| Revision as of 04:02, 27 February 2010 edit70.23.226.239 (talk) Are you seriously claiming that "Free Enterprise," the publication of the US Chamber of Commerce is a reliable source? The other passage is sourced to an SEC page that makes no mention of shorting.Tag: references removed← Previous edit | Revision as of 05:11, 27 February 2010 edit undoB.Wind (talk | contribs)Autopatrolled, Pending changes reviewers15,684 edits restore deleted sentence and added new sourceNext edit → | ||
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| http://www.webcitation.org/5nSEkhdBd| archivedate = February 11, 2010| accessdate = February 11, 2010}}</ref> ]s and text-based ] are the primary tools for the people committing "short and distort" as they tend to hide the source of the information.<ref> - ] Global Fraud Report</ref> | http://www.webcitation.org/5nSEkhdBd| archivedate = February 11, 2010| accessdate = February 11, 2010}}</ref> ]s and text-based ] are the primary tools for the people committing "short and distort" as they tend to hide the source of the information.<ref> - ] Global Fraud Report</ref> | ||
| Once the stock price has declined, the investor uses the proceeds of the initial sale to buy a larger number of the company's shares than sold originally. Some of the newly purchased stock is used to fulfill the short-selling contract; the remaining shares are then offered for sale, which causes an additional decline in the company's share price.<ref> - ] Global Fraud Report</ref> | It is often performed as a form of ] in which stock is sold without being borrowed and without any intent to borrow.<ref>] State ] ], cited in - Liz Moyer, ] 25 September 2006</ref> Once the stock price has declined, the investor uses the proceeds of the initial sale to buy a larger number of the company's shares than sold originally. Some of the newly purchased stock is used to fulfill the short-selling contract; the remaining shares are then offered for sale, which causes an additional decline in the company's share price.<ref> - ] Global Fraud Report</ref> | ||
| During the takeover of ] by ] in March 2008, reports swirled that short sellers were spreading rumors to drive down Bear Stearns' share price. ] ] ] said this was more than ]s and said, "This is about ]."<ref> ''New York Times'' 30 April 2008</ref> Chase was victimized by a similar "dump and distort" scheme six years earlier when rumors arose about its purported relationship with ].<ref>In a 22 July 2001 hearing of a Senate subcommittee, questions were raised about a "maze of financial transactions that . . . makes Rube Goldberg look like a slacker" to which Chase was one of several banks was a party. Rumors flowed about Chase starting the day after the hearing; on 23 July 2001, Chase's stock prices dropped to a six year low ( '']'' 12 August 2002)</ref> | During the takeover of ] by ] in March 2008, reports swirled that short sellers were spreading rumors to drive down Bear Stearns' share price. ] ] ] said this was more than ]s and said, "This is about ]."<ref> ''New York Times'' 30 April 2008</ref> Chase was victimized by a similar "dump and distort" scheme six years earlier when rumors arose about its purported relationship with ].<ref>In a 22 July 2001 hearing of a Senate subcommittee, questions were raised about a "maze of financial transactions that . . . makes Rube Goldberg look like a slacker" to which Chase was one of several banks was a party. Rumors flowed about Chase starting the day after the hearing; on 23 July 2001, Chase's stock prices dropped to a six year low ( '']'' 12 August 2002)</ref> | ||
Revision as of 05:11, 27 February 2010
"Short and distort" is a type of securities fraud in which Internet investors short sell a stock and then spread negative rumors about the company in an attempt to drive down stock prices. Cell phones and text-based messaging are the primary tools for the people committing "short and distort" as they tend to hide the source of the information.
It is often performed as a form of naked short selling in which stock is sold without being borrowed and without any intent to borrow. Once the stock price has declined, the investor uses the proceeds of the initial sale to buy a larger number of the company's shares than sold originally. Some of the newly purchased stock is used to fulfill the short-selling contract; the remaining shares are then offered for sale, which causes an additional decline in the company's share price.
During the takeover of The Bear Stearns Companies by J.P. Morgan Chase in March 2008, reports swirled that short sellers were spreading rumors to drive down Bear Stearns' share price. United States Senator Christopher Dodd said this was more than rumors and said, "This is about collusion." Chase was victimized by a similar "dump and distort" scheme six years earlier when rumors arose about its purported relationship with Enron.
References
- Investopedia entry of "short and distort" - Forbes
- Glasner, Joanna. "New Market Trend: Short, Distort". Wired. Condé Nast Digital. Archived from the original on February 11, 2010. Retrieved February 11, 2010.
{{cite web}}: Check date values in:|accessdate=and|archivedate=(help) - Cheating in a bear market: Short and distort - Kroll Global Fraud Report
- Connecticut State Attorney General Richard Blumenthal, cited in Wall Street Disses Regs - Liz Moyer, Forbes.com 25 September 2006
- Cheating in a bear market: Short and distort - Kroll Global Fraud Report
- "A New Wave of Vilifying Short Sellers" New York Times 30 April 2008
- In a 22 July 2001 hearing of a Senate subcommittee, questions were raised about a "maze of financial transactions that . . . makes Rube Goldberg look like a slacker" to which Chase was one of several banks was a party. Rumors flowed about Chase starting the day after the hearing; on 23 July 2001, Chase's stock prices dropped to a six year low (James Surowiecki, "Short and Distort" New Yorker 12 August 2002)
See also
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