There is a very good opinion piece in the Financial Times today from short-seller Marc Cohodes. It suggests that the fairness of capital markets is under threat in the new digital age and opens with this paragraph: “We live in an era where some stock promoters and short sellers open large positions prior to publishing market-moving information about a company, and rapidly close those positions after inducing a buying or selling frenzy”.
The author suggests that there should be a rule requiring a ten-day minimum holding period for any stock promoter or short seller who opens a large position and disseminates market moving information. That would give markets the time to evaluate the claims made while if the espoused views turn out to be true the publisher could still make profits. That seems an eminently sensible suggestion to me.
See https://www.ft.com/content/01b765c2-854e-11ea-b6e9-a94cffd1d9bf for the full article which is well worth reading.
What might be the objections to this proposal?
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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