Short Sellers

In case you missed it, which would be easy to do since it appeared in the Saturday edition of the Wall Street Journal, Professor Moin Yahya had an op-ed (subscrip. req’d) decrying the relationship between short sellers and the securities litigation plaintiffs’ bar. The op-ed discusses a few cases in which short sellers appear to have profited by sponsoring securities fraud suits against companies (including the Terayon case).

Quote of note: “Plaintiffs should be deemed insiders until they announce their intention to sue or commence the lawsuit. Furthermore, any hedge funds that deal with plaintiffs or their lawyers should disclose their dealings prior to any short-selling. The SEC has had no compunction in the past targeting fraudulent practices, and the short-selling plaintiffs should not be treated any differently.”

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