Floyd Norris of the New York Times has written a column about the SEC’s recently expired “emergency order” preventing naked short selling of 19 financial stocks. His argument is…Actually, I have no idea what Mr. Norris is trying to tell us.
Mr. Norris provides a lot of data suggesting that the stock prices of those 19 companies might have gone up, or might have gone down. Meanwhile, the prices of other companies have gone down, or maybe up.
If this has some significance, Mr. Norris doesn’t say.
He adds, however, that short-selling in some companies has increased, and short-selling in other companies has decreased.
This, Mr. Norris writes, “could mean nothing.”
And, in conclusion, “10 of the 17 primary dealers in Treasury securities are headquartered outside the United States…” This reveals something new: financial markets are “global.”
Poor Mr. Norris. Obviously, he wanted to write a good column. But Mr. Norris, who is the chief financial correspondent of the New York Times, got confused. He wandered into the ward where they keep the irrelevant data. Then he forgot what his column was about.
Here’s some help, Mr. Norris. Your column was about the SEC issuing an “emergency order” to prevent fraudulent naked short selling. It was not about an SEC order to prevent stock prices from falling. It was not about an SEC order to curb legal short-selling. It definitely was not about globalization or U.S. Treasury securities.
Fraudulent naked short selling affects several hundred companies. Fraudulent naked short selling probably contributed to the demise of a big bank called Bear Stearns. Gary Matsumoto of Bloomberg News has written an excellent story about this. When you are ready, Mr. Norris, please read the story. It contains relevant data.
Mr. Norris, the SEC did not want other banks to fall prey to this crime.
The SEC did not want the American financial system to collapse.
The SEC is thinking about preventing illegal naked short selling across the market.
The SEC says it would like to stop criminals from selling stock they do not have.
The SEC says it would like to stop criminals from destroying corporations.
Mr. Norris, stopping crime is good.
Mr. Norris, I hope this helps.
Have a nice day.