A shot over the bow on naked short selling

[cgallery]

I find it interesting that once it was made clear that different federal and state government agencies were going to investigate the recent short selling on Wall Street (to make sure no "naked short selling" was involved), that the market reversed and started heading back up.

I'd be willing to bet at least a couple of money managers are sweating bullets right about now.

http://www.outlookseries.com/news/Financial/5151.htm

[jackellis]

I'd be willing to bet at least a couple of money managers are sweating bullets right about now.

I think a couple might find themselves in jail!

It's entirely possible the shorts were correct about AIG and Lehman, and they could also be right about other firms in the news. However the speed with which stock prices were driven down is suspicious and when Morgan Stanley and Goldman Sachs got hammered even though they reported very respectable earnings, I think regulators felt they had to act (disclaimer - I own some Morgan Stanley stock).

Hedge funds have been having too much fun and they've been able to operate in secret for too long. When they reach a size where their activities and their possible demise starts to affect other firms, then it makes sense to ensure that they have to play by the same rules as everyone else.

[Tom Slick]

naked short selling

I always figured Wall Street was a suit and tie kinda place.

[jackellis]

I always figured Wall Street was a suit and tie kinda place.

Clearly thread creep but it's actually not quite what you'd think. I've visited both the Chicago Board of Trade and the New York Merchantile Exchange. Traders and runners are required to wear ties, but it doesn't mean their uniforms would make GQ. I've seen (almost exclusively men) in black athletic shoes, trousers that were clearly too long, and dress shirts that wouldn't qualify for cleaning rags in our house. It was quite shocking the first time.

I've also been on the trading floors of some energy businesses and although the uniform of the day is typically business casual, they do dress neatly.

Investment bankers, of course, are another story. One of their suits probably costs more than my entire wardrobe.

[jackellis]

...and then there were the rumors and misquotes:

http://biz.yahoo.com/ts/080919/10438431.html?.v=1

Talk about pouring gasoline on a fire.

[Alex Franke]

Trading naked is the only way to trade.

Short selling is one thing, but naked shorting is just reckless IMHO. I though the SEC regulated it several years ago, though...

Thanks for the link -- I'll give it a read.

[BobSch]

Somehow using naked and short in the same sentence gives me all sorts of problems.

[cgallery]

Short selling is one thing, but naked shorting is just reckless IMHO. I though the SEC regulated it several years ago, though...

NPR had a story about "short selling facilitators" about six months ago. These are the guys that arrange for loans of shares for short selling. It sounded early 20th century (verbal communications, hand-written ledgers, etc.).