SALT LAKE CITY, Nov 30, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Overstock.com, Inc. (Nasdaq: OSTK) president, Patrick Byrne, issued the following statement today at the North American Securities Administrators Association's public forum on naked short selling:
"I commend NASAA for holding this hearing. Naked short selling is a growing problem within the securities markets. The Depository Trust & Clearing Corporation (DTCC) admits that 'failures to deliver' are as high as $6 billion per day. This is an incredible number.
Continued abusive short-selling practices pose strong potential for a systemic Wall Street meltdown that will undermine our capital system and our economic strength. The prosecution of Enron executives will begin in January 2006. On the heels of this tragedy, we are persuaded that Main Street shareholders, through their retirement and other accounts, again may be at risk because of the manipulation of the markets. Already these practices may have contributed in substantial part to the massive frauds featured in recent financial headlines involving such companies like Refco, Inc.
Naked short selling consists of persons selling (or colluding with others to sell) massive quantities of stock they neither own nor have arranged to borrow. They do so with the intent to manipulate downward the stock price of targeted companies in order to profit by a repurchase of the stock following the downturn, making tens (or hundreds) of millions of dollars engaging in this illegal conduct. Abusive short-sellers frequently never deliver the stocks they are selling, but rather postpone trade closures indefinitely.
The SEC's Regulation SHO, intended to redress these abuses, has been largely ineffective in curbing the excesses of naked short sellers and, in fact, may have actually encouraged the practice by:
* "grandfathering" abusive conduct of the past;
* establishing a list of companies for which brokerage firms have failed
to deliver a substantial number of shares to close short-selling
trades, which essentially is a "bill board" for short-sellers to
further target these companies for abuse;
* extending by ten days the time for delivery of shares for companies
listed on the Regulation SHO threshold list; and
* incorporating vague and non-binding provisions for short selling firms
to locate shares to borrow.
This conduct is a serious disease in our capital markets and calls for immediate corrective action.
NASAA's public forum today is another step towards bringing basic transparency and profile to this issue and Congress should seriously consider hearings and legislation to remedy the obvious shortcomings of Regulation SHO."
SOURCE Overstock.com, Inc.
Scott Blevins, +1-801-947-3133, email@example.com, or Investor Relations, Kevin
Moon, +1-801-947-3282, firstname.lastname@example.org, both of Overstock.com
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