Shortseller Charged With Spreading False Rumors

The SEC charged Paul Berliner, a short-seller, with spreading false stories about Blackstone’s acquisition of Alliance Data Systems while selling ADS shares short, according to Financial Times.

According to the complaint, Mr Berliner on November 29 sent instant messages to traders at brokerage firms and hedge funds and elsewhere suggesting that Blackstone’s agreed deal to acquire ADS for $81.75 was being renegotiated at $70 a share. The rumours were picked up by the media and caused ADS’s shares to fall 17 per cent, according to the complaint, which did not identify the media outlets.

The case comes as the SEC faces growing pressure to investigate allegations that false rumours about Bear Stearns may have had contributed to its collapse last month.

Perhaps this new scrutiny comes too late for Enron – but maybe not for Jeff Skilling. If the dirty acts of these short sellers comes to light and are accepted for the crimes that they are, it might be possible to take a new look at the activities of the Wall Street Journal, Jim Chanos, Richard Grubman, and others who consistently talked down Enron stock during the summer of 2001. If the general opinion changes to allow the possibility Dr. Lay was correct when he accused the WSJ of being malicious with their stories, it might not be too late for Jeff Skilling to win his freedom.

Stories like this will continue. It’s just a matter of the public being willing to see the truth when it’s right in front of their faces.

Cara Ellison


  1. I’d be curious to know how much the sudden prosecution of the short-seller is just the SEC trying to exert itself after all the talk of reforming the regulatory regime and the Fed’s increased influence. I’m sure there’s some fear of losing influence…

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