May. 25, 2022
May 25, 2022 My understanding is that short sale is a contract to sell 100 shares of stock X at price Y, usually on a specific date, Z. Im not sure why buying to cover is even allowed. Under the general contract rules, I must fulfill a sale with goods of the kind paid for at the agreed upon time or refund the other partys money with a penalty prescribed in the contract. Similarly, if I advertise a price or contract terms in advertising (I.e. proffering it to the counterparty), those terms must be fulfilled to meet my legal obligations. Therefore, someone who sells a stock short and fails to deliver should be forced to buy and close all positions in that stock before being able to open any new ones. If they are meeting their contractual sales dates, the short transactions should be reported as unrealized gains or losses in accordance with good accounting practices and handled as such. Note that shares sold but not yet borrowed would, to have integrity, need to be reported as a liability at current market value and not based on future predictions or whatever we think it is. Try underpaying the IRS or state of New York based on possible future expenses and see how that goes. You either execute the contract or you dont. You either report your positions honestly and openly or you dont. Buy to cover is like take money from the new investors to pay the old investors. Thought thats been illegal since Ponzi. ALL short positions in excess of share inventory should be immediately and publicly posted, not just this buy to cover nonsense. If we dont see it, it isnt transparent. ALL buy to cover transactions should be reportable.