Fuld, former SEO of Lehman Bors, said naked short selling -- coupled with “unsubstantiated rumors” -- played a role in the demise of both his bank and Bear Stearns.
As Lehman Brothers Holdings Inc. struggled to survive last year 2008, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, 2008, according to data compiled by the Securities and Exchange Commission and Bloomberg.
That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30, 2007.
That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30, 2007.
“Abusive short selling amounts to gasoline on the fire for distressed stocks and distressed markets,”
Short sellers arrange to borrow shares, then dispose of them in anticipation that they will fall. They later buy shares to replace those they borrowed, profiting if the price has dropped.
Naked short sellers don’t borrow before trading -- a practice that becomes evident once the stock isn’t delivered. Such trades can generate unlimited sell orders, overwhelming buyers and driving down prices.
Naked short sellers don’t borrow before trading -- a practice that becomes evident once the stock isn’t delivered. Such trades can generate unlimited sell orders, overwhelming buyers and driving down prices.
