Naked shorting

Sunday, October 23, 2005

In finance, entering into an agreement to sell shares of stock that you neither own nor have borrowed for that purpose.

When done in large volume, a technique for simultaneously manipulating a stock's share price and profiting from it.

A strategy reportedly once favored by offshore hedge funds.

An explanation for why the number of shares of a stock that are shorted sometimes exceeds the number of outstanding shares.

An activity recently prohibited in most instances by the Securities and Exchange Commission and NASD (see Regulation SHO).

The focus of an ongoing SEC investigation into the securities unit of futures broker Refco.

-- S.P.

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