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Ever been busted out? Chances are, no. We aren’t talking about busting out where someone “spills the beans” on you causing you to get in trouble or lose out on something you wanted. We are speaking of Bust-Outs in terms of business.
On December 17th, 2013 Chairman and CEO of Overstock.com, Patrick Byrne presented a speech titled “Naked Shorts, Bust – Outs, and the Once and Future Cataclysm: economic warfare as an Instrument of Transnational Organized Crime.” During this speech, Byrne begins by giving a short background of his company, Overstock, followed by a short lesson on how stocks work. He educates listeners on a few important terms in stock; fault tolerance, efficient market hypothesis, naked short selling. The most important term, however, in understanding Byrne’s view is Bust-Out. A bust-out consists of three things: 1.) Leverage the business sup 2.) Deplete the cash from the business 3.) Burn the business down for more profit.
So how do the stock market and bust-out relate? You guessed it…. Several “heavy hitters” in the stock market learned to used these organized crime techniques to, in essence, “cheat” the stock system. Milberg Weiss and Bershad Schulman were prime examples of this, in the 2006 case of the US v. Milber Weiss Bershad Schulman. It was found that these two men “purchased the securities at issue anticipating that the securities would decline in value, in order to position themselves to be named plaintiffs in securities fraud calls actions and to obtain kickback payments. In essence, they worked together on a common goal: stock market manipulation.
I am so glad to have watched this video, and I know that you will be too. How does it relate to you, you might ask? As a business owner, entrepreneur, or someone with aspirations of either it is important that you have full understanding of business finance and economic warfare. These knowledge could not only keep you from becoming a victim of these criminals, but will also allow you to spot out those looking to prey on you or your business through these techniques. Obama declared the threat of Transnational Organizational Crime a threat to America!
Watch Patrick Bryne’s speech for yourself here: