Counterfeiting Stock – Explaining illegal naked shorting and stock manipulation
The author seems to be really upset about this, but I don&#x27;t understand why. Nothing they are describing, if you ignore histrionic language like &quot;counterfeiting&quot;, seems especially nefarious. Maybe I am misunderstanding. Basically, a short is when A borrows from B a share of corporation C with the promise to return a share of corporation C at a later time, plus some cash interest. A naked short is where instead B gives cash equal to the value of a share of corporation C minus some interest to A, with the promise that at a later time A will deliver a share of corporation C to B. The second activity seems functionally equivalent to the first, and I don&#x27;t understand why I&#x27;m supposed to be outraged by either.