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Patch's email , re: Sedona fails.This went out to everyone, not just Kotz. And they read his emails. Wonder what excuse they'll come up w/ now? As you are aware, the issue of naked short selling has been a concern of mine for near a decade. As part of that concern I have alleged that the SEC's commitment towards addressing this abuse has been severely lacking; to the point of negligence and obstruction. I am attaching below a message sent to Senator Kaufman with regards to recent trading in Sedona. Recent data that has been published by the SEC again raises serious questions about the SEC's interest in protecting the investors. This data involves the public reporting reporting of DTCC CNS fails, the accuracy of such reporting's, and possibly how fails are being hidden from the system. Most importantly, the information begs the question that if fraud and manipulation is taking place, why isn't the SEC staff doing anything about it? Do they not see it and understand it? The case in question: On October 14, 2009 Sedona Corp (SDNA) issued a press release regarding a contract award received by Liberty Bank. On that day, over 282,000 shares of Sedona traded in a very tight range of market. The significance of this is that for the prior 37 trade days, the average daily trade volume in this market was 35,000 shares with many days trading less than 5000 shares. Trade Settlement for trades executed on October 14, 2009 would be October 19, 2009 and by SEC CNS reporting's, there were no settlement failure issues associated with the significant (9X) volume jump in the market on that day . In fact, for the month of October 2009, the SEC reports only 2-days that settlement failures of any size existed in this market. Those days were October 23, 2009 when 7500 shares reported to have failed settlement and October 28, 2009 when 132,700 shares failed to settle. The problem is October 28,2009. For a reported fail date of October 28, 2009 (T+3) the trades executed had to originate on October 23, 2009 (Trade). But according to market trade volume reports, the total volume traded on October 23, 2009 was only 19,600 shares. In fact, the cumulative total trade volume between October 16th and October 28th is only 125,900 shares. So where does a single rise in fails, accounting for 132,700 shares, originate on the DTCC CNS reports one day and disappear again the next day if the trade volume does not support such a settlement requirement for that day? While I recognize that it is not the OIG's responsibility to investigate the possibility of fraud in this matter, the issue continues to raise questions and awareness as to what exactly the SEC is doing with regards to protecting investors. The SEC, as has been the case with each event such as this, has been notified of the concerns of the company. Off-Record the SEC will claim they are assisting the company in their endeavors to address the markets abuses but actions do not support their words. The SEC has not offered up enough to solve the companies problems. If fails continue to be hidden, and forces continue to work this market, this company will never be able to survive the abuses. if the executives of Sedona focus on improving their business model, and continue to generate business contracts, only to have abuses in the market scare away potential investors how can the company raise capital if necessary? How an a public company survive as a public company if the company can not raise investor interests? Our nation demands the strength of small business enterprises as they provide the most significant accumulation of job creation and yet small public companies are ignored by major banks and it now seems, ignored by regulators. Sedona is the first case and the poster child for the SEC with regards to naked short sale enforcement. That was based on an event they started in 2003 and have yet to resolve some 6 years later. Unfortunately, while the SEC went after Rhino Advisors and others, the SEC never took the initiatives to look carefully at who held stock in this company, counted the totals, and deciphered where and how have trades been hidden from market reporting. Details, critical details such as these, remain ignored to this day. Because this case is on-going, and has been for many years, the Company has limited access to what the SEC has in fact uncovered. Denial of such evidence makes it near impossible to seek civil restitution through the court systems. The SEC has boxed the company into a corner and at the same time has ignored their responsibilities in driving out the market abuses that hold this company down. At least that is the opinion of many who hold on as investors in this market. I do not know if much can be done by your office but I was requested to pass this along to you none-the-less. It disturbs me when this stuff continues to pop up because we all know this is not isolated. If these fails are being hidden from the system for Sedona somehow that means the system remains broken. Such a system can never be fixed if the SEC chooses not to even look at it. The SEC has been informed of this latest episode but none involved believe that anything will change. Thank You, David Patch |
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