Scapegoating the Short-Sellers

Banks want the SEC to prevent bets that share prices will fall, accusing shorts of manipulating stock prices. However, targeting short-sellers would be counterproductive and markets function better when there is more liquidity and price discovery.

May 30, 2023 . 12:54 AM

1 min read

Banks accuse short-sellers of manipulating stock prices during the current banking anxiety.
Industry groups claim that opportunistic short-sellers have caused share prices at healthy regional banks to plunge.
The American Bankers Association urges the SEC to investigate short selling, but concedes legitimate short selling can generate market liquidity and price discovery.
Targeting short-sellers would be counterproductive according to a NY Fed study.
Markets function better when there is more liquidity and price discovery.