Thursday, September 18, 2008

Shorting stocks


The WSJ reports that NY AG Andrew Cuomo has opened an investigation into short selling of the stocks of several troubled companies.

More interesting is that Goldman Sachs is on the list of troubled companies being shorted.

Several hedge funds are also being investigated for "rumor mongering."

Cuomo thinks the SEC should freeze short selling on a temporary basis which seems eminently reasonable. I think Congress should make short selling illegal. It's a highly predatory practice that seems to me to have no positive effect on markets -- while having many negative effects including the issues that are the subject of Cuomo's investigation.

Am I missing something?

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