Letter to Mr. Robert Khuzami, Director of Enforcement
10 June 2010
Dear SEC
As
an individual investor I still feel very much out in the cold vs. the
powers of Wall Street and the sympathy they have historically received
from the SEC and specially the Republican commissioners. So the result
of Main Street vs. Wall Street is clear: Main Street loses, not only
because Wall Street has more resources but because the SEC seems to be
on its side. When it comes to curbing manipulative practices SEC takes
too long and at the end its action is marginal. For the longest time
the cop was asleep at the wheel, now we see a few movements, far too
little, but better than none.
And it is not just Main Street
that loses, but small companies that are victims of toxic financiers,
and there are concrete things SEC can do to make this better but SEC
has repeatedly failed to do anything in this regard and instead gets
caught in months and years of rhetoric and useless beating around the
bush. Something as simple as mandating a large short seller's identity
to be available to a company would help companies tremendously in
knowing their friends and enemies and who they do business with and
not, but SEC has denied this right to small companies and equally Main
Street because of nonsense, utterly incoherent argument posed by the
hedge fund industry and supported by Republican commissioners that
somehow large short sellers' identity should be protected for
competitive reasons while large shareholders' identities should not
(please see my last emails on the subject archives of which are
available on www.rezamusic.com) under the "Ethics & Financial
Markets" section).
I like to bring your attention to trading in
Beacon Power, one of these rape victims of Wall Street toxic financiers
with zero protection by SEC. Beacon has spent over 10 years and
millions of dollars developing the best energy storage technology
around. When you think of energy storage you think of batteries, but
Beacon's flywheels beat batteries hands down for applications such as
grid frequency regulation which effects every citizen every day of the
year, and the security and stability of the national grid. The US
government has fully backed Beacon Power by loan guarantee, grant,
contracts, and various endorsements. SEC, as the financial markets cop
has not provided any protection to Beacon or companies like Beacon,
which has resulted in the company to fall in toxic traps and its stock
being manipulated time and again.
Further to that long
introduction, please investigate the latest trading of Beacon Power
(Nasdaq: BCON). The company has issued a number of warrants outstanding
( http://phx.corporate-ir.net/phoenix.zhtml?c=123367&p=warrant )
and the stock might be manipulated to bring the price close to the
exercise price of $0.272. And/or please investigate the great deal of
"short & distort" that goes on with Beacon. You may start with the
large short sellers -- you may know who they are but you are protecting
their identity from us and from Beacon to protect the short sellers
(thanks SEC, you're siding with Wall Street again).
It's nice to
read Honorable Ms. Schapiro speak about building investor confidence,
but I can assure you, the Main Streets many individual investors know
have zero confidence in the SEC presently. I hope this will change. I
think you've prosecuted one naked short case in your entire history?
That's better than none!!
Why can companies not know the names
and positions of large entities who are betting against them just as
they can regarding entities who are investing in them? Why? The
reasonings I've heard so far have been completely illogical and
rhetorical and shout only one thing: Because SEC wants to protect Wall
Street against Main Street. Sorry, but that seems to be the fact, in my
opinion.
Thanks & Best Regards Reza Ganjavi <contact info>
PART II -- Letter to Mr. Robert Khuzami, Director of Enforcement
Dear Mr. Khuzami:
I hope you saw my letter of 10 June 2010 (reprinted below). May I add a couple of notes:
1)
I am not accusing the warrant holders of manipulating the stock but it
appears to me that this might be the case. Neither I, nor the company
itself has the means of investigating whether this is true or not, but
SEC does. All I can say is that Beacon has been a victim of
manipulative practices which were immoral and illegal, but under the
current rules, the company receives no protection from the SEC, such as
the mandate that people who sell its shares would have to borrow it
first, or the identity of people who have bet heavily against the
company by shorting over 4 Million shares are revealed to the company.
But I do seriously suspect, that illegal manipulation of Beacon's
shares have occurred and I hope you will order your department to
investigate this matter. Who has done it? I do not know. Could be a one
or more of warrant holders, short sellers, or people who have other
malicious intentions towards the company and its rule-changing
technology.
2) I am not an enforcement professional, but from a layman's view, I would perhaps suggest the following:
a) Get a list of large short sellers (which SEC has but is keeping private to protect the shorts) b) Get a list of the warrant holders from the last offering (December 9, 2009) c) Demand list of all traders of the warrant holders and their affiliates. d) Demand list of all traders of the large short sellers and their affiliates. e)
Investigate their other activities -- somebody must be behind this
"short and distort" and all the false publicity and misrepresentation
that is going on to help push Beacon's shares down. f) Do a
detailed investigation of the short term recursive naked shorting of
Beacon's shares (sell without hard locating the shares, cover within 3
days at lower price, repeat -- which is a convenient way to naked short
but as far as the SEC is concerned get away with murder. It's
unbelievable that the SEC is not mandating a hard-locate rule. This is
against every criminal justice system that I know of: it is a crime to
sell what you do not have and not have borrowed, but for some reason,
for the SEC, this is normal, because this is the way Wall Street wants
it and this is the way they get it. You might be surprised at what
you find. Doing this kind of investigation for Main Street and standing
up for Main Street will highly elevate SEC's credibility both with Main
Street and the Congress. Thanks & Best Regards Reza Ganjavi <contact info>
Letter to Mr. Robert Khuzami, Director of Enforcement -- August 2010
18 Aug 2010
Dear Mr. Khuzami and Madam Chairman Schapiro:
Beacon
Power (Nasdaq: BCON) just received a $43M loan guarantee from the US
Department of Energy, under Section 1705 of the American Recovery and
Reinvestment Act. The government recognizes the importance of leading
edge clean technologies for the future of the economy, environment, and
global competitiveness. Beacon is building the world’s first Grid
Frequency Regulation Flywheel Plant which is critical to the stability
of the backbone of any nation, the electric grid. This plant is
scheduled to be fully operational by the end of March 2011. The target
market in the US is estimated as several billion dollars, and there is
growing international demand for a clean effective way of doing
frequency regulation.
While the government is trying to
support and foster Beacon, Wall Street is trying to kill them by
shorting, naked-shorting, and manipulating its stock. Like many other
small innovative companies, Beacon relies on capital markets for
funding and has gone through several rounds of toxic financing already.
The SEC has not been helpful a bit. You know who the large short
sellers are but you are protecting their identities for reasons which
only make sense to short sellers and their supporters (including your
own Republican Commissioners).
There are warrants that are expiring at the end of this month and the stock seems manipulated in relation to these warrants.
I
brought this to your attention in my letter of 10 June 2010. By the end
of June a lot of warrants got exercised. The trading of the stock now
is even more suspicious than in June. There seems to be a determined
effort to keep the price capped. The least you could do is to
investigate if the people who are shorting the stock are not violating
any rules. You could request trade logs from the large short sellers of
BCON (you have their list, we don’t). You could also look at the
trading of the warrant holders and their affiliated market makers.
According to one report, since last August, 94.56 million shares have been shorted. 26.02% of all daily volume is short selling. Many thanks for your kind consideration Best Regards Reza Ganjavi
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