Ackman's Failure Signals Need for Anti-Crony Capitalism Regulation

Seemingly masterminded with the aid of Wile E. Coyote, billionaire crony capitalist hedge fund manager Bill Ackman of Pershing Square Capital Management, L.P. has catastrophically failed to destroy Herbalife Ltd (NYSE: HLF). His five (5) year effort to destroy Herbalife with a Billion Dollar gamble to short sell Herbalife stock and destroy the company and its owners, investors and citizen distributors has ended in a personal debacle causing massive layoffs and redirected strategies for Pershing Square.

Ackman’s plan or scheme was simple: to blatantly destroy Herbalifes stock value, and cash in on the plunder of Herbalife’s dead body. Ackman attempted to profit on the backs of the American investing and working public that rightfully sees multi-level marketing opportunities as a traditional and legitimate beacon of hope that his silk stocking ilk cannot comprehend. He set out over five (5) years ago to purposely eradicate Herbalife, along with the financial investment, profit expectations, business opportunities, property values and hopes and dreams of millions of lower and middle-class innocent American citizens who owned and worked for Herbalife.  

Pershing Square and Ackman are losers, despite their scorched earth efforts to obliterate Herbalife that included financing a D-Grade self-promoting propaganda feature documentary defaming and demonizing Herbalife; public threats of prosecution of Herbalife through criminal process and potentially crippling administrative action arising from a Democrat U.S. Senator in Ackman’s pocket; and, SEC, FTC, and State Attorneys’ Generals investigations. Pershing Square and Ackman spent $50,000,000.00 to put in the fix and failed. Anticipating profits from his command center,

Manipulation of the stock market by billionaires for profit and sport through shorting a stock and then enlisting Congress, government regulators and the media to win the bet is cheating. Make no mistake, corporate death, ruin, and destruction are generally the intended outcome in Ackman’s game.

The process of shorting stocks is a game for only the wealthiest of the wealthy. The process of shorting stocks has been left essentially unregulated because the prevailing popular wisdom amongst regulators is that the use of short selling is a self-regulatory mechanism whereby stock fraud is rooted out by private investors who profit by pocketing the difference in value of the shorted stock upon its decline in price due to the exposure of the fraudulent company. Regulators love this idea, and permit investors engaged in shorting a stock free reign without oversight. This blind-eye neglect by regulators is just another manifestation of crony capitalism whereby the government disregards the public weal and helps the wealthy elite secure private profits.

There is no transparency in these lawless Crony Capitalist corporate raider war rooms, the market benefit theory only works as a concept. Greed is the driving wheel of the Short Sell Machine of forced ruin. Hence, many companies find themselves to be victims of false charges by predatory short sellers.  The investing public, the general public and the American economy are all victims of this shadowy practice through unnatural investment losses, job losses, reduced taxes paid and co-opting of governmental resources by a handful of bloated crony capitalists whose sole purpose is to feast on the corpses of the otherwise economically viable companies they kill off.  

Astoundingly, short sellers are not required to disclose their shorted positions. Investment firms, such as Pershing Square, while required to disclose their long positions in equities, stock options, or notes/convertibles are not required to disclose their cash or short positions. Short positions remain cloaked in darkness and secrecy. Query whether it is a good idea for regulators to aid the wealthy and powerful to operate in secret on matters that enrich them if the public interest is harmed.

Therefore, Congress must draw back the curtains and mandate short-seller disclosure requirements that are not less than those currently required of “normal” long-term investors who seek and hope for the investment rewards reaped of profits as opposed to those who labor for losses and financial ruination. These disclosure requirements would entail public filings in which investors who hold more than 5% of a stock must disclose their ownership stake, even if those investors are short sellers seeking to destroy. Additionally, disclosure of short sell activities of company insiders should be required regardless of ownership interest.

The seminal American jurist Mr. Justice Louis Brandeis famously said: “Sunlight is said to be the best of disinfectants”. Transparency brings light and permits oversight, which fosters fairness and preserves liberty.  Ackman and his grave-robbing kind despise the cold light of day that follows transparency. Therefore, Congress must act to pass legislation that introduces transparency into the short sell process.  It is time to let the sunshine in and render the Ackmans of the market powerless to pull the levers of power in secret and darkness.

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LIGHTER SIDE

 

Political Cartoons by Tom Stiglich

ALERT ALERT

 Judge Orders Mueller To Prove  Russia Meddled In Election 

Judge Dabney L. Friedrich

A Washington federal judge on Thursday ordered special counsel Robert Mueller’s team to clarify election meddling claims lodged against a Russian company operated by Yevgeny Prigozhin, an ally of Russian President Vladimir Putin, according to Bloomberg.

Concord Management and Consulting, LLC. – one of three businesses indicted by Mueller in February along with 13 individuals for election meddling, surprised the special counsel in April when they actually showed up in court to fight the charges. Mueller’s team tried to delay Concord from entering the case, arguing that thee Russian company not been properly served, however Judge Dabney Friedrich denied the request – effectively telling prosecutors ‘well, they’re here.’

Concord was accused in the indictment of supporting the Internet Research Agency (IRA), a Russian ‘troll farm’ accused of trying to influence the 2016 US election.

On Thursday, Judge Freidrich asked Mueller’s prosecutors if she should assume they aren’t accusing Concord of violating US laws applicable to election expenditures and failure to register as a foreign agent.

Concord has asked Dabney to throw out the charges – claiming that Mueller’s office fabricated a crime, and that there is no law against interfering in elections.

According to the judge’s request for clarification, the Justice Department has argued that it doesn’t have to show that Concord had a legal duty to report its expenditures to the Federal Election Commission. Rather, the allegation is that the company knowingly engaged in deceptive acts that precluded the FEC, or the Justice Department, from ascertaining whether they had broken the law. -Bloomberg

On Monday, Friedrich raised questions over whether the special counsel’s office could prove a key element of their case – saying that it was “hard to see” how allegations of Russian influence were intended to interfere with US government operations vs. simply “confusing voters,” reports law.com.

During a 90-minute hearing, Friedrich questioned prosecutor Jonathan Kravis about how the government would be able to show the Russian defendants were aware of the Justice Department and FEC’s functions and then deliberately sought to skirt them.

“You still have to show knowledge of the agencies and what they do. How do you do that?” Friedrich asked.

Kravis, a prosecutor in the U.S. Attorney’s Office for the District of Columbia, argued that the government needed only to show that Concord Management and the other defendants were generally aware that the U.S. government “regulates and monitors” foreign participation in American politics. That awareness, Kravis said, could be inferred from the Russians’ alleged creation of fake social media accounts that appeared to be run by U.S. citizens and “computer infrastructure” intended to mask the Russian origin of the influence operation.

“That is deception that is directed at a higher level,” Kravis said. Kravis appeared in court with Michael Dreeben, a top Justice Department appellate lawyer on detail to the special counsel’s office. -law.com

Concord pleaded not guilty in May. Their attorney, Eric Dubelier – a partner at Reed Smith, has described the election meddling charges as “make believe,” arguing on Monday that Mueller’s indictment against Concord “doesn’t charge a crime.”

“There is no statute of interfering with an election. There just isn’t,” said Dubelier, who added that Mueller’s office alleged a “made-up crime to fit the facts they have.”

Dubelier added that the case against Concord Management is the first in US history “where anyone has ever been charged with defrauding the Justice Department” through their failure to register under FARA.

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