Is Naked Short Selling a Form of Legalized Theft?
If you're wondering if naked short selling is a form of legalized theft, you are wondering right.
That's because the practice involves someone selling stocks that they do not own.
That isn't like taking your neighbor's car and selling it to someone as if you were the owner.
This is like ACTING like you have your neighbor's car to sell, but you really don't.
You have no intention to deliver that car to the person purchasing it off of you.
Instead, you pocket the money and that's it.
However, when it comes to stocks, the person who has done the buying may not realize that the stock has not been delivered.
If they find it hasn't, they have to prove that it was never delivered in order to take legal action against the person who sold them nothing.
Now, let's make it a little more complicated.
Let's say that a trader who has the capability to naked short sell sells 500,000 shares of a company's short.
The problem, however, is that they did not borrow the shares from the trader's account.
This means that the shares were literally created out of thin air.
He or she snapped their fingers, turned a few circles, and viola! They have shares that look like they exist, but they don't.
Those shares are then added to the stock's float.
When it comes time to for the short position to be covered by a buy order, the shares are no where to be found.
This is both degrading to shareholders and it is unethical.
Unfortunately, how unethical the practice is and the effect on shareholders is things that do not find their way into the heads of these individuals.
This is a practice in which the offender never has the intention to cover the shares that have been sold.
This has been such a problem.
As a matter of fact, it has been an issue since the Great Depression.
It is one of the factors that led us into the Depression and it could very well throw our country into that hole again.
As it stands, there is somewhere between $700 million and $1.
5 billion in equity that is not delivered in equity securities on any given day within the equities markets of the United States.
This is a figure that has been released by the National Coalition Against Naked Short Selling.
This missing equity does not include any ex-clearing failures.
The report Wall Street Under Attack: Naked Short Selling and the Illegal Hacking of the U.
S.
Securities Market explains how naked short selling has literally wrecked our market.
Every single day we are seeing investor confidence decline and they are taking their money back.
Naked short selling has a lot to do with this.
It also has a lot to do with the lost equity within our financial institutions, which is why it is even more important that the government step in with a plan.
If they don't, the spiral will continue and naked short sellers will win.
That's because the practice involves someone selling stocks that they do not own.
That isn't like taking your neighbor's car and selling it to someone as if you were the owner.
This is like ACTING like you have your neighbor's car to sell, but you really don't.
You have no intention to deliver that car to the person purchasing it off of you.
Instead, you pocket the money and that's it.
However, when it comes to stocks, the person who has done the buying may not realize that the stock has not been delivered.
If they find it hasn't, they have to prove that it was never delivered in order to take legal action against the person who sold them nothing.
Now, let's make it a little more complicated.
Let's say that a trader who has the capability to naked short sell sells 500,000 shares of a company's short.
The problem, however, is that they did not borrow the shares from the trader's account.
This means that the shares were literally created out of thin air.
He or she snapped their fingers, turned a few circles, and viola! They have shares that look like they exist, but they don't.
Those shares are then added to the stock's float.
When it comes time to for the short position to be covered by a buy order, the shares are no where to be found.
This is both degrading to shareholders and it is unethical.
Unfortunately, how unethical the practice is and the effect on shareholders is things that do not find their way into the heads of these individuals.
This is a practice in which the offender never has the intention to cover the shares that have been sold.
This has been such a problem.
As a matter of fact, it has been an issue since the Great Depression.
It is one of the factors that led us into the Depression and it could very well throw our country into that hole again.
As it stands, there is somewhere between $700 million and $1.
5 billion in equity that is not delivered in equity securities on any given day within the equities markets of the United States.
This is a figure that has been released by the National Coalition Against Naked Short Selling.
This missing equity does not include any ex-clearing failures.
The report Wall Street Under Attack: Naked Short Selling and the Illegal Hacking of the U.
S.
Securities Market explains how naked short selling has literally wrecked our market.
Every single day we are seeing investor confidence decline and they are taking their money back.
Naked short selling has a lot to do with this.
It also has a lot to do with the lost equity within our financial institutions, which is why it is even more important that the government step in with a plan.
If they don't, the spiral will continue and naked short sellers will win.