jcreech

Why Short Sellers Are the Heroes of Wall Street

I don't have a problem with short-sellers, but I do have a problem with naked shorts. Although I am ambivalent about the uptick rule, I can see its advantage as a small circuit breaker from an onslaught of short sellers. However, by prohibiting naked shorts, the very act of borrowing shares for allowable shorting should suffice for the circuit breaker.

The three things I would add to a regulatory scheme are: (1) end of the day verification that any shorted shares involved a legitimate borrowing of owned shares (which may be onerous enough to have a chilling effect on shorting), (2) a public filing with the SEC by those who short 5% of a company's stock (equivalent to the long requirement already in place), and (3) the resources and backbone to enforce SEC regulations.