Wall Street firms are understandably upset over Utah’s new law designed to crack down on short sellers. Overstock.com’s subpoena celebrating CEO, who lobbied hard for the bill, has some words for the brokers, and is hopeful for yet another celebration-worthy event: "Tell them I said that while they’re at it, please sue me personally. [Overstock attorney John] O’Quinn and I are salivating at the thought of crawling through their stock loan operations with flashlights and bolt-cutters"….
Wall Street’s grumbling over Utah’s crackdown on so-called naked shorting of stocks resumed Tuesday, with state officials saying they stood ready to defend the law in court.
Overstock.com founder Patrick Byrne, who lobbied hard for the legislation, also said he is ready to fight if the state faces litigation from disgruntled securities brokers and dealers.
"Tell them I said that while they’re at it, please sue me personally. [Overstock attorney John] O’Quinn and I are salivating at the thought of crawling through their stock loan operations with flashlights and bolt-cutters," Byrne said.
Believed to be the first state law of its kind, the statute aims at stockbrokers, dealers and investment consultants who fail to produce stocks purportedly borrowed for transactions that include short sales – essentially a bet sold shares will lose value.
Such naked short selling results in "failures to deliver," which can create artificially inflated trading volume that in turn suppresses prices for a company’s legitimate shares. Market regulators acknowledge the illegal practice continues, though they debate just how serious the problem has become.
The New York-based Securities Industry Association, or SIA, was unsuccessful in an 11th-hour attempt Friday to convince Gov. Jon Huntsman Jr. not to sign the legislation, which legislators overwhelmingly passed in last week’s special session.
"The industry is reviewing all of its options, including legal recourse," SIA spokesman Travis Larson said Tuesday….
Wall Street contests new stock law – Salt Lake Tribune
Tags: Overstock, Patrick Byrne
