Thursday, November 12, 2009

Study: Bear Stearns and Lehman Brothers Not 'Destroyed' by Naked Short Selling

Readers of this blog may find this article in the Big Money of interest, particularly the last part, in which I cite an academic study that debunks the theory that Bear Stearns and Lehman Brothers were brought down by naked shorting.

The study was based on "fails to deliver" data, which naked shorting conspiracy theorists have been using as a proxy for naked shorting.

I think that fails are a questionable way of plotting naked shorting, but even if you use it as a proxy for NSS, as the NSS conspiracy theorists do, the numbers show very clearly that such trading did not cause the decline in share prices for Bear and Lehman. The fails took place after both companies tanked.

Matt Taibbi based his entire recent, wretched Rolling Stone article on that same premise, which turns out to be false. No surprise, as most of his named sources were related to's wack-a-doo CEO Patrick Byrne, or were otherwise old veterans of the NSS conspiracy circuit. Among them were someone from the Haverford Group, which he didn't mention is a Byrne-owned company, and ex-Overstock lawyer Brent Baker, without his mentioning that his client list includes two of the most wretched companies to use NSS as an excuse, Universal Express and the recently-indicted CMKM Diamonds.

You'd think that Taibbi could have at least discovered that Byrne owned Haverford. Isn't that hard, for chrissakes.

Looks like Taibbi was really conned--again.

© 2009 Gary Weiss. All rights reserved.

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