Score one for sanity in financial markets.
In the midst of outcries about naked short selling from a group of conspiracy theorists deemed the "Bologna Brigade" by one of my favorite investigative journalists, Gary Weiss, the SEC has found no evidence of manipulative naked short selling of IPOs.
The agency studied 295 IPOs over 16 months and, according to the Wall Street Journal, didn't find evidence that traders engaged in naked short selling were the cause of fails to deliver. According the SEC, failures to deliver in IPOs "cannot be explained by short selling in general or 'naked' short selling specifically."
This could be bad news for the anti-naked short selling zealots led by the entertainingly insane Patrick Byrne, CEO of Overstock.com (NASDAQ: OSTK). They have long held fails to deliver as being the indicator of widespread naked short-selling but, according to the SEC, that isn't the case, in least in the case of recent IPOs.
The naked short selling issue looks like a red herring to me, tossed around by CEOs whose stocks are underperforming because management has established a track record of OPUD -- Over-promise, under-deliver. In the case of OSTK, the only fail-to-deliver investors need to worry about is Patrick Byrne's failure to deliver profits.
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Reader Comments (Page 1 of 1)
4-24-2007 @ 9:56PM
ronnie said...
Zac Bissonnette is a total idiot and a lying thief of the truth.
4-25-2007 @ 10:41PM
Paul said...
Well, the SEC's "study" has been shown to be a sham, once again. Dave Patch deconstructs their findings. Here's the lead in, then link to full story:
SEC's OEA Study Short Changes Public - April 25, 2007
David Patch
You really have to wonder what talent pool the SEC searches when they seek out their economists.
For the second time in barely a year the SEC's Office of Economic Analysis (OEA) has submitted a study or analysis in which the conclusions drawn directly mislead the public relative to market risks and market controls. The two questionable studies took on the common issue of short selling and Regulation SHO and each presented opinions that were either directly misleading, inaccurate, or both.
http://www.investigatethesec.com/20070425.htm
6-21-2007 @ 6:28PM
mike said...
Is it true that Goldman Sachs can naked short IPO's on first day of issue? Why cant us retailers short IPOs on first day? why do we have to wait 30 days but the big gurus can? IF THIS IS TRUE? hmmmm