Talk:Naked short selling/Archive 5

Reasons for Version 14:10, 6 October 2006:
I thought I should state my reasons for reinstating the above-mentioned version.

1. Definitional section, Line 1: Overall, there is no change in substance here, but I think there is definite improvement in clarity.

2. “The Practice”, Line 6: Again, no major substantive changes, merely an improvement in clarity. I would disagree that the addition of “and then failing to deliver it to the buyer” is accurate in order to have a naked short sale of a security, however the addition is probably necessary because the current discussion among regulators and participants focuses upon the insidious results of naked short selling. It might help to clarify this aspect of the Wikipedia page by elaborating upon the history of the bear raids precipitating the stock market crash of 1929, which directly led to congressional curtailment of shorting, specifically naked shorting, in the Securities Act of 1933. Side 3. “Does Naked Shorting Drive Stock Prices Down?”, Line 18:  I think that the additional paragraph after the large blocked paragraphs could be simplified. I am not sure it adds anything. it is factually accurate although it is unsourced. Naked short selling is often accompanied by dissemination in the media of distortive misinformation or disinformation. (See also Wikipedia’s page on media bias.)

4. Under “Controversy”, several suggested edits to the Mantanmoreland version appear to have improved the clarity of this section, but perhaps there is still room for improvement.

4.a. The prior version began “Some investors....”  The latest version change this to “Some traders....”  I would suggest “Some market participants....” but have not made this change. Others may be inspired to do so, however.

4.b. The prior version then proceeded to state: “Naked short-sellers claim that they are enacting market pressure against overpriced and undertraded small-cap stocks.”  The proper word is “exerting,” not “enacting.”  Enactment has to do with laws or with acting out, as on a stage. The subsequent description under “Controversy” of the prior Mantanmoreland version has engendered the most significant edits from other readers. In full, it read as follows:


 * - In the bubble of the 1990s, they argue, regulations against short-selling would have caused an even greater boom and bust.[business week cite]


 * - Penny stock brokerages urge all investors to keep their stocks in cash accounts so that no shares can be shorted. The penny stock fraudsters can then illegally hype the stock to very high prices allowing the penny stock fraudsters to pump and dump their shares.


 * - Naked shorting keeps the penny stock brokerages from driving prices above the true value of the stock. The free market in this case could prevent the crime of pumping and dumping without any additional police or raising taxes.


 * - Pump and dump organizations sometimes are run by the Mafia (see Gary Weiss's true story of Hanover Sterling in the book Born to Steal, published in 2003).


 * Critics contend that the naked shorting is fraud, and that it constitutes "taking a buyer's money and not delivering the product." However, the SEC denies that occurs, saying that a fail to deliver "does not mean that the customer's purchase is not completed." [cite to SEC's brief filed in the Nanopierce litigation]


 * This campaign has drawn criticism. Financial columnist Floyd Norris of the New York Times observed that "Investors who own [allegedly shorted] shares might do better to try to understand why some think the shares are overvalued, rather than simply rail about unfair short selling." [cite to NY Times article]


 * Critics of the naked shorting campaign contend the practice is not harmful and its prevalence exaggerated. Opponents include Wall Street Journal, which criticized the naked shorting allegations in an editorial, and columnist Joseph Nocera of the New York Times. Author and journalist Gary Weiss criticized the anti-shorting campaign in his book “Wall Street Versus America," as a diversion of regulatory resources from more pressing issues.

4.c. What is the purpose of the foregoing? The above definitely expresses its preference for a particular “side” of the controversy and therefore falls (far) short of the standards Wikipedia requires for an unbiased presentation of both sides of an issue. For example, the following statement – “Penny stock brokerages urge all investors to keep their stocks in cash accounts so that no shares can be shorted. The penny stock fraudsters can then illegally hype the ...” – is fallacious for a number of reasons. Following the preceding sentence (“In the bubble of the 1990s, they argue, regulations against short-selling would have caused an even greater boom and bust”), the first declaration that follows is a non sequitor and fails to explain why this should be so. If this declaration is to be retained, it should explain the theory behind why keeping stocks in a cash account (as opposed to a margin account) is supposed to curtail misappropriation (by one’s broker, I might add) of one’s shares. Second, it appears to be a statement of fact, and as such it incorrectly assumes that naked shorting is only a problem of so-called penny stocks and incorrectly presumes that a broker (and by extension the DTCC) will abide by regulation and not abuse an investor’s securities that are held in street name. The extent to which certain brokers are abusing their custody of investor assets is precisely a large part of the controversy surrounding naked short selling. Next, the second statement of the prior version, “...penny stock fraudsters...”, is, in addition to also being a ''non sequitor, is unnecessarily laden with bias and innuendo. It serves only to confuse or divert the focus away from what should be'' a Wikipedia (encyclopedic) explanation of naked short selling. Its proper interpretation is not possible, because the statement is inherently inconsistent or incoherent. Does it mean that all penny stocks are “frauds”? If penny stock “fraudsters” are to be distinguished from legitimate penny stock “promoters,” then the addition of “illegally” is redundant. US courts of law mandate that an allegation of fraud must be plead with “particularity” or the allegation will be tossed out, so to toss around “fraud”, “fraudulent” etc. willy-nilly, without any specific context, is to commit the combined fallacies of argumentum ad ignorantiam, circulus in demonstrando, dicto simpliciter, petitio principii, post (and/or cum) hoc ergo propter hoc, red herring, and straw man all at the same time.

4.d. As for the rest of the prior version’s summation of the “Controversy,” I think more need not be said about it here, except that others have repeatedly pointed out spamming some obscure author’s biased opinion as the “definitive” authority on the subject has no place under a heading entitled “controversy.” Furthermore, there is no Wikipedia entry for “Joseph Nocera,” and the continual kneejerk reversions to older version(s) which perpetuate that error are becoming irritating. The latest version merely reads as follows:


 * Critics contend that naked shorting is fraud, and that it constitutes "taking a buyer's money and not delivering the product." However, the SEC denies that interpretation, saying that a fail to deliver "does not mean that the customers purchase is not completed." [cite to SEC’s brief filed in the Nanopierce litigation.] The SEC doesn't articulate how a purchase is concluded absent delivery of the product purchased, however.
 * Critics contend that naked shorting is fraud, and that it constitutes "taking a buyer's money and not delivering the product." However, the SEC denies that interpretation, saying that a fail to deliver "does not mean that the customers purchase is not completed." [cite to SEC’s brief filed in the Nanopierce litigation.] The SEC doesn't articulate how a purchase is concluded absent delivery of the product purchased, however.


 * Harvey Pitt, the former Chairman of the SEC from 2001 to 2003, formalized his understanding of the practice's damaging impact in a recent Forbes Magazine editorial [cite to Forbes article].


 * Regulation SHO requires the timely close-out of securities that linger on Regulation SHO, but it is not enforced, as there are stocks that have been listed for over 1 year. Every day there are new stocks that exceed the 13 day closed-settlement date. The fact that there are securities on Regulation SHO for more than 13 days has led many observers to comment on the inadequacy of the regulation.

In general, I think the above is a vast improvement over the prior version, and I am certainly not alone in that regard, but there is probably still room for further improvement. Avoiding the contraction “doesn’t” springs to mind. If others see fallacy or error in the current “Controversy” summation, then they should state their reasons HERE, and not engage in ad hominim attacks and immediate reversions (to prior versions) without considering the evolution that this page has had to date.

5. “Regulators Respond”:  As with the prior section, I think the way the current version reads is an improvement over the prior version, both in clarity and for succinctness. Ocham’s Razor, and all that....

6. “Recent Developments”: The changes between the versions are minor. But again, to “wipe out” the latest edits with a knee-jerk reversion to a much older, discredited version of this page is irresponsible and disrespectful to the person(s) who took the time and effort to make a contribution to this project.

Sincerely and respectfully,

UB

It's about time someone gave Joseph Nocera at least a stub. Here's a good place to start. http://www.nytimes.com/ref/business/bio-nocera.html --Christofurio 21:05, 12 January 2007 (UTC)  I may do it later this weekend if I haven't persuaded anybody else to get there ahead of me!

Cellar Boxing: A Term of Art?
I deleted a sentence that seemed to be repetitive of material already there except for the introduction of some new lingo. It claimed that there's a term of art for naked shorting, "cellar boxing." I found a few uses of this term via "google," but the ones that related to naked shorting seemed to mirror each other suspiciously. A lot of the appearances of the term are in irrelevant contexts, i.e. "I would only work out in my cellar, boxing isn't a sport of mine...." The few that are relevant only indicate very rare usage, not a notable term of art. More important, perhaps, the reference was inserted into a quotation from an SEC document! If you follow the link to that document, you'll see that the sentence about cellar boxing wasn't in the original. --Christofurio 19:35, 20 January 2007 (UTC)

http://www.sec.gov/spotlight/keyregshoissues.htm

Also, note that the references to Joseph Nocera have gone from red to blue, so that particular objection to the material is moot.

Problems with "Controversy"
Two points:

First, one might expect the "Controversy" section to present the points of views of naked short-selling critics in a balanced fashion vs. those of defenders of the practice. However,

(1) The first half of this section attempts to justify naked short-selling with no rebuttal, (2) Each criticism of the practice in the second half of this section is promptly rebutted, and (3) Critics' point of view is never clearly explained (see below).

Why is that? Given the amount of brainpower expended on this page, why is it so lopsided?

Second, the language below makes no sense. Why are we allowing it to stand?

Critics contend that the naked shorting is fraud, and that it constitutes "taking a buyer's money and not delivering the product." However, the SEC denies that occurs, saying that a fail to deliver "does not mean that the customer's purchase is not completed."[7]

By definition, when a naked short sale occurs, shares are neither borrowed nor delivered. The seller has the money, but the buyer has no shares. How could the customer's purchase possibly be completed? The SEC quote makes no sense in this context; it is non-responsive to the criticism. Heck, the SEC quote does not even address naked shorting per se; it addresses "fail to deliver". Is there a good reason to use a non-responsive, not-quite-on-topic SEC quote?

In general, this article seems to reflect a view that naked short-selling is interesting despite criticisms of the practice. In fact, naked short-selling is interesting precisely because evidence suggests it is being used to manipulate stock prices. Absent its critics, naked short-selling would be of no importance whatsoever. The article should reflect this reality by making the controversy the central topic and exploring both points of view thoroughly.

By the way, I am adding a link to SEC comments on proposed SHO amendments.

--Errudite (sic) 23:31, 28 January 2007 (UTC)

1. Some defend NSS as just another tool of the market 2. Some caution against federal regulation 3. Naked short-sellers enact market pressure against overpriced small-caps 4. In the bubble of the 1990s, short-selling mitigated the damage 5. NSS deters penny stock fraudsters 6. Prevent pump and dump without police or taxes 7. Pump and dump organizations are run by the Mafia 8. Naked shorting is fraud 9. Taking buyer’s money and not delivering product 10. SEC says FTD does not mean purchase is not completed 11. SEC has acted against NSS under pressure from small companies 12. Campaign has drawn criticism 13. NYT says investors should focus on why shares are heavily shorted 14. Critics contend NSS is harmless and infrequent 15. WSJ criticized NSS allegations 16. GW criticized anti-NSS campaign as NSS deters pump-and-dump 17. GW says NSS regulations are a “diversion”

Number of points made in the "Controversy" section: 17

Number of points defending naked short selling: 15

Number of points criticizing naked short selling: 2

Hi-jacking a supposedly neutral forum and using it to mislead the public: Priceless. --Errudite (sic) 03:18, 4 February 2007 (UTC)

Who is Gary Weiss?
And why would anyone care about his ridiculous opinion regarding the utility or propriety of allowing naked short selling as a deterrent to illegal pump and dump schemes?

I don't see how this article is served by referencing the opinions of unknown parties with undetermined conflicts of interest. --Errudite (sic) 05:46, 31 January 2007 (UTC)


 * If you were really interested in who he was/is, you might have simply checked out the wiki article addressing that question, Gary Weiss. Or is the question rhetorical, sort of like starting a novel with "Who is John Galt?" At any rate, who is Errudite (sic), who doesn't bother to register as a user? --Christofurio 20:39, 31 January 2007 (UTC)


 * That question is rhetorical; the next question is not. In fact, I have no interest in who he is as I find ludicrous the notion of allowing one illegal behavior to counter another.  Sort of like allowing murder to counter rape: dead people can't rape; never mind if the wrong people get murdered.  By the way, I am registered, but I am not cited in the article, and properly so.   Not sure where you are going with the ad hominem comments.  Any comments on the article?  --Errudite (sic) 05:06, 1 February 2007 (UTC)


 * If a person of notability equal to Weiss' maintained that murder shouldn't be prosecuted because it may deter rape, would that opinion not be notable? worth mentioning in an article on the laws on murder? If not, explain why not. At any rate, my only point was that your comment makes no sense unless you're trying to imply that Weiss is less notable than, say, Patrick Byrne or anybody else cited in the article. You've given no reason for that, except by asking a question which you now say yourself you didn't care about. Should anybody else care about your questions/comments if you don't, or are you just practicing your typing? --Christofurio 14:49, 1 February 2007 (UTC)


 * Exactly my point. Anyone who would take such a ridiculous stance is not worthy of attention.  Notable?  Weiss?  Don't think so.  When I get around to it, I will delete his silliness.  If you don't care about my comments, why are you wasting time responding to them?  Dictionary.com can help you out on the whole "rhetorical" thing.  Good luck.  --Errudite (sic) 15:08, 1 February 2007 (UTC)


 * I do care about your willingness to make deletions from this article that I don't believe to be warranted. I don't care about your comments insofar as they are only rhetorical flourishes. You start off asking who somebody is then say you don't care who he is, and you say you're "registered" but your name remains red, and aside from those flourishes ... have you had anything to say at all? Words like "ridiculous" don't constitute reasoning. They constitute labelling. There's a difference. You have not yet given any reason for deleting any material relating to Weiss except that you don't like what he's quoted as saying. I don't like a lot of things that get quoted in encyclopedias. Big deal. So your point is ...? --Christofurio 16:40, 1 February 2007 (UTC)


 * Weiss' position seems to be that illegal naked short selling is a useful deterrent against illegal pump and dump. I think this is illogical.  Rather than unleash a band of thieves to stop another band of thieves, hoping they don't steal anything from the good guys (or ignoring the fact that they do), I am in favor of enforcing the law, as I believe most rational readers are. I think most readers will be confused by a suggestion that a practice known to be harmful to businesses, destructive to honest investors, and illegal on its face be allowed to continue, regardless of its effects on other crooks. --Errudite (sic) 03:44, 2 February 2007 (UTC)


 * Thank you for finally attempting a more substantive point. But I still don't see a case for deletion. After all, "this quotation takes a position which I find irrational" is no case for deletion. People who argue for a flat earth, or even a hollow earth, are quoted in encyclopedias, including this one, all the time. We aren't including only authors with whose views we agree. If readers are confused by suggestions, then they really can't be trusted with an open encyclopedia.


 * Furthermore, I for one am not of the view that all laws are equally deserving of enforcement. If my local police department decided to stop going after marijuana smokers, I'd be delighted, not because I smoke the stuff but because I think its efforts in that area are a waste of my tax dollars. Even if people who think as I do can't prevail in the legislature to get the laws off the books, the view that enforcement should be de-emphasized isn't inherently irrational.


 * Indeed, although the brief passage stating his view in this article doesn't spell that out, Weiss' book contends that the laws and regulations against naked short selling are wrong. The enforcement issue is secondary for him. But, obviously, if you believe a law to be misguided (as I do in the marijuana case) you're also likely to believe the same about its enforcement. --Christofurio 14:14, 2 February 2007 (UTC)


 * So Weiss believes the 1934 Securities Exchange Act, which requires prompt settlement of trades including delivery of actual shares to the buyer, is wrong? Certain people should be allowed to violate the SEC Act and sell short as many millions of shares of targeted companies as they want, pocket the cash, and never deliver the shares to the buyer?  Buyers should be content that their brokers claim the buyer owns shares, when in fact all they have done is enrich the seller and dilute the value of the company by creating "phantom" shares?  Oh, now I see.  Thanks for clearing that up.  Weiss is obviously looking out for investors' best interests.  --Errudite (sic) 21:41, 3 February 2007 (UTC)

I agree with Christofurio on this. Weiss is a respected market commentator.Samiharris 14:37, 2 February 2007 (UTC)


 * No offense, but if the statement attributed to Gary Weiss in this article is accurate, it is my considered personal opinion that Gary Weiss is an imbecile, a crook, or both. As such, citations to GW should be removed. --Errudite (sic) 03:31, 4 February 2007 (UTC)


 * No offense taken, though I do not agree with removal. I see that there was an addition to the article, with the Overstock suit. I agree with Christofurio that lawsuits against brokerages are not per se notable, so will remove and replace with a summary sentence concerning the general issue of private (as opposed to SEC) lawsuits. Also I have added comments from Joe Nocera that I believe have a bearing on this article and also addresses Errudite's concerns. Do you have an opinion on the Reg. SHO article?--Samiharris 14:34, 4 February 2007 (UTC)


 * I agree with Christofurio and Samiharris. Do not remove content from Wikipedia because one does not agree with it. Under certain circumstances it can be considered vandalism.--Mantanmoreland 17:55, 4 February 2007 (UTC)
 * I think anyone considered notable enough to have an article on Wikipedia is a credible source for articles on subjects related to the reasons that they are considered notable. Gary Weiss is considered notable enough for inclusion on Wikipedia because of his work as a journalist in financial and securities exchange-related issues.  Therefore, he is a credible source for an opinion on this issue. Cla68 07:48, 15 February 2007 (UTC)


 * I have kept an open mind on this particular issue, because obviously it appears to be the crux of recent problems.
 * However, it is an inescapable fact the theory that this particular journalist is being quoted for is something that is generally straightforward - that shorting should not be constrained because selling short is the best way to avoid bubbles, then he doesn't need to be quoted. A million more reliable people have said it.
 * If, on the other hand, the theory is that naked short selling should not be touched because it is the only defence against understudied micro-capitalised firms, then it is not generally mentioned - alright, I can't find a single mention - in the relevant academic literature. The closest is a paper I found that examines NYSE data and concludes that a trading strategy of being naked short in highly shorted firms is unprofitable, that highly shorted stocks are above all small stocks, with both "micro-cap" stocks and large-cap stocks lower in relative proportion. I was unable to find, in my reading of it, an answer to whether whether the data indicated such highly shorted stocks were overvalued, or any policy implications.
 * I'd like to point out this appears to be a relatively fringe-y theory, or at best something that is considerably less important than a dozen points that are not in here, and any sort of frequent pushing of it should have set off some alarm bells. Relata refero (talk) 13:11, 15 February 2008 (UTC)

Separate article on Regulation SHO?
Can someone please explain to me why there is a separate article with the title "Regulation SHO"? Shouldn't that article be folded into this one?--Samiharris 16:10, 2 February 2007 (UTC)
 * It is a blatant POV fork and should be deleted.--Mantanmoreland 17:53, 4 February 2007 (UTC)


 * I see 38,800 Google news hits.
 * I see SEC Rule 10b-5 has an article, as does SEC Rule 10b5-1 and Rule 144A, although insider trading has a separate article.
 * Inappropriate redirection of a non-POVfork concept. Relata refero (talk) 12:36, 15 February 2008 (UTC)

lawsuits
Removed statement that Novastar has sued alleging naked short selling. A group of shareholders sued in California court, but the company is not a party to the suit. It is therefore not notable. Lawsuits and enforcement actions related to naked short selling of Sedona Corp and the Refco Group might be included, however. Also, the settlement of Friedman Billings and Ramsey founder Emmanuel Friedman with the SEC with respect to his firm's abuse of the short selling delivery requirements prior to issuance of PIPEs deals would be on point. It also eliminates the conclusion that no suit has been successful, since banning from the profession and multi-million dollar settlements generally counts as success. —Preceding unsigned comment added by 72.192.57.229 (talk • contribs)
 * Sorry for the error on Novastar. I will check out the Friedman settlement you mention. The sentence references the private lawsuits not being successful and therefore the sentence is correct as it now stands.--Samiharris 00:31, 5 February 2007 (UTC)

Actually, the Overstock lawsuit that claims illegal naked short selling was only filed yesterday, so saying that it is not successful is a great deal like POV pushing. The existing lawsuit by Overstock was about stock manipulation via release of coordinated and biased research and news articles that Overstock claims were being managed by (legal) short sellers. It withstood a motion to dismiss and a motion to change venues to Federal Court, and is just now going into discovery. Not successful, but you can't really call it unsuccessful, either. It certainly doesn't belong in an article about naked short selling. —Preceding unsigned comment added by 72.192.57.229 (talk • contribs)


 * Please log in and sign your posts. The edit that you made incorrectly implies there there have just been two recent lawsuits on this issue. There have been at least ten naked shorting suits against the Depository Trust and Clearing Corp. that were withdrawn or were unsuccessful, in addition to the recent suits. See this link: Not one has succeeded. I have added this information to the encyclopedia. Please do not remove.--Samiharris 15:26, 5 February 2007 (UTC)


 * Note: mischaracterisation of available documents and the legal situation. "Withdrawn as unsuccessful" is not quite true. Of the cases I've looked at, some were viewed as insufficiently pled and dismissed without prejudice; others were held up because of discovery violations. In several of those cases motions to dismiss on the basis of 10(b) manipulation were survived. Tut. Relata refero (talk) 12:28, 15 February 2008 (UTC)

Assessment explanation
I've assessed this article as a Start class for the Bussiness and Economics Wikiproject. Some of the problems which I think we should adress before rating it higher are:
 * needs thorough clean-up and copy-editing: the style is not encyclopedic (rather journalistic), some parts are just collections of quotes;
 * over-long and over-detailed discussion of the controversy, with too much focus on specific cases - all this should be summarized, with content maybe put in other articles on the specific cases (if they are notable enough);
 * not comprehensive enough: it misses any discussion of the economics of short selling. AdamSmithee 12:48, 16 February 2007 (UTC)
 * I think these are good points. It seemed to me that this article was written by committee. I think one problem may be a lack of independent and reliable sourcing, other than government documents. There seems to be just a smattering of news articles.--Samiharris 20:43, 16 February 2007 (UTC)
 * Artificially ignoring available reliable sources, and a puzzling emphasis on inappropriate advocacy/news articles. As of February 2007, there were at least seven major scholarly studies. Relata refero (talk) 12:31, 15 February 2008 (UTC)

WP:OR vs WP:RS
I see a source (that appears to me to meet WP:RS for a video showing SEC's Cox commenting on Naked shorting) was added by an anon IP, removed by an editor Mantanmoreland, added again (by me, as I see initially no problem with it meeting WP:RS), then removed again by same editor with brief note about WP:OR. I don't see how that applies as this quote from Cox is not an unsourced opinion from the anonymous editor, it's a direct quote from a video that's from a "reliable" site, from my initial research on it.

If the editors could specifically prove how that site does not meet WP:RS, then the quote should be removed, otherwise I see no reason why it shouldn't exist in this article, especially since it's from the Chairman of the most dominating source in this article, the SEC.

Mantanmoreland, for the betterment of other editors' future efforts to properly source, please give more details on why you have found the source to be WP:OR instead of WP:RS, and please don't confuse emotional outbursts from anonymous editors with a reason to revert such quotes. Thanks for your research on this and any help you can provide as this article is sorely in need of WP:RS with detailed opinions on th e matter. I'm willing to learn more about what constitutes WP:OR and WP:RS, and have seen way too many YouTube videos and blogs used as WP:RS across this encyclopedia, so I share your concerns for proper sourcing.Piperdown 18:23, 18 March 2007 (UTC)
 * There was no substantiation for the quote on the website linked. There was a webcast link but it was/is dead.--Mantanmoreland 18:54, 18 March 2007 (UTC)

OK, see that the link is dead, thanks for the correction! That would probably be a constant problem with links to webcasts that are recent, as live casts are usually kept at the same link for a short time, then later archived days later to a separate link. Perhaps the transcript for the Q&A section will be published by US C of C, but until then you are in the right. Perhaps this could have been explained to the original editor in the quote removal edit to explain, they probably felt the removal was unjust, probably not realizing the link was in limbo. Also, I am wondering what the difference is here between a quote from a videocast that could be attained by request from a RS, vs one from a published book that also can not be instantly verified by 2 clicks of a mouse. I don't think there's a good answer to that, but at least a book can be eventually verified for a quote, while a webcast that's waiting for a government site admin to provide an archive link from a live cast will have to wait. I hope you can understand why I reverted your deletion of the quote and source, as it was there when I watched it live myself, so I agreed with the original editor's inclusion of it. But I'm no WP:RS, and I didn't reverify the link was still live when I edited. Thanks,Iw'l be wary of verifying recent webcasts links as sources. Interesting questions these modern times raise when it comes to using the web as source, as dynamic as it is. If editors find this video later archived and available to wikipedia readers, or the contents used in another WP:RS, the quote should be restored or at least key parts of it.Piperdown 19:21, 18 March 2007 (UTC)

I take offense to your calling my edit "erroneous" - Goldman fine
From the piece: "The settlement is the first between the Securities and Exchange Commission and a brokerage firm where the US regulator alleged that the firm played a role in a type of abusive short-selling practice known as “naked” short selling." We could go on and quote the entire piece in the entry, or we could just not beat around the bush that the article leads in with "naked short selling" to provide more detail on the "short selling" in the headline. It is a fact that the SEC charged GS with naked short selling according to the article. If you feel my addition was incomplete in providing view points from the article, that's fine, but what I wrote about it was not "erroneous".Piperdown 19:49, 18 March 2007 (UTC)


 * Goldman Sachs  clients engaged in the trades. Goldman Sachs was acting as prime broker. See the Bloomberg article here-- Saying that Goldman Sachs engaged in the trading was wrong. The current version is correct.--Mantanmoreland 20:27, 18 March 2007 (UTC)

As a prime broker, GS is liable for ensuring their customers have shares that have been located and borrowed. Again, the SEC did charge GS, not GS's customers. And the charge was that "the firm played a role in a type of abusive short-selling practice known as “naked” short selling." Your edit can be described as correct according to the sources cited, but my edit was not "erroneous". It was a very short but accurate decription of the Times/AP article. I don't have a problem with your edit, but I do have a problem with you calling my edit "erroneous". It was not. Your additions to the section are well sourced and well done. But you're not doing wikipedia any favors by calling other's edits "erroneous" when sources show they are not. Incomplete? OK, editors should expand when they feel a statement does not fully charcterize the situation. Encyclopedias are by nature too brief and subject to the same limitations as headlines. Thank you for ensuring that this one is not too brief. Have a good day.Piperdown 20:43, 18 March 2007 (UTC)


 * I have made far far worse mistakes believe me! People make mistakes all the time in the encyclopedia and one should not be upset when corrected.
 * I have cut back on the Indian material, particularly the lengthy and difficult to understand quote from the chairman of Sebi. The paragraph also left the impression that naked shorting had been banned by India when it had not just yet. I also removed the lengthy quotation from Regulation SHO, which was unnecessary in my opinion and much too technical and jargon-y.--Samiharris 00:27, 19 March 2007 (UTC)

The article re:Sebi was explicit in stating that its sources said that naked short selling would be disallowed on March 29th. So we'll revisit your edit then. Also removal of the entire Sebi commissioners's quote is not very productive. Quotes from heads of regulartory agencies should carry more weight on complicated topics such as this, than one line soundbites from non-regulators. If you feel the quote wsa too long, then you should shorten the quote, not cut it out completely. It was a very straightforward quote, I'm sorry that you feel it wsa hard to understand. It will be restored after the Sebi meeting on the 29th and subsequent followup by a WP:RS.Piperdown 02:38, 19 March 2007 (UTC)


 * Reverting is not preferable and we all have to keep in mind the three-revert rule, which is at WP:3RR. That said, I strongly disagree with your adding that lengthy excerpt from Regulation SHO. It clogs up an article that is already top heavy with jargon, and it is unnecessary detail. As for India, your edit of the article said as follows: "Naked short selling would not be permitted as per the recommendations by India's Secondary Market Advisory Committee. Investors in Indian stock markets will be required to deliver securities at the time of settlement." That gave the impression that this was certainty or had already been passed by the pertinent Indian authorities. The ambiguity in the language had to be removed and the article needs to be quoted accurately. The quote from the Sebi chairman, first name not given, was very hard to understand and was disjointed. --Samiharris 04:03, 19 March 2007 (UTC)

Nice job!
I think Piperdown did a really nice job of summarizing the article last night and I think he deserves a round of applause for that. Good job! I still have a problem with the addition to the October 2006 Q&A at the SEC. Though now summarized, which is good, I still question its significance. Was there some kind of change in policy in October 2006 regarding Reg. SHO? I searched the SEC website and could find none. I then looked for articles mentioning this and could find none. So I would suggest to please provide some article sourcing meeting Wikipedia criteria. As written currently, it falls squarely under the category of "original research" which is verboten under Wiki rules. Thanks for understanding and for your good work.--Samiharris 14:57, 20 March 2007 (UTC)


 * Sam, let me get this straight. First I post the exact verbiage with a link to the SEC site. You suggest that this including long excerpts from SEC site is not encyclopedic, which I agree with and so have improved the inclusion. Now you say you can't find the information and call it WP:OR? C'mon. How about going back to my original inclusion, and searching the linked Reg SHO Q&A site? It's there. My summary is a best shot at cliffs notesing it. I also am puzzled why you didn't previously apply the same approach to the earlier section that had 4 long exact quote paragraphs on the SEC's opinion on how to value stocks, which has nothing to do with explaining naked short selling. Also the ncans.net sourced NASAA document is not only poorly summarized, it's technically WP:OR as that is not a WP:RS site. I can see that this article has suffered from selective application of WP rules. Let's all work together to improve it and hold the patronizing applause rhetoric. Piperdown 17:19, 20 March 2007 (UTC)


 * Section summarizing from "(NEW! 10/10/06)" section on SEC Reg SHO website restored to "Regulators Respond". Please do not remove properly sourced material with baseless WP:OR claims. Piperdown 17:31, 20 March 2007 (UTC)


 * The SEC adding something to its website, restating the existing requirements of Reg SHO, hardly warrants inclusion as a "recent development." It says at the top of the Q&A that the questions and answers are provided by the staff and may be periodically updated. Their adding a new item that just restates what is already in the regulation is thus of zero significance. Reg SHO is already adequately explained and this addition is unnecessary.--Mantanmoreland 19:09, 20 March 2007 (UTC)

re: user:Mantanmoreland comment deleting a propely sourced NPOV edit where he says "(rv - erroneously implies SEC action in October 2006 when there was NOTHING except an addition to the website)"....that's just bizarre. It doesn't imply anything except what it says. That there Q&A website was updated in 2006 October with information that is directly pertinient to that section. I don't understand what game is being played here, I'm pretty sure it's an attempt to get me to violate a 3 revert rule while two editors continually remove a well sourced, as neutral as possible addition from the SEC itself clarifying the topic discussed here. I won't be bullied or intimidated by nonsensical excuses in a baiting attempt to be intimidated from editing here. Stop removing well sourced and applicable edits. If you can improve them, do so. Piperdown 02:22, 22 March 2007 (UTC)

If you feel it's not a "recent development", then feel free to include it in the section explaining technicality of what naked short selling is. There is no detail on Reg SHO here, other than a site link at the bottom. If there was a section on what Reg SHO is summarised here, I would agree with your point. There isn't. I see the entire first half of the article containing odd segues about issues peripheral to naked short selling, but little in the explanation in the intro of exactly how the SEC is defining and addressing the matter.Piperdown 02:27, 22 March 2007 (UTC)


 * The third paragraph of "The Practice" section is more than sufficient discussion of Reg SHO.--Mantanmoreland 03:33, 22 March 2007 (UTC)

For further discussion of this topic please see the user talk page of Piperdown. Samiharris 22:14, 22 March 2007 (UTC)

Pending litigation
Someone inserted a lengthy "let's go to the jury" statement from the CEO of Overstock, in the context of an overlong discussion of denial of a motion to dismiss in a case brought by Overstock. This insertion is absurdly long, as per WP:WEIGHT. It is inappropriate to include a lengthy self-serving statement from one side in ongoing litigation. Let's not repeat that. This is a neutral encyclopedia, and p.r. from one side or another of a legal dispute does not belong in it.

Please be mindful of the following aspect of WP:NPOV:

"An article should not give undue weight to any aspects of the subject, but should strive to treat each aspect with a weight appropriate to its significance to the subject. Note that undue weight can be given in several ways, including, but not limited to, depth of detail, quantity of text, prominence of placement, and juxtaposition of statements."

Devoting an entire paragraph to an interlocutory decision in an ongoing lawsuit clearly falls in that category. Let's have no repetition.

I additionally cut back on a likewise disproportionate discussion of Rhino Advisors, when there was no actual charges files and none have been filed since 2005. There seems to be a real intent on the part of some editors to engage in one-sided skewing of this article. --Samiharris 19:13, 22 July 2007 (UTC)

So it's OK to include the POV of Joe Nocera, who comments on Byrne having a "meltdown", and also on the POV of Gary Weiss, but its not OK to include Liz Moyer's reporting of Byrne's statements on the suit, which you call "Overstock PR" [Ms Moyer does not work for Overstock, she works for Forbes]. The beat goes on on wikipedia. Piperdown 19:22, 22 July 2007 (UTC)


 * The only "beat" that I see going on is the relentless drumbeat of your agenda. You attempted to place a description of one denied motion in  one lawsuit that would have been three times as large as the description of the demise of ten lawsuits successfully defended by Depository Trust Clearing Corp. It's hard to find a better example of an editor on a POV rampage. So stop the sarcasm and get your act together.--Samiharris 19:43, 22 July 2007 (UTC)


 * Wtf are you talking about. Feel free to add meat to DTCC lawsuit wins. Dunno, don't care. I didn't see anything about that in the 8 major media outlets that covered the 7/18 story.


 * Again I ask - how can you call Liz Moyer's reporting of Byrne's quote to be removable as an company press release? Would you care to run that characterization of Moyer's reporting to an RFC? I doubt it. As for "my agenda", I'm not the one who has posted  on wikipedia that Overstock and Byrne are running a "Smear campaign" against its critics (would you like to see the quote of yours?}. I don't know how that could allow you to claim any NPOV. And your editing partner Mantanmoreland is on record on wikipedia as saying "Patrick Byrne hates Wikipedia" (would you like to see the edit on that? It's hilarious). The only reason I haven't escalated your behavior on all things Byrne is that no one besides you and Mantanmoreland really give a damn. And you two really really give a damn. Why is that? It would be interesting to pull a "sparkzilla" on this (as wikipedians of great repute have recently endorsed an on-WP COI outing). Mantanmoreland has claimed on his user page that he has "professional interests" in these topics, and you have shown extensive knowledge of 1980's era Chicago Exch. history. I really doubt you want to pursue the POV and COI angles on these issues bilaterally. I could be wrong. Piperdown 19:55, 22 July 2007 (UTC)


 * Creepy threats and innuendo now? This is consistent with your behavior from Day One, and is evident from your history. I urge you pursue "POV and COI angles" to your heart's content. The "POV" angle is your agenda, and the "COI" is whatever may be rumbling in your background not mine. Your own words underline my concerns about your editing behavior in this and other articles, most recently your giving excess emphasis to an interlocutory motion in the Overstock lawsuit.


 * You know perfectly well that my talk page comment, further elaborated upon in my initial comment in this section, made no reference to the "Moyer article." My edit summary was a reference to your editing, in that you injected a large portion of text out of proportion to the significance of the denial of the interlocutory motion. That is something you have done repeatedly, when you are not removing material you view as unfavorable to Overstock and its CEO, or pursuing your personal hatred of journalists who have reported on Overstock and its CEO. Your agenda, as in the past, has been to exaggerate everything favorable to Overstock.com and to minimize everything negative, and you pursue that agenda aggressively, through a pattern of personally attacking Talk page comments. The fact that your comments and behavior have been aggressive and attacking from Day One has been noted in the past by other users. So let's stop the kidding. --Samiharris 21:40, 22 July 2007 (UTC)


 * I added a reference to a suit against prime brokers by NovaStar Financial that is substantially the same as Overstock's lawsuit. In your zeal to overemphasize the motion to dismiss in the Overstock litigation, you neglected that lawsuit entirely. The section on these lawsuits is in my view quite adequate. In fairness to both sides of the litigation, please do not expand references to these lawsuits adding the viewpoints of only one party to the litigation. Please strive to adhere to WP:NPOV in tone as well as substance. The fact that Overstock's CEO was quoted in a reliable source publication does not automatically make that quotation appropriate when it concerns ongoing litigation. Thank you.--Samiharris 15:58, 23 July 2007 (UTC)

Rule 203
Rule 203 does not use the term "naked short sale", and doesn't use the word "naked" at all. It therefore does not say "naked these short sales of securities may be legally permitted" under certain circumstances. Please be accurate when quoting the law, if you feel the need to do so at all. Dozen13 01:43, 25 September 2007 (UTC)


 * That is correct. However, your changes were otherwise incorrect, and specifically you can't say that naked shorting is always illegal because it is contradicted by other sources, specifically the SEC website (saying only that "manmipulative" naked shorting is illegal). The Motley Fool article you quote goes on to say that it is just "technically" illegal and then goes on to contradict itself by pointing out situations in which it is legal.--Samiharris 04:09, 25 September 2007 (UTC)


 * Is this a terminology problem? From what I've read the term "naked short selling" is generally used to refer to the illegal practice.  For instance, while market makers can sell a stock short without first identifying the borrowed shares, I don't think many people would refer to this as "naked short selling" because market makers aren't even supposed to hold such positions overnight, let alone for enough time to generate a fail to deliver.


 * In any case, starting the article with "[Naked short selling]] is a form of selling shares of securities short that seeks to profit from share price declines" doesn't provide the reader with any idea at all what naked short selling is besides the obvious conclusion one can derive simply from its name. Can't we move what is now the third line up to the top to fix this?


 * As for legal/illegal, I'll wait for your response. Do you have a reliable source which outright says that naked short selling is legal?


 * Dozen13 11:42, 25 September 2007 (UTC)
 * I have no problem with your recent edits, based on a brief skim. You are correct that "fails" and naked shorting cannot be used interchangeably, as many fails are not naked shorts per se. --Samiharris 17:38, 25 September 2007 (UTC)


 * Asked and answered, a dozen times. "Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity." --Mantanmoreland 14:10, 25 September 2007 (UTC)

Needs to represent world-wide view
This article needs to have more of a world-wide view. The problem is hardly contained within the United States. There are a number of stories out there about trading on the German exchange (mostly US stocks though, which I see a bit) but also on the London exchange. I'm not sure how to fit that in. Does anyone have a suggestion? -- Ricky81682 (talk) 02:30, 10 October 2007 (UTC)


 * I've had trouble locating any WP:RS sources talking about naked shorting outside the U.S., except for the regulations in India which are already mentioned. The Berlin exchange thing is mentioned in the context of the Cam Funkhouser comment. Apart from that, do you know of any sources that have discussed this as an international issue? If not, than I am not sure the tag is warranted. The impression I have gotten is that this is mainly a U.S. issue.--Samiharris 14:59, 10 October 2007 (UTC)


 * I've removed the tag, as per above remarks. I don't believe it is warranted. If there are international aspects of this issue that should be added, that should happen. However, I think the tag is not warranted in the absence of reliable sources indicating a global aspect to this not reflected in the article.--Samiharris 14:06, 16 October 2007 (UTC)


 * Inappropriate removal of tag.
 * On East Asia:
 * "The Impact of Short Selling on the Price–Volume Relationship: Evidence from Hong Kong", ÓT Henry, M McKenzie - Journal of Business, 2006 has part of its model that models a period of naked shorting in HK between 96 and 98.
 * "Developing short-selling on the mainland Chinese equity markets", Clunie, James and Ying, Tongshan: U of Edinburgh. Has a brief description of actions already taken following the 1998 crisis, and prescriptive remedies.
 * "Capital Flows and Exchange Rate Volatility: Singapore's Experience", B Kapur of Singapore Natl U compares the HK experience to Singapore.
 * Similar resources are available for Europe and India. Relata refero (talk) 12:50, 15 February 2008 (UTC)

NPOV
It is difficult to argue with a straight face... That's no neutral way to dispute arguments.--Thw1309 (talk) 11:50, 7 December 2007 (UTC)
 * Fixed.--Mantanmoreland (talk) 13:53, 7 December 2007 (UTC)

Would like to add ADV tag to the entire article. The neutrality of this article is in doubt. Please see:http://www.theregister.co.uk/2007/12/06/wikipedia_and_overstock/

Please respond if any of you have serious objections.

TwakTwik (talk) 16:15, 7 December 2007 (UTC)


 * geez, someone already did that - perhaps, we should wait till discussion takes place here?. TwakTwik (talk) 16:34, 7 December 2007 (UTC)


 * The Register piece is straight from Judd Bagley's playbook. It is 100% unreliable in this context. Guy (Help!) 16:42, 7 December 2007 (UTC)


 * I don't think you're in any position to say claim that the Register is unreliable "just because you say so."--TheSlanderer (talk) 17:09, 7 December 2007 (UTC)


 * Well, you can't do anything about it TheSlanderer. The guy who owns Wikipedia, gave Guy full reigns ( see talk on Gary Weiss's page), so we just need to shut up and put up. Welcome to 1984. TwakTwik (talk) 18:23, 7 December 2007 (UTC)


 * How is it unreliable? Please explain, I thought it was pretty interesting. His arguments seemed to be prety straightforward for me as an outsider. 78.54.168.130 (talk) 18:36, 7 December 2007 (UTC)


 * You could at least be rational about it and admit that the issue is highly disputed. IMHO adding an NPOV tag is not only merited, it is necessary to redeem the reputation of WikiPedia. 138.251.227.2 (talk) 13:53, 8 December 2007 (UTC)

No Edits?
Why is a rather technical article about stock purchases and sales closed to editing?
 * Because it was recently featured on the Register, as well as being the subject of some editing disputes. Iorek (talk) 07:31, 8 December 2007 (UTC)

Byrne Belligerent and cursing
I removed the sentence "Nocera also reported that a leader of an anti-naked short-selling campaign, CEO Patrick Byrne, was in a "meltdown" during a meeting with Utah legislators, where he was "belligerent" and "cursing"." because it (and its placement after a quote saying that rational people don't think short selling is a problem) implies (as I see it) that Patrick Byrne is irrational. While I'm sure he might be, and the sentence is referenced, it is still the author's opinion. It might be relevant on Byrne's page as a description of his character but I'm not convinced it is necessary on an article about a stock market issue. If it, as John Nevard suggests, "shows the great deal of concern some people have about these issues", then why not just say "Short selling is an emotive issue among some people, who often get into heated arguments"? I still don't think it's necessary, even in that form, as you could find someone who gets worked up to the point of swearing on any issue. Iorek (talk) 07:31, 8 December 2007 (UTC)


 * Byrne is the only significant person who gets worked up about vast conspiracies of 'naked short selling' to the extent where he goes on a 'jihad' against them (and of course, the 'Sith Lord' behind them). Really, most of the controversy he has created should be merged and linked to his article. John Nevard (talk) 07:43, 8 December 2007 (UTC)


 * Then just say that Patrick Byrne is a prominent anti short selling campaigner, and the driving force behind the criticism of the practice (if that's the case). The implied irrationality on his part isn't necessary, especially with the preceding sentence already stating that most people think short selling is bogus. Iorek (talk) 03:14, 9 December 2007 (UTC)


 * True, they have properly reasoned arguments, as would be implied of others too if we excluded notable information on their irrationality. John Nevard (talk) 05:43, 10 December 2007 (UTC)

Wording

 * ever, if the covers are impossible to find, the trades fail. A sudden rise in number of fail reports will alert the SEC that something "funny" is going on. In some recent cases, it was found that the daily shorting activity was larger than all of the available shares, which would normally be impossible.[3]

Could a better word then "funny" be found? While the meaning is clear, it seems a bit unenyclopaedic to me Nil Einne (talk) 13:51, 8 December 2007 (UTC)


 * potentialy irregular might be a more conventional phraseing.Geni 11:11, 9 December 2007 (UTC)


 * Thanks for that, I was thinking untoward but it didn't seem to quite fit Nil Einne (talk) 21:45, 9 December 2007 (UTC)

A word.
So one can't move on this project these days without discovering that this article may or may not be a problem. I've come to have a look myself. It has problems. Here are the problems:
 * Far too much dependence on financial journalism. The "media coverage" thing dominates the end of the article, and is least encyclopaedic. It should be cut down drastically. Since there are several complaints about it, and a recommendation from the Business and Economics Working Group already on this page suggesting as much, it beggars belief that it has not been done as yet.
 * Nowhere near enough reliable academic sources covered in the "studies" section. I am not an expert, but have some small knowledge of theoretical financial economics, and the current section is clearly underweighted, outdated and unrepresentative. Here are a couple of relevant studies:
 * Finnerty, John D. (Fordham): Short Selling and Death Spirals, SSRN no 687282.
 * Boni, Leslie (Anderson SoM) :Strategic delivery failures in U.S. equity markets, JFinMar 9:1.
 * Angel, Christophe and Ferri (Georgetown and GMU): A Short look at Bear Raids.
 * Culp and Heaton, (Chicago GSB): Naked Shorting, SSRN no 982898.
 * Knepper, Zach (Berkeley): Future-Priced Convertible Securities & The Outlook For “Death-Spiral” Securities-Fraud Litigation, Berkeley Legal Press. This last has a decent survey of the litigation.
 * It also dramatically fails to provide a worldwide perspective; there are several other countries with much stiffer approaches to this than the US, including the PRC, Singapore and Spain (IIRC) and although there are academic studies of all those approaches, none are in here. I notice the content on the Indian regulation has been unjustifiably pruned back.

Relata refero (talk) 11:01, 14 February 2008 (UTC)

I did a little more reading on this specific subject, and am going to rewrite this article shortly so that it finally complies with policy. Relata refero (talk) 12:16, 15 February 2008 (UTC)

Questions

 * Are "traders", who are not market makers, required to identify shares before selling them short, or may they "use naked shorts in the case where they felt there was a reasonable opportunity to make the borrow some time during the settlement period"?
 * Per my reading of Regulatory Circular RG07-87 (and a lack of response on this question), I have decided to remove this. As the circular states, " Only options market-makers that are engaged in bona-fide options market-making may utilize the exception to Regulation SHO's "locate" requirement when effecting a short sale in the underlying security as a hedge."
 * Is it undisputed that fails to deliver are "a bothersome but relatively benign clerical problem under normal conditions"? If not, is there a source which this can be attributed to?  http://www.fool.com/investing/high-growth/2005/03/24/the-naked-truth-on-illegal-shorting.aspx doesn't seem to say that, as far as I can tell.

Anthony (talk) 23:39, 20 February 2008 (UTC) 17:14, 2 March 2008 (UTC)

Blog attention to article
I hope you realize that this article and few others are getting a *lot* of attention in various blogs and on the net. Is that worth mentioning in the article?--Stetsonharry (talk) 22:42, 7 March 2008 (UTC)
 * No- blog attention is transitory and largely irrelevant. Good of you to point this out here -- it raises the risk of POV editing to the article. John Nevard (talk) 23:08, 7 March 2008 (UTC)
 * This article and others are a subject of a great deal of talk in blogorhhea. It may be worth my while to take a look at them myself. Sometimes a fresh viewpoint is helpful. Am new here, but already found that an article on a well known book from the 1930s gets everything wrong about it, including the title! If someone can show me how to rename an article, I will do it myself.--Stetsonharry (talk) 15:05, 8 March 2008 (UTC)
 * See Help:Moving a page. If it's likely to be a controversial or unexpected move, make a note on the discussion page of the article first and wait a day or two.  If there is significant opposition but you think it may be possible to obtain consensus with a big enough discussion, see Requested moves. --Anticipation of a New Lover's Arrival, The 16:32, 9 March 2008 (UTC)
 * Thanks yr reply. I used the "redirect" technique that I found somewhere. I did not think it controversial because the title of the book was wrong. The correct title was stated in the article on the author of the book. FYI, the book in question is "I am a Fugitive from a Georgia Chain Gang."--Stetsonharry (talk) 16:52, 9 March 2008 (UTC)

India
I've expanded the lead a bit on India, and explained the background a bit. --Anticipation of a New Lover's Arrival, The 04:04, 10 March 2008 (UTC)
 * I've restored the Indian content to the lead. It was removed by someone who apparently believed the article to be about a US-only phenomenon. --Anticipation of a New Lover's Arrival, The 01:46, 15 March 2008 (UTC)

I missed this interesting though misguided attempt at characterizing my edit as motivated by "someone's apparent belief" that ignored just about everything my edit summary said. You have no way to guess what I believe, you guessed wrong, and in the end what I believe doesn't even matter. I don't believe I have to explain this to you. Avb 14:28, 16 March 2008 (UTC)

Affirmative determination
In the US (and India too) to comply with the regulator's rules short sales must be made either on borrowed stocks or else the dealer must make an "affirmative determination" that the stocks can be borrowed in time for delivery. That's a bit of compliance language introduced, I believe, by NASD in 1990 (see /Notes 1 for details). Just about all descriptions of naked short selling I've found use language that describes the principle of the thing, not the compliance-oriented language. It's a quibble, most likely, but I've decided to remove the "affirmative determination" stuff from the lead. --Anticipation of a New Lover's Arrival, The 04:04, 10 March 2008 (UTC)


 * I've also removed some unsupported material that seemed to be arguing the illegal naked short selling is fraud. While the SEC is considering a declaration of this kind, at the moment it isn't cut-and-dried (it's illegal, so whether it's definitively fraud or not is a technical nicety that can be left to the courts).  There was also some unsupported stuff that seemed to argue that there was an "economic justification".  Although this gave an argument that may or may not be true, it's not verifiable because it's unsupported, and in face may amount to original research. So also removed. --194.66.226.95 (talk) 17:11, 11 March 2008 (UTC)

Reinsertion within minutes of lede sentence that did not cover the article's content
Tony's revert (diff) did not address the 3 points made in my edit summary. Fourth argument: the lede should be a summary of the article. If anyone wants this in the lede, better make the article less US-centric. The lede now looks like an ad for a detergent. Also note that I did not make the article "less US-centric" (Tony's single argument to reinsert) as I moved the lede sentence into the relevant section. The number of sentences about India remained two. Avb 01:50, 15 March 2008 (UTC)


 * Sure, we should have something about it in the body (there was at one point, perhaps it got factored out). There is also something about Australian moves at /Notes 1.  The fact that the article body has far too much US material doesn't make the non-US material too unimportant for the lead. --Anticipation of a New Lover's Arrival, The 01:56, 15 March 2008 (UTC)

Please address my four arguments. Here they are again: Avb 02:05, 15 March 2008 (UTC)
 * 1) overemphasized India-related content (single sentence in USA-centric article)
 * 2) differed significantly from that sentence
 * 3) the lede sentence wasn't even about naked shorting
 * 4) the lede should be a summary of the article


 * Could you please stop calling this a US-oriented article? --Anticipation of a New Lover's Arrival, The 02:07, 15 March 2008 (UTC)

Why, isn't it? Please address my arguments. PS Feel free to take your time. I'll be back tomorrow. Avb 02:13, 15 March 2008 (UTC)


 * I don't think it's wise to start repeating text Wikipedia talk pages in the manner of a parrot. This one is on probation, you know. --Anticipation of a New Lover's Arrival, The

Regarding your response above: Thanks for indicating that you have now seen my arguments. I'll remove the second instance now that they have your attention. Unfortunately you still haven't addressed them, choosing to comment on my behavior instead. We may have different views on article probation. My view is that editors should be on their best of behaviors when editing or discussing such articles. I'll ignore "wise" "parrot" and "you know".

Regarding your removal of the disputed text from the lede "for now": Thanks for that. However, my original edit moved it to the relevant section, where it made some sense. Maybe you had missed that? I'll insert it once again. Avb 11:26, 15 March 2008 (UTC)


 * This article must not progress as a result of a disagreement between two editors. Accordingly I have accepted your edit (please make further changes if you think my own revert was in error).  I don't think your change was problematic except that it seems to be a move in the direction of US-orientation.  --Anticipation of a New Lover's Arrival, The 02:56, 16 March 2008 (UTC)


 * OK, thanks; now you're talking. I quite agree about the number of editors. If others are watching the article but holding back due to the (now closed) MM arbitration, please jump right in. As to US-orientation, the article clearly needs work (as in other areas; maybe it even needs stubbing, tracking more sources, also international ones, and rebuilding from scratch). Avb 14:42, 16 March 2008 (UTC)


 * I became aware of this and other articles because of blog publicity. Coming here and reading them, I saw some bias but nothing major. I would jump in myself but nothing seems pressing. --Stetsonharry (talk) 16:07, 16 March 2008 (UTC)

Gary Weiss
I have removed a potentially promotional pair of sentences about Gary Weiss. There is substantial evidence that COI editing has occurred involving that writer or his supporters. Jehochman Talk 02:03, 17 March 2008 (UTC)
 * That amount of prominent comment does belong in that section, I think. --Anticipation of a New Lover's Arrival, The 02:36, 17 March 2008 (UTC)

Much improved version available
Setting aside the slant of the current article, I find its organization to be abominable. Reporting on the opinions of many people is woven at every turn into sections that should merely be expository. I created a Sandbox in which to restructure the current article, finding a way to include all the material, but bringing all the exposition together to the top of the article, then the material that describes what various people and institutions think of the issue. Once that was done, it was clear that there were approximatey 10 times as many links to NSS-denial materials as there were to equally prestigious (or more prestigious) publications who were NSS-critics (that may have been the point of creating such a muddled structure). In any case, this restructuring preserves the original material but makes it a far clearer read, I believe. I respectfully suggest that you should copy it over and making it the new page.PatrickByrne (talk) 01:09, 6 April 2008 (UTC)

Restructured for Clarity
I know this is a controversial article, so I want to explain why today I moved material around to create a structure that I believe makes it far clearer to the newcomer. The former structure had a section regarding the controversy over this issue, with pebbles from both sides of the scale; however, pebbles from one side of the scale were also strewn through the rest of the article, creating a mishmash that was, if nothing else, repetitive (literally, whole sections were repeated). I kept all the pebbles from each side of the scale, so no one could say I was adding or subtracting from either argument. However, I rearranged the sections this way: a description of the issue and the evolution of the regulations which govern it; a section on the controversy, preserving all the NSS-apologist lines but bringing them together into one place (you can see some of the duplicate paragraphs), and nothing added from the NSS-critical side; then a section on the issue vis-a-vis the courts (with all material about enforcement and litigation preserved). If it is the case, as it may appear, that a NPOV is a difficult thing on which to agree when it comes to this subject, then the closest thing would be an article that presents the clashing points of view neutrally. I cannot see how someone could in good faith deny that this structure makes for an article that presents the various points of view most neutrally. PatrickByrne (talk) 02:31, 4 May 2008 (UTC)
 * As a matter of fact, I believe the structure could be further improved with one additional move along the previous lines: have the section explaining NSS, then the section regarding the controversy (with all arguments from both sides retained), and then the sections on regulation, enforcement, and litigation. In other words, take the current section on regulation, (which is #2, and splits the explanation of NSS from the controversy), and move it after the section on the controversy. This would keep the explanation at the top, followed by the controversy, followed by all sections on legal issues (regulation, enforcement, and litigation) grouped together. This approach has some charm to me, but I will see what others think.PatrickByrne (talk) 02:54, 4 May 2008 (UTC)

'Pervasiveness of naked shorting' intro
The section that begins "Regulators downplay the extent of naked shorting in the US." seems to discuss regulators downplaying the effect, the impact, effectiveness or importance of naked shorting. John Nevard (talk) 06:54, 4 May 2008 (UTC)
 * Rather than any 'pervasiveness' or 'extent' of naked short selling. John Nevard (talk) 06:59, 6 May 2008 (UTC)

I fixed the Lead, which previously had said inaccurately that naked shorting is illegal That is contradicted by the quotation from "Key Points About Regulation SHO" and the quote further down in the article.--Bassettcat (talk) 13:13, 4 May 2008 (UTC)

Per COIN
It would seem to be sensible not to restore the version of the article as rewritten by someone with an actual financial interest in promoting a naked short selling conspiracy as a serious problem to honest companies. John Nevard (talk) 03:07, 29 May 2008 (UTC)

Process Question
The section on the process confuses me. How can it be legal to sell something that you don't own? Maybe it is me, but I find this confusing.--Stetsonharry (talk) 16:10, 19 March 2008 (UTC)
 * One example of this would be a nominee account (or "Street name security"), in which a shareholder (the nominee) who has legal title to the shares holds them beneficially for a client. The U.S. Securities and Exchange Commission (SEC) has a summary of the advantages and disadvantages of this form of trading and holding in U.S. markets here.  To sell the security, the beneficiary instructs the nominee to perform the necessary transactions.


 * Another way in which one can sell shares which one does not own is by selling shares that one has borrowed, or made arrangements to borrow (see short (finance)).


 * It is also legal in some circumstances and in some markets for a market maker to sell shares it does not own, has not borrowed, and has made no arrangements to borrow. --Anticipation of a New Lover's Arrival, The 17:43, 19 March 2008 (UTC)
 * The "no intention of borrowing" is one of the points I've tried to verify. My basic understanding, to Stetsonharry, is that most of this has to do with the loose meaning of the word "sale."  We say someone "sells" the stock, but by that we don't necessarily include the transfer of the stock, we just mean an agreement between the parties that this will take place.  The general regulations, as I understand, are in turn that a seller has three days to transfer the stock ("deliver" it) after "selling."  This is what creates the basic discrepancy where someone could "sell" a stock, quickly aquire it, and then deliver it, even though he didn't have it when he initially made the "sale."


 * The complaints are in turn that the three day limit isn't well enforced, which is what creates other issues. Thus someone sells the shares, doesn't deliver, and the unfulfilled transaction sits open on the market, "diluting" the float and lowering the share price.  Presumably (this is the point I haven't been able to verify) that also means the seller could then simply buy new shares and deliver them directly to the buyer without ever having borrowed anything (and paid the fees, etc.).  It's also what creates the situation where you can theoretically sell an unlimited number of shares to different parties, deliver them gradually, and then eventually just buy back from buyer A B and C to deliver to buyer X Y and Z (to over-simplify).  Of course, others dispute that this happens or is harmful to the extent it does.


 * In any case, I think the biggest complaint is that the process can harm a company by preventing it from raising money by issuing additional stock. If the share price is driven down from 10 to 5 dollars by naked short sales, the naked short seller may say this will even out in the end when he eventually delivers, but if the company needs money at that moment, then they're out of luck.  Thus, if you naked short enough stock of a company that needs capital, you could end up hurting the company itself in a way that makes the shares cheaper to "cover" (or in this case, buy outright, if I understand correctly).  Other than the legality, I believe these are some of the main objections. Mackan79 (talk) 19:12, 19 March 2008 (UTC)


 * I think the short answer to the "has no intention of borrowing" is "yes, subject to the short sale being part of bona fide market-making activity", which is less than satisfactory I know but due to the complexity of the stock market the SEC seems to deliberately avoid spelling out situations that would be genuine, although it does list some that would not. The exception to Regulation SHO for market makers consists of an exemption from the so-called locate requirement (203(b)(2)(iii)). For this purpose, a market maker is defined as "any specialist permitted to act as a dealer, any dealer acting in the capacity of a block positioner, and any dealer that, with respect to a security, holds itself out (by entering quotations in an inter-dealer communications system or otherwise) as being willing to buy and sell such security for its own account on a regular or continuous basis."  The SEC FAQ says "market makers may maintain temporary short positions in CNS until such time as there is sufficient trading to flatten out their position."   CNS here stands for "Continuous Net Settlement", a settlement system operated by a subsidiary of DTCC, the Depository Trust & Clearing Corporation.  Sorry about the alphabet soup.


 * In practice, "market maker" usually means merchant bank, a company that you would expect to quote a price for any share you would want to buy.


 * On Mackan79's point about the seller being able to obtain and then sell new shares to fulfil his obligations without paying lending fees, as I understand it this would be legal, but questionable, under the current system. It would for instance be one means by which the short seller would remedy a legitimate fail-to-deliver resulting from failure of his borrow transaction despite due diligence in the locate.


 * The stock borrow program in many cases also provides the setttlement system with a means of making the buyer whole in the meantime. In this scheme, holders of shares register their willingness to loan shares (listing stock, and quantities available, at close of trade) and the settlement system uses these shares to resolve fail-to-delivers, depositing cash in bank accounts held by the lender as collateral. At a later stage in settlement the loan is returned, and capital removed from the lender's account and he keeps the interest. While the shares are on loan the lender foregoes all normal ownership rights, which are temporarily assigned to the buyer until the transaction is properly settled. Unfortunately the shares most likely to result in a fail-to-deliver are those that are difficult to obtain, and thus less likely to be available in sufficient quantities via the Stock Borrow Program to satisfy settlement.


 * But I don't believe the defaulting short seller (whether legitimate or not) gets away scot-free in this failed transaction. I don't have the details to hand but I seem to recall that the consequences are outlined in the paper by Culp and Heaton (see /Notes 1).  Suffice to say that he doesn't just pocket the proceeds and go on to trade without consequences.


 * Some people have argued that either naked short selling or the Stock Borrow Program creates "counterfeit shares" but the Securities and Exchange Commission sets out a refutation of this in its FAQ at 'Question 7.1: Do naked short sale transactions create "counterfeit shares?"' and 'Question 7.2: Does NSCC's stock borrow program ("SBP") create "counterfeit shares"?'


 * The degree to which manipulative traders could use naked short selling in order to profit by shorting a company (for instance, in a so-called bear raid) is undeniable, and this could do serious harm to a company already experiencing solvency problems, but the extent to which this occurs is disputed. As with all regulation, the costs of regulating (which would damp short selling and thus tend to moderate its beneficial effects in restraining share overpricing) must be balanced against this. --Anticipation of a New Lover's Arrival, The 20:31, 19 March 2008 (UTC)


 * This sounds about right to me. However, the "counterfeit shares" issue may be one that can't entirely be taken at face value.  I think from one perspective, any sale without ownership is to sell a share that doesn't "exist," and thus creates a sort of "counterfeit" share.  Non-owners are soaking up the buys, thus bringing the price down.  You could equally call this "dilution."   On the plus side, I think it's also what's called "liquidity" in terms of allowing a short sale today even though the share can't be found until tomorrow.   I'm not clear on all the technical aspects of the borrowing, but I think these are mostly different words for the same thing. Mackan79 (talk) 21:46, 19 March 2008 (UTC)


 * The SEC Regulation SHO basically defines how the short seller is to ascertain that he can cover his sale; similar rules existed (from about 1994) formulated by the NASD (the dealers' trade association now known as FINRA), based on rules initially formulated for long sales. See /Notes 1


 * You document the steps you've made to locate shares that you will be able to borrow, and make sure that the lender is promising to do so within the timescale of delivery. The SEC FAQ I cited before, I believe, addresses the argument that short sales involve a dilution ("counterfeit shares").  --Anticipation of a New Lover's Arrival, The 23:25, 19 March 2008 (UTC)


 * So, if the real estate market worked the same way, I could sell a house when I don't actually own one, or even rent or lease one, and it's possible the particular house I'm selling hasn't even been built yet, but I did spend some time looking through real estate listings in newspapers and online, and have some hopefulness to the effect that, by the time the closing takes place and I have to turn over possession of the house to the buyer, I'll have managed to actually obtain a house to so transfer. *Dan T.* (talk) 15:27, 7 June 2008 (UTC)


 * I was wondering the same thing. It seems illogical. I also can't understand how, in ordinary short selling, I could borrow somebody's camera and sell it.--Stetsonharry (talk) 14:49, 8 June 2008 (UTC)

Recover useful and relevant external links that were improperly removed
editprotected I am requesting undo of the removal of several very useful and relevant external links. Those external links were removed in revision 20:40, 17 May 2008, please undo that change. Specifically I want the external link list to go back to the revision right before the removal, which looked like the list below. Silverbach (talk) 06:13, 12 June 2008 (UTC)


 * Short Selling FAQ: Securities and Exchange Commission
 * Naked Short Selling FAQ: Depository Trust and Clearing Corp.
 * Who's behind Naked-shorting? - Fool.com
 * AMEX's daily and monthly Regulation SHO threshold security list
 * NASDAQ's Regulation SHO threshold security list
 * NYSE's Regulation SHO threshold security list
 * Failure to deliver data charting for US securities exchanges.


 * Edit declined at this time, consensus not yet apparent, see WP:PER.  Sandstein   07:22, 12 June 2008 (UTC)

editprotected In that case I am requesting adding back AT LEAST the NASDAQ link. There is currenly NYSE link, AMEX link, but no NASDAQ link, which doesn't make sense. Also the FTD link from SEC should also be included since this is from an official SEC web site. Let me leave out the Motley Fools web link for now. My proposed modification will look like below. Silverbach (talk) 19:56, 14 June 2008 (UTC)


 * Short Selling FAQ: Securities and Exchange Commission
 * Naked Short Selling FAQ: Depository Trust and Clearing Corp.
 * AMEX's daily and monthly Regulation SHO threshold security list
 * NASDAQ's Regulation SHO threshold security list
 * NYSE's Regulation SHO threshold security list
 * Failure to deliver data charting for US securities exchanges.

A good link for the SEC web page
The current link at the bottom for the "SEC FAQ" link isn't really that much about naked short selling, but this link is. I hope it helps once the article is unlocked. Rhetth (talk) 21:44, 26 June 2008 (UTC)
 * That link is in the lead of the article. --Jenny 14:53, 9 July 2008 (UTC)

Please add
de:Ungedeckter Leerverkauf Thanks and KR Bahnemann (talk) 08:33, 7 July 2008 (UTC)

editprotected pov or totally-disputed


 * Shouldn't this page have one of these boxes on it, since apparently everything on it is wrong? What is the box for, if not to tell readers that an article is crap, which this one is?
 * How did locking the talk page allow a NPOV version to be built by consensus? Predictably, no one talks about anything when the page for talking is locked.  Improvements will be enacted by neutral admins.  When will that be?  Next month?  Next year?  Hopefully soon.
 * Naked short selling is illegal everywhere, but I'm guessing you already knew that.
 * I believe the current version of the article correctly states the legal situation in the lead with reference to the SEC's statement "Key Points About Regulation SHO". . --Jenny 09:11, 9 July 2008 (UTC)
 * I raised the issue myself a while back and there was an extensive discussion. Jenny appears to be right.--Stetsonharry (talk) 14:46, 9 July 2008 (UTC)
 * Just so we don't get confused, I recently changed my username and signature from Anticipation of a New Lover's Arrival, The to Jenny. I was involved in that previous discussion. --Jenny 14:51, 9 July 2008 (UTC)

I'm disabling the editprotected request; there is already a prominent protection tag at the top of the article. &mdash; Carl (CBM · talk) 15:04, 10 July 2008 (UTC)

The article is US centric
The article in the current form is US centric. I think "globalize" tag should be added. --Doopdoop (talk) 21:34, 5 March 2008 (UTC)
 * Is a tag really going to do any good? I agree that the article could use a lot more information about naked short selling outside the US, but I'm not sure that just adding a "globalize" tag will attract anyone capable of doing that (personally, I don't even know where to begin to research it).  I also think once we get that global perspective, if not sooner, Regulation SHO should be split back out to its own article, and most of the US-centric parts can be moved there.  What do you think?  Anthony (talk) 01:36, 6 March 2008 (UTC)
 * Tags such as globalize can be good in 3 ways: to alert the reader to possible problems, to act as an incentive for readers to become editors, and to alert current editors (who may be interested in either the topic itself, or the specific problem-type). If the article is severely lacking in global perspective, and thereby misrepresenting the topic as being US-centric, then by all means add the globalize tag, and/or subsection headings with expansion requests. -- Quiddity (talk) 04:04, 6 March 2008 (UTC)
 * Even the first sentence of the lead is US-centric. I agree Reg SHO might merit a separate article. Let's wait a couple of days for more comments before adding "globalize" tag. --Doopdoop (talk) 20:08, 6 March 2008 (UTC)

Why has the the template globalise (note the spelling) not been added to this article? For example "Naked shorting is not necessarily a violation of the federal securities laws, and can contribute to market liquidity, but is illegal when it drives down stock prices." which federal? --Philip Baird Shearer (talk) 12:55, 7 June 2008 (UTC)

Talking about US centric, the T+3 rule is from 1934!? Isn't it about time they updated it for electronic/demat holdings? Isn't demat mandatory in the US now? Nshuks7 (talk) 09:21, 16 July 2008 (UTC)

Changes/changing
The SEC seems to clearly be taking a harder line stance now than the article displays, in as much as it is engaging in emergency rule making to prohibit the practice completely for certain companies. See New York Times, Forbes, Globe & Mail. This isn't an urgent update - and in fact the various news articles will probably be more useful tomorrow or the day after than they are today - but it does clearly indicate that the current article is obsolete if it ever was reasonable. GRBerry 19:52, 15 July 2008 (UTC)
 * I added a bit to the regulatory actions section to keep the article up to date, since I'm sure there will be people stopping by to learn what naked short selling is. Marumari (talk) 21:37, 15 July 2008 (UTC)


 * Can the powers that be please do something to get whatever disputes resolved so that this article can return to its normal status of open editing? This really isn't the sort of topic that, by its nature, needs permanent full protection.  People could really have benefited from a good and neutral article on this topic today.  We have failed our readers here. --JayHenry (talk) 22:19, 15 July 2008 (UTC)


 * The article looks to have been protected a few weeks ago but there is no ongoing dispute that I'm aware of. If you want to edit it, you can ask someone to unprotect it at WP:RFPP. --Jenny 00:03, 16 July 2008 (UTC)


 * As you know, this article was recently the subject of a very acrimonious ArbCom case. The status of the disputes are unclear to me, as I don't follow these dramas closely.  I simply would like to request that editors familiar with the case work to bring about unprotection.  I would not be comfortable making such a request myself as I am not familiar with the intricacies of this case. --JayHenry (talk) 00:32, 16 July 2008 (UTC)


 * I'll request unprotection. Apparently a sock puppet involved with the article recently has been banned. --Jenny 09:45, 16 July 2008 (UTC)
 * User:LessHeard vanU seems to be pretty busy - I've gone ahead and semi-protected the article for now. I'll keep an eye on it to make sure everybody behaves. --Marumari (talk) 17:23, 18 July 2008 (UTC)

Mixed Media Feedback?
Almost all the media comments are in favor of nudism. Then how come the section starts with "mixed reaction" statement? I'm not making the edit myself since there are a lot of contentions around this topic. Nshuks7 (talk) 12:03, 16 July 2008 (UTC)

This article is not about Nudity. Rekutyn (talk) 00:45, 18 July 2008 (UTC)

Is there any room left to mention that I turned out to be right?
Gosh, I wonder if anywhere in this article there is room left to mention that the last two weeks has seen a desparate scramble (emergency SEC orders, suddenly-called Congressional hearings, demands from the US Chamber of Congress and an association representing 8,000 banks) to keep naked short selling from collapsing the US financial system? At the risk of being accused of “soap-boxing”, I am going to give extensive citation and quotation because it appears that nothing but a nuclear blast will penetrate the hermetically-sealed version of reality it seems to be the intent of some to perpetuate.

Naked Short Selling Is One Problem a Slumping Market Shouldn't Have The demise of IndyMac, coming on the heels of Bear Stearns' desperate sale to JPMorgan Chase, is a sure sign of the fragility of today's markets….The classic "pump and dump" scheme, in which a stock is inflated through false information and then dumped on unsuspecting investors when the perpetrators flee, is one example of how this works. "Distort and short" is the same thing in reverse. Naked short selling can turbocharge these "distort and short" schemes. In a naked short, the usual process of short selling is circumvented, because the seller doesn't actually borrow the stock and simply fails to deliver it… It allows manipulators to force prices down without regard to supply and demand. Next week, the SEC will implement an emergency order designed to prevent naked short selling in the financial firms that the Federal Reserve Board has designated as eligible for access to its liquidity facilities… At the same time, eliminating the prospect of naked short selling will help assure investors that it is safe for them to participate, and that the current declining market is not the product of unseen manipulators and "distort and short" artists... The abusive practice of naked short selling is far different from ordinary short selling…But when someone fails to borrow and deliver the securities needed to make good on a short position, after failing even to determine that they can be borrowed, that is not contributing to an orderly market — it is undermining it. And in the context of a potential "distort and short" campaign aimed at an otherwise sound financial institution, this kind of manipulative activity can have drastic consequences….Naked short selling can undermine the market's integrity. For the financial sector in this crisis, certainly, but as soon as possible for the entire market, this is one worry investors shouldn't have.
 * Here on July 18 is a public statement by SEC Chairman Cox (printed in Investors Business Daily and appearing on the SEC website “Public Statement” section):
 * Here is CNBC, saying that I have been vindicated.


 * Then |shapiro here is Fox Business News saying that the kooky guy (that would be I) turned out to be right.


 * Then here is Fox Business News discussing with me how it turned out that I was right.

SEC Order On Naked Short Selling Takes Effect An order from the Securities and Exchange Commission aimed at protecting some of the country's largest financial companies against a form of short selling took effect yesterday, provoking complaints from smaller firms that they have been left vulnerable to the practice.... Shares of the 19 large companies in the SEC's order have been rising since the commission announced last week that it would shelter them from the practice, known as naked short selling, while organizations representing banks and investment firms excluded from the list have been pressing to have the protection extended to them…. In naked short selling, the seller doesn't actually borrow the security but conducts the rest of the transaction as if he had. Since the seller is not constrained by the number of available shares, he can sell an unlimited number of securities that may not even exist. In large volumes, naked short selling can depress a company's stock by creating sustained downward pressure and ultimately destroy it, driving down the price until it is worthless, critics say. The SEC's order, issued last Tuesday, provides further protection against abusive naked short selling -- which was already barred by securities law with only a few exceptions -- to 19 companies, including mortgage giants Fannie Mae and Freddie Mac and leading Wall Street investment banks Goldman Sachs, Merrill Lynch and Lehman Brothers, among others… The ABA, which represents 8,500 banks, last week wrote a letter to SEC Chairman Christopher Cox expressing fear that naked short sellers would turn their attention to the banks and bank holding companies not on the list. The Financial Services Roundtable, which represents 100 of the largest financial services companies in the country, sent a similar letter… Naked and abusive short selling are not new. Robert J. Shapiro, a former undersecretary of commerce for economic affairs, testified before the SEC's rules committee in 2003 about the then-growing problem. He noted that one form of manipulative short selling that was widespread in the 1990s, called death-spiral financing, created "strong incentives for large-scale naked short sales focused on small and medium-size public companies." His research found that a sample of 200 companies victimized by the technique posted a combined market loss of more than $105 billion. Shapiro, who is chairman of Sonecon, a District economic advisory firm, said in an interview yesterday that the troubled financial market had made it possible for naked short sellers to affect much larger companies than before, including the major firms covered by the SEC order. "Finally, the real concern has arisen because the target of it is a financial institution whose failure could pose a systemic risk to the capital markets," Shapiro said. "That's why they're concerned. But the phenomenon has been around in significant scale, and cost thousands, maybe millions, of investors money, who have been in stocks that have been driven down by naked short sellers for years now."
 * Here is The Washington Post describing the emergency action the SEC took this week to prevent our financial system from being destroyed by … precisely what I have been talking about for three years:
 * And here is Fox again having me on to discuss this issue.

What the SEC Really Did on Short Selling "The classic "pump and dump" scheme, in which a stock is inflated through false information and then dumped on unsuspecting investors when the perpetrators flee, is one example of how this works. "Distort and short" is the same thing in reverse. "Naked" short selling can turbocharge these "distort and short" schemes. ... For this reason, naked shorting can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions....Last week, in close consultation with the Treasury and the Fed, the SEC issued an order to further the objective of existing commission rules that restrict naked short selling...Illegitimate naked short selling is different. In the context of a potential "distort and short" campaign aimed at an otherwise sound financial institution, this kind of manipulative activity can have drastic consequences….Eliminating the prospect of naked short selling will help assure investors that it is safe for them to participate, and that when the market declines it is not because of unseen manipulators and "distort and short" artists....When the SEC announced this order, I also made clear my intention to ask the full commission to apply operational protections against abusive naked shorting to the broader market....Although the Commission's order was issued under emergency authority in unusual market conditions, it is based on several years of experience and analysis...But Regulation SHO also offers an alternative to these requirements if the broker has "reasonable grounds" to believe that the security can be borrowed. This could create opportunities for evasion of the rule's purpose....We are also exploring other remedies to "distort and short" and naked short-selling abuses, such as the reporting of substantial short positions (akin to the long-standing requirement to disclose significant long positions). All of this comes on the heels of the agency's recent elimination of other exceptions to Regulation SHO, and our March proposal of a new antifraud rule targeting naked short selling....Abusive naked short selling is far different from ordinary short selling, which is a healthy and necessary part of a free market. Manipulative naked short selling is one worry investors shouldn't have."
 * Then here is SEC Chairman Chris Cox again, in another op-ed (this one to the WSJ) and again, appearing in the public comment section of the SEC website:

Now while the SEC imposes emergency rules to stop naked short selling from taking down our financial system, and Congress holds hearings, and it suddenly is being reported on in every serious newspaper, and the possibility of systemic meltdown due to it is discussed on CNBC and Fox, here are the nuggets I find on the current Wikipedia page:


 * "Regulators downplay the extent of naked shorting in the US."
 * "NYSE had found no evidence of widespread naked short selling, and alleged 'fear mongering that there's this rampant naked shorting that's gone unregulated.'"
 * "fails-to-deliver are not necessarily the result of short selling, and are not evidence of abusive short selling or 'naked' short selling."
 * "The Motley Fool... observes that "when a stock appears on this list, it is like a red flag waving, stating 'something is wrong here!'"
 * "the SEC states that appearance on the threshold list 'does not necessarily mean that there has been abusive naked short selling or any impermissible trading in the stock.'"
 * "Wall Street Journal columnist Holman Jenkins observed that fails were 'more like an acceptable kludge, helping the market work better, than a cesspot of corruption liable to bring down the financial system.'"
 * "However, the SEC observes that fails can occur because of ordinary 'long' stock sales and for reasons entirely unrelated to efforts to profit from share price declines."
 * "the SEC cites the prevalence of false claims of naked short selling in Pump and Dump fraud."
 * "The SEC downplays naked shorting as a factor in declining stock prices."
 * "Curtis Bramble said at the time of repeal that he now believed that Overstock's motives were 'highly suspect.' Bramble said, 'There are those who believe Overstock has been using the Legislature as a distraction against its own problems. It raises serious questions.'"
 * "A study of trading in initial public offerings by two SEC staff economists, published in April 2007, found that excessive numbers of fails to deliver were not correlated with naked short selling. The authors of the study said that while the findings in the paper specifically concern IPO trading, 'The results presented in this paper also inform a public debate surrounding the role of short selling and fails to deliver in price formation.'"
 * "Even though fails to deliver are viewed by some as a way of measuring the degree of naked short sales, the SEC economists said the delivery failures seen in the IPO market 'cannot be explained by short selling in general or 'naked' short selling specifically.'"
 * "some commentators contend that naked short selling is not harmful and its prevalence has been exaggerated by corporate officials seeking to blame external forces for their own shortcomings."
 * "Wall Street Journal columnist Holman W. Jenkins, Jr., has derided naked shorting allegations."
 * "In the New York Times, several columnists have criticized the campaign against naked short selling. Chief financial correspondent Floyd Norris contended that investors of stocks that are being shorted 'might do better to try to understand why some think the shares are overvalued, rather than simply rail about unfair short selling.'"
 * "New York Times financial columnist Joseph Nocera has criticized naked shorting allegations as diversionary complaints, and said that 'most people who understand the issue or have looked into it think it's pretty bogus.'"
 * "Author, columnist and former Business Week investigative reporter [sic] Gary Weiss ...cites economic justifications for naked short selling and downplays its significance as a problem for the market."

Does that seem odd? Because it seems odd to me. So once again I ask, amidst all the stuff about how minimal this issue is, how all the old studies said this was not really an issue, how the Establishment journalists assure us that it is a non-issue, how suspect my motives must be to try to warn people of this before it crashes the system... is there any chance that there is room for someone to mention that the biggest financial news story of the year, and perhaps for all time, is that our financial system is on the brink of a Chernobyl from this figment of my imagination? PatrickByrne (talk) 00:27, 27 July 2008 (UTC)


 * Two points:


 * 1. To the best of my knowledge, Mr. Cox has not endorsed your Wall Street conspiracy theories.


 * 2. You omitted from your presentation the following pertinent facts contained in the article Overstock.com:


 * 'In February 2007, Overstock.com launched a $3.5 billion lawsuit against Morgan Stanley, Goldman Sachs and other large Wall Street firms, alleging a "massive illegal stock market manipulation scheme" involving naked short selling. Among its allegations, Overstock stated that since at least January 2005, naked short selling has accounted for large portions of Overstock stock, in some cases exceding the 23.4 million total shares outstanding.[27] The lawsuit alleged that this had created "immense downward pressure" on share prices over time.'


 * As CEO of Overstock, you have a direct personal interest in the outcome of this litigation. Thus I think it desirable that you desist from commenting on this talk page in an effort to slant its contents in your favor. --Janeyryan (talk) 03:59, 27 July 2008 (UTC)


 * Actually, Janeyryan, this is exactly where he should be commenting; he, of all people, is aware of the Arbcom ruling that applies to this page and is operating completely under its direction. He has a recognised conflict of interest and, per our policy, is permitted to comment on the talk page of the article while being strongly advised not to edit it directly. Perhaps you too should become familiar with the Arbitration Committee's ruling here.  Risker (talk) 05:14, 27 July 2008 (UTC)

Quite. Mr. Byrne is welcome to comment and request changes, but not to use this talk page as a Soapbox, and I think his comment above crossed the line into that. --Janeyryan (talk) 13:14, 27 July 2008 (UTC)


 * Thank you Risker. In addition:
 * "1. To the best of my knowledge, Mr. Cox has not endorsed your Wall Street conspiracy theories." Returning to the real world for a moment, that is exactly what he has done, which explains why CNBC and Fox are reporting that I have been vindicated (links above). Have a beef with that? Take it up with CNBC and Fox.
 * "2. ... I think it desirable that you desist from commenting on this talk page on the subject of naked short selling in an effort to slant its contents in your favor." It may be desirable to you for it to remain slanted (as I have shown above), but it is desirable to me to expose the slant by posting links to articles and TV clips on this talk page. You may try to run me out on that grounds that the Washington Post, CNBC, Fox, etc. are BADSITES, or entartete kunst, or whatever your word for it is these days. See how many Wikipedians want to see that farce return, or want to see the Project be used in a cover-up (as my post on this talk page amply demonstrates). So go ahead, make my day. PatrickByrne (talk) 08:13, 27 July 2008 (UTC)

Cox's order was bizaare on many grounds. I spoke recently to an attorney who is on the same side of the issue as Mr. Byrne. My interviewee is in fact at the heart of litigation from Nevada to Georgia against naked short selling practices, and this atty indicated with what seemed to me surprising vehemence that he regarded Cox' order as more of an affront than a vindication. The only firms protected by the order are those who (via their prime brokerage operations) have been causing the problem [or alleged problem -- though my interviewee wouldn't have put it that way] all these years. So who is vindicating what? I have difficulty seeing how one vindicates a crusade by concosting a travesty of what it stands for, using some of its slogans, and aiding Saladin. --Christofurio (talk) 00:20, 30 July 2008 (UTC)
 * I agree that the emergency order is "bizarre on many grounds." We now have an explicitly apartheid capital market, with one set of rules for favored companies (those being the one that the government has backed), and another set of rules for the unwashed (that would be me, you, and just about everyone else). I have so many problems with the absurdity of the emergency order that I hardly know where to start. One thing the emergency order makes clear, however, is that "Naked short selling can turbocharge these 'distort and short' schemes.... It allows manipulators to force prices down without regard to supply and demand....The abusive practice of naked short selling is far different from ordinary short selling… But when someone [naked shorts] that is not contributing to an orderly market — it is undermining it. And in the context of a potential 'distort and short' campaign aimed at an otherwise sound financial institution, this kind of manipulative activity can have drastic consequences…Naked short selling can undermine the market's integrity." And in that sense, yes, I think the Emergecny Order does vindicate those who have been arguing for years now that, well, Naked short selling can turbocharge 'distort and short' schemes, and that it allows manipulators to force prices down without regard to supply and demand, and that it is far different from ordinary short selling, and that naked shorting does not contribute to an orderly market — it is undermining it, and lastly, that naked short selling can have drastic consequences and can undermine the market's integrity. Those are, in a nutshell, precisely the points that we have been arguing all this time. And now it shows up in an editorial from Chairman Cox. So while I agree that his subsequent action was tepid, I am missing why you think that the views of the anti-NSS movement have not been vindicated. PatrickByrne (talk) 06:50, 31 July 2008 (UTC)


 * I thought I explained myself well enough and am missing what you are missing about my point. I'll try again, though because: hey, that's the kind of guy I am. The underlying theory of the anti-NSS crusade is (tell me if I'm mis-stating it) that Wall Street is using the mechanism of phantom stock to steal from Main Street USA. I understand "Wall Street" here in an extended sense to include, say, Greenwich CT and the Caymans. Main Street includes, say, Scottsdale, Ariz. where Taser Inc. is headquartered, and Nevada, former home of Nanopierce.


 * The theory that this mechanism has been used in a big way for that purpose is not at all vindicated by an order that seems designed simply to keep Wall Street from preying upon itself. Whether Cox is right or wrong about the threat that Wall Street will prey upon itself in this way unless stopped -- or right or wrong in his apparent view that this is what happened to Bear Stearns -- that doesn't vindicate, it doesn't even address, the "Wall Street versus Main Street" theory at the heart of this article.


 * That's no spin of mine, BTW. It's a point the key lawyer involved was anxious to make when I last spoke to himOn Borrowed Time?. He's been pursuing lawsuits against the very banks his new ally, Christopher Cox, is protecting. Some alliance. Though both may be using phrases like "naked shorting can undermine the market's integrity" the "market" they have in mind is very different. Cox is worried about the "market" in stocks in the company that are, in Mr. Christian's view of things, doing the undermining of the "market" he and his clients are concerned about.--Christofurio (talk) 13:42, 31 July 2008 (UTC)


 * Pure spin. First and foremost, the claims of the NSS movement are that Naked short selling can turbocharge 'distort and short' schemes, and that it allows manipulators to force prices down without regard to supply and demand, and that it is far different from ordinary short selling, and that naked shorting does not contribute to an orderly market — it undermines it, and lastly, that naked short selling can have drastic consequences and can undermine the market's integrity. These allegations end up as the main claims of a published editorial by the SEC Chairman to IBD. That's vindication. Yes, we believe that these dynamics have led to a giant crime against Main Street by Wall Street. To argue, however, that this is not vindication simply because the corporations protected by the emergency order are themselves Wall Street banks, is intellectual gibberish. The fact that the protected parties are themselves Wall Street banks, is certainly one more great irony among many, but the main event is that Cox's letter states things we have been saying about NSS for many years, things which, incidentally, the Wikipedia page on NSS continues to downplay, dismiss, or deride. PatrickByrne (talk) 16:10, 31 July 2008 (UTC)