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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: Dominick who wrote (10707)2/20/2003 5:54:17 PM
From: Dan Duchardt   of 12617
 
It seems to me the heart of the matter is the provision that enables MMs to short naked (unborrowed) shares. The case for naked shorting rests on a legitimate market making function of providing liquidity, which is a whole different thing than sitting on a pile of naked shorts to pressure a stock price into oblivion.

As for companies interest in publicly owned shares, it does not end when shares are issued and sold. John Q. Public buys shares in a company with an expectation that the issuing company will manage themselves in a manner that will increase the value of the shares they hold (implicitly long). Any attack on the value of those shares should be of concern to the companies as well as the public holders. In fact, the logical extension of the notion that a company should buy back shares they want to have under their control could be construed as an incentive for the companies themselves to engage in practices that would depress the value of shares so that they could be repurchased "cheap".

The politicians are fond of invoking "disclosure" as the means for dealing with all kinds of abuses. This is one area where disclosure is sadly lacking, and where I think it might actually do some good. IMHO, since these companies are "public", the ownership of these companies should in all cases be a matter of public record. The technology is readily available to maintain a daily update of long and short holdings, and anybody who is interested should be able to access this public information.
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