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June 20, 2006
Senate Panel to Scrutinize Hedge Fund Sales
The Senate Judiciary Committee will examine the short-selling activities of hedge funds and independent analysts at a hearing in July. The issue has generated headlines and lawsuits alleging collusion and market manipulation. The Committee is finalizing a list of witnesses for the hearing. Recently, the head of the Salt Lake City-based online discount retailer has sued hedge fund Rocker Partners and small stock-research firm Gradient Analytics Inc. It alleged that they made a conspiracy to have Gradient issue negative reports on companies that Rocker had sold. The Senate Panel will look into all these issues. Yahoo Finance has published an article on the Same Topic.
Short sellers borrow shares for sale and profit if the stock price declines. While the practice is legal, Byrne has been vocal in attacking "naked" short sales in which sellers don't borrow shares before selling, which he says may have destroyed hundreds of small companies while enriching hedge funds and Wall Street bankers.
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