Blame the Nudists.Blame the Nudists.
The free-flow of information is key to a healthy market. Yet, the SEC seems to want to put a stop to it unless it's information. Naked short selling (shorting a stock you haven't actually borrowed) has always been against the rules. The hedge fund I work for sells short all the time, but our prime broker would kill the trade if we put on a short and didn't borrow the shares. Yet, the SEC put a month-long
September 1, 2008
Nate Wendler
The free-flow of information is key to a healthy market. Yet, the SEC seems to want to put a stop to it — unless it's “happy” information. Naked short selling (shorting a stock you haven't actually borrowed) has always been against the rules. The hedge fund I work for sells short all the time, but our prime broker would kill the trade if we put on a short and didn't borrow the shares. Yet, the SEC put a month-long moratorium on shorting 19 financial stocks — ostensibly to keep naked short sellers at bay. But look what happened to the share prices during that time: They rose. The rule expired last month, but the SEC is thinking about making restrictions on short sellers permanent.
