IPFS News Link • Stock Market

Squeezed by the Shorts: Time to Ban Short Selling?

• arclein

Short sellers have made a killing in the recent banking crisis, scalping $14.3 billion from bank stock owners just in March of this year. Short sellers "borrow" stock they don't own and immediately sell it, driving the price down. Then they buy it back at the lower price, return the stock, and pocket the difference. Bankers say the practice is threatening the stability of the banking system and are calling for a ban on short sales of bank stock. The SEC is expected to decline but is investigating whether the practice constitutes illegal market manipulation intended to deceive investors. It is argued here that short selling is fraudulent by its very nature - it is a fraud on the legitimate stock owners - and should be banned across the board. But first a closer look at the issues and some recent developments.