SEC Must Take Action Against “Short and Distort” Market Manipulation

It’s long past time to end the abusive practice of ‘short and distort’ reports that unfairly harms investors and the reputation of public companies.

WASHINGTON – The American Securities Association (ASA) today called on the U.S. Securities and Exchange Commission (SEC) to take enforcement action against “short and distort” market manipulation practice that harms Main Street investors and retirement savers.

“Profiting from the intentional spread of false information to help hedge fund short sellers profit at the expense of Main Street investors and retirement savers, must be met with swift enforcement action from the SEC,” said ASA CEO Chris Iacovella. “It’s long past time to end the abusive practice of ‘short and distort’ reports that unfairly harms investors and the reputation of public companies.”

Last week, General Electric was the target of a research report alleging accounting fraud. According to the Wall Street Journal, the report’s author “Mr. Markopolos said he and his colleagues are working with an undisclosed hedge fund, which is betting GE’s share price will decline. Mr. Markopolos’s group gave the investor access to the research before publication and will receive a portion of any trading proceeds.” The Journal noted the company’s shares suffered its lowest single-day percentage drop since 2008.

Last year, ASA called on the SEC to address abuses or unlawful activity related to short sales—including the practice of “short and distort”—in a joint trade association report detailing recommendations to help more companies go and stay public.

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ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.