speedking

Short selling = borrow shares, sell them, buy them back when cheaper, pocketing the difference. Why has this caused such a furore?

Surely when the price of HBOS bounced back there would be people who'd sold the borrowed shares watching the price rise who are going to lose money, balancing the gains made by those with better timing?

Is it any different to make money on falling prices than on rising ones? It's OK to borrow money from the bank, buy some shares, sell them at a profit, pay back the loan, pocketing the difference.

False rumours are also spread to make share prices go up; reference my e-mail inbox for all the 'once in a lifetime opportunities' to invest in The Austrailean Minning Company (sic).

As finance is probably our only major 'industry', I worry for UK plc when all this dabbling is required to ensure a fair playing field.

David Lock

It's bad because so much is based on deception. Spreading false rumours. Bit like asking for money 'cos your gran's got cancer, when she hasn't. People in the finance system have got to be able to trust each other.

I am sure it's always gone on but much worse these days.

Not sure how they are going to enforce it though but if they catch a couple and lock 'em up that might reduce it. dl

PeteBrant

It's not just the UK, the US is looking into this as well.

I'm in two minds, on the one hand, you are restricing a source of revenue for the city. On the other, in the current climate, you probably ought not to encourage it.

AndyC_772

iTrader: (2)

There are 'pump and dump' scams where false information is presented to make prices go up too - there's nothing special about short selling in that respect.

Normally there's no deception involved, you're just betting that the price of something is going to fall - just like when you buy shares to hold for a time and then sell them you're betting that the price is going to go up.

alloy

I'm a trader, and yes i use short selling to manipulate the markets and make money. By shorting a stock it weighs down the order book so it presses the share price down, which is why people may blame short-sellers for the markets taking a tumble.

At the end of the day its a zero sum game, for those that win, there are equal others that don't. But we are not allowed to short the financial sector at present which is why you're seeing a surge in the markets because all the orders now are buys and the FSA have removed a sizeable portion or orders that very well may be of a short position.

TBH the things we have seen over the past week are insane, if i was to say Lehman Bros, Merrill Lynch, HBOS and AIG we're going to go down i would of been laughed off the floor 10 days ago!