I saw an interesting fallacy. The author said “You can’t short sell Facebook. After an IPO, there are no shares available to borrow, preventing short selling.”
That is false. It is perfectly legal to naked short sell Facebook.
A pro-State troll says “No! Naked short selling is illegal!” It is illegal, but not enforced. If something is illegal, but there’s no enforcement, then it’s legal.
The SEC is supposed to police stock fraud, including naked short selling. However, the actual trade records are not given to the SEC.
At one of my wage slave financial software engineer jobs, I looked at their database. They had records for naked short selling. For a “hot IPO” like Facebook, the naked short selling can reach 100% of a day’s volume, or more!
How does a bankster profit naked short selling Facebook? Facebook is way overpriced, due to hype and the investment bankers propping up the IPO. The bankster naked short sells Facebook. In 3-6 months, pre-IPO share lockup agreements expire, and insiders may start selling, pushing down the price further. The naked short seller waits 3-6 months to cover his short, profiting from the hype.
The naked short seller counterfeits shares of Facebook. He sells them to gullible people who buy the IPO hype. The naked short seller waits a few months and then covers.
The average person cannot naked short sell. Your broker won’t let you. Only banksters and insiders may naked short sell. The stock clearing and settlement system covers up naked short selling, treating fails as equivalent to legitimate trades.
Naked short selling robs stupid people who buy a “hot IPO”. The naked short seller is counterfeiting. A regular counterfeiter makes fake State paper money. A naked short seller counterfeits shares of stock and sell them.
There probably is a ton of naked short selling in Facebook. It could be 100% of the daily volume or more. The SEC can’t do anything about it, because they don’t have the records. Even if they did, like Bernard Madoff, the banksters would use their connections to prevent an honest investigation.