing and Information Technology Operations, National Instruments Corp. (NASDAQ: NATI), Austin, Texas. Mr. Davern is chairman of the working group of the American Electronics Association ("AeA") on Section 404 of the Sarbanes-Oxley Act. He also serves on the board of directors and is chair of audit committee of SigmaTel Inc. Mr. Davern has a post-graduate diploma in professional accounting from the University of Dublin. He will represent smaller technology companies, which comprise a large portion the AeA's membership, and directors of public companies.

Joseph "Leroy" Dennis, Executive Partner, McGladrey & Pullen, Minneapolis, Minn. Mr. Dennis's firm is one of the prominent "second tier" public accounting firms, which frequently provide auditing services to smaller public and private companies. His firm's client base includes a substantial number of publicly traded financial institutions. He will represent middle market accounting firms, smaller public and private companies and publicly traded financial institutions.

Janet Dolan, Chief Executive Officer, Tennant company (NYSE: TNC), Minneapolis, Minn. Ms. Dolan's company manufactures industrial and commercial floor maintenance applications. It has a market capitalization of $355 million. She has been an advocate of assuring that the costs of compliance with the Sarbanes-Oxley Act are commensurate with the benefits, especially for smaller public companies. Ms. Dolan will represent mid-sized smaller public companies, especially those in manufacturing industries.

Richard M. Jaffee, Chairman of the Board, Oil-Dri Corporation of America (NYSE: ODC), Chicago, Ill. Mr. Jaffee is the retired President and CEO of Oil-Dri, a producer of sorbent products, such as cat litter, with a market capitalization of $75 million. He will represent microcap companies, especially those in basic industries.

Mark Jensen, National Director, Venture Capital Services, Deloitte & Touche, San Jose, Calif. The clients of Mr. Jensen's firm, a "Big Four" accounting firm, include numerous smaller public companies. Mr. Jensen himself has a diverse background in venture capital. He is a Certified Public Accountant, has worked on numerous initial public offerings and other securities offerings, and has served as audit partner for numerous companies in the venture capital, life sciences and information technology industries. He will represent emerging growth companies, venture capital funds and their auditors.

Deborah D. Lambert, Co-Founder, Johnson Lambert & Co., Raleigh, N.C. Ms. Lambert is Chairperson of the task force of the Council of Sponsoring Organizations of the Treadway Commission that is studying implementation for smaller companies of COSO's framework on internal control for financial reporting. She is also on the board of directors of the American Institute of Certified Public Accountants. Ms. Lambert will represent smaller public accounting firms and the companies they serve.

Richard M. Leisner, Partner in the law firm of Trenam Kemker, Tampa, Fla. Mr. Leisner is a senior securities lawyer specializing in providing legal services to growing companies in capital formation and other corporate transactions and on ongoing SEC reporting issues. He has been active in the American Bar Association and is the former Chairperson of the Small Business Committee of the ABA's Business Law Section. Mr. Leisner will represent emerging growth companies and lawyers working with these types of companies.

Robert E. Robotti, President and Managing Director, Robotti & company, LLC, New York, N.Y. Mr. Robotti's firm provides broker-dealer and investment advisory services relating to small to mid-cap companies. His firm also invests in these companies. He will represent investors in small to mid-cap companies as well as the interests of financial services firms active in the markets for the securities of these companies.

Scott R. Royster, Executive Vice President & Chief Financial Officer, Radio One, Inc. (NASDAQ: ROIAK), Washington, D.C. Mr. Royster has been Chief Financial Officer of Radio One, the nation's seventh largest radio broadcasting company, since 1996. The company primarily focuses on African-American and urban listeners. Before joining Radio One, Mr. Royster was a principal in private equity and private capital investment firms and an analyst with Chemical Bank/Chemical Venture Partners. He has an M.B.A. from Harvard Business School. He will represent rapidly growing smaller public companies and telecommunications companies.

Pastora San Juan Cafferty, Professor, School of Social Service Administration, University of Chicago, Chicago, Ill. Professor San Juan Cafferty sits on the boards of Harris Bancorp, Waste Management, Inc., People's Energy Corporation and Kimberly Clark Corporation. Her fields of special interest include cultural diversity, race and ethnicity in the context of American politics and government. Professor San Juan Cafferty will represent directors of public companies.

Kurt Schacht, Executive Director, CFA Centre for Financial Market Integrity, Charlottesville, Va. Mr. Schacht has been involved in the investment management business since 1990, serving as COO for a retail mutual complex, General Counsel and COO for a hedge fund, and chief legal officer for the State of Wisconsin Investment Board. Mr. Schacht will represent investors in smaller public companies.

Ted Schlein, Managing Partner in the firm of Kleiner Perkins Caufield & Byers, Menlo Park, Calif. Mr. Schlein sits on the board of directors of the National Venture Capital Association. He has been with KPCB, a premier venture capital firm, since 1996. He is credited with establishing Symantec Corporation in the utilities and antivirus markets before joining KPCB. Mr. Schlein will represent venture capitalists, companies funded by venture capitalists, technology companies and investors in venture-backed companies.

James C. Thyen, President and CEO, Kimball International, Inc. (NASDAQ: KBALB), Jasper, Ind. Mr. Thyen has served in various financial and executive capacities since he joined Kimball in 1966. The company manufactures furniture, cabinets, and related components for the office, hospitality, entertainment and retail infrastructure markets and electronic contract assemblies for the durable electronics markets. It has a market capitalization of $354 million. Mr. Thyen serves as Co-Chair of the advisory committee and represents mid-sized smaller public companies on the committee, especially manufacturing companies and companies in highly competitive markets.

John B. Veihmeyer, Mid-Atlantic Area Managing Partner for Audit and Risk Advisory Services of the accounting firm of KPMG LLP, Washington, D.C. The clients of Mr. Veihmeyer's firm, a "Big Four" accounting firm, include numerous smaller public companies, including many technology companies. He will represent larger public accounting firms and the smaller companies they serve.

Herbert S. Wander, Partner in the law firm of Katten Muchin Rosenman, LLP, Chicago, Ill. Mr. Wander is a Chicago lawyer who concentrates on business law, especially corporate governance, securities law and merger and acquisition transactions. Much of his practice has focused on companies classified as small and mid-cap. Mr. Wander serves as Co-Chair of the advisory committee and represents smaller public companies served by firms like his, as well as representing lawyers working with these types of companies.

The official observers of the advisory committee named by previous SEC Chair William Donaldson are:

George J. Batavick, Member, Financial Accounting Standards Board, Norwalk, Conn. Mr. Batavick is the Board Collaborator for the FASB Small Business Task Force.

Daniel L. Goelzer, Member, Public company Accounting Oversight Board, Washington, D.C. Mr. Goelzer served as General Counsel of the SEC from 1983 to 1990. He is a Certified Public Accountant in addition to being a lawyer.

Jack E. Herstein, Assistant Director, Nebraska Bureau of Securities, Lincoln, Neb. Mr. Herstein is serving as an official observer representing the interests of the North American Securities Administrators Association (NASAA), the organization of state securities regulators.

For up-to-the-minute news, features and links click on financialwire.net

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From: 2494434/12/2006 10:41:06 PM
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Minyanville subscribers?

Does anybody have any firsthand experience with Todd H.'s minyanville? Damn I would have to spend a couple days deciphering the terminology and cartoon characters...

minyanville.com

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