(Editor’s note: This is a letter that was sent to President Elect Obama and Vice-President Elect Joe Biden. This particular letter was written by Steve Walker, one of millions who have been trying to warn those in charge about the dangers of naked short selling and fails to deliver, only to have their cries fall on deaf ears. We now turn to our new leaders with a renewed hope. Obama and Biden should have thousands of letters just like it. Send your story or comments to: http://change.gov/page/s/yourstory )
Dear Mr. Obama and Mr Biden,
Congratulations on you well deserved victory. Our country is in desperate need of people like you. I pray for your success.
In January 2003 I bought stock in Casavant Mining Kimberlite International, Inc. That same month, the company, in a press release, claimed to be a victim of naked short selling. I had never heard the term. Five years later, I am probably more knowledgeable on the subject than an average Senator. This practice has infiltrated our financial markets so deeply, they may never recover. It requires your immediate attention.
In 2003, there was little information available to the general public. Thanks to the internet, a small group of investors were able to share their due diligence. The more we found, the more we understood the dangers. Our numbers grew. We started chat rooms, message boards. Our numbers grew and grew. In October 2004, there was a radio call in show dedicated to the subject. One of the callers was named Patrick. He said he owned a company that was a victim of the practice. Very intelligent, very lucid gentleman. Shortly after, we learned this was Dr. Patrick Byrne from Overstock.com. He became our unofficial leader. The media, especially CNBC, tried to make him look like a lunatic. He went on CNBC, more than once and warned of systemic risk. He provided proof, ON THE AIR, of the naked short in Overstock. What did the CNBC anchors do? They laughed at him. Mocked him. Asked if he wouldn’t be better off running his company, rather than his mouth. One publication showed him with a flying saucer over his head. He persevered. He does to this day. So do I and many others. Why? Sometimes I wonder why, but I always come back to the same thing. Our country’s future is a stake.
In 2004, we alerted every major news organization, the SEC, and many in Congress. In 2005, there were demonstrations in Washington and New York. We wrote comment letters on RegSho on the SEC website. We did so again and again, as they said they needed more time and more comments. Why did they need more comments, when every time they asked for comments, 99% demanded they put a stop to it?
Now fast forward three years and Dr Byrne was right and we were right. When the full story of the mortgage meltdown comes out, I believe we will find naked short selling weaved into the fabric of the entire mess.
What needs to be done now? First a permanent ban on naked short selling. Period. No market maker exceptions, no exceptions period. You want to short a stock? Fine, locate it. And once you borrow the shares, no one else can borrow the same shares.
Second, a complete overhaul of the SEC. Top to bottom. First they tried to ignore us, then they tried to stall us. And now they are exposed for all the world to see. Even Chairman Cox wants an investigation. Bernie Madoff is the tip of the iceberg.
Third and MOST important, force the Depository Trust and Clearing Company to open their books. The same DTCC in charge of clearing derivatives and mortgage backed securities, is also in charge of clearing and settling trades. The whole story is there, behind closed doors, under lock and key. Now, I challenge anyone to find the real ownership of the DTCC. Do the names Morgan Stanley, Lehman Brothers, Chase and Citi ring a bell? The same greedy bozos who created the mortgage crisis, clear and settle their own trades. In secret. They refuse to open their books. Why? A two year old can tell you why. The answers are there, if anyone has the huevos to take these people on.
So Mr Obama and Mr. Biden, if you really want change, follow the gold plated road to the DTCC, open there books, straighten this mess out. And whatever you do, DON’T LET THESE GREEDY BASTARDS SELF REGULATE EVER AGAIN.
That’s my story and only you can make it a happy ending.
Good luck and Godspeed.