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No. of Recommendations: 9
1) I don't wanna repeat old arguments, but, if you ruin your or OSTK's reputation on Wall Street you might be shooting yourself in the foot because you need Wall Street if you want to raise capital and you need the share price to be higher and higher in order to make it more and more accretive to existing shareholders. This requires credibility, and you might be taking credibility away from people who arn't miscreants.

What I mean is, Tiddman, for example, sold your stock. Me...I still hold your stock - I almost sold - but decided to hold for now. There can be tons of nice people like Tiddman, UsuallyReasonable, or myself on Wall Street (or maybe even private investors) who simply would pass on an OSTK secondary. "Why should I buy those shares? Why take the risk of investing in a stock led by this potentially wacko CEO?"

On the other hand maybe it's not a huge problem. You probably know so many people through your father and in the value investing community. I still don't get why OSTK is public. (By the way if you had to do it all over again, would you have gone public? Was private capital such a problem?)

Anyway, even if you were private there would be small issues. Credibility is always an issue. And even if you're right about the whole Sith Lord thing, you need to make sure that your capital requirements are going to be met from now until the day that you're vindicated with all this Sith Lord stuff.

And unless you're totally sure these credibility issues have been taken care of, it occurs to me that you're sacrificing OSTK for this naked shorting campaign (which is a commendable campaign). I know that TomG talked about this back when you first appeared here and that this issue's been beaten to death. But there is no conclusion yet, because you still ARE the CEO of OSTK and your family and friends OWN shares of OSTK etc etc. So it seems that you've created a dependency link between the destiny of OSTK to that of your battle against the miscreants.

With that in mind, don't you need to announce this dependency link publicly - at the very least in your "risk factors" section in the 10-k?

2) You know, when potential disasters like naked shorting are developping, a lot of "ordinary people" tend to say: "oh you know don't worry, all those bigshots in government they know all this, all the senators and congressmen and greenspan, they all talk about these issues every day, they're well aware of the dangers of derivatives and keeping the financial system's integrity intact...bla bla bla"

And then some disaster happens and we find out that no one was guarding the gate. (9/11 type stories) Now, you and others are urging everyone to call the SEC and DTCC. Ok fine, then what? they'll deny everything and obfuscate everything...what does that give us? And if we go too public with this (like big ads in the papers and TV and all over blogs) we'll cause the whole system to crash via a country-wide or world-wide panic and an ensuing liquidity crisis.

The best option seems to me to work backstage. I don't know what's going on backstage, and if something's going on it is better left unreported but in case NOTHING is going on backstage: it would make sense to have your father or Charlie Munger or someone contact Levitt or Volcker or other Wall Street people with patience, time and credibility, so that they can in turn go and talk to other people like Greenspan or the New York Fed and then those would go talk to the DTCC and SEC and brokers etc etc and engineer an orderly unwinding of some chains of long-short positions in stocks with high FTD's.

Some will argue the probablity of this procedure working out is small, and therefore not worth doing, but then again we might as well say that this scandal is guaranteed to explode in all our faces at some time between now and infiniti so why do anything at all...

vg
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