, Jamie Dimon, chairman and chief executive of the banking giant JPMorgan Chase & Co., urged the Securities and Exchange Commission to “go after them, and vigorously,” if it could be shown that “people are in collusion or ... going short and making a tweet about a bank.”
Demands by the tech industry’s most vocal libertarians for a government bailout of Silicon Valley call to mind the old saw: The goal in business to privatize profits and socialize losses. Short selling is an appropriate strategy if you believe or fear that a stock’s price is headed down. But it goes against the grain: Selling something you don’t own smacks, at first blush, of a confidence scheme.
The ban on short sales of 799 bank stocks in 2008 did nothing to stem the selling tsunami in those stocks. Almost inevitably, when corporate managements bellyache about short selling, their shares are under pressure for fundamental reasons, such as management ineptitude or dishonesty. The idea that short sellers are determined to undermine deserving companies purely for profit isn’t unusual. A great example emerged a few years ago related to stock in the Washington-area biotech firm Northwest Biotherapeutics, which is in the business of developing cancer drugs., got it into their heads that Wall Street hedge funds and Adam Feuerstein, a reporter for TheStreet.com, were somehow in cahoots to drive the company’s shares lower.
Indeed, the bankers say, short sales have followed “relatively favorable earnings reports.” The letter complains about “extensive social media engagement about the health of various banks ... disconnected from the underlying financial realities.”
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