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Within the framework of current regulations, I'd consider naked short selling as a close cousin to something like insider trading. It's not so much fraudulent a
by michaelbuckbee 17y ago
Within the framework of current regulations, I'd consider naked short selling as a close cousin to something like insider trading. It's not so much fraudulent as it is both an indicator and piece of knowledge that the rest of the market doesn't have.
In general it's disallowed because people just betting on the price of stocks instead of owning them (at least in some derivative way) is considered a bad idea.
- yangyang 17y agoIt's disallowed because it can cause failures to deliver if a borrow can't be located. Lots of fails can lead to systemic problems.
- anamax 17y agoInsider trading is actually a form of fraud against the entity that owns the information. For example, Google is allowed to trade on the fact that it's doing biz with Intel. Google's employees are not.
- joezydeco 17y agoBut let's say Google enters a deal with Intel that is going badly. Let's say it's 100% Intel's fault. Google shorts Intel stock just before announcing to the public that the deal is off and it's Intel's fault? I don't think that's exactly allowed.