ML-Implode News - Short-Selling Vital to the Market: Hedge Fund Experts

"If one looks back and finds those stocks that have been picked upon by shorts, that have been the subject of all this sort of talk, and find out what ultimately occurs to the price of those shares," he said, "overwhelmingly, one will find that the shorts were right."

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The problem is that the rule is only designed to build investor confidence in the financial sector, and not to completely eliminate the practice, Roth said. That's why the SEC chose to enforce the regulation only among the 19 financial institutions that serve as primary dealers.

Of course the SEC chose specifically not to enforce the regulation amongst primary dealers, which is part of what is so suspicious. It looks a lot like crushing Wall Street outsiders who are using short selling (naked or otherwise) to bet that financials and Fannie and Freddie are overvalued.

Our position is that short-selling is indeed vital and is given the short shrift (no pun intended), but that naked short selling by any party is bad and should have been stamped out long ago.

Relevant:

Short-Selling Vital to the Market: Hedge Fund Experts