Jump to content

SEC Cracks Down on CBOE For Naked Short Sales


Parsad

Recommended Posts

  • 7 months later...

There's:

 

1- Naked shorting so you can make easy money arbitraging the cost of borrowing stocks to short.  You essentially get to collect the borrow (10-100% interest???) without having to pay the borrow.

2- Bear raiding.  This has very little to do with naked shorting.

3- Driving the price of a stock down by selling the shares without mercy.  In at least one case, the SEC found that somebody engaged in naked shorting to do this.  The selling party benefited from a lower share price.

 

Largely the SEC has found people guilty of #1.  Some people would like you to believe that naked shorting always involves the evils of bear raiding.

Link to comment
Share on other sites

Yes naked short selling is a problem but it largely doesn't have much to do with bear raiding.

 

Suppose naked short selling was completely wiped out.  Would abusive bear raiding still be a problem?  Yep.  If you think that bear raiding is this massive evil, then you should address bear raiding.

 

2- I have a feeling those university professors caught doing naked short selling didn't care whether their stocks went up or down.  They were probably fully hedged and making easy arbitrage money.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...