"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey
The Rest of the Story
I am seeing examples of unprecedented crimes talking place in the stock market. Though the media has not comprehensively brought these things into focus, I thought I would.
Remember in July when the SEC put a ban on the "naked" short-selling of 19 financial stocks? "Naked" is the key word here. This means that the institution or individual shorting a stock was never loaned the stock in the first place. There is an infinite amount of danger to a company or stock that has become the target of a "naked" short seller.
Here is the danger;
1) Let's assume a hedge fund places a "naked" short sell on a stock. This means they never received permission from a brokerage firm to borrow the shares that they shorted.
2) Let's assume the hedge fund blows up, goes bankrupt, or folds. Since they never borrowed the shorted shares, the shares are never unaccounted for, and never returned.
3) Since the hedge fund is now out of business, they can't buy back the "naked" short sale, and the money that was stolen by the short seller has vanished.
In essence, naked short selling is a tactic used by crooks and thieves to steal money from the market place. If a "naked" short is never covered, the money is sucked out of you, me, and the company they illegally shorted.
I encourage you to read the following websites to fully understand how this crime is being perpetrated on you the investor.
