5 ms·

Fraud requires intent to deceive. Where's the intent to deceive in short selling?

by growse 6y ago

varispeed 6y ago
Selling something you don't own.
- Chris2048 6y ago
  You do own the stock, and when you sell it you no longer own it - the person you sold it to does. You are obliged/contracted to "return the/a stock" but there is no requirement that it be the same stock, as the agreement is wrt stock as a commodity. Furthermore, that agreement doesn't in any way apply/affect to the stock you sold (or the person you sold it to), the obligations to return is yours alone.
- growse 6y ago
  Is a future contract fraudulent then? If I sell you an August-settled coffee future, that's a promise to deliver you coffee in August. Is it fraudulent if I don't have the coffee right now? After all, I've sold you something I don't own. Of course it isn't. What matters is that the contract is fulfilled, and for equity sales in the US, the contract states that a share will be delivered to the buyer 2 days after the transaction.
  - varispeed 6y ago
    You are comparing apples to oranges. Paying for a product in advance is quite different from selling something you don't own.
    - growse 6y ago
      You're going to have to fill in some of the blanks explaining how paying someone to deliver a share 2 days from now is fraud but paying someone to deliver coffee 6 months from now isn't. How about if you sell a share that you bought within the last two days. I mean, your buy trade hasn't settled yet so you technically don't own it yet. Is that fraud?
    - Chris2048 6y ago
      > Paying for a product in advance From the other end, someone is accepting payment in advance i.e. selling a product that doesn't exist. If you intend to purchase that product (or constituents of it) from third parties, then that becomes selling a product that you don't own (the third parties you intend to buy it from currently own it). Now you can say it doesn't yet exist, or isn't yet bought, in order to fulfill the order - but the argument for selling stocks you don't own, is that you don't yet own them. I see no reason to say a genuine intent exist when fulfilling a purchase order, but not when returning a stock; kick-starter provides enough evidence against that..
  - pbhjpbhj 6y ago
    Capitalism only optimises with freely available information. As long as I know you don't have a share, and the market as a whole knows you don't have a share, then yes, it's not fraud. The fraud is you decide (with your cabal) to appear to have shares, you don't announce to the market "I'm selling 5% of STONKS but I don't own any STONKS [yet]". When I buy from you there's no shares that I bought. It's not fraudulent if you don't have the coffee, as long as you make public that you don't, "I do not own any coffee, but will sell you a delivery of coffee for August". Now, if you're selling share in ownership of a company, IMO it's right to disallow - by law - representations of ownership of companies that are not backed by numbered shares. It's not coffee, you can only own shares in the company itself, you can't get those shares from other origins it's not a commodity. You make a post-harvest offer to sell me coffee from a particular plantation, then you arrange for the media to report that plantation's coffee is really inferior, maybe not even drinkable - something you had arranged in advance, of course. Tell me, why is this good for society? Now, you advertise, with your friends, lots of coffee available at low prices (after all the media said it's inferior coffee), only thing is you're offering more coffee for sale at low prices than there is coffee from that plantation ... that's driving the price down, there being lots of coffee noone wants ... only it's a lie, a trick, a fraud, just so you can manipulate the price. And now, oh look that plantation has gone out of business and you managed to buy them coffee I ordered for essentially nothing. Wow, you added so much value to the World by destroying the livelihood of that coffee plantation's workers.
- nmfisher 6y ago
  That is only fraudulent if you never intend on delivering.
ds206 6y ago
Here are some examples of how to deceive: https://youtu.be/VMuEis3byY4 https://youtu.be/VMuEis3byY4

Fraud requires intent to deceive. Where's the intent to deceive in short selling?

by growse 6y ago

Fraud requires intent to deceive. Where's the intent to deceive in short selling?

varispeed 6y ago

Selling something you don't own.

Chris2048 6y ago
You do own the stock, and when you sell it you no longer own it - the person you sold it to does. You are obliged/contracted to "return the/a stock" but there is no requirement that it be the same stock, as the agreement is wrt stock as a commodity. Furthermore, that agreement doesn't in any way apply/affect to the stock you sold (or the person you sold it to), the obligations to return is yours alone.
growse 6y ago
Is a future contract fraudulent then? If I sell you an August-settled coffee future, that's a promise to deliver you coffee in August. Is it fraudulent if I don't have the coffee right now? After all, I've sold you something I don't own. Of course it isn't. What matters is that the contract is fulfilled, and for equity sales in the US, the contract states that a share will be delivered to the buyer 2 days after the transaction.
- varispeed 6y ago
  You are comparing apples to oranges. Paying for a product in advance is quite different from selling something you don't own.
  - growse 6y ago
    You're going to have to fill in some of the blanks explaining how paying someone to deliver a share 2 days from now is fraud but paying someone to deliver coffee 6 months from now isn't. How about if you sell a share that you bought within the last two days. I mean, your buy trade hasn't settled yet so you technically don't own it yet. Is that fraud?
  - Chris2048 6y ago
    > Paying for a product in advance From the other end, someone is accepting payment in advance i.e. selling a product that doesn't exist. If you intend to purchase that product (or constituents of it) from third parties, then that becomes selling a product that you don't own (the third parties you intend to buy it from currently own it). Now you can say it doesn't yet exist, or isn't yet bought, in order to fulfill the order - but the argument for selling stocks you don't own, is that you don't yet own them. I see no reason to say a genuine intent exist when fulfilling a purchase order, but not when returning a stock; kick-starter provides enough evidence against that..
- pbhjpbhj 6y ago
  Capitalism only optimises with freely available information. As long as I know you don't have a share, and the market as a whole knows you don't have a share, then yes, it's not fraud. The fraud is you decide (with your cabal) to appear to have shares, you don't announce to the market "I'm selling 5% of STONKS but I don't own any STONKS [yet]". When I buy from you there's no shares that I bought. It's not fraudulent if you don't have the coffee, as long as you make public that you don't, "I do not own any coffee, but will sell you a delivery of coffee for August". Now, if you're selling share in ownership of a company, IMO it's right to disallow - by law - representations of ownership of companies that are not backed by numbered shares. It's not coffee, you can only own shares in the company itself, you can't get those shares from other origins it's not a commodity. You make a post-harvest offer to sell me coffee from a particular plantation, then you arrange for the media to report that plantation's coffee is really inferior, maybe not even drinkable - something you had arranged in advance, of course. Tell me, why is this good for society? Now, you advertise, with your friends, lots of coffee available at low prices (after all the media said it's inferior coffee), only thing is you're offering more coffee for sale at low prices than there is coffee from that plantation ... that's driving the price down, there being lots of coffee noone wants ... only it's a lie, a trick, a fraud, just so you can manipulate the price. And now, oh look that plantation has gone out of business and you managed to buy them coffee I ordered for essentially nothing. Wow, you added so much value to the World by destroying the livelihood of that coffee plantation's workers.
nmfisher 6y ago
That is only fraudulent if you never intend on delivering.

ds206 6y ago

Here are some examples of how to deceive: https://youtu.be/VMuEis3byY4 https://youtu.be/VMuEis3byY4