Skip navigation

So Byrne et al got what they wanted, and yet look what’s happened to the markets.  Not saying there’s any kind of causal relationship there or anything, but it’s really hard to see how it helped.

Our first new guest in Deep Capture this week is one David Rocker, who is a highly successful hedge fund manager, or at least who was highly successful until the Lehman Brothers bankruptcy tied up what seems like half the capital on Wall Street.  Few portrayals of the man as a person are terribly positive, though that’s not a surprise when you make as many enemies as the man has.  Of which Byrne, Mitchell and the rest of the Deep Capture gang are just a small segment.

Rocker is unlike most hedge fund managers in that he allows himself to be quoted by journalists, notably Jim Cramer and Herb Greenberg, thus making his opinions public.  His voice is usually that of the bearish case in a given stock, which, as we have seen, the Deep Capture very gang strongly object to being heard.

Mitchell labels Rocker’s reports and comments “often bogus”, but rather than cite any examples, Mitchell decides it enough to smear them as being largely based on the research of Gradient Analytics.  That’s the firm that was subpeonaed by the SEC in 2006, then sued by Overstock… then cleared by the SEC and finally allowed to exit Overstock’s lawsuit with a brief and narrow retraction — if it actually amounted to a retraction at all.

Oops.  Now that Gradient is no longer one of the “bad guys” Mitchell’s whole basis for impugning Rocker’s commentaries just blows away in the wind.  Should’ve gone with some examples instead, Mark!

Mitchell goes on to portray Rocker as “tight with the SEC”, to the point, Mitchell claims, that they would open an investigation into a company simply on his say-so.  “As was Elgindy,” Mitchell hastily adds, lest the reader wonder what exactly is a bad thing about having the implicit trust of the cops.  So noted, in Mark Mitchell’s view of the markets, that there’s no surer sign of being crooked, than having the trust of the cops.

Mitchell does concede that some companies thus targeted were in fact found to be fraudulent.  But others, Mitchell says, were instead proven to be “beyond reproach”.  (Someone needs to introduce Mr. Mitchell to the concept of “middle ground”.)  But, as Mitchell laments, by the time exoneration and deification came through, it was too late and the businesses had been destroyed by the specter of having been under SEC investigation.

I hate to keep harping on this, but once again, an example of a company thus exonerated but nevertheless driven to bankruptcy by nothing more than being under the weight of an investigation, would not have been out of place here.

But no time for that, because it’s time to switch subjects, and once again do so in mid-paragraph!  (Seriously, the folks at CJR have to be truly embarrassed by this point.)  Our next guest is a name — two names actually — heard all too often during the meltdown of the dot-com bubble, ladies and gentlemen, let’s welcome Milberg Weiss!

Milberg Weiss — today known simply as Milberg — is a law firm specializing in class-action lawsuits.  And frankly I’m not even sure any elaboration on that is necessary as anyone who was in for the downside of the market in the early 2000’s probably has a pretty good idea how that works.  You lose thousands in the market, then years later, you get a check for twenty bucks, and that gets called justice.

As you might have gathered from my tone just now, I’m not a fan.

So for once Mitchell and I might at first blush appear to be on the same page.  But Mitchell, never one to do anything unless he can overdo it, isn’t satisfied with the giant fees Milberg pulled down on these class-action suits, as a motivation for their actions.  No. he has to go one further and say Milberg selected its lawsuit targets at the behest of the shadowy short sellers.  Because after all, why be satisfied with straightforward greed when you can pull a full-blown conspiracy into the picture?

Let’s face it, Milberg was the ultimate vulture of the early 2000’s.  You couldn’t just ignore them.  If they still wielded the power today they did seven years ago, they’d be all over Overstock over this restatement business, if they hadn’t been already.  So the notion that Gradient would have a file on them and their actions?  Not a surprise and not in and of itself particularly suspicious.  Of course if Mitchell could give us some insight into the actual contents of… no?  Well, there you have it once again, another Mitchell special, heavy on innuendo, feathery light when it comes to facts.  I believe in some sectors of journalism they call that a “hit piece”.

To be fair to Mitchell, the quiet settlement between Gradient and Overstock was not one that many saw coming, so his focus on Gradient, while a little embarrassing in retrospect, is nonetheless at least somewhat understandable.

That is not so much the case for the topic of next week’s section.  You know all that fuss I’ve been making over how Mitchell rarely if ever provides examples of victims, to back up his claims?  Next week, he finally gets around to one.  But there’s a small problem.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: