Red! Red! Red!
Dropping like a rock!!!!!
Insiders selling! Look out below!
Investors courageous enough to brave Yahoo!
Unfortunately, the Internet has made it very easy for hucksters to spread their manure far and wide, to see what they can reap. Fortunately, computers make it all but impossible for the offenders to hide their tracks. But that doesn't stop them from trying. To wit: the parable of SINA
On Oct. 24, 2003, Safavi shorted 1,000 shares of SINA at $42. On Oct. 28, the shares gapped up over $3.50. Safavi must have been sweating in his bathrobe, because by noon he had concocted and posted a bogus news story on the Yahoo! SINA board, adopting the byline of two real Goldman Sachs
The SEC complaint shows that Safavi apparently lost his taste for securities fraud very shortly after putting his toe in the water. He attempted to delete the message, but couldn't. Within a few hours, CNBC was reporting that the post was a hoax, but by this time, the stock was trading down 3%. That evening, Safavi changed his buy to cover order from $37 to $42, and it was executed Oct. 29 at $41.65, grossing him a cool $350.
Yesterday, the SEC filed suit against Safavi for violating Rule 10b-5 of the Securities Exchange Act of 1934. He agreed to a $25,000 fine. The only fly in the ointment is that Safavi -- like everyone else the SEC seems to nab -- slithered away with no admission of guilt. Boo.
With the financial world watching, it looks like the SEC has finally stepped up enforcement to a level that might reassure investors. It may be too much to hope for, but if this action puts any chill on sleazy, short-term trading tactics, that's a good thing.
Interested in the real scoop on SINA? Check out the Fool's China Connection board.