Oct. 31, 2022
October 31, 2022 I don't fundamentally have an issue with shorting a stock. I think it improves the efficiency of the market at reallocating capital away from failing companies. The issue I have is with selling a stock short without first actually borrowing the shares. This is fraud in that you received payment for something you never had. If the share is never found it results in a failure to deliver. Even one failure to deliver represents a dilution of the stocks value and the voting rights of the other shareholders. If these failures to deliver are allowed to buildup for over a decade they can begin to represent a catastrophic risk to the entire system. Fixing this problem starts with not making it worse. Require that all short sales be reported in real-time and disallow them if shares to borrow haven't been located.