I have an open mind on who is culpable, actually. Some good posts above, thanks all, but time now to refocus on the job at hand - which is to Send A Message early next week. The message still is that the actual and present owners of STX are fed up with the share price manipulation of the last five months or so and are venting our concerns with a clear and unmistakeable signal. I haven't seen the movie but this isn't like the wild ride over a longer period that was GameStop in 2021. This is, I hope, a flashmob event, short term then vanish back where we came from. It's fairly unprecedented so I think there is no road map for what might happen. But hopefully whatever it is that happens is obvious to the Market and causes others to also rethink the presence of these foxes in the henhouse. I've spend the last two days really thinking about shorting and I've come to the conclusion that it falls into three main categories: Type A would be Fully Covered Shorts. By that I mean shareholders with large holdings of a particular stock, say STX, in their portfolio who for whatever reason are becoming pessimistic about future performance. If they attempt to exit some or all of their holding over a short period they are very likely to crash the price of their own holdings [and others] by their own actions. Arguably these owners should be able to temporarily offset their long position with a short sale. That said, a transparent market ought to require this type of shorting to report on the public record as instantly as modern communications allow, no more T+4 delays. Also to report unambiguously in that entity's own name and not hiding behind the nom de plume of a trust holding company. Those loopholes are obsolete. And reporting, should be absolutely compulsory, fines apply, not as it is now, if the Broker gets around to it, maybe. I also believe there ought to be limits on this type of shorting. e.g limiting percent new shorting per day, week, month and an overall limit on the percent of each owner's own stock that can be shorted. Owners need to accept some consequences if their shareholding tanks and should be required to wear some pain. But these are longer term reforms that only ASIC can enact. Way beyond our immediate focus. Type B would Naked Shorting. Naked Shorting is when you sell shares that you don't own for the sole purpose of hopefully later closing out the trade at a lower price to pocket the difference. In most countries, including Australia this is illegal for very good reasons and penalties apply. I note though that in the GameStop 2021 event it is recorded that at one point short interest reached about 140% of that Company's free float. On the face of it means that there were some porkies being told as desperate shorts tried to stem their losses by nakedly doubling down on their positions to force the price down for their benefit. Type C is the "Rent To Short" model - the cause of our disquiet and the focus of our present attention. At the smaller end of town, pretty much all a trader has to do is open a margin account with a Broker, pay a small fee to rent then keep enough funds in their account to cover potential losses if and as they occur and "Bob's Your Uncle, Fanny's Your Aunt", a shorter is born. At the big end of town there are very well known and frequently used channels for large Funds and wealthy individuals to rent the shares to short directly from their Owners. What, you say, which Owner would do that, against their own interests? Well, here's the Market's biggest dirty secret. Most often, those rented shares come from you. You see, the biggest source of shares for shorting are large Super Funds! Make that open square with your hands. 'Industry Super Funds' come to mind? Yep, they are [nearly] all complicit in this as are many Index Funds . So money you hold in the Default Option in Australian shares is most likely without your knowledge being rented out to people with the express aim of harming your interests. Is this legal? Yes, at the moment it is. Is this so like Type B shorting to be essentially the same? Yes - in my opinion. Should Type C Shorting be banned? Yes - In my opinion. Now you'll get weak argumernts against this like "shorting aids price discovery", "shorting facilitates an efficient market" etc. But let's just stop for a moment and consider what is the whole purpose of a Sharemarket. The principal purpose of a Sharemerket is to bring investors together. aka "capital formation", to form Companies to produce things, buy things, invest in things and generally grow the company and the economy. For those investors' potential profit it is true but also for the greater and common good. And what is the aim of Type C Shorters? To destroy that process, to profit from that destruction, to arguably then take control of Companies at a discount price. On our watch? I hope not, I really do. Sorry for the long explanation. Just one more thing to add. Within the next 24 hours I will be using existing back channels I have to notify certain parties in ABC News and also Four Corners of the developing situation. Journalists like nothing more than the inside track on a worthy story. And the ABC still have good journalists who do research and investigate. Should get some good traction going, once the journalists and the producers there realise they have their savings for retirement in Super also. Bring it on.
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