That Kinder Morgan Thing

         Any company tapping debt and/or equity markets to fund growth in lieu of using internally generated cash is vulnerable to attack by short-sellers seeking to impair or destroy its access to public money, a weakness in American-style capitalism we ascribe to the absence of effective law enforcement on Wall Street.  The potential for short scams exploiting this systemic flaw is often a good reason not to invest in some real estate investment trusts, small business development companies, master limited partnerships, too-little-to-survive commercial banks, and any weak sister, really, throughout the entire financial sector, relentlessly preyed upon by shorts during every harrowing market vacuum.  At worst, using mark-to-market accounting, reduced asset values can trigger bond indenture provisions threatening to force a hapless victim into bankruptcy, the Holy Grail for perps running this kind of securities racket. 

         Kinder Morgan is in the crosshairs now, with short-sellers dumping “borrowed” shares aplenty and talking smack.  Management says the shorts are blowing smoke up our asset management accounts with all their drivel, but that’s never the issue.  All that matters is, can attackers pound the appropriate price(s) down low enough and/or long enough to precipitate a fatal market disruption that scares weak-handed investors into joining the racketeers by selling real holdings en mass at the same time short-sellers are dumping their fictitious play shares into the mix, gaming the short term supply/demand equation into a false read that can withstand regulatory scrutiny because there is no regulatory scrutiny?

         The media has even been drawn into this one, making us wonder once again what criminal conspiracy by shady journalists has to do with freedom of the press.

         Corruption inside Washington’s revolving door, namely the Securities and Excuses Commission (SEC), has become so pervasive that staff makes no attempt whatsoever at protecting us from grifters running short-selling cons.  On the contrary, if history is any indication, many of the agency’s seniors will be joining the racketeers themselves in a few years.

         Either the shorts are committing securities fraud, or Kinder Morgan management is.  SEC hotshots simply have no excuse for running away from cases like this.

         But they do, and will.

         Kinder Morgan is a big, remarkably successful operation run by a brilliant man recognized as a giant in his field.  Whether or not he and his bankers can rally enough buy-side support to sop up all the short and homeless shares currently awash out there remains to be seen.  For what it’s worth, here at your Post we're betting that they can.