Pump and Dump is protected by First Amendment

The practice of pump and dump is scheme whereby a person takes a long position and then uses media outlets (internet, TV, print) to pump up the stock, hoping that the public would buy the stock. The pumper then dumps the stock at a profit.  Short-selling and then offering negative opinions is an equivalent scheme.  Perhaps there should be a term for this like:  “Short and Dump on”; or “Dump on and Cover Short”.

The Financial Post reports that U.S. court gives short-sellers freedom of speech shield in Silvercorp ruling:

Vancouver-based Silvercorp, which operates in China, was one of the most high-profile companies targeted by short-sellers last year. Anonymous websites Alfredlittle.com and Chinastockwatch.com posted reports within days of each other, both suggesting the reported production and resource figures from the company’s Ying mine were too good to be true.

Silvercorp fought back. It figured out who was behind the anonymous sites and named them as defendants in a defamation and stock-manipulation suit. The company is disappointed it was dismissed, and has already filed an appeal.

I suppose this means that SEC should return Jonathan Lebed his money, since what he did as a fourteen year old was far more innocent.


Whitecap Resources to pay dividend in 6-12 months

Whitecap Resources’ CEO Grant Fagerheim speaks to Enercom Consultants.  He says that Whitecap is planning to reward shareholders with regular dividend starting within 6-12 months.  As a former shareholder of Midway Energy (which Whitecap took over earlier this year in a shares and cash deal), this will be a realization of my hopes: that my shares in Midway would turn into a dividend payer.  I’m crossing my fingers.

Out of the fry pan: on playing musical trading accounts (UPDATED)

Update: I am happy and relieved to say that the rest of my US positions have been moved now to TD Waterhouse. It is now only a matter of getting them to transfer any remaining dividends will be paid on the 15th of June. Also, I’ve learned the reason for Penson Worldwide’s financial woes: a bad bet on a horse race track.

(NB: I’ve started to see my final positions show from Questrade show up in my TD Waterhouse US funds account after I published this post–so good news. I’ve got my fingers crossed for now.)

In the Spring of 2011, when I was in the process of getting out of the United States tax system, my lawyer advised that I move my accounts out of TD Waterhouse into a company that had no holdings in the United States, as he thought the US could hold TD’s US assets as leverage against me. So I took his advice, and moved my bank accounts to a credit union and my investment accounts to Questrade, a Canadian only company. Thus, if things got nasty with FATCA, I would create distance between me and the United States. I wonder how many US laws I broke doing this.

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No Civilized Country Would Ever Banish Eduardo Saverin

This article appeared today in the American Thinker:  No Civilized Country Would Ever Banish Eduardo Saverin, by Peter W. Dunn

The Ex-Patriot Act introduced by Senators Chuck Schumer and Bob Casey is a bill of attainder which would result in cruel and unusual punishment.

Eduardo Saverin’s renunciation of U.S. citizenship has angered many people in the United States.  I write as one who has also relinquished U.S. citizenship.  As a blogger who openly writes about the experience, I’ve attracted some media attention, including an article by Dow Jones columnist Al Lewis.  Lewis starts by saying that I renounced my citizenship to avoid the IRS.  So now, Saverin and I have joined the ranks of the most hated people in America — so much so that Senators Chuck Schumer and Bob Casey want to banish the likes of us from the United States forever.  To that end, they have proposed a new law, the Ex-Patriot Act.  But would such treatment of former citizens be in accordance with the rule of law?  I would like to argue that it would be a bill of attainder, forbidden by the US Constitution.

The late Chief Justice Rehnquist explains a bill of attainder as follows (emphasis mine):

These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted.  A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial.  Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment.

The United States already has the rarely enforced Reed Amendment, which imposes exile and ten years of taxation on those who expatriate to avoid U.S. taxation.  Senators Bob Casey and Chuck Schumer want to harden this law with the “Ex-Patriot Act”; it will exile any wealthy person who relinquishes citizenship to avoid taxation, and it will single such people out for special treatment as compared to other non-resident aliens.  Here are some of the tax details:

Any ex-pat with either a net worth of over $2 million, or an average income tax liability of at least $148,000 over the last five years, “will be presumed to have renounced their citizenship for tax avoidance purposes.” The ex-pat will have to demonstrate to the IRS that this is not the case if it is not. If there is a “legitimate reason” for that person living outside the U.S. no penalties will apply. But if the IRS finds that someone gave up their passport for tax purposes, they will impose a tax on that individual’s investment gains “no matter where he or she resides.”

The rate of that capital gains tax will be 30 percent — the same that non-resident aliens currently pay on dividends and interest earnings.  The tax detailed [in] this act, if approved, will backdate for 10 years after its approval.

Now the Constitution absolutely prohibits ex post facto laws.  But these illustrious senators also have no grasp of history.  Historically, banishment is a form punishment.  Permanent exile is a vicious and vindictive form of punishment often exacted in lieu of execution.  But what for?  Eduardo Saverin has only exercised a fundamental human right.  Thus, far from committing a crime, he and I have done nothing wrong except to assert our right to leave the United States to avoid extra-territorial tyranny in the form of tax and bank account filing requirements; this is not so different from the thirteen colonies fighting a war against the mother country to avoid taxation without representation and whole host of other abuses.

This Ex-Patriot Act and the Reed Amendment are thus bills of attainder, which apply punishment and the seizure of a person’s of wealth without the benefit of a criminal trial.  Banishment is terrible and inhumane; it is in principle a violation of the Eighth Amendment, which permits no cruel and unusual punishment.  Even Professor Bruce Ackermann at Yale Law, who called for banning Saverin in the LA Times, understands this and would therefore allow an exception for those who would need to visit a family member who is dying or in hospital.

Exile is torture, and torture is universally condemned around the world.  The Ex-Patriot Act would permanently separate persons from their heritage and their families — children from parents, brothers from sisters, nieces and nephews from beloved aunts and uncles.  It tears people away from communities and friends.  Exile would destroy their lives.  It is psychological warfare, condemning people to years of regret, bitterness, and rage.  Saverin is lucky to be originally from Brazil.  But many thousands of those who have relinquished and will relinquish citizenship are citizens by birth and have loved ones still living in the United States.

Exile also punishes those who remain in the country who may never again see their loved one, unless they are able to travel to see him or her in exile.  What if my father, an octogenarian, were to fall sick, and I couldn’t visit him?  Whom are Schumer and Casey punishing now?  Both me and my father.  But it is wrong to punish people without a trial.  This has been the case since laws were first invented.  No truly civilized country ever punishes people without the benefit of a trial and the right to defend themselves before an impartial jury.  This is why bills of attainder are odious.  Schumer and Casey, however, must know that such a punishment could hardly pass the scrutiny of jurisprudence, and so it is better only to allow a hearing rather than bringing criminal charges and requiring the involvement of the Justice Department, grand juries, petite juries, and media attention.  No, let the law declare the expats guilty.  Let the law itself banish them.  I.e., it is indeed a bill of attainder.

The United States must not ban persons who would normally have permission to enter the country lawfully as a visitor or on a visa.  The United States must treat former citizens in the same way as all other people from their country of citizenship.  Other Canadians may visit the United States for up to six months without a visa.  To single out former U.S. citizens for special treatment is vicious and vindictive, and it is not becoming of a constitutional democracy.  I cite the Expatriation Act of 1868, which shows that the United States expects other countries to treat its naturalized citizens with fairness and respect:

And be it further enacted, That all naturalized citizens of the United States, while in foreign states, shall be entitled to, and shall receive from this government, the same protection of persons and property that is accorded to native-born citizens in like situations and circumstances.

The principle of reciprocity requires that the United States treat other nations’ naturalized citizens in the same manner as native-born citizens of their countries.  As the Apostle Paul says, “You then who teach others, will you not teach yourself?”  To punish ex-Americans would also be a violation of the Universal Declaration of Human Rights (Article 15, 2): “No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.”

The problem with many lawmakers in the United States is that they don’t understand the first thing about freedom, justice, or fundamental human rights.  Schumer and Casey are stuck on stupid.  Yet it is not these two senators alone.  This Ex-Patriot Act is different from the Reed Amendment not in kind, but only in severity.  It is demagoguery.  It is an affront to all who cherish liberty.

But should we be surprised?  Power corrupts. Absolute power corrupts absolutely.  The United States is for now still the most powerful nation in the world; this power has clearly corrupted some of its leaders, who are now drunk with arrogance and pride.  They obviously believe that they are above the Constitution.

Peter W. Dunn is a DIY investor, a scholar of Early Christianity, and a former United States citizen who blogs on the discrimination of United States persons abroad at the Isaac Brock Society under the alias “Petros.”