back to article Wikimadness XVII: The Return of Byrne

We spoke too soon. The web's longest running farce is alive and well. Earlier this summer, it seemed we had finally seen the end of the epic squabble pitting the CEO of Overstock.com against Jimmy Wales and the cult of Wikipedia. But as it turns out, more fun was on the way. Three and a half years after Overstock boss Patrick …

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  1. Dan Davis
    Thumb Down

    Who cares?

    What's "one-sided" is your unhealthy obsession with Wikipedia and every belch and far emanating from that website. Who cares?

    Latching on to the demented Byrne, because he hates Wikipedia, just makes you people look foolish.

  2. William Morton

    If they maliciously used Wiki to discredit him I am interested

    Suing for libel should be possible even where the publication is on the web, if he can prove he lost out he should be reinbursed. I don't know anything about the subject but I don't like the idea that Wiki was used maliciously

  3. Anonymous Coward
    Unhappy

    Who cares? You should.

    The problem with Wikipedia is that it shows up all over the place when you do a search for information. It's omnipresent and worse yet, contains the letters "pedia" - which tends to make people believe that it's an encyclopedia. If it's in an encyclopedia, it must be correct, right? ( An acquaintance of mine got $10k for rewriting some articles for the Encyclopedia Britanica . They make mistakes too...)

    The appearance here is that "someone" deliberately forced false information into a financial article and the powers-that-be in Wikipedia colluded with them. Was this for money? Or not? And how can you prove it either way? This is a whole different problem than simply making a mistake.

    I want Wikipedia gone from the search results of people who work for me. The system is tainted and there's no way to determine what other results have been tampered with - whether for obvious financial gain or not.

  4. Jim Middleton
    Go

    Just about everyone who is invested in the US market should care...

    And how exactly do you figure Byrne is demented? It looks to me like he is right, both about naked shorts and Wikipedia.

  5. Anonymous Coward
    Thumb Down

    Sue?

    He's already suing about a dozen Wall Street firms, blaming them for his stock declining. The fact that his company has never made a nickel is of course not the reason.

    If anyone owes anyone an apology, it is the apology Byrne owes his shareholders for being incompetent.

  6. Bronek Kozicki Silver badge

    geez, what took you so long?

    SEC order is almost month old now. I was wondering when El Reg will notice. As to Byrne and Wikipedia - I do not care. Those who make financial decisions based on Wikipedia articles deserve what they get.

  7. Adam Williamson
    Thumb Up

    @AC 20:24

    "The fact that his company has never made a nickel is of course not the reason."

    it probably isn't. There's enough firms out there whose stock prices do just fine not on the basis that they're actually making money but that they've promised very solemnly to make *ever* so much money in the future.

    Remember Mr. Carroll's "jam tomorrow". Making money is a mug's game - the real trick is convincing everyone that you're definitely going to make money. At some point. When it's done.

  8. Angus Wood
    Boffin

    There is nothing wrong with shorting stocks, naked or not

    Shorting, for those that don't know it is the business if borrowing company stock from someones in exchange for collateral such as cash, bonds, other shares etc. and selling them on the open market. The idea is that you do so, wait a while as the stock goes down and then buy the same number of shares back at the (now) reduced price, return them and get your collateral back. The difference in price is your profit.

    Doctor Overstock's beef is against people who sell the stock without doing the "borrowing in exchange for collateral" bit. The reason being that he thinks that people doing so will sell their stock at a lower price than the "unsullied" market and so the price of the stock (which, it's worth repeating is simply the mid-point of the highest registered bid for <x> amount of a stock and the lowest registered offer for <y> amount of stock. x and y have no relation) will drop, depressing the value of the company.

    It is true that the SEC have banned shorting of a handful of US financial institutions, and here in the UK the FSA have banned shorting a handful of finacial institutions during any time they are having a rights issue. Opinion is fairly sharply divided between those who think that they're ineffectual idiots and those who think they're childish morons. It's a tough call.

    Herr Overshtoker isn't right, and he does need to get over this whole thing.

    Remember: You can't sell something unless someone buys it. It takes two parties to perform a transaction, willing and aware. Neither enters in to it unless they belive that they will profit from doing so.

    No-one loves someone who profits from misery, but that doesn't change the fact that shorting is perfectly legitimage business.

  9. Patrick Byrne

    Comment on article by Patrick Byrne

    Hi. This is mostly accurate. Far more accurate than the tripe which passes for journalism in our financial media, in any case. Just one thing with which I would take issue. Mr. Metz writes:

    "But Byrne is still peeved. Much like the Wall Street press, a group of Wikipedia insiders - including cult leader Wales - spent years battling the Overstock chief over the naked shorting issue, and Byrne has long claimed that these anonymous encyclopedia obsessives conspired with a well-known financial journalist to ruin his company and his reputation. Well, now he want wants a mea culpa. And Wikipedia has yet to oblige."

    Once again, this trivializes the issue by reducing it to some kind of personal beef. The truth is, this fight is not about me being "peeved" or some guys trying to ruin my reputation or me wanting "a mea culpa". What this is about is as follows: there is a crime going on. It is destroying the US capital markets and, as is now obvious, creating a risk of systemic collapse (which is why the feds passed this Emergency Order to wall off our banking sector from the very problem that a few years ago they were denying exists). I am trying to expose these criminals. Because Gary Weiss has hijacked these pages on Wikipedia, and the Wiki-elite are covering him, it means that the Wikipedia page has been used in a cover-up. The cover-up has reached absurd proportions, where the Wikipedia page reports as fact claims that have been blown out of the water by the events of the last few months. (See the talk page for numerous examples.)

    To all who have deep concerns about Wikipedia, you will never find an example like this: Wikipedia has successfully been used as an instrument of mass mind-control and cover-up. Read the NSS page and the Talk page at Wikipedia to see what I mean.

  10. Steve Hogan
    Pirate

    Shorting may be OK, but naked shorting is definitely not.

    Angus,

    You are right when you say you cant sell something unless someone buys it. However, you can sell something you don't own. This is normally called fraud, but is usually, or has been usually overlooked in the case of naked short selling.

    The American stock market is not the only market affected by this practice. It is also rife in the Australian stock market. It has been speculated that ASX, an incorporated business managing the stock market in Australia, is in collusion with institutions participating in naked short selling. Some financial journalists are of the opinion that the share register the ASX holds may be incorrect and corrupted by this practice. For example, a fund naked shorts some shares, selling them at discounted prices to create a dropping market and panic selling. This is to drive the price even further down so they can buy them at the cheaper price and transfer them to the entity who purchased them off the fund at the intermediate price. However, occasionally the shares remain tightly held and there are not enough available to buy to meet the sale order. Tthis is where the fraud is occuring.

    The ASX is crediting shares to the buyer that don't exist. This is why I will not trade in stocks until naked short selling is illegal and prosecutions occur. I could be parting with cash for shares that do not exist.

    The market is being artificially manipulated. Real manipulation is bad enough, but when it can and does happen due to fraud encouraged and supported by the governing body, thats a bit too corrupt for me to want to have anything to do with it.

  11. amanfromMars Silver badge
    Alien

    Inculpatory Evidence ..... Fiscal Meltdown

    Re; @AC 20:24 Posted Monday 11th August 2008 21:54 GMT

    And can continue to indefinitely make money too, at every point, while you're doing IT, Adam Williamson, is the Real Virtual Trick, and QuITe Tricky IT is too.

    IT is a Knack available to All and yet Practised by Very Few ..... and they would not be at all Jammy, for Lady Luck Plays No Part in Such Shenanigans.

    "No-one loves someone who profits from misery, but that doesn't change the fact that shorting is perfectly legitimage business." ... <<There is nothing wrong with shorting stocks, naked or not>> By Angus Wood Posted Tuesday 12th August 2008 00:53 GMT

    Are you deeply compromised and a miserable unloved instrument in naked short selling, Angus?

    "Wikipedia has successfully been used as an instrument of mass mind-control and cover-up." ... By Patrick Byrne Posted Tuesday 12th August 2008 02:13 GMT

    Top of the Morning to you, Patrick. Methinks even a blind man on a galloping horse would see, that it has clearly been a clumsy, unsuccessful instrument. And the Capitalist Markets are Collapsing as a Direct Result of such Cynical Manipulations for the Heartless Love of Money, and Obscene Obscure Wealth would Identify the Fraudsters Admirably.

  12. JCL

    @Dan Davis

    ..he's obviously not demented in his overall case if his beliefs have turned out to be right. Also, there is also the broader concern that texts written by anyone, anyone at all, can be used not just in the money markets, but for definitions in a court of law as was seen this last couple of weeks.

    I'm happy to use Wikipedia for trivial purposes - finding out about a celeb, film, or a starting point for research into open-source software, but I'd never use it for anything really important. Unfortunately not everyone knows that the articles can't be trusted in this way.

    Name calling is a little childish. Given your one-sided rant you should be worried that you are a little too sensitive to criticism.

  13. Anonymous Coward
    Heart

    Introductions...

    Mr Byrne meet amanfromMars, amanfromMars meet Mr Byrne. Mr Byrne, they may be wisdom in what Mr Mars says, but please don't stare to long. Down that path madness lies.

  14. Anonymous Coward
    Dead Vulture

    @ Angus Wood

    Naked shorting does affect the market differently to borrowed shorting. By naked shorting, you artifically increase the supply of the stock, driving the stock down. The listed pricing of the stock is the last executed price, not the mid-point between the closest ask and the bid prices. If the price is articifially depressed, and someone is leveraged in the stock targeted, the drop in price can cause a margin call and trigger a sell-off, further driving the price down.

    And "x" and "y" do have a relation. Unless it's an illiquid stock, or there will be some price sensitive news breaking soon, the bid/ask prices are normally quite close together. If there's a huge spread between the prices, there are always people willing to sell/buy at a better price than you. Naked shorting tells all the buyers that they can get their stock for the price they're asking. This in turn means that the sellers have to offer lower prices or get undercut by someone else offering the stock between the new bidding price and their asking, which drives the price down again, etc etc.

    With covered shorts, the seller has to, at some point, buy the stock back. The seller also has to find, and borrow (read: pay a fee for), the stock. If too much is being borrowed and shorted, the lenders are less likely to lend out more and risk the value of the stock they're still actually holding. (At the end of the day, they know they have to take their stock back. At some point.)

    So, having driven the price down, transactions are now being completed at the lower price, and the naked shorter can now cash in all his options and merrily go on his way.

    The equivalent opposite, a "naked long" I guess, would be to promise to buy stock when you don't have the money. And that just sounds silly from the get-go. And before anyone says "that's stupid", a covered long would then be taking a loan to buy some stocks, with the plan to make some money and pay the cash back + interest. Which is what people do.

    ... ... ...

    I'm sure I had a point in there somewhere...

    Ah, yes. Excessive naked shorting can then be construed as market manipulation, which I believe is illegal.

    Death, in memory of Overstock and Bear Stearns...

  15. Anonymous Coward
    Thumb Up

    @Bronek Kozicki and Angus Wood

    First @ Bronek I'm sorry but it affects every one as abusive naked shorting can bring down substantial companies. Bring down enough and the market gets a cold. At that point you find yourself in recession.

    Second @ Angus Isn't it a tad surreal that companies are dealing stock that doesn't exist, or even when they are conducting the less abusive form of this business, that they don't own ? What happens when a company you depend on is shorted out of existence ? How about someone you don't know flogs your house or car out from under you, doesn't that amout to the same thing ? It's Alice in Wonderland fantasy shares/money. Your company takes a dive because someone, somewhere is handing out share certificates with a perforation at either end.....

    It's a process that allows those rich enough to distort markets whether they have holdings in the companies concerned or not. The most vulnerable, since they have the fewest shares available, naked shorting a relatively small dollar value would have the greatest effect, I would suggest are startups with genuine innovations and Intellectual Property. You can trash the company then take their IP in a fire sale. Obvious implications here for the IT industry. Couple the basic shorting mechanism with a stooge in the media leaking malicious stories that lower the target companies share price and you have a financial weapon capable of destroying economies, that has implications for everyone.

    Unfortunately of course those involved in these activities have powerful friends and are unlikely to find themselves regulated out of these activities any time soon, although I note both UK and US authorities have placed a prohibition on these activities on a select handful of companies. Wait until cash rich governments with a grudge start targetting western financial institutions, media stooges (doubtless with their own money ploughed into the same game) run stories noting huge amounts of sales and then the share price goes free fall. Spooky eh ?

  16. Mike Groombridge
    Boffin

    ok time to cut down on my comments intake

    as aman from mars kind of made sense.

    naked short selling is wrong you can't sell something that doesn't exsist that would be fraud. and while short selling isn't exactly geart atleast you are actually selling stock (althoughed borrowed stock.)

    what i want to know is in normal short selling where does this borrowed stock comes from.cause if i'm letting you borrow a thousand shares at X which is the current stock price (call the total Y) and when you give me the shares back i return Y to you no matter what when the stock is sold forceing the price down the value of X decreases but when i get my stock back i'm still giving you the return of Y so really my stocks worth nothing and i'm out of pocket. so who in there right mind lends there stock so it can lose value.

    if the trading firm is "borrowing" the stock with out informing customers that it's doing it( basically they make the promise to pay y value to the customer if the customer wants to sell before they get they shares back) then that's still faud as they still don't own the stock they are just saying they do.

    so where does this borrowed stock come from if it's not lent be a customer borrowed without permission, and big companies aren't going to lend there stock to bring it are they so where is this borrowed stock from.

  17. John Hughes
    Flame

    Google without wikipedia

    Just add -site:wikipedia.org to the end of your query.

    That was hard, wasn't it.

  18. Neil

    common sense suggests..

    Wikipedia is generally useful when you have the urge to look something up out of interest.

    Don't use it for research when investing money.

    It's called common sense.

  19. Anonymous Coward
    Anonymous Coward

    apt

    "Just add -site:wikipedia.org to the end of your query."

    Here's hoping that one day Cade Metz will do just that.

  20. Anonymous Coward
    Anonymous Coward

    Yes,

    I agree. The Reg's hyperfocus/obsession/hard-on concerning Wikipedia is past the point of ridiculous.

  21. Michael

    @ AC 15:21

    >>>I agree. The Reg's hyperfocus/obsession/hard-on concerning Wikipedia is past the point of ridiculous.

    Thus spake the Anonymous Coward...

  22. ChessGeek

    @ Angus Wood

    Instead of something "abstract" like shares of stocks, imagine someone doing this with your home - without your knowledge or consent.

  23. Dan Davis
    Gates Halo

    Demented?

    Today is the third anniversary of Byrne's famous Sith Lord Rant.

    http://money.cnn.com/2005/11/01/news/midcaps/overstock_fortune_111405/index.htm

    http://www.theregister.co.uk/2005/12/03/overstock_issues/

    Demented.

  24. amanfromMars Silver badge
    Pirate

    What they would rather you didn't Know ..... Dark Matters in Deed, indeed.

    For an invaluable insight and an education in what is wrong with the System and the Terminal Cancer which is naked short selling and the Failure To Deliver Scams of Sub Prime/Toxic Investments and Collateralised Debt Obligations etc, ......... Spend/Waste/Enjoy an hour and a half of your miserable existence and Watch 42 Understand .... http://www.businessjive.com/ ....... [and I just can't remember who first referenced that site to me, .... for a grateful acknowledgment and thanks.]

    Starring ...... Crooks in Suits Fronting and Pimping a Clear and Present Danger of Olympian Crash.

    PS if a slide locks up or sound disappears, [and it happened three times for myself] closing down the page and recalling from Favourites or the Web again, will start it up again from the slide you were watching ........which is a nice facility rather than having to remember where you were.

    And then jump into El Reg and Champion the Wiki corner.

  25. yeah, right.

    need to find

    a plugin that automatically adds "-wikipedia" to all my searches.

    Quite frankly, it's a pile of crap. This latest Byrne thing is nothing more than Wikipedia and its overlords deliberately and with malice using Wikipedia to libel Byrne. Stuff like this makes me want to stuff a used toilet brush down the throats of anyone who uses Wikipedia for anything. It's like Fox news, but without the integrity.

  26. Steve Hogan
    Stop

    Construed?

    Saying

    "Ah, yes. Excessive naked shorting can then be construed as market manipulation, which I believe is illegal."

    is like saying shooting someone in the head and killing them can be construed as murder.

    I would love to see someone attempt to defend themselves against a charge of market manipulation where there is proof they had performed shorts naked. The two things stopping this at the moment are toothless regulators and difficulty proving the naked condition of the trade. We need a whistleblower.

  27. Anonymous Coward
    Anonymous Coward

    To Mr Byrne

    I don't agree that naked short selling is destroying the US Markets. Fundamental business mistakes, such as giving loans to people who can't pay them back (eg NINJA loans, sub-prime etc), then building hugely complex financial packages, giving them AAA ratings, selling them, then leveraging hugely off them, is destroying the US Markets. Naked short selling is a pain, sure, but you know what, them's the markets. And the hilarious thing about it is, when the markets rally (as they have done recently), short sellers get caught short (see what I did there) and we can all point at them and laugh. Again, that's capitalism.

    However, I do agree with your right to have an opinion about it, and Wikipedia is full of basic errors, but hey, that's the internet for you. It's about as trustworthy as a pub full of drunken freaks all telling you THE TRUTH.

  28. amanfromMars Silver badge
    Black Helicopters

    Naked Short Selling has Destroyed the US Markets is an unpleasant Truth.

    "And the hilarious thing about it is, when the markets rally (as they have done recently), .." ...By Anonymous Coward Posted Wednesday 13th August 2008 07:28 GMT

    I admire/pity your blind delusional optimism, AC, but would counsel that it would mark one out as being part of the Problem rather than being able to contribute to the Solution.

    I do wonder at how you resolve in your head, fundamental business mistakes, which you then share are hugely complex financial packages destroying the US Markets. It clearly shows how easy it has been to dupe the less than well enough informed.

    I take it that you are more a down-at-the-pub-getting-freakily blind drunk sort of guy rather than a surfing-the-web-doing-SMART-Homework type of dude? That is bound to be a recipe for easy manipulation of markets for you know what they say .... When the drink's in, the Wit's out and a drunk man cannot tell a Lie.

    Which Spookily enough would agree with your last sentence. Bravo. Something finally we may be able to agree on.

  29. Anonymous Coward
    Anonymous Coward

    The stock markets are just another form of gambling

    No surprises in the title however bear in mind what happened with the housing markets, banks, LLyoyds names etc. Where these investment companies loose their bet we the tax payer end up footing the bill.

    Shares rarely have any real value in themselves, their value is determined by what people are willing to pay for them. The price is determined by confidence and gossip, both of which are open to manipulation by the unscrupulous.

    It is stupid, I know but this issue has an effect on us all. The fraud which pervades the investment markets has the end result that we the majority loose money so that the cheats can become even richer.

    I personally would ban all speculation, we shouldn't be allowing the greedy to have such control over our lives.

  30. James
    Alien

    I don't like him when he's angry.

    It appears that the angrier amanfromMars gets, the more sense he makes.

    (This is subjective of course)

  31. Anonymous Coward
    Anonymous Coward

    Naked Shorting has destroyed ... which companies

    @amanfromars: you say, "Naked Short Selling has Destroyed the US Markets is an unpleasant Truth."

    Name one company that has been destroyed by naked short selling.

  32. Patrick Byrne

    Force Protection

    Force Protection makes MRAP's for our soldiers. 300 IED attacks, no fatalities (except one roll-over where a guy hanging out the machine gun portal was crushed).

    In the last 4 quarters FRPT has made Net Income (GAAP) of $40 million on $500 million in sales. The DOD has ordered 12,000 of them. FRPT cannot keep up with production. So, with their stock at $25, they announced a secondary to raise capital to expand their factory. They were immediately naked shorted down to $4 (in fact, I think they have been on the Reg SHO list for about a year now).

    Because they were naked shorted down to $4, they cancelled their offering. Because they cancelled their offering, they did not raise capital to expand their factory. Because they did not expand their factory, fewer MRAP's are being shipped to Iraq and Afghanistan. Because of that, some soldiers will die in Iraq this month, just so some hedge fund ass-clown in Stamford, Connecticut can drive a Porsche.

  33. Anonymous Coward
    Stop

    But what about the accounting issues, Mr. Byrne?

    @Patrick Byrne: I assume that you can substantiate that?

    According to 10Q Detective, the company hit a "land mine" in the form of a reduction of orders from the Marine Corps, and also raises possisble accounting issues.

    http://seekingalpha.com/article/56185-force-protection-hits-a-land-mine

    Not a word about naked shorting in that report. I guess that makes 10Q Detective part of the conspiracy.

  34. Fuion
    Alien

    @Inculpatory Evidence ..... Fiscal Meltdown

    Electronic control of coffee brewing as many things very day. It was actually literally swarms of fire bug fucker. They would tell you? Maybe she stimulated his beard, and positive behavior - His singular master.

    Some dude I am - still just the nativitys porcelain milk always love the raw primordia gives birth to draw attention to f*(k s*it anyway. They could oppose him to the family recipe and fill dogs bowls full of sh*t.

  35. Patrick Byrne

    It's always something, Coward

    How would the Marine's cancelling orders explain why FRPT shares have been sold and not delivered for 300 days?

    Coward's post illustrates the routine perfectly. Crooks naked short a company, then fill social media with innuendo about "possible accounting issues...", see a small group of compliant financial journalists repeat the innuendo, and hope the public is suggestible enough not to notice that the innuendo really has nothing to with the issue that someone is selling non-existent shares that never deliver.

    FRPT's economics are soaring. However, that is not relevant to the analysis, so it would not matter even if they were not. The analysis is: Someone is selling non-existent shares of FRPT, not delivering anything, but taking people's money for it. In fact, this is happening in hundreds of companies. For years, anyone trying to question this was drowned out by claims that "Maybe this company has an accounting issue," "Maybe this company's drug is not going to work as well as people hope," "Maybe the orders are going to drop off," etc. Just blue-smoke-and-mirrors.

    If you want to read how this is all being organized, read DeepCapture.com .

    Patrick

  36. Anonymous Coward
    Heart

    Sure "it's always something," but what about substantiating what you say?

    @Patrick Byrne. There's no "routine" here. I'm just asking you to provide evidence, which you haven't, and I pointed out that a respected newsletter pointed out problems with the company.

  37. Glenn Shoosmith

    ..and here's what Wikipedia thinks of El Reg...

    "The Register is not exactly the most reliable source. If there were interesting news, I suspect it would first appear in better places. They seem to do a fair amount of rumor mongering at The Register, and not so much fact checking."

    http://en.wikipedia.org/wiki/Talk:Naked_short_selling#New_source-_The_Register

    probably all true, but I still think you should send the boys round!

  38. Anonymous Coward
    Anonymous Coward

    Cat got your tongue, Byrne?

    This is from Tracy Coenen, a forensic accountant who authors the Fraudfiles blog and is an authority on shady corporate practices:

    "I've yet to see anyone prove that naked short selling has destroyed even one company. If there’s evidence of that, I’m sure the world would love to see it. For now, all we have are rantings and 'Patrick Byrne says so.' I guess when you have lots of money, it’s easy to make people listen to you. But they don’t have to believe you, no matter how much money you have."

    http://www.sequence-inc.com/fraudfiles/2008/08/16/overstockcom-and-naked-short-selling/#more-1763

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