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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?
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To: tracor who wrote (3614)7/22/2008 8:27:52 PM
From: rrufff  Read Replies (1) of 5034
 
Nice information Tracor - you can bet that there are a lot of frantic hedge fund employees and associates whining on message boards and contacting their captured government cronies because the game is getting more fair for all of us.

Naked and abusive short selling are not new. Robert J. Shapiro, a former undersecretary of commerce for economic affairs, testified before the SEC's rules committee in 2003 about the then-growing problem. He noted that one form of manipulative short selling that was widespread in the 1990s, called death-spiral financing, created "strong incentives for large-scale naked short sales focused on small and medium-size public companies." His research found that a sample of 200 companies victimized by the technique posted a combined market loss of more than $105 billion.

Shapiro, who is chairman of Sonecon, a District economic advisory firm, said in an interview yesterday that the troubled financial market had made it possible for naked short sellers to affect much larger companies than before, including the major firms covered by the SEC order.

"Finally, the real concern has arisen because the target of it is a financial institution whose failure could pose a systemic risk to the capital markets," Shapiro said. "That's why they're concerned. But the phenomenon has been around in significant scale, and cost thousands, maybe millions, of investors money, who have been in stocks that have been driven down by naked short sellers for years now."
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