Quote from: Rival on September 21, 2013, 02:22:09 AM

The day before Lehman Bros collapsed the CEO told investors in a conference call that the company was in no danger of insolvency. He knew exactly what was happening.

His defense was that if he had told investors the true state of the company that it would have immediately collapsed due to share selling.

Does anyone understand the inherent conflict here? How can it be justified to withhold information that something is in danger of collapsing because disclosing it would hasten it?

Personally, I think that the truth should be laid out regardless of the consequences. If the truth causes a collapse, the collapse was inevitable anyway. All that gets bought by hiding the truth is a few days for the well-connected to get out and get clear.

I don't know the future of labcoin or any other security with any certitude. But I do know the truth when I see it. And the warning on BTC-TC was no exaggeration if you read this thread. If speaking the truth causes the price of a share to collapse, then maybe it should collapse. It is all the process of price discovery in a free market after all.

It seems to happen repeatedly in the securities business that owners refuse to deliver bad news because of the effect it will have on investors. They delay any real news as they scramble to put together enough performance to release a statement that is not bad enough to tank the shares. They delay, and delay, and delay. And then investors get antsy. And then they get frustrated. And then they get angry. And by then, no news will be good enough, and the whole thing comes crashing down.

When will owners learn that delivering bad news is part of their job?

I'd like to point at that with LB, the CEO made the decision to disclose or not, and not the NYSE. The exchange has no place in these matters. Once it has decided to list a security it is up to the shareholders to decide what to do. Make a scammer thread on Bitcointalk, make a Reddit post, shout from the rooftops. Whatever floats your boat is within your rights as a holder, but the exchange is not the appropriate entity to be labeling securities as anything after they have been approved.

Edit: If I were Burnside I wouldn't even set the precedent that it is somehow the exchange's responsibility to inform shareholders that they may be investing in a scam. That could come back to bite.