Sulja Bros. Building Supplies, Ltd (SLJB)

[Grande25]

I'm pretty sure shorting stocks is legal on just about any exchange. It's selling shares of stock that don't exist and then failing to pay on margin calls that is illegal.

Selling of phantom shares gives the illusion of unlimited shares which drives the price down due to the perception of high supply and inadequate demand. This is basically counterfeiting a valuable commodity and from my understanding it's very illegal.

At least, that's my understanding :)

All you are doing when you are shorting a stock is borrowing money or using money in your "margin" account to purchase a stock and sell it based on your perception that the stock price will go down. When the stock price goes form 100 to 90 dollars you pay the 90 dollars you borrowed to buy the stock and pocket 10 dollars. If the price goes up to like.. 110 dollars than you have to pay back the 90 dollars you borrowed (or payed out of your margin account) as well as the 20 dollars from the PPS increase. So instead of gaining 10 you lost 110 if the price goes up (from 90 to 110) and there is a margin call.

Feel free to correct me if I'm wrong, anyone. That is my understanding after about 1.5 years of leisurely looking into it from time to time and I think this is layman's terms the average Joe could understand.