Hedge funds will have to begin disclosing short positions publicly today, the first time that Main Street will get to peer into the nefarious world of people who bet against companies.
Of course, I don't think there's anything nefarious about short selling, but with some of the largest banks bleeding red ink and fading into bankruptcy or fire sales, investors smart enough to predict the current market mess have been a leading scapegoat.
So is there anything wrong with this new SEC rule? Yes, and CNBC sums it up without even meaning to: "For shareholders who have blamed short sellers for driving down company stocks, it will be a chance to see who is targeting their firm."
Mandatory disclosure of short positions will expose fund managers to issuer retaliation, frivolous lawsuits and harassment. What's so ridiculous about this rule is that a short position in a stock does not represent ownership of a security, and other than subjecting short sellers to harassment, there is no reason to require that the positions be publicly disclosed.
The SEC failed miserably in its responsibility to protect investors, and now it's compounding that mistake by targeting the wrong enemy.
Hedge funds forced to disclose short positions: Bad news
Posted Sep 29th 2008 11:50AM by Zac Bissonnette
Filed under: Other issues, Market matters
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Reader Comments (Page 1 of 1)
9-29-2008 @ 1:06PM
JCH said...
Sorry, but allowing blind shorting with no ownership is akin to providing a hunting blind on your property so unknown snipers can pick off your children.
If they want to be snipers hunting me, I should get to shoot back.
9-29-2008 @ 4:51PM
Chris K. said...
I imagine a lot of HF will simply unwind their positions rather than disclosing their strategies. Also, you can replicate a short position with options. HF are smarter than the SEC.
10-02-2008 @ 2:03AM
Northpal said...
Hedge funds and pivate equity funds should be required to register with SEC for needed disclosure and transparency. Paying politicians for loop holes you wish to exploit does not make you smarter than every one else. 40 to 1 leveraged buyouts and that is after a short sell seige, they are destroying many fine companies and is riskier financing than any of those toxic mortgages.
Let those mortages fail, housing is too high for the average worker, hell 1 million for a bungalow I bought for 93 thou 23 years ago, cmon ridiculous.