8000 Inc. (EIGH.pk) Statement to Shareholders May 25, 2011 - SEC letter and Response

May 25, 2011 - PRLog -- An Open Letter Response to Letter Received from Josephine Tao, Assistant Director, relating to a letter to Mary Schapiro, Chairperson SEC. (File number TP 11-11)

Dear Ms. Tao,

We are surprised at the information contained within your e-mail/letter on behalf of the office of Mary Schapiro. We are sure this is based on inaccurate information being made available to the Office of Mary Schapiro, especially when E*Trade has publicly admitted failures to deliver and receive (naked short positions) of about 173,000.  We are sure this is an oversight or error in communication within the SEC as these failures to be delivered should have been reported and recorded assuming E*Trade were correct in their statement that they had informed the regulators and the Company had informed the SEC many weeks ago.

In addition, we will address a couple of points that have been raised within this letter and in direct response to your e-mail.  This is now becoming a serious matter, and should now be for Chairperson of the SEC, having (in our view)  been given incorrect information which is then through representatives quoted in official letters. There are some serious issues that need to be resolved:

~          Acknowledged and Believed Short Positions
•   The quote of 30,034 short sales for 8000 Inc cannot be correct because E*Trade has admitted in e-mail format directly that they are aware of 173,234 shares which are either failures to deliver or failures to receive, or simply short. Please refer to the above E*Trade communications.
•   In any event, EIGH.pk is ineligible for short sales since it is a Grey sheet stock and simply it does not meet any of the legal requirements for short sales.
•   The SEC has quoted 30,034 shares short. E*Trade and Ridge have stated publicly (see above), they hold 173,000 shares short (1.2% naked short, satisfying the RegSHO requirements), as failures to receive and/or deliver. These figures do not include the naked short positions we believe are identified through the shareholder accounts, not reported and in excess of 178,000,000 shares held in the accounts of just 60% of the 8000 Inc. shareholders. But what is staggering is that these firms hold these short positions in a stock ineligible for shorts sales and they refuse to address until they are told to, and so far the neither SEC nor FINRA has told them to correct their errors. And why is Ridge involved and included in correspondence with E*Trade, a self-clearing brokerage in connection specifically to E*Trade accounts?  We submit this is a mechanism to hold the shorts from public and regulatory inspection!

~           Shareholder Testimony That Indentifies Held Naked Short Positions.

•   Approximately 450 shareholder accounts (60% of the actual total number of shareholders) were counted form a total of c745 shareholder accounts.
•   Each account included was accompanied by a copy of the individual’s current account holdings by broker, by date, by name, and also testimony to confirm the numbers of shares held were accurate and would be supported in a court of law, if required.
•   Simply adding up the 450 account totals, the number of shares they hold, unequivocally and empirically demonstrable is approximately 180MM shares, significantly more than the number of shares actually issued by the Company.
•   Please also note that there are still some 42 brokerage firms and nearly 300 shareholders account figures to add to the total! We have attached the “audit” findings to date for your reference.


~          SEC
•   The Company has requested help and support in relation to these matters.
•   The SEC has been notified of the Company’s findings, including the evidence and is prepared moreover to fully cooperate with full disclosure.
•   The Company through this non-activity and non-action is being held to corporate ransom because of the investigation "in the matter of Monks Den" as it cannot move forward.
•   Every attempt to progress and to deal with the situation has been stopped.
•   In fact, SEC staff has informally stated the Company is on its own in dealing with what we are sure are naked short sales.
•   The trading suspension has been served and concluded many months ago and yet, even though requested, so far Consent for the Company has not been pursued by the staff and, in turn, the Company's requests so far have been ignored.
•   Thus it is impossible for the Company to move forward—which, in turn, allows brokers to hold their short positions unabated, notwithstanding the SEC, FINRA, the law and associated regulations.
•   The Company continues to plead: The shareholders have to be protected, the Company has to be helped, protected and or released from the repressive death knell unless the path we are on turns around –and quickly!

~          Protection of Shareholders and Investors and Ensuring a Fair and Proper Market
•   The Company, having been left to fend for itself, even when both the SEC and FINRA were aware of E*Trade's admission of short positions, undertook a corporate action under Nevada law and through a majority shareholder vote.
•   This action would exchange common stock properly held for a like number of shares of preferred stock
•   within the Company and, in our view, would in one simple measure, address all admitted market irregularities.
•   This action, FINRA advised EIGH.pk, was declined, purportedly to protect the shareholders and public and to ensure a fair market place and citing FINRA Rule 6490.
•   EIGH.pk asks these questions:

   If having applied Rule 6490 to decline approval for a justifiable corporate action, then surely (in view of what the Company is convinced are admitted short positions), then shouldn’t FINRA apply the same authority to protect EIGH.pk shareholders in the same way?
   Should not that analysis and legal precedent against the Company, then why shouldn’t that authority be used by the same FINRA against the brokerage firms which are short (and associated Rules RegSHO, FINRA 4320)?  
   Otherwise, it sure looks to management like Rule 6490’s application here is discriminating against EIGH.pk shareholders!
   Besides, we submit there is no down side in honoring the request for the corporate action—it either flushes out the shorts are it doesn’t.  With the denial, EIGH.pk shareholders are screwed and the brokerage firms do not have to take action even though existing rules say they are required to cover!

The Chairperson of the SEC often opens her speeches and letters with the following statement, "the mission of the SEC is to protect the investors and to maintain a proper and orderly market". We wonder if the Chair, now with the correct information and absolute evidence of not only naked short positions, but also deliberate non-reporting and inaction to address failures to deliver and receive for many months would now change her position. It is clear that, as things currently stand, there is NOT a fair and orderly market in EIGH.pk and the shareholders are not being protected. Empirically, we are sure there have been more than 80MM shares sold naked short to the public than issued by the Company—and this is based on only 60% of the total number of shareholders!  Has EIGH.pk not established the following: (i) Non-reporting of failures to deliver and receive by broker-dealers on a stock that is ineligible for short sales; (ii) the consequence that the Company file its Form 211; and (iii) refusal by brokers to discuss their known short positions?  Meanwhile, SEC staff  (nor FINRA’s) has neither acted nor told EIGH.pk that it was wrong, basically taking the view that because of the careless prior disclosures, why should the Company’s associates be believed.  Bottom line:  the SEC has been advised of the foregoing for at least 5  months and yet nothing is done!

We hope this answers your questions and give you the information you need.


Yours truly,
8000 Inc.

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