Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Has the legal status of short selling been tested by many Courts ? It seems WRONG that professionals can borrow shares (they don't own) to manipulate a market. This practice is for their benefit but to the small retail investor detriment. I don't buy the argument "short selling makes a market" It distorts a market for small investors and discourages participation. Is short selling permitted in all markets world wide ? Have there been any class actions ?
Hi Leonard,
We don’t fully agree with your view as long as positions are reported and aren’t impacting an orderly market it adds liquidity in our opinion, while it has shown to uncover wrongdoing.
For the record this is not just an Australian practice, it is permitted globally.
There are times when short selling is not permitted as dictated by the regulators or exchanges, but generally, we think it is an important part of a functioning market.
We are not aware of any legal/Class actions, but we reiterate if a company is healthy and improving earnings its share price will follow to the detriment of “Short Sellers”.
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