People loved this article. Some had questions about how toxic convertibles work. Others had insight. Still others begged me to go through it again. Normally, on Saturdays I rewrite pieces that people seem confused or fascinated by to get rid of the trader-speak and the jargon. But I don't think enough of you know about my rewrites on weekends, because our readership drops off significantly on those days. Every Friday, I pick a piece from the week and give it a thorough going-over. I am also asking Todd to do one about some of his harder stuff. In order to show you what it is like on weekends if you never tune in, I am doing a rewrite on a Thursday.

What if I told you "Inside Wall Street," the BusinessWeek column, hyped this thing at 25 a year ago and everything it said came true, except the stock price plummeted anyway? (Well, this is par for the course. I used to criticize that column every Friday, but it was like shooting fish in a barrel, frankly. And it sure did irritate those BusinessWeek guys. So I knocked it off. It was really funny when the editor of BusinessWeek, in introducing a midweek Net version of that column, mentioned that it was so important to read it that Jim Cramer writes about it every week in TheStreet.com. Man, that was a brilliant stroke; it shut me up for good! Touche, Steve! Always liked that guy.)

And what if I told you that Nortel (NT:NYSE - news - boards) has a big investment in the company (This was actually no big deal, as it is typical vendor financing. In fact, it was really a straw man. After I wrote it I figured someone would sell Nortel for doing stuff like this! I love Nose Tackle, as we call it, and I hope you do dump it (LOL).) and that Robert Annunziata, former CEO of Global Crossing (GBLX:Nasdaq) and Teleport (two wildly successful companies) just joined the board? (I like Annunziata, whom I met several times during my stint on Squawk Box. He is a straight shooter. He got a ton of options for joining this board. Maybe he has some clout and can get some money out of the bankers that advised on this deal -- First Boston -- for the company. First Boston is not a defendant, but it didn't do the company any favors either.)

Ah ha, but before you go buy Log On America (LOAX:Nasdaq - news - boards) this morning, what if I told you that it had issued a toxic convert at 17 six months ago? Would you still be tempted? Maybe you shouldn't be. (I found Log On America when I was looking through Mary Meeker's excellent tables on the dot-com universe, although this company is hardly a dot-com. After I found it, I read about the lawsuit, which is why you are reading this article.)

Log On America is one of those companies that should have known better. I don't know how many times I have urged CFOs in this column that they should not issue so-called floorless convertibles, because they will lose everything to their investors. (We have an amazing readership. We may not have as many buy-and-hold mutual fund types as I would like, but we have a ton of senior execs and decision makers. I heard from 10 CFOs after I wrote this piece, all subscribers. I suspect I will hear from many more in the ensuing days.)

I have beaten myself up endlessly for failing to stop Hayes, a now-bankrupt company, from issuing a toxic convert. At the time, Hayes was one of my firm's largest positions, having gotten it as part of a sale of Penril Datability's high-speed modem business to Bay Networks (now Nortel). (I often talk about 1998 because it was a terrible year for me, just terrible. Many many things went wrong. The worst, though, was watching Hayes go from 6 to zero in no time flat, as it was shorted to oblivion. It was not a good company, but it was helpless in the face of these sharks. It took me three months to convince the CEO that the short stuff was even happening. I do not have a deceitful mind, but as soon as I heard the terms of the deal, I said to the CEO, "Are you crazy? They will short your stock to zero now." He said that would make no sense, that they were good guys, that they had given him their word that they would work with him and not do that, and that they were going to help save the company.

I cannot repeat what I said to him on this site because I really lost my temper -- and I have a very bad temper. But the whole office was shaking. I told him that I knew we were about to lose $14 million and we would be helpless. I said it would happen overnight. We lost $14 million overnight. I am still very angry. It destroyed our performance for the quarter and set back our year. It helped lead to massive withdrawals.)

I argued vociferously with the CEO of Hayes -- who shall go nameless because, in the end, I am a better guy than he is -- not to do this trade. I predicted that the preferred holders would short the common stock into oblivion as a risk-free trade, which they did. I said it would put the company into bankruptcy faster than a speeding bullet. (The preferred guys denied they were doing this all the way down. They said I was making it up. There was no way to prove it until finally when it was too late and they admitted they had been doing it all along. Thanks guys!) The preferred guys drove the stock down to zero and the company filed for Chapter 11 protection. We lost everything. So I have made it my mission since then to shout from the rooftops: Don't do these kinds of deals, even if you think they will save your company. They won't. (These deals only happen to companies in trouble. But I don't buy that they are last-recourse financing. You can always sell the company. The guys who get screwed here, by the way, aren't management. It is the common shareholder. It is you. Management will get another job. You will lose everything invested.)

Log On America didn't listen. It took money from a couple of savvy convertible preferred guys and the company now alleges that toxic issuers systematically drove the stock down from 17 to 2 by selling short the common, knowing they had a risk-free short because the lower the stock went, the more shares that would be issued against the convert. (I could have added some caveats here. Management was given an incentive to bring in financing, for example. They did well for bringing in the sharks. But I think that misses the point. They lost the whole shooting match in the end, didn't they? And yes, I think it is the end. Also, with ICG Communications (ICGX:Nasdaq - news - boards) down to 4 and NorthPoint (NPNT: - news - boards)-Covad (COVD:Nasdaq - news - boards)-Rhythms (RTHM:Nasdaq - news - boards) doing terribly and lots of these Earthlink (ELNK:Nasdaq - news - boards) types stumbling along at lows, you could argue that these guys are dead meat too.

Again, though, remember that they ended up giving the company away. Clearly, they could have sold it for something earlier on when it was at 17. Also, I am cognizant that they were brought public by Dirks, instead of by a major firm. Nevertheless, they hired First Boston last year for help on this. That's a major firm.) It got shafted.