Back in 2000, Justin Raimondo wrote an article called “An Electronic Pearl Harbor?” about curious Kosovo war-related hacker attacks and the role of Network Solutions, the then-monopolist of Internet domain names. Interested readers can revisit this story in Sold Short: Uncovering Deception in the Markets by famed short-seller Manuel Asensio.
Short-sellers are, essentially, people who bet that certain stocks will fall. It’s risky business; a stock can rise more than it can fall so gains are limited but losses are theoretically unlimited. And as the old trader ditty says: “He who sells what isn’t his’n, must buy it back or go to prison.” Short-sellers have a bad reputation but during the height of the millennial excesses, while the Feds were chasing a New Jersey high school student, Asensio was uncovering deception in the markets and posting the information for free on his website (much like Antiwar.com posted warnings about the domestic terrorist threat while the government was busy aiding jihad in the Balkans).
Asensio’s book primarily chronicles his successes, but in a chapter called Abusing the Process, in a section called “Fiends [sic] in High Places: Network Solutions,” he details a notable failure:
“Network Solutions (Nasdaq: NSOL) achieved its fortune on the basis of a government affirmative action contract that was snatched up by a huge, money-laden defense contractor. The contractor then leveraged this prize many times over by working the political system, applying a political headlock at the highest levels of the federal government. …
“In March 1995 McHenry and his partners sold Network Solutions for $48 million to Science Applications International Corp. (SAIC), a huge, privately owned, astonishingly well-connected defense contractor based in San Diego.
“SAIC has about $4 billion in annual revenues, roughly 80 percent of which are derived from federal contracts. SAIC board members include Retired Admiral Bobby Ray Inman, who was offered the job of defense secretary by Bill Clinton, and two retired generals, from the army and the air force. Past board members have included former Defense Secretary William Perry; Melvin Laird, Nixon’s defense secretary; Donald Hicks, former head of research and development for the Pentagon; and former CIA directors Robert Gates and John Deutsch. The firm and its executives contribute over $100,000 to political campaigns in each election cycle. …
“All of the facts indicated to us that NSOL should not have been successful in retaining the interests that if did in the domain-name registry. The amount of money it was allowed to change for its registry service is offensive. The terms were imposed on the market through the influence that Network Solutions has with the federal government. That’s what makes this case completely different from any other company we’ve publicly shorted.
“When you’re dealing with the president of the United States and the secretary of commerce, you’re beyond the law and beyond logic. These people create the rules. We bet … on free market forces. There was a lot of money involved here – and a lot of companies that could do the job. We believed that potential competitors in both the registry and registrar services were going to balance out Network Solutions’ political power. But SAIC’s influence in the federal government was greater than the force of the free enterprise system, stronger than those competitors that were willing and able to provide better services at far lower cost than Network Solutions. Who would have thought it? Not I – not at the time, anyway.”
More:
Buy Sold Short: Uncovering Deception in the Markets (and help Antiwar.com)!
Read “Network Solutions: By Any Other Name, a Monopoly.com,” by Debra Sparks.
Read “An Electronic Pearl Harbor?” by Justin Raimondo.
Read “Jonathan Lebed: Stock Manipulator, S.E.C. Nemesis – and 15,” by Michael Lewis.
Visit Asensio.com.
Read “American Interventionism and the Terrorist Threat,” by Jon Basil Utley.
Read “Washington Behind Terrorist Attacks in Macedonia,” by Michel Chossudovsky.