Post by sandi66 on Jun 18, 2009 10:32:33 GMT -5
CEO to feds: Cut down on short-selling of small cos.
June 17, 2009
The CEO of Overstock.com blasted the Securities and Exchange Commission yesterday for failing to enforce rules against naked short-selling, a trading practice that is illegal if used to manipulate the market and drive a company’s share price down.
“They ignored 5,000 complaints about this,” said Patrick Byrne, head of the Utah-based Internet financial company, during a visit to Boston. “But when 19 of nation’s biggest financial companies complained last summer, the agency protected the big boys and ignored the rest of us smaller companies.”
Naked short selling happens when investors sell stocks short without borrowing the security first or delivering it to the buyer. The procedure can destroy public companies and destabilize the financial system, he said.
In an e-mailed statement, an SEC spokesman said the emergency order issued last fall prohibited short selling in the securities of more than 900 financial firms of all sizes.
But Byrne - who has been battling short selling for years, claiming it has hurt his company’s stock price - insists that enforcement has been limited to larger firms such as Morgan Stanley, Goldman Sachs, Citigroup, Wells Fargo, Freddie Mac and Fannie Mae. “What about the rest of us?” he asked.
Help could be on the way from U.S. Sen. Ted Kaufman, a Delaware Democrat who has introduced legislation that would reinstate the “uptick rule.” The measure, repealed in 2007, prevented naked short-selling or selling stock that the trader does not own.
“Abusive short selling is tantamount to fraud and market manipulation and must be stopped - now,” Kaufman said in a statement. “The uptick rule should have never been repealed. To permit people to sell shares they don’t have and won’t be able to deliver turns investment into pure speculation. The time has come for this practice to stop.
www.bostonherald.com/business/general/view.bg?articleid=1179604&srvc=rss
June 17, 2009
The CEO of Overstock.com blasted the Securities and Exchange Commission yesterday for failing to enforce rules against naked short-selling, a trading practice that is illegal if used to manipulate the market and drive a company’s share price down.
“They ignored 5,000 complaints about this,” said Patrick Byrne, head of the Utah-based Internet financial company, during a visit to Boston. “But when 19 of nation’s biggest financial companies complained last summer, the agency protected the big boys and ignored the rest of us smaller companies.”
Naked short selling happens when investors sell stocks short without borrowing the security first or delivering it to the buyer. The procedure can destroy public companies and destabilize the financial system, he said.
In an e-mailed statement, an SEC spokesman said the emergency order issued last fall prohibited short selling in the securities of more than 900 financial firms of all sizes.
But Byrne - who has been battling short selling for years, claiming it has hurt his company’s stock price - insists that enforcement has been limited to larger firms such as Morgan Stanley, Goldman Sachs, Citigroup, Wells Fargo, Freddie Mac and Fannie Mae. “What about the rest of us?” he asked.
Help could be on the way from U.S. Sen. Ted Kaufman, a Delaware Democrat who has introduced legislation that would reinstate the “uptick rule.” The measure, repealed in 2007, prevented naked short-selling or selling stock that the trader does not own.
“Abusive short selling is tantamount to fraud and market manipulation and must be stopped - now,” Kaufman said in a statement. “The uptick rule should have never been repealed. To permit people to sell shares they don’t have and won’t be able to deliver turns investment into pure speculation. The time has come for this practice to stop.
www.bostonherald.com/business/general/view.bg?articleid=1179604&srvc=rss