Article: The ‘Phantom Shares’ Menace

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The ‘Phantom Shares’ Menace

John W. Welborn

Securities & Exchange,  24 April 2008

In 1985, the National Association of Securities Dealers (nasd) commissioned Irving M. Pollack, a securities law expert and former Securities and Exchange commissioner, to conduct a comprehensive review of short selling in nasdaq securities. The nasd sought to determine what, if any, additional short selling regulation was needed for the nasdaq market. The result was the now-famous “Pollack Study,” which described the short selling landscape of the day and made important recommendations regarding the disclosure, reporting, and settlement of short sales.

PDF (10 pages): The ‘Phantom Shares’ Menace

Article: The Economics of Naked Short Selling — The Koch Brothers Approve!


The Economics of Naked Short Selling

Christopher Culp and J. B. Heaton

Despite the cries of alarm, we believe that naked short selling
is unlikely to have significant detrimental effects on capital markets.
In this article, we will first examine the relevant economics
and regulation, and then argue that, from an economic perspective,
naked shorting is little different from traditional shorting.

PDF (6 Pages): Paper Economics of Naked Short Selling

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Article: The Naked Truth: Short Selling must be Banned

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The Naked Truth: Short Selling must be Banned

Terry McCrann

The Australian via Wayback, 5 April 2008

I refer to real – or so-called “naked” – short selling. So-called “covered” short selling is an altogether both simpler and more complex matter.

“Covered” short selling goes to the sort of volatility and transparency and possible malpractice issues that have battered a range of stocks over the past six months or so. It also goes to the fiduciary duties and practices of fund managers and trustees.

But there is no inherent reason to ban “covered” selling. And indeed the Corporations Act does not.

It arguably isn’t even short selling. More a contractual matter between the seller and the person from whom the seller has borrowed the stock. But with significant and reasonable disclosure issues for the ASX as the market.

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