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Oct. 5 2009 - 7:29 pm | 151 views | 2 recommendations | 15 comments

Insta-Reporting, Clusterstock-Style!

Today he posted a video allegedly showing a “day trader” shorting tens of billions of shares of a stock with a float of only 5.5 billion shares. The trader allegedly executes his trades through the clearinghouse Penson.

via Matt Taibbi Falls For A Naked Short Selling Hoax Video.

The idiots at Clusterstock, just one week removed from making the uniquely asinine (even for them) claim that there is no difference between short-selling and naked short-selling, have struck again, proving once again that it is always best to actually put down your paper bag full of airplane glue fumes before you make blog posts.

Business Insider writer John Carney here seems to have read my recent post on Penson and taken from that that I was reporting that someone had executed a short sale of tens of billions of shares in a company whose float was only five and a half billion. This would, indeed, be ridiculous. Except that is not at all what I reported.

What I published was a tape of a trader asking for a locate of tens of billions of shares. It is the size of the locate, and the speed with which it is approved  that is the issue, not the trade. The actual trade, if Carney had bothered to read the text, was only for 100 shares.

Carney then goes on to claim in another post that the “system” worked because a second trade was rejected at :27 on the tape. But this is a second trade for a larger amount of shares that was rejected not because of the locate but because the trader in question had insufficient funds in his account to make the short sale. It has nothing to do with the locate and is completely irrelevant to the story.

Nothing like good old-fashioned, fact-checked journalism by the good folks at Clusterstock! No wonder they’re on such good terms with Goldman Sachs, who was good enough to provide them with the full version of the fact sheet they distributed to Congress last week, and which I first reported here on this site. Hilariously, Clusterstock was in that instance unable to accurately report information given to it by its own sources at Goldman. They originally wrote that Goldman had “denied circulating a fact sheet” to politicians.

Then they came out shortly afterward and admitted that they had had a “miscommunication” with Goldman, and that what Goldman was telling them was not that they hadn’t circulated a fact sheet to politicians, but that the fact sheet they had circulated was not about naked short-selling. Which wasn’t true either, but whatever.

It is really not easy to fuck the reporting process up that badly that many times in a row. But some of us, it seems, are just born with the magic touch. God bless these guys.

p.s. I wasn’t going to say anything about this, but it’s worth pointing out that Joe Wiesenthal was also posting on my site (see below, under the name Stalwart) and referencing his own site’s articles as “proof” that my story was a hoax. I confirmed with him that that was him. I’d heard stories about reporters doing this sort of thing, but I’d never actually seen it. What a strange character.


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  1. collapse expand

    Hey Matt!

    You definitely got me on FUBARing that Goldman Sachs story. Shows me what happens when I report something based on a voicemail I get at night from someone without an American accent.

    However, I really hope you judge us based on the entire corpus of our work (i.e not just stuff about you, Goldman and Naked Shorting).

    Cheers and peace

    Joseph Weisenthal.

  2. collapse expand

    I was originally writing what I thought was a quite clever troll comment meant to bait Mr. Weisenthal and Mr. Carney. It was based on glancing at Clusterstock and briefly reviewing Mr. Weisenthal and Mr. Carney’s profiles on the site. Unfortunately, part way through I noticed that Mr. Carney was *managing* editor, which actually puts Mr. Weisenthal in a position to apologize for and correct what he let his managing editor slip past him. So, I apologize for all of the things I just refrained from posting about how women must find an interest in Chinese food absolutely riveting and for spending a paragraph figuring out where in the douche scale sunglasses-and-suit-with-no-tie was compared to full-suit-and-creepy-faux-sex-predator-expression. It was unfair of me to go for the kneejerk ad hominem, which is all too often too easy in financial circles. I mean, after all, even Mr. Taibbi will occasionally fall prey to the urge to wear a pink button down under his jacket.

    That said, as the editor of Clusterstock, if you fully accept that you screwed up beyond all recognition, why have you not amended the articles in question with a retraction?

  3. collapse expand

    Salieri: You flatter me.
    Mozart: No, no! One hears such sounds, and what can one say but… ”Salieri.”

    Clusterstock: You flatter me.
    Taibbi: No, no! One experiences such journalism, and what can one say but… ”Clusterstock.”

  4. collapse expand

    This seems to have been glossed over by everyone. The posters over at Clusterstock seem to be ripping Mr. Taibbi a new one for his hack style. In fact none of the powers that be at Clusterstock have changed their original story or recanted in any way.

    Who is corrent? If Matt is wrong then it is a negative mark on his credibility and if Clusterstock is wrong then the same is true of their credibility.

    I find it interesting that no one seems to be making a big deal of this.

  5. collapse expand

    Matt,

    I noticed that Penson seems to be denying that they received any locate requests at the time in the video, and that the trading software that was used was not “their’s”.

    http://garyweiss.blogspot.com/2009/10/was-matt-taibbi-victim-of-hoax.html

    Now, while Penson might not offer whatever software was used directly, they do process the trades for a number of different brokerage firms, such as Zecco, Cobra Trading, Investrade, MarkeTrade.com, and Placetrade Financial. Each of which offer a number of different software solutions, one of which was obviously used in the video.

    Now, in order to counter Penson’s claims, wouldn’t it be possible to communicate with whatever broker that trade was processed through in order to determine for fact whether or not the broker forwarded the locate request to Penson, and that the resulting success did come from Penson?

    • collapse expand

      I think folks have hit Matt enough on the issue of him being hoaxed and re-imagining the theme of his original post. Like Joe Klein, George Will, etc., Matt is a star. Such things as journalistic integrity need not apply. Any mistakes he has made are purely the fault of those who point them out, and those who point them out are clearly on the Goldman Sachs payroll. Get with the program.

      In response to another comment. See in context »
      • collapse expand

        I think you missed the point of my post entirely.

        Matt accused Penson of wrongdoing, and Penson sent a letter to the SEC claiming a few bullet points on why this information Matt is presenting is wrong.

        This is coming directly from the people he is accusing.

        My point is that their claims are easily refutable with sufficient evidence from the broker, so why not just get that information to prove them wrong?

        I am on Matt’s side in this issue, I’m sorry if you construed my arguments incorrectly.

        In response to another comment. See in context »
  6. collapse expand

    Matt,
    While I have every sympathy for your worst thoughts re Goldman Sachs I must beg to differ with the unending flood of misinformation around the term ‘naked short selling’.I was defrauded in a Stanford University connected ‘pump and dump’ fraud and I believe money laundering operation called Endovasc between
    200 and well – now -because I am still fighting it and James Dale Davidson of the National Taxpayers Union and David P Summers a Beltway banker who fraudulently popsed as a Texas biotech ‘genius’ to pull it off.Worse is that Davidson’s NTU office is only a few blocks from the main SEC office in Alexandria,Virginia.And when they disappeared the NAANSS(see below) from the internet in 2005,it was replaced by Patrick Byrne’s NCANS and if you believe any of the scams called ‘public companies’ were or are the victims of ‘naked shorting’ rather than insider manipulation and pump and dump fraud I have an offshore island I bought just for you.
    Note below the link to sec.gov 2008 in which ex SEC Chair Chris ‘Naked Shorts’ Cox even claims your favorite company Goldman Sachs was ‘naked shorted’ – a purposeful lie on his part.
    Just as bad Utah Moron Senators Bob Bennett and Orrin Hatch have been aiding and abetting the lie that penny stocks such as Global Links and Byrne’s Overstock.con were ‘naked shorted’. All lies.I believed Endovasc was ‘naked shorted’ which is why I am still fighting this after all these years and I believed they were a legit biotech company !
    Further think – where did you first hear the term ‘naked shorting’ ? It was NOT used during the depression and if it was used at all before James Dale Davidson,David Patch,Grant ATKINS, BRENT PIERCE,ET.AL. BEGAN PROMOTING THE TERM TO DISTRACT FROM THE PUMPS AND DUMPS AND CONSEQUENT COLLAPSE OF PENNY STOCKS THEY WERE INVOLVED WITH AROUND 2002 – I WOULD BE VERY SURPRISED. Yet even Senators Carl Levin and Arlen ‘Magic Bullet’ Specter are badgering it about now -perhaps to cover up Fannie Mae and Freddie Mac that Michael Moore’s pal Rahm Emanuel and many more Beltway politicos are enmeshed in,including Barney Frank’s boyfriend through Fannie Mae.This is the lie that has gone around the world on Al Jazeera in english in 2006 and Bloomberg and in the UK for the first time I believe in 2007 when Times of London and The Guardian hinted Norther Rock was ‘naked shorted and in Australia 2008.The source is James Dale Davidson’s now disappeared NAANSS and Patrick Byrne’s Overstock.con.

    According to Ex Securities Exchange Commission Chairman Christopher
    ‘Naked Shorts’ Cox who created the reg to make coventional shorting
    easier then lied about Fannie Mae and Freddie Mac being ‘naked
    shorted’(when in fact all investors were receiving their dividends so
    ZERO shares were counterfeit’ or ‘naked shorts’ were in circulation at
    least at dividend paying time) he also said that Goldman Sachs WAS
    BEING ‘NAKED SHORTED’ IN 2008 ! Wasn’t Goldman Sachs ALSO PAYING
    DIVIDENDS LIKE FANNIE MAE AND FREDDIE MAC ? DID ANY SHAREHOLDERS COME
    to dealbookFORWARD TO SAY THEY DIDN’T RECEIVE THEIR DIVIDEND ? NO!

    The ‘naked short selling’ term was first popularized by James Dale
    Davidson of the National Taxpayers Association,a lobbyist and tax
    avoidence club and penny stock money laundering operation for
    multi-millionaires and billionaires who run penny stock pumps and
    dumps as for as I can make out,or aid and abet those who do.Davidson’s
    pal Steve Forbes has also lied about unnamed stocks being ‘naked
    shorted’ for some reason.The fraudulent claim of naked shorting works
    for penny stocks that do not pay dividends but it is a proveable lie
    when the claim is made for stocks like the Ponzi scheme Novastar
    Financial that was more like a ponzi scheme that paid dividends until
    it didn’t.But while it did pay dividends NO shareholder ever claimed
    they didn’t receive them.
    Novastar Financial ,was the scam that Bill and Hillary Clinton’s and
    Jane Harman’s and the present Honduran coup leaders’ attorney, Lanny
    Davis, defended from fraud charges but stayed silent on its fraudulent
    naked short victim claim.In fact so did NFI or Novastar’s ‘management’
    who allowed Patrick Byrne of Overstock.con and his NCANS or National
    Coalition Against Naked Short Selling’ that replaced James Dale
    Davidson’s NAANSS in 2005 to make the fraudulent claim for them to
    distract from the organized semi-anonymous crminal gang,with the
    exception of Byrne and a couplr of others who revealed there
    identities, and ran the nfi.net and ncans.net and later
    thesanitycheck.com site that Bud Burrell threatens my life from at the
    apparent pleasure of Byrne,ex Utah Governor Jon Huntsman and the ‘man’
    who appointed him to U.S.China Ambassador Barack Osama Obama.Yes Obama
    could have Bud Burrell stop threatening me because he has direct
    contact with his U.S.Ambassador to Chins Jon Huntsman who received
    $75,000 FROM THEM !
    You and Matt Taibbi can all thank James Dale Davidson for giving you
    so much ‘naked shorting bs’ to write about now that you know and you
    can still view Chris Cox,corrupt Houton attorney John
    O’Quinn,Georgetown University’s corrupt ‘business’ professor James
    Angel,Patrick Byrne,and the mysterious
    ‘Bobo O’Brien of NCANS,NFI and Circle Group Holdings PENNY STOCK PUMP
    AND DUMP,(that James Dale Davidson coincidentally held up as a poster
    child for ‘naked shorting on his Agora Inc Vantafe Point blog before
    Bob O’Brien took over),on Bloomberg’s 2006 video mis-infomercial even
    now.

    http://www.sec.gov/news/press/2008/2008-143.htm

    Washington, D.C., July 15, 2008 – The Securities and Exchange
    Commission today issued an emergency order to enhance investor
    protections against “naked” short selling in the securities of Fannie
    Mae, Freddie Mac, and primary dealers at commercial and investment
    banks.

    “The SEC’s mission to protect investors, maintain orderly markets, and
    promote capital formation is more important now than it has ever
    been,” said SEC Chairman Christopher Cox. “Today’s Commission action
    aims to stop unlawful manipulation through ‘naked’ short selling that
    threatens the stability of financial institutions….’

    The securities identified in the Commission’s order:

    Company Ticker Symbol(s)
    BNP Paribas Securities Corp. BNPQF or BNPQY
    Bank of America Corporation BAC
    Barclays PLC BCS
    Citigroup Inc. C
    Credit Suisse Group CS

    Daiwa Securities Group Inc. DSECY
    Deutsche Bank Group AG DB
    Allianz SE AZ
    Goldman, Sachs Group Inc GS
    Royal Bank ADS RBS
    HSBC Holdings PLC ADS HBC and HSI
    J. P. Morgan Chase & Co. JPM
    Lehman Brothers Holdings Inc. LEH
    Merrill Lynch & Co., Inc. MER
    Mizuho Financial Group, Inc. MFG
    Morgan Stanley MS
    UBS AG UBS
    Freddie Mac FRE
    Fannie Mae FNM

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