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Hi Tiddman,

First, let me thank you for writing back as you have. I really, really want to continue this conversation in a civil way, and find out wha you think. Unfortunately when I get to this point in the past with others the conversation seems to quickly degenerate into, "Oh you're just mad because your stock went down!" kind of stuff, and it breaks off. But I want to keep this alive with you because I have been really curious as to what is going on inside the heads of doubters, and wondering, are they all agenda-prone, or is there an angle I missed. So, I am happy you are engaging me like this.

I can see your point that you and all people have duties as citizens and humans in addition to their professions and such. But running a company is also a duty, and I don't see the virtue in neglecting one duty to satisfy another. I don't think I'm taking a hard line in saying that I expect the people running companies to remain dedicated to their stakeholders. Running a company is an optional task, after all.

By the way, I do appreciate and admire your humanitarian efforts. The Worldstock thing in particular I think is awesome.

But your statements on this have morphed over time. In the now-infamous "miscreants ball" conference call a few months ago, you started the call by saying that the call would be your last comment on the issue and that you'd turn it over to your lawyers. Yet that was hardly your last comment or effort on the issue. I hate to sound like one of those short hedge fund guys, but I don't think you have been either clear or consistent with shareholders on this.

First, thanks on the Worldstock thing. Best idea of my life.

As far as the other goes: your point is not without merit. I do think that the CEO duties are trumped by the citizen duties, generally speaking, even though the former are optional.

I did in fact say I would be turning it over to the lawyers and backing out, and I did not. two things happened: one, I started getting a lot of TV and radio and print requests, so I took them, as I always have, on the grounds that (as Bill Marriott says), "As long as they spell it with two r's and two t's I don't care what they wite. The second reason is, I had the bug worse than I thought. Actually, there is a third reason: I realized that it might be possible to drive the issue to a kind of goal line, and since it was in site, I just decided to keep pushing (and now I think I am just one good trip short of that goal line). Not necessarily good reasons, but that is how it happened. But as I say, your point is not without merit.

I think it is lame that the DTC doesn't reveal the extent of the FTD's. And their explanations are also lame (i.e. "proprietary trading strategies"). These are points upon which we agree.


But Patrick, these are all just allegations and rumors. There are very few facts. The absence of information is not incriminating evidence. We don't know how many immigrants illegally enter the US every year, but I'm not going to assume it is 50 million just because we don't have a number..... But, these things don't prove that the worst case is true. I don't see any "harm" done to either company or stock, and anyone looking at the facts will come to the same conclusion. I don't see any evidence whatsoever that anyone has been negatively affected by this. I don't see any connection to Refco or Enron, as you have alleged. There simply aren't any facts supporting this.

I never alleged a connection to Enron and am unaware of anyone else making such allegation. If I have ever mentioned "Enron" in this context it was something like, "imagine an Enron-like collapse but on a systemic scale." That's all.

Now let me handle the "allegations and rumors" and apparent absence of "facts" in your view. I am going to do this by listing a series of facts and inferences. The citations for these have been given in so many earlier postings I will not bother again. At the end, if you agree, great. If not, please tell me either which of the putative facts I got wrong, or else, which of the the inferences went farther than the facts. Seem fair? I truly hope so, because I really want to know what a sane, reasonable-seeming guy thinks when he writes what you wrote above above (i.e., how this is all allegation and rumor with little facts to back it up).

1) The Reg SHO list grandfathered all fails through January 3, 2005 in calculating the threshold, because of the SEC's fear of creating volatility in the marketplace. Part of their reason for refusing to disclose the size of the FTD's over the threshold was to avoid revealing proprietary trading data, but part of it appears to be also intended so as avoid triggering volatility. Is that a fair summary of the FAQ's?

2) I infer from #1 that the Reg SHO FTD's must not be an insignificant amount. If it were an insignificant amount, the SEC would not be worrying that, absent grandfathering, Reg SHO could trigger market "volatility," nor would their concern about releasing the size of the fails be partially explained by, again, their fear that the information would create volatility.

3) OSTK has seen enough FTD's to land itself on the Reg SHO Threshold list.

4) OSTK's has been on the Reg SHO list 155 days straight. That makes it one of the top #10. However, it actually was on since January 27 with a brief respite in March-April. If one counted the total number of days OSTK has been on the Reg SHO list, it is likely even higher. Thus, it seems safe to conclude that the OSTK's FTD's are at the more significant end of the Reg SHO Threshold stocks.

5) So we know from 1-2 that the Reg SHO carves out a basket of stocks the FTD's of which, taken as a class, are significant, at least, significant enough that the SEC fears excessive volatility if they do not grandfather and keep secret the size of these FTD's. And we know from 3-4 that OSTK is likely at the more significant end of the FTD spectrum of these these stocks. Taken together, a class of stocks with significant FTD's has a member that is at the more significant end of the spectrum of that class: I conclude that the member of that class must have FTD's that are "definitely significant," "more than average significance," even "quite significant."

The chain of logic in 1-5 seems intuitive to me. Yet you have said that, while you agree there are more than a few FTD's, you didn't think that the number was significant. Thus you must disagree with the line of reasoning 1-5 above. Could you point to where you think my fallacy is? Or have you come around to my way of thinking?



PS I agree that the Refco thing is speculative. I could be missing something. Do you ahve any other explanation that ties together the data as well as mine does? Of course, I understand that you do not need your own theory in order to reject mine as far-fetched. BUt I just wonder if you have one of your own that explains as many of the facts.

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