Wednesday, March 15, 2006

Short-Selling Plaintiffs

PointofLaw.com has an interesting discussion among legal scholars regarding short-selling plaintiffs and what, if anything to do about them.

The issue is the allegation that a plaintiff, or his attorney, who is about to file a class action suit against a public company sells the company's stock short prior to filing the suit, hoping that the stock will go down after the announcement.

The debate is over whether that is legal, what can be done about it, and whether anything should be done about it.

Most commentators are not fans of class action attorneys, and there is a bit of a bias in the discussion against the plaintiff's bar, but the discussion brings up a number of interesting issues regarding short selling and insider trading. Just how far are we willing to go to level the playing field in securities trading?

The discussion is here. Thanks to The 10b-5 Daily for bringing the discussion to our attention.
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