Replay of Herb Greenberg's event last night; The SEC Wants to Stop Activism; An Alleged Fraud Uncovered by a Short Seller Ends in Gunfire; Crypto Scammers' New Target: Dating Apps; Ignore the naysayers. Dollar dominance is here to stay

1) In case you missed the big event last night with my colleague Herb Greenberg and me, you're in luck...

I joined Herb on camera as he broke his latest exposé – it's what he's calling "the biggest untold investment story of 2022." Nearly 240,000 people registered to watch.

As Herb says, if you know where to look, all the manic activity we've seen in the market recently has opened a massive "backdoor." This is something that has been 20 years in the making... and it allows you to turn the tables on Wall Street and take advantage of the recent shakeups in a way that the big institutions hope you'll never figure out.

For a limited time, we've made a replay of the event available – you can watch it right here.

2) I was shocked to read in Matt Levine's Bloomberg column yesterday that The SEC Wants to Stop Activism. Excerpt:

More fundamentally, though, activism is one of the few ways that shareholders can exercise real power over the companies that they theoretically own. As we often discuss around here, if a company's board and managers want to ignore their shareholders, they mostly can. The only ways that shareholders in the U.S. can actually fire the board and CEO of a public company are (1) a proxy fight or (2) a hostile takeover...

Overall the effect of these rules seems to be to stop activists from (1) making money from activism and (2) talking to other shareholders. And so there will be less activism, and corporate managers will have more ability to do what they want without listening to shareholders.

This is weird!...

It is reducing shareholders' ability to actually pressure companies: It is making activism harder, which makes it easier for corporate managers to ignore shareholders.

It's not just weird, it's total madness!

I'll admit to being biased, as I've been an activist on both the long and short sides a handful of times, but what problem does the SEC think it would be solving by enacting these proposals?

Activists pushing flawed ideas and hurting companies does happen on occasion, to be sure... But as Levine correctly notes, they are far more often holding bad CEOs and/or boards to account, pushing for value-unlocking actions, fighting against flawed strategies, etc.

Throughout my long career, I've owned dozens of stocks in which activists were involved and I can't think of a single time when I wished they'd go away...

3) Speaking of activism (albeit unrelated to a public company), this is a crazy story! An Alleged Fraud Uncovered by a Short Seller Ends in Gunfire. Excerpt:

Matthew Beasley wasn't surprised when three FBI agents rang his doorbell.

Authorities were asking questions about a high-return, zero-risk investment plan that his law firm helped run. They had already visited an associate.

They also had secret recordings of the sales pitch from a citizen sting operation that involved an embittered improv comedian, a rented private jet and a well-known New York investment firm.

Mr. Beasley came to the front door of his Las Vegas home standing sideways. When he turned to face the agents, he was holding a gun to his head.

Then he swung the gun toward the agents, a federal prosecutor said during a court hearing earlier this month. The agents shot him twice, the prosecutor said. Mr. Beasley retreated into his house.

The Federal Bureau of Investigation brought in a hostage negotiator. Mr. Beasley said he wished the agents had killed him – he said he would rather die than go to prison, the prosecutor said.

Bleeding from gunshot wounds in his chest and shoulder, he confessed: The investments were a Ponzi scheme, according to the prosecutor. Check his bank records, Mr. Beasley said, and it will all be clear.

After nearly four hours, an FBI SWAT team brought Mr. Beasley out alive.

Kudos to Nate Anderson of Hindenburg Research. He does our country a service by not only regularly exposing public company frauds, but also blowing the whistle on Ponzi schemes and other private frauds like this one. Here's his report on it: J&J Purchasing: When It Sounds Too Good to Be True. Excerpt:

Today, we go back to our origins. Over the last several months, we have been researching an investment firm that we believe to be a Ponzi scheme.

This firm, J&J Purchasing, has pitched potential clients on an investment offering 50% annualized returns with virtually zero risk. It claimed, at one point, to have raised $400 million from over 1,000 investors since 2016.

Through the course of our research, we submitted our findings to regulators through the SEC's tip program. We recently also shared our work with reporters at the Wall Street Journal.

Our work has included in-house research, extensive document review, as well as in-person meetings and recorded correspondence with the firm's principals and marketers under the guise of becoming a potential client.

Like Anderson, I view it as a personal mission to help people avoid obvious scams, though I only focus on public companies.

4) Speaking of scams, this is so outrageous: Crypto Scammers' New Target: Dating Apps. Excerpt:

The man from the dating app Hinge checked all of Tho Vu's boxes.

He was a boyishly handsome architect from China, staying in Maryland on a long-term assignment. They had never met in person – he was still waiting to get his Covid-19 booster shot, he said – but they had texted back and forth for months and she'd developed a serious crush. He called her his "little sweetheart," and told her that he was planning to take her to China to meet his family when the pandemic was over.

So when the man, who went by the name Ze Zhao, told Ms. Vu, who works in customer service for a security company, that he could help her make money by trading Bitcoin and other cryptocurrencies, she was intrigued.

"I'd heard a lot about crypto in the news," she said. "I'm a curious person, and he actually was very knowledgeable about the whole trading process."

But the man wasn't trying to help Ms. Vu invest her money. He was entrapping her in an increasingly popular type of financial scam, she said, one that combines the age-old allure of romance with the newer temptation of overnight cryptocurrency riches.

Within weeks, Ms. Vu, 33, had sent more than $300,000 worth of Bitcoin, nearly her entire life savings, to an address that Mr. Zhao had told her was connected to an account on the Hong Kong cryptocurrency exchange OSL. The website looked legitimate, offered 24/7 online customer support and had even been updated to show Ms. Vu's balance changing as the price of Bitcoin rose and fell.

Mr. Zhao – whose real name could not be verified – had promised her that her crypto investments would help them get married and start a life together.

"We can make more money on top of OSL and go on a honeymoon," he said, according to a screenshot of their texts that Ms. Vu shared with me.

But there was no honeymoon, and no crypto windfall. Instead of going into an exchange account, Ms. Vu's money went into the scammer's digital wallet, and he vanished.

Now, she is struggling to make sense of what happened.

"I thought I knew him," she said. "Everything was a lie."

Romance scams – the term for online scams that involve feigning romantic interest to gain a victim's trust – have increased in the pandemic. So have crypto prices. That has made crypto a useful entry point for criminals looking to part victims from their savings.

5) I think this is exactly right: Ignore the naysayers. Dollar dominance is here to stay. Excerpt (the last line is especially brilliant):

The shock-and-awe financial sanctions on Russia have rekindled an old trope: that the weaponization of the dollar will end its role as the global reserve currency. Why would foreign countries use dollars, the argument goes, if the dollar can be turned against them? Why wouldn't China, soon to be the world's largest economy, build the renminbi into a rival reserve currency? And if not China, what about crypto?

This dollar defeatism is vastly overblown. Russia, China, and other U.S. adversaries would love to escape the financial hegemony of Uncle Sam. But they have been trying for years and have little to show for it...

What's more, a careful look at the status of the dollar confirms that it is not really at risk. Five or 10 years from now, dollar-based sanctions are likely to be as powerful as ever, including in a crisis where the target is China...

A standing credit line in renminbi is the financial equivalent of fluency in Esperanto.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.