9 ms·

Documents Show How Goldman et al Engaged in 'Naked Short Selling'

102 points by llambda 14y ago

tedunangst 14y ago
Article lists a bunch of interesting details, and even is very careful to make sure the term 'muppets' gets incorporated twice, but doesn't quite connect the dots and explain just exactly how the naked shorting fucked the muppets. For example: More damning is an email from a Goldman, Sachs hedge fund client, who remarked that when wanting to “short an impossible name and fully expecting not to receive it” he would then be “shocked to learn that [Goldman’s representative] could get it for us.” I mean, there are all sorts of reasons why naked shorting is bad, but the most damning thing we can say is "Goldman offered to make their customer happy"? That's what passes for screwing the 'muppets'?
- waterlesscloud 14y ago
  I'm lost on the mechanics here, but doesn't this mean that any profit on the part of a short-selling customer was actually coming out of the pockets of GS? I mean...where does the money to cover the customer's profit on a naked short come from?
  - deleted 14y ago
    [deleted]
  - asmithmd1 14y ago
    Come on, you know it was not coming out of GS pockets. It was a heads I win tales you lose situation. Evidently there is some amount of time between when a stock transaction is booked and when it clears - like a purchase made with a check. They were essentially writing bad checks by selling stock they didn't own. If the price of the stock went down, they would actually go out and buy the stock at the new lower price. If the stock went up they would say, sorry that stock transaction "failed" - darnedest thing, just happens sometimes. "Instead, he preferred to just sell stock he didn’t actually possess. That is what is meant by, “We want to fail them.” Trafaglia was talking about creating “fails” or “failed trades,” which is what happens when you don’t actually locate and borrow the stock within the time the law allows for trades to be settled."
    - joe_the_user 14y ago
      And moreover, creating an apparent supply of the stock which didn't exist before would exert downward pressure on the stock (by supply-and-demand), hurting the holders of the company's shares. So he made the profit scenario more likely for himself.
    - quantgenius 14y ago
      We want to fail them means we are going to issue a failure to deliver because it turns out that the stock we thought was available is not. If you fail on a trade, you don't cancel the trade, a trade is binding, it means you require the customer to buy the stock back to cover the short sale since the stock wasn't actually available. Since in this case the Goldman rep had told the client they could get the stock even though the client thought the stock was likely to be available, issuing a fail to deliver and requiring the client to buy the stock back would lead to egg on the face for whoever the client spoke to at Goldman. The other option for Goldman of course was to buy the stock to lend the customer and hedge out their risk maybe with a put option or to keep looking somewhere else for stock to borrow.
  - paperwork 14y ago
    No, the profit doesn't come from GS. Say you think XYZ, currently priced at $100 is going to go down in price. You tell your broker (GS in this case) to short 1 share in the market. GS sells XYZ (someone else buys it) and you get $100 in your account while the quantity of XYZ shows up as -1. Later, the price does drop to $90. You tell GS to buy 1 share, and you pay $90 for that share. You now have $10 in your account ($100-$90) and the quantity of XYZ in your account it zero (-1 +1). Someone else in the market lost this money, you gained it. GS was supposed to have borrowed this 1 share from someone, but they didn't. In other words, for a short time, this 1 share was created out of this air. If there was a system to make sure that every single transaction was backed by an actual share, then this would not have been possible. However, transactions are not actually reconciled on a real-time basis. Someone with more knowledge of the back office will have to explain how such naked shorts can exist in books for longer than 3 days (perhaps GS was rolling over these shorts?)
    - waterlesscloud 14y ago
      But if it's a naked short, the only transactions are between me and GS. I sell short at $100, GS gives me that $100. If there's no share behind that to sell, then they just gave me that $100 out of their own pocket, right? So then the stock drops to $90 and I cover my short by sending GS $90. There's still no real share to deal with. So GS gave me $100, had no source for that money other than their pockets, and I gave them back $90. They're down $10 of their own money. This can't be how it works or they wouldn't do it, and if they did, no one would be complaining. So how does it actually work?
      - refurb 14y ago
        I think the difference is that no money changes hands. Normal shorting is when you "borrow" a share from someone else with the promise of giving it back at a given date. You sell it and pocket the current price, then try and buy back the share in the future at a lower price, pocketing the difference. In reality, money never changes hands during a short (other than the cost of setting up the short). The short is only due at the end of the borrowing period (or before if a margin call happens). So in the case of a naked short, it's more of a bet on GS part. They don't located a share to "lend" you, they just say "ok, pay us a few dollars and you have a short". If the stock goes down, GS gives you the difference, if it goes up, you pay up. It's basically a bet and GS is the counterparty.
- jblow 14y ago
  I think you didn't understand that paragraph. The implication is that Goldman couldn't get the stock, and in fact did not bother, and just lied and said they did.
  - tedunangst 14y ago
    I get that. But there's no explanation as to why that's bad for the client, as is implied by the article.
    - p0ckets 14y ago
      It's not bad for the client. They wanted to short, and they did. Also, there are now non-existent shares being traded which artificially depresses the price, which is good if you shorted the stock.
  - quantgenius 14y ago
    I think the paragraph means that the client THOUGHT Goldman couldn't get the stock and did not expect them to be able to get it but Goldman was able to get the stock.
- lmkg 14y ago
  I'm not 100% up to speed on this particular topic, but I think that the damage is diffuse, i.e. it distorts the market but doesn't affect any particular involved party. Therefore, it doesn't make a good story, and doesn't show up in the news. Basically, you're increasing the amount of good for sale, without the corresponding purchases that would normally balance that out. It's the converse situation of buying things even when you don't have the money (not even in the form of credit or loans), and distorts the market in corresponding ways. The market is robust to a certain amount of shenanigans like this, but when a player the size of GS is doing it willy-nilly, the distortions can become measurable. According to econ 101, naked-shorting is observationally equivalent to a sudden inflation of supply, which should drive the price down. Lowering the price benefits those in a short position, at the cost of people who are taking a long position, like value investors, or the companies themselves. If you have weight to naked-short enough volume that it actually effects the market, you would in theory be pushing the stock market down and pocketing the difference. Again, I'm not an expert and this is a pretty naive analysis. I am willing to be corrected. Eventually you have to cover your short, which in theory should un-do all the market effects you've done, but my gut says that in practice the sudden drop has lasting damage to intangibles like "investor confidence" and "market volatility."
- pppttt 14y ago
  It's actually quite clear. Much like printing money takes value away from savers, naked short selling takes value from existing stock holders. The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against.
  - tedunangst 14y ago
    Overstock's shareholders were not Goldman's clients. I want to know how the 'muppets' were harmed, as the article claims. There is a story here, but this is not the author who's going to write it.
- quantgenius 14y ago
  No, it just means the Goldman salesman was able to find someone who owned OSTK stock and was willing to lend it out at the rate the hedge fund client was willing to pay to borrow it. It's called good customer service.
casca 14y ago
That naked short selling is allowed is an anachronism coupled with the lobbying of the self-interested. In the olden days, it was reasonable to give a time delay to deliver the physical paper that proved ownership. Now everything is electronic so _could_ be verified instantly. But there's a lot of money to be made by doing it and the government will covert catastrophic losses, so it should be expected that everyone does it. Fortunately the solution is quite simple. Force short sellers to make the shares available instantly at the time of the short. They could be held in escrow by the exchange until settlement either way. Go go gadget SEC?
- roel_v 14y ago
  What's the problem with it, really? If A promises B to sell him something and then A can't deliver for some reason, then B will stand to be compensated by A for any damages resulting from that. Why would it be special for stock? Of course there is the risk that massive naked trades will influence the price of stocks, but that should just be priced in, like any other risk, no? What am I missing?
  - joe_the_user 14y ago
    Uh, The risk of massive short sales are not to the naked short-sellers. Thus the market does not work as an automatic way system taking this into account. Moreover, the hypothetical that the market prices in bad behavior is not a justification for bad behavior.
    - quantgenius 14y ago
      The risk of massive short sales are precisely to the naked short-sellers because you can be required to deliver at any time and if you fail to deliver you broker or the DTC can buy you in at any price, and charge you an enormous commission on that specific trade.
      - joe_the_user 14y ago
        All this does hinge on whether an entity is going to be heavily penalized for failure to deliver. Can you reference me instances of such penalities being applied? I searched for instance and instead found this: http://www.billcara.com/archives/2006/09/a_failure_to_de.html http://www.billcara.com/archives/2006/09/a_failure_to_de.htm...
CUR10US 14y ago
Should the public have the right to see the full details of "fails"? The SEC website says disclosing this info would put firms like GS at a competitive disadvantage. But someone has to know which sales cleared and which did not. How can we accurately set a market price for something based on historical sales data that may in part be false (i.e. sales that were never cleared)?
rapind 14y ago
Every time I read about complex wall street scams I get so unreasonably infuriated. At this point I can't help but unfairly assume that anyone who works at an investment bank is a complete douche. Just thinking about the bailouts gets me worked up.
- twoodfin 14y ago
  The bailouts that have largely been paid back? At this point, even if you're a high income taxpayer, these guys lost very little money that you didn't choose to give them. And really, getting your blood boiling is just about all Taibbi is good for.
  - rapind 14y ago
    I'm not sure I'd say largely paid back. http://projects.propublica.org/bailout/main/summary http://projects.propublica.org/bailout/main/summary
  - deleted 14y ago
    [deleted]
asynchronous13 14y ago
Ok, here's the full quote: Last week, in response to an Overstock.com motion to unseal certain documents, the banks' lawyers, apparently accidentally, filed an unredacted version of Overstock's motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they've been fighting for years to keep sealed. And now let's parse it: Last week, the banks' lawyers filed an unredacted version of Overstock's motion as an exhibit in their declaration of opposition to that motion. This means that Overstock's accusation is now public. This says nothing about the veracity of the accusation.
- Natsu 14y ago
  > This means that Overstock's accusation is now public. This says nothing about the veracity of the accusation. The information about this comes from internal Goldman emails produced during discovery which admit to the practice. Emails that Goldman has fought in court to prevent the release of, only to have one of their own lawyers screw up by filing something not under seal. EDIT: If you want to quote the actual emails, I've added most of the quotes from them below: "Fuck the compliance area – procedures, schmecedures," chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales. "He should be someone we can work with, especially if he sees that cooperation results in resources, both data and funding," the lobbyist writes, "while resistance results in isolation." “We are NOT borrowing negatives… I have made that clear from the beginning. Why would we want to borrow them? We want to fail them.” “Two months ago 107% of the floating was short!” “We have to be careful not to link locates to fails [because] we have told the regulators we can’t,” one executive is quoted as saying, in the document.
CUR10US 14y ago
Has anyone read the motion (available from an economist.com server)? This what the Rolling Stone article is based on. Is the issue whether and how GS makes money from the practice of naked short selling? Maybe the issue is that feeding the market with info about short sales that are never actually cleared (but which the market assumes will be cleared), can destroy the value of a company's stock. Obviously if you can sell something without ever having to own or deliver it (is that really a sale?), you can do a lot of selling; and you can exert considerable influence on the market for a stock. Maybe what happened here is a company, Overstock, believes they got screwed by naked short selling. I need to read the motion to get a better idea of what happened.
krob 14y ago
This kind of aggressive shorting makes me start to wonder are these type of investors the real cancer behind the unemployment growth in this country? You read more and more about these kind of shenanigans and start to wonder what would happen if we actually started to lock-up/punish all of these crooks, what would be the aftermath? Would we see a slow growth in this countries GDP based on income growth from small & large businesses? Makes you wonder if we came swinging with large hammers and destroyed their worlds what kind of foundation would arise out of their financial destruction.
shareme 14y ago
Folks you still are not getting it.. Short selling is selling a stock you do not own in exchange with a promise to pay for it with either stock or cash. Naked short selling is pump-dumping a stock price with FALSE TRADES. any individual trader caught doing this would be doing 40 years in the nearest FED prison...its time for some GS execs to be facing jail time..no exceptions no get out of jail due to friends with Obama cards used
rottyguy 14y ago
I started reading Patrick Byrne's adventures in Naked Short Selling in the beginning but have since trailed off (this is like 10 years ago mind you). Perhaps his infamous "Miscreants Ball" diatribe kicked everything off which has been ridiculed since day one but begins to be prescient as more and more news of NSS surfaces. He now funds/participates in http://www.deepcapture.com/ http://www.deepcapture.com/ which is fun reading from time to time. It's been quite a ride; I must give him kudos for his stamina but having read his speech from Pan-Mass http://www.pmc.org/articles.asp?ArticleID=110 http://www.pmc.org/articles.asp?ArticleID=110 regarding his life, one can't help but root for the guy.

102 points by llambda 14y ago

Article lists a bunch of interesting details, and even is very careful to make sure the term 'muppets' gets incorporated twice, but doesn't quite connect the dots and explain just exactly how the naked shorting fucked the muppets. For example: More damning is an email from a Goldman, Sachs hedge fund client, who remarked that when wanting to “short an impossible name and fully expecting not to receive it” he would then be “shocked to learn that [Goldman’s representative] could get it for us.” I mean, there are all sorts of reasons why naked shorting is bad, but the most damning thing we can say is "Goldman offered to make their customer happy"? That's what passes for screwing the 'muppets'?

waterlesscloud 14y ago
I'm lost on the mechanics here, but doesn't this mean that any profit on the part of a short-selling customer was actually coming out of the pockets of GS? I mean...where does the money to cover the customer's profit on a naked short come from?
- deleted 14y ago
  [deleted]
- asmithmd1 14y ago
  Come on, you know it was not coming out of GS pockets. It was a heads I win tales you lose situation. Evidently there is some amount of time between when a stock transaction is booked and when it clears - like a purchase made with a check. They were essentially writing bad checks by selling stock they didn't own. If the price of the stock went down, they would actually go out and buy the stock at the new lower price. If the stock went up they would say, sorry that stock transaction "failed" - darnedest thing, just happens sometimes. "Instead, he preferred to just sell stock he didn’t actually possess. That is what is meant by, “We want to fail them.” Trafaglia was talking about creating “fails” or “failed trades,” which is what happens when you don’t actually locate and borrow the stock within the time the law allows for trades to be settled."
  - joe_the_user 14y ago
    And moreover, creating an apparent supply of the stock which didn't exist before would exert downward pressure on the stock (by supply-and-demand), hurting the holders of the company's shares. So he made the profit scenario more likely for himself.
  - quantgenius 14y ago
    We want to fail them means we are going to issue a failure to deliver because it turns out that the stock we thought was available is not. If you fail on a trade, you don't cancel the trade, a trade is binding, it means you require the customer to buy the stock back to cover the short sale since the stock wasn't actually available. Since in this case the Goldman rep had told the client they could get the stock even though the client thought the stock was likely to be available, issuing a fail to deliver and requiring the client to buy the stock back would lead to egg on the face for whoever the client spoke to at Goldman. The other option for Goldman of course was to buy the stock to lend the customer and hedge out their risk maybe with a put option or to keep looking somewhere else for stock to borrow.
- paperwork 14y ago
  No, the profit doesn't come from GS. Say you think XYZ, currently priced at $100 is going to go down in price. You tell your broker (GS in this case) to short 1 share in the market. GS sells XYZ (someone else buys it) and you get $100 in your account while the quantity of XYZ shows up as -1. Later, the price does drop to $90. You tell GS to buy 1 share, and you pay $90 for that share. You now have $10 in your account ($100-$90) and the quantity of XYZ in your account it zero (-1 +1). Someone else in the market lost this money, you gained it. GS was supposed to have borrowed this 1 share from someone, but they didn't. In other words, for a short time, this 1 share was created out of this air. If there was a system to make sure that every single transaction was backed by an actual share, then this would not have been possible. However, transactions are not actually reconciled on a real-time basis. Someone with more knowledge of the back office will have to explain how such naked shorts can exist in books for longer than 3 days (perhaps GS was rolling over these shorts?)
  - waterlesscloud 14y ago
    But if it's a naked short, the only transactions are between me and GS. I sell short at $100, GS gives me that $100. If there's no share behind that to sell, then they just gave me that $100 out of their own pocket, right? So then the stock drops to $90 and I cover my short by sending GS $90. There's still no real share to deal with. So GS gave me $100, had no source for that money other than their pockets, and I gave them back $90. They're down $10 of their own money. This can't be how it works or they wouldn't do it, and if they did, no one would be complaining. So how does it actually work?
    - refurb 14y ago
      I think the difference is that no money changes hands. Normal shorting is when you "borrow" a share from someone else with the promise of giving it back at a given date. You sell it and pocket the current price, then try and buy back the share in the future at a lower price, pocketing the difference. In reality, money never changes hands during a short (other than the cost of setting up the short). The short is only due at the end of the borrowing period (or before if a margin call happens). So in the case of a naked short, it's more of a bet on GS part. They don't located a share to "lend" you, they just say "ok, pay us a few dollars and you have a short". If the stock goes down, GS gives you the difference, if it goes up, you pay up. It's basically a bet and GS is the counterparty.
jblow 14y ago
I think you didn't understand that paragraph. The implication is that Goldman couldn't get the stock, and in fact did not bother, and just lied and said they did.
- tedunangst 14y ago
  I get that. But there's no explanation as to why that's bad for the client, as is implied by the article.
  - p0ckets 14y ago
    It's not bad for the client. They wanted to short, and they did. Also, there are now non-existent shares being traded which artificially depresses the price, which is good if you shorted the stock.
- quantgenius 14y ago
  I think the paragraph means that the client THOUGHT Goldman couldn't get the stock and did not expect them to be able to get it but Goldman was able to get the stock.
lmkg 14y ago
I'm not 100% up to speed on this particular topic, but I think that the damage is diffuse, i.e. it distorts the market but doesn't affect any particular involved party. Therefore, it doesn't make a good story, and doesn't show up in the news. Basically, you're increasing the amount of good for sale, without the corresponding purchases that would normally balance that out. It's the converse situation of buying things even when you don't have the money (not even in the form of credit or loans), and distorts the market in corresponding ways. The market is robust to a certain amount of shenanigans like this, but when a player the size of GS is doing it willy-nilly, the distortions can become measurable. According to econ 101, naked-shorting is observationally equivalent to a sudden inflation of supply, which should drive the price down. Lowering the price benefits those in a short position, at the cost of people who are taking a long position, like value investors, or the companies themselves. If you have weight to naked-short enough volume that it actually effects the market, you would in theory be pushing the stock market down and pocketing the difference. Again, I'm not an expert and this is a pretty naive analysis. I am willing to be corrected. Eventually you have to cover your short, which in theory should un-do all the market effects you've done, but my gut says that in practice the sudden drop has lasting damage to intangibles like "investor confidence" and "market volatility."
pppttt 14y ago
It's actually quite clear. Much like printing money takes value away from savers, naked short selling takes value from existing stock holders. The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against.
- tedunangst 14y ago
  Overstock's shareholders were not Goldman's clients. I want to know how the 'muppets' were harmed, as the article claims. There is a story here, but this is not the author who's going to write it.
quantgenius 14y ago
No, it just means the Goldman salesman was able to find someone who owned OSTK stock and was willing to lend it out at the rate the hedge fund client was willing to pay to borrow it. It's called good customer service.

casca 14y ago

That naked short selling is allowed is an anachronism coupled with the lobbying of the self-interested. In the olden days, it was reasonable to give a time delay to deliver the physical paper that proved ownership. Now everything is electronic so _could_ be verified instantly. But there's a lot of money to be made by doing it and the government will covert catastrophic losses, so it should be expected that everyone does it. Fortunately the solution is quite simple. Force short sellers to make the shares available instantly at the time of the short. They could be held in escrow by the exchange until settlement either way. Go go gadget SEC?

roel_v 14y ago
What's the problem with it, really? If A promises B to sell him something and then A can't deliver for some reason, then B will stand to be compensated by A for any damages resulting from that. Why would it be special for stock? Of course there is the risk that massive naked trades will influence the price of stocks, but that should just be priced in, like any other risk, no? What am I missing?
- joe_the_user 14y ago
  Uh, The risk of massive short sales are not to the naked short-sellers. Thus the market does not work as an automatic way system taking this into account. Moreover, the hypothetical that the market prices in bad behavior is not a justification for bad behavior.
  - quantgenius 14y ago
    The risk of massive short sales are precisely to the naked short-sellers because you can be required to deliver at any time and if you fail to deliver you broker or the DTC can buy you in at any price, and charge you an enormous commission on that specific trade.
    - joe_the_user 14y ago
      All this does hinge on whether an entity is going to be heavily penalized for failure to deliver. Can you reference me instances of such penalities being applied? I searched for instance and instead found this: http://www.billcara.com/archives/2006/09/a_failure_to_de.html http://www.billcara.com/archives/2006/09/a_failure_to_de.htm...

CUR10US 14y ago

Should the public have the right to see the full details of "fails"? The SEC website says disclosing this info would put firms like GS at a competitive disadvantage. But someone has to know which sales cleared and which did not. How can we accurately set a market price for something based on historical sales data that may in part be false (i.e. sales that were never cleared)?

rapind 14y ago

Every time I read about complex wall street scams I get so unreasonably infuriated. At this point I can't help but unfairly assume that anyone who works at an investment bank is a complete douche. Just thinking about the bailouts gets me worked up.

twoodfin 14y ago
The bailouts that have largely been paid back? At this point, even if you're a high income taxpayer, these guys lost very little money that you didn't choose to give them. And really, getting your blood boiling is just about all Taibbi is good for.
- rapind 14y ago
  I'm not sure I'd say largely paid back. http://projects.propublica.org/bailout/main/summary http://projects.propublica.org/bailout/main/summary
- deleted 14y ago
  [deleted]

asynchronous13 14y ago

Ok, here's the full quote: Last week, in response to an Overstock.com motion to unseal certain documents, the banks' lawyers, apparently accidentally, filed an unredacted version of Overstock's motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they've been fighting for years to keep sealed. And now let's parse it: Last week, the banks' lawyers filed an unredacted version of Overstock's motion as an exhibit in their declaration of opposition to that motion. This means that Overstock's accusation is now public. This says nothing about the veracity of the accusation.

Natsu 14y ago
> This means that Overstock's accusation is now public. This says nothing about the veracity of the accusation. The information about this comes from internal Goldman emails produced during discovery which admit to the practice. Emails that Goldman has fought in court to prevent the release of, only to have one of their own lawyers screw up by filing something not under seal. EDIT: If you want to quote the actual emails, I've added most of the quotes from them below: "Fuck the compliance area – procedures, schmecedures," chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales. "He should be someone we can work with, especially if he sees that cooperation results in resources, both data and funding," the lobbyist writes, "while resistance results in isolation." “We are NOT borrowing negatives… I have made that clear from the beginning. Why would we want to borrow them? We want to fail them.” “Two months ago 107% of the floating was short!” “We have to be careful not to link locates to fails [because] we have told the regulators we can’t,” one executive is quoted as saying, in the document.

CUR10US 14y ago

Has anyone read the motion (available from an economist.com server)? This what the Rolling Stone article is based on. Is the issue whether and how GS makes money from the practice of naked short selling? Maybe the issue is that feeding the market with info about short sales that are never actually cleared (but which the market assumes will be cleared), can destroy the value of a company's stock. Obviously if you can sell something without ever having to own or deliver it (is that really a sale?), you can do a lot of selling; and you can exert considerable influence on the market for a stock. Maybe what happened here is a company, Overstock, believes they got screwed by naked short selling. I need to read the motion to get a better idea of what happened.

krob 14y ago

This kind of aggressive shorting makes me start to wonder are these type of investors the real cancer behind the unemployment growth in this country? You read more and more about these kind of shenanigans and start to wonder what would happen if we actually started to lock-up/punish all of these crooks, what would be the aftermath? Would we see a slow growth in this countries GDP based on income growth from small & large businesses? Makes you wonder if we came swinging with large hammers and destroyed their worlds what kind of foundation would arise out of their financial destruction.

shareme 14y ago

Folks you still are not getting it.. Short selling is selling a stock you do not own in exchange with a promise to pay for it with either stock or cash. Naked short selling is pump-dumping a stock price with FALSE TRADES. any individual trader caught doing this would be doing 40 years in the nearest FED prison...its time for some GS execs to be facing jail time..no exceptions no get out of jail due to friends with Obama cards used

rottyguy 14y ago

I started reading Patrick Byrne's adventures in Naked Short Selling in the beginning but have since trailed off (this is like 10 years ago mind you). Perhaps his infamous "Miscreants Ball" diatribe kicked everything off which has been ridiculed since day one but begins to be prescient as more and more news of NSS surfaces. He now funds/participates in http://www.deepcapture.com/ http://www.deepcapture.com/ which is fun reading from time to time. It's been quite a ride; I must give him kudos for his stamina but having read his speech from Pan-Mass http://www.pmc.org/articles.asp?ArticleID=110 http://www.pmc.org/articles.asp?ArticleID=110 regarding his life, one can't help but root for the guy.