By Brandon Matthews

In a world that seems to be stacked against retail investors with firms such as Goldman Sachs developing and using manipulative market trading programs and a United States government that appears oblivious to fact, equity investors again have reason to be hopeful. I have written extensively in the past regarding Senator Ted Kaufman, D-Del, and the admirable strides he has taken to bring awareness of the damage caused by both naked short selling and the failure of the Securities & Exchange Commission to reinstate the uptick rule in a timely manner.

The ability to naked short securities together with the removal of the uptick rule nearly caused the total collapse of the world’s banking system. These loopholes allowed for the collapse of Bear Sterns and Lehman Brothers. In fact, the only thing that saved the banking industry and thus the U.S. and world financial systems was a temporary ban on the short selling of bank stocks, which to many people proves beyond any reasonable doubt that change needs to occur, save for the SEC under the mighty influence of Goldman Sachs. Companies such as Sirius XM Radio (SIRI) however, remained fair game to these illegal market manipulators as the S.E.C. continued to drag its feet and delay the change demanded by the public.

The documentary “Stock Shock,” explains in detail just how easy it is to steal wealth from investors in layman’s terms. It demonstrates that any stock can be the next target. I had personally arranged for the Senator’s office to receive a copy of the film, and I am now able to confirm that the Senator has received it and has requested more copies from the film’s producer. The film will no doubt become the talk of Washington in the coming weeks as it may be introduced as evidence of how naked short selling destroys the American dream. I have previously reported that the SEC had begun its own investigation that included the movie as well.

A common thread of the the equities that have come under attack is that the equities in question were not just bank stocks, but stocks that were broadly held by retail investors. Without these safeguards in place AND ENFORCED, any widely held stock such as Walmart (WMT), Verizon(VZ), Microsoft(MSFT) or Merck (MRK) are fair game to bear raids designed to collapse retail shareholder value and could be next. Unfortunately, once a company’s shares are reduced to penny stock status, few seem to care about how it got there. In fact, the stocks are given nearly zero respect by law enforcement at that time. That seems to be changing, and it may be changing at a perfect time for Sirius XM Radio thanks to the efforts of Senator Kaufman.

Senator Kaufman’s strong ties to the Obama administration together with an MBA from the Wharton School at the University of Pennsylvania make him the ideal person to bring this topic to the financially inept on Capital Hill.  The Wall Street Journal reports that Senator Kaufman is not just talking the talk, but walking the walk. It is beginning to look more and more as if that real change is coming. As companies like Sirius XM Radio begin to plan on the timing of approved reverse splits to maintain listing requirements, the Senator’s secondary plan seems to offer a window of opportunity that may offer Sirius XM shares a blanket of security when and if such an approved reverse split is authorized.

The Senator has apparently drawn a line in the sand, demanding that the SEC take action or threatening that he will if the SEC does not. If the SEC does in fact launch a pilot program to require pre-borrowing on all short sales, as the Senator and others have suggested, Sirius XM may be able to time its own reverse split to occur simultaneously, preventing the equity from further illegal manipulations as it continues to grow its bottom line and recover, rendering naked short sellers impotent.

Position: Long SIRI

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