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This is how a lot of short selling works - they find fraud, mismanagement, etc and position themselves to profit from revealing it. That's why this journalist t
by Kalium 4y ago
This is how a lot of short selling works - they find fraud, mismanagement, etc and position themselves to profit from revealing it. That's why this journalist talked to one.
- tcoff91 4y agoIs that a form of illegal insider trading?
- jjtheblunt 4y agoI think you are asking if people with insider knowledge might place short sales orders, and the answer is yes. but selling short isn't only done by people privy to insider knowledge; a person who has built extreme expertise in ${whatever} might have reason to believe a price will drop, and in that belief choose to sell shares not currently in possession. this is possible because there is a few days lag between sale and delivery, so the person profits if able to buy shares to deliver at a price lower than the price at which the shares were sold days earlier. (like, promise something, sell it now, and deliver it days later, purchased in the meanwhile for less) i often wonder if the practice arose because of physical lag in delivering paper-based shares of corporations many decades before everything was electronic.