Friday, April 28, 2006 12:58:20 AM
Q. What harms result from naked short selling? Conversely, what benefits accrue from naked short selling?
A. Naked short selling harms securities in many ways. The first being the downward selling pressure it places on stocks. When these abusers are simply allowed to counterfeit shares of a particular stock and sell into the bid or constantly be sitting on the ask, it can drive a stock into the ground or never allow for it to rise in price reflect the true market value. This can further be exacerbated when legitimate shareholders began to panic and sell as the stock is plummeting. The Illegal activity of Naked Shorting, also causes MASSIVE DILLUTION to the company and its existing shareholders. This MASSIVE DILLUTION most often crushes small companies.
I personally see NO benefit to Naked short selling, as it is simply a manipulative, abusive loophole, used to steal and drain all the equity from the current shareholders, while destroying the company whose shares they have counterfeited.
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