Tag: short sales

Law professors submit rulemaking petition to deter “short and distort”

A committee of law professors, led by John Coffee and Joshua Mitts, both of Columbia Law School, have submitted a petition for rulemaking with the rhythmic title, “Short and Distort,”  concerning the practice of “negative activism”: as they describe it, a negative activist “opens a large short position; disseminates sometimes aggressive negative opinion about a public company (often stopping just short of factual falsehoods)…, which induces a panic and run on the stock price; and rapidly closes that position for a profit, prior to the stock price partially or fully rebounding.”  In these scenarios, the short sellers do well, but the investing public—not so much.