May 8, 2009
short sellers are predominately hedge funds who short stock that has not been located. in other words they sell something they don't have, that's fraud not the euphemistic "naked shorting". In addition many of the shorts buy a credit default swap, call CNBC to announce the cost of insuring a financial firms debt just went up which CNBC dutifully reports, then they establish their short position. The whole manipulation creates an atmosphere of panic which hurts individual investors more than institutions. The SEC should step up to protect individuals over the wishes of hedge funds looking to game the system.