Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation

Re:Counterfeiting Stock – Explaining illegal naked shorting ... by dhruvdh on Monday February 01, 2021 @08:42AM (#25988569)

I can't say I agree at all.

Naked short system is potentially very disruptive (like we are currently experiencing with GME), is essentially a tool for entities with large capital to synthetically induce bankruptcy earlier than necessary, and poses systemic risks. There is a reason there are regulations that attempt to guard against it.

See: Dark Side of the Looking Glass, a 9-part lecture on the same. Part 1: https://www.youtube.com/watch?v=gpWzOjB8qtU

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Re:Counterfeiting Stock – Explaining illegal naked shorting ... by dcolkitt on Monday February 01, 2021 @08:47AM (#25988608)

Incorrect. Shorting cannot make a company go bankrupt, because it has no effect on the operations. Having a low stock price will not make a profitable company become unprofitable.

All short sellers can do is reveal pre-existing flaws In the company. Which is why the presence of short sellers reduces corporate fraud

https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12369

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Re:Counterfeiting Stock – Explaining illegal naked shorting ... by dhruvdh on Monday February 01, 2021 @09:12AM (#25988819)

Shorting can affect a companies ability to raise capital. All your comments sound like you live in a textbook, uncaring of what happens in the real world.

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Re:Counterfeiting Stock – Explaining illegal naked shorting ... by fennecfoxen on Monday February 01, 2021 @10:28AM (#25989466)

> Shorting can affect a companies ability to raise capital.

So can negative press coverage. And yes, either can prevent a company that is on the brink from staving off bankruptcy. It's questionable whether you ought to call the press coverage the cause of the problems, though, and the same objection applies to the shorting.

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