Very interesting article in The Australian on 30 March re shorting and Harvey Norman. The general thrust of the article and 'morality or legality' of the motives and actions of the illegal shorters is true of many algo traders and those that speculate in exotic instruments. I have reproduced the article below. Surely the governement must realise these traders as playing with the integrity of the market for their own short term gains.
Billionaire Gerry Harvey has stepped up his attack on short sellers as he again waded into the market to buy another two million Harvey Norman shares, taking his spending on the retail giant’s stock over the past week to nearly $28 million.
Mr Harvey declared he would personally “bring the criminal shorters undone” as they become increasingly bold and “reach new levels of criminality”.
“Some of these shorts are genuine shorts, others are acting as criminals and I am trying to bring the criminals undone,’’ Mr Harvey told The Australian.
“And the criminals, I call them criminals, because when they short they just don’t then short, they then use all these other methods to decrease the price and manipulate the shares.’’
Harvey Norman has been under sustained attack from short sellers over the last month, sending its share price down more than 14 per cent since February and slashing Mr Harvey’s fortune by more than $100 million just last week alone.
He last week claimed the retailer (HVN) had been the victim of a “potential scam” by local fund managers that had seen them work with alleged media allies, including Fairfax Media, to push the value of the company lower.
Not prepared to sit back and let the shorts savage his company, Mr Harvey spent $18m in two days last week to soak up Harvey Norman shares and, according to a director’s interest statement lodged with the ASX this morning, he yesterday spent just under $9m to scoop up another two million.
Mr Harvey has levelled a number of allegations against investors shorting his stock, including the use of offshore entities to co-ordinate an attack on the Harvey Norman share price.
“So they are criminals,’’ Mr Harvey said. “They know they are criminals and no-one to my knowledge has ever been pursued.”
The billionaire retailer would now take them on.
“So there has to be someone out there that pursues some of these criminals, because they have been getting away with it for so long and they think because they get away with it and no-one ever pursues them and they just get a little bolder all the time.
“And so now they have become so bold, they go out there and brag about how smart they are and they don’t go into how they manipulate (shares) because they won’t tell the world that, but most people out there in the market know how they manipulate.
“When they go to the extent of using multiple offshore entities that cannot be pursued by Australian regulators, they use those entities to aid and abet, then they are reaching new levels of criminality.’
Mr Harvey said regulators including both ASIC and the ASX had a “history of doing nothing”, hence his personal pursuit of these “criminal shorts”.
“They have a long history of ignoring it and if you mention it to any regulator they say ‘thank you for telling me, see you later’.’’
Mr Harvey has also hit out at sections of the media over Harvey Norman’s price slump, and last week accused the Australian Financial Review of “making false statements” in an article that suggested an ASIC probe was underway into the company’s reporting of exposure to franchisee losses.
