Pump and dump: This is a fraud where a promoter makes false positive statements about a stock he or she owns, often using several different lines of communication; e.g., press releases, chat rooms, bulletin boards, etc. After this “pump,” the promoter then sells his or her own shares for a profit—the “dump.” —A (Very Brief) Encyclopedia of Securities Fraud (American Bar Association)
… pumping disinformation over the gazillion-jigawatt megaphone with an eye to stampeding the suckers with shrieks of gabbling, rumor-driven moral panic. –The NMM Dictionary of Devils in the Details
Out of pure curiosity, I would really like to know who did what to whom during the
Today, for lack of anything better to do, I am trying to read the original and two amended complaints in International Equity Investments, Inc. v. Opportunity Equity Partners, Ltd., et ano., with the corresponding Answers, in an attempt to get a general layman’s idea of what the factual issues and theories are.
I used to work as a paralegal — mostly articles of incorporation for rust-belt widget factories and drawing up wills for aging California Quakers, mind you — so I know my way around the gears and sprockets of a Jarndyce v. Jarndyce factory fairly well.
I had Con Law 101 in college, too, where you learn bluebook citation and legal research. Got an A-. My prof counseled me that law school would only make me miserable.
But I am, of course, NAFL (Not A (bona) Fide Lawyer.)
Not by a long shot. Graças a Deus. My prof was right.
So I am trying to focus exclusively on the alleged facts.
What is especially interesting is this issue about the admissibility of the “corruption theory” in the counterclaim. Mr. Amorim (Conversa Afiada) interviewed one of the judges who has apparently been targeted for such accusations the other day:
This theory has gotten prominent play in the Brazilian news media:
- Veja (Brazil): Behind the Scenes of an “Exemplary” Investigative Report
- The Persecution of Daniel Dantas: An Italian Opera in (?) Acts
- Brazil: Reviewing IstoÉ’s “The Spy Who Bugged Me”
- Brazil: Attuch’s Book of Revelations
So I am just trying to read for myself what, specifically, is implied by “must prove bribery” in this headline.
Amorim, who tends to work in the political sturm und drang genre these days, can get a little melodramatic.
Opportunity and its lawyers — from the law firm headed by David “The Microsoft Slayer” Boies, perhaps best known for Bush v. Gore (his client lost) and the Napster case (his client basically lost, right?) — apparently sought production of documents on which to base this corruption theory.
ORDER: The  Motion of Banco Opportunity S.A. to Compel Production of Documents is DENIED as further set forth in said Order. (Signed by Judge Lewis A. Kaplan on 11/27/07)
The plaintiffs’ attorney had argued against the motion as follows:
Defendants’ allegations of misconduct by persons directly or indirectly affiliated with counterclaim defendants cannot serve as a basis for a good faith document request. As was demonstrated at the recent deposition of Daniel Dantas, these allegations are completely unsubstantiated and would not even come close to meeting a Rule 11 standard, nor will they survive the pending motion to dismiss. Defendants also seek documents “concerning internal investigations by Citibank of these issues,” Brenner to Boccuzzi Ltr. dated Oct. 24, 2007, a request apparently tailored to obtain information provided to us last year in meetings among Phil Korologos, Anita Romero, Howard Zelbo and myself. Any such information (which as you know is nothing more than unsubstantiated rumor, newspaper articles and other unsubstantiated hearsay) is of course either already in defendants’ possession or would be our work product.
Rule 11 has to do, with standards for the admissibility of evidence. Rule 11(b)(3):
(b) By presenting to the court a pleading, written motion, or other paper — whether by signing, filing, submitting, or later advocating it — an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery;
I am trying to find the Dantas deposition here.
Portions of the proceedings that were originally under seal are now on the public record. Such moments in a legal proceeding are generally good for an easy-to-write story or two, filling in the factual background to the case.
So really, I am just interested in reading what the judge actually ruled about the adequacy of the representations Opportunity made in support of its motion, and the admissibility of the evidence it offered.
Is this another one of those cases where you plant a story in the press, without attribution, and then use that press report as “independent” corroboration of your claim?
Press observers here in the gigante pela própria natureba say the practice is widespread, and accounts for a lot of the leak-journalism that passes for “investigative reporting” here.
To select an example at random: Dick Cheney leaks the “aluminum tubes” story to Judy Miller, then cites her report as independent corroboration for the theory that Saddam is cooking up a Sa-nuclear Sa-bomb.
Judy is currently (quitely and prematurely) retired from the business.
Another element of this theory, I am gathering from preliminary reading: Alleged “corruption” of news organizations and journalists.
The defendants wanted documents in the possession of plaintiffs relating to “corruption issues,” defined in the request for production as
“Bribery of judges, government officials, journalists and media companies.”
One of the murkiest issues in this case is the reported existence of e-mails, found on the hard drives of computers seized from the offices of Opportunity, between Opportunity executives and Brazilian journalists.
Some of these were leaked some months back, and were suggestive of collusion by journalists in conducting “gabbling ratfink” and disinformation campaigns against business adversaries.
Rumors swirled — mainly promulgated by Veja‘s Radar column, so consider the source — about a federal police investigation of journalists in the case.
The evidence on the Opportunity hard drives remained sealed until a fairly recent court order permitted them to be analyzed.
Dantas’ trial in the Kroll wiretapping case moves along at a glacial pace — under seal in some aspects, if I am not mistaken — and getting your hands on the papelada in Brazilian lawsuits is a trickier proposition. Unwieldly database interfaces. Losts of server-side database connectivity errors.
The usual suspects screamed “Stalinism!”
I keep saying this, but then I keep forgetting where I put the notes on this case: There was a case in the United Kingdom a year or so back in which a journalist was found to have used his regular column to create — ahem — information arbitrage with respect to the issues of a company in which he had an undisclosed interest. As in, if I remember correctly, making extra money helping someone with a substantial position in the stock dump the pump to make it slump.
The journalist and his accomplice went to jail.
Let me see if I can find that.
The “pump and dump” can also be applied in reverse, in theory: The “short” strategy. Trash the issue, then buy it cheap because you know, from inside information, that it is about to announce that it has discovered a bottomless diamond mine under its executive parking lot.
In any event, the strategy is to pump disinformation over the gazillion-jigawatt megaphone with an eye to stampeding the suckers with shrieks of gabbling moral panic.
Consider that case from Mexico: People who wanted to take over land occupied by squatters used a rumor of impending natural disaster to spread terrifying factoids about impending geological disasters based on explanations that deny the laws of physics.
Mexican squatters are not normally well read on the laws of physics, of course.
Okay, still reading.
What did the judge say about the admissibility of Brazilian “investigative journalism” as evidence in a court of law in my patriotic homeland, the quasi-autonomous metrosexual city-state of the Knickerbocker Archipelago?