Replies to post #135269 on Sulja Bros. Building Supplies, Ltd (SLJB)

[equityofficer]

Yeah, but the only way to stop naked shorting is to ban shorting altogether.

[spongebob39]

Legal shorting, as distastful as it may seem to some, is probably a healthy thing for the market. If you feel the fundamentals, or other circumstances appear that the stock price will go down, you borrow the stock from a broker, sell it, and hope to re-buy it at a much lower price and return the borrowed shares bact to the broker plus a fee. Just the reverse of thinking that a stock will go up and buy the stock and sell once it rises. However, naked shorting is what I think we are really talking about here. Obvious to me that selling non-existance (air shares) is totally fraud. (I do understand that during a given day or two, the MM's can be short shares during a big run up, so they will try to bring the price down to cover their short position and I think that is reasonable. But to go beyond a very short period of time of selling shares that are no borrowed from DTCC, brokers, or whomever, is stealing in my book. What say you? aimo

[anderbest18]

your definition of shorting is actually very very much linked to naked shorting. Shorting by borrowing other people shares can pretty much be considered as naked shorting too when the market turns against you. Let me explain. They actually DONT borrow on an agreed basis because they dont ask permission to borrow. This person holding these ( his earlier bought ) shares always has the right at any period in time to sell his shares which are so called 'borrowed' at the time. The broker who borrowed these shares might have big problems to get these shares back when for instance the stock goes up and the legal owner sells them, so a logic consequence is that they suddenly are naked short (since there so called borrowed shares suddenly dissapeared, sold by the party they 'borrowed' from). This can inflict a chain reaction in shorting naked just in the hope they can drop the price to cover their positions at a lower price.

If you really want to use the correct terminology, you go short when you sell a stock you own, you go long when you buy. If you dont own the shares you are shorting naked, even borrowed shares are pretty much naked and especially when it is common practice in one stock. Just make the reflection, the borrowed shares that were sold got into somebody else portfolio. Assume another agent also borrows them and sells them, before you know it, the initial, lets say 100 shares are VERY naked. And this can go on and on...