ARTICLE
NAKED SHORT SELLING: HOW EXPOSED ARE
INVESTORS?
+∗
James W. Christian,* Robert Shapiro,** & John-Paul Whalen***
+ One of the Authors of this Article is plaintiff’s counsel in a series of litigation
involving naked short selling. The Houston Law Review invited a response from defense
counsel, who elected not to submit a response.
* Managing Partner, Christian Smith & Jewell, Bachelor of Science, West Texas
State A&M University, 1975; J.D. South Texas College of Law, 1977, in only two years. In
addition to being licensed by the Texas State Bar, Mr. Christian is also licensed by the
New York State Bar. He is admitted to practice in all state courts in Texas and New York
and before the United States District Court for the Southern District of Texas, the United
States District Court for the Northern District of Texas, the United States Court of
Appeals for the Fifth Circuit, the United States Tax Court, the United States Court of
Claims, the United States Court of Customs and Patent Appeals, and the United States
District Court for the Western District of Colorado. I thank John M. O'Quinn for being my
partner and inspiration in these stock fraud cases; John and I believe our pursuit could
result in exposing the largest commercial fraud in U.S. history involving hundreds of
billions of dollars.
** Chairman, Sonecon, LLC, A.B., University of Chicago, M.Sc., London School of
Economics, Ph.D., Harvard University. I thank my collegaues, James Christian and John
O'Quinn, for their insights and teaching on this complex subject. The work benefitted
enormously from the opportunity to spend much of the last three years examining case
after case and instance after instance of short sales and their abuses. I also want to
acknowledge the experience I gained in understanding how financial markets work and
how they can be manipulated, through my service as Under Secretary of Commerce for
Economic Affairs in the administration of President Clinton and as a fellow of Harvard
University, the Brookings Institution and the National Bureau of Economic Research.
Finally, I thank Professor Nam Pham for his unstinting assistance in the technical
analysis of short sales.
*** J.D. candidate, University of Houston Law Center, BBA Finance, Texas A&M
University 2003. I would like to thank my wife Jennifer, and the rest my family for their
support during the writing of this Article. I would also like to thank Robert Ragazzo,
University of Houston Law Foundation Professor of Law at the University of Houston
Law Center, for his review of this Article and his helpful suggestions throughout the
publication process.
AI
