Selling us all short?

[Gromit]

Hedge fund managers have been able to profit from the slump in global stock markets by short-selling banks and other vulnerable companies.

The manoeuvre - effectively a bet that a share price will fall - is thought to have made at least �1 billion in profits for traders who shorted HBOS shares in June and July, amid rumours that the bank was enduring financial difficulty.

And the winners are...

Noam Gottesman
Mr Gottesman, an Israeli-American businessmen, is the co-chief executive and chairman of GLG, which he founded in 1995. It is a known "shorter", and has in the past targeted Northern Rock and Bradford & Bingley. Mr Gottesman made an estimated �400 million last year.

Paul Ruddock and Steven Heinz Mr Ruddock and Mr Heinz are thought to have made �350 million each since setting up the �8 billion Lansdowne hedge fund in 1998. It is thought that a short position held by the group in Northern Rock made it �100 million when the bank collapsed. It has also short-sold HBOS, and recently held a 0.58 per cent short position.

How capitalism works? or Under-regulated spivs?

http://www.telegraph.co.uk/news/2980669/Short- selling-the-key-players.html

[jake-the-peg]

It's a bet.

If the price had gone up he'd have lost money.

The problem arises if he had inside knowledge on which he based the decision.

The Americans take that very seriously and there are a number of Executives serving significant jail terms at the moment for doing this.

The regulation is there it's a case of enforcing it and I feel we're somewhat behind the US in this regard

[scotstone]

These spivs are not making an honest bet on a company's future because they spread false and malicious about the company they have targetted after they have made their 'bet'.
It's like betting a horse will lose a race and then breaking one of its legs.
There should be legislation against these parasites similar to insider dealing so they can receive long sentences to deter others from destroying the financial system of this country.

[helpmetoo]

yawn again

[maxximus]

what is a spiv? jake my good man, and here i thought all along you were americans disguised as briits and not europeans,but now your suggesting your behind the americans. so is it a case of that your so far behind that you think your ahead? or are you just being cautious . why do texan's like it doggie style? so they can both watch nascar YEEE!!!! HAAA!!! that's truly being behind . again what is a spiv? cheers!

[libertie]

http://en.wikipedia.org/wiki/Spiv

My knowledge of the financial world is pretty limited but "spivs" sounds about right!

[rov1200]

Ted Heath was quoted as saying 'The unnacceptable face of Capitalism'. His message is even truer today!

[rov1200]

And he was a Tory! Can't imagine Cameron saying that.

[tigerlily11]

Ok indulge an old hippy and tell me what a hedge fund is?
We're not all smart on here.

[jno]

http://news.bbc.co.uk/1/hi/business/4499290.st m

It's just another form of investment fund, for the super-rich.

[Gromit]

A big dollop of private money that investors can use to make speculative bets on a company's share price. They can bet that it will rise or fall in the future. If their prediction is right they make money.

[Gromit]

http://en.wikipedia.org/wiki/Hedge_Fund

[tigerlily11]

So they are sort of brokers only for the very rich?
If so then how did the very rich get that way if they placed their trust in people like these.
I'm lost. I think.

[helpmetoo]

most people want a good pension when they retire,

some of the biggest pension funds in the world invest in hedge funds,

the typical money taken by the hedge fund managers is 2% service charge p.a. and 20% of profit made,

the vast bulk of profit goes to the investor...you and me

[tigerlily11]

Ty for those links.
This is some thing that will take a while to sink into what little gray matter I have left.
I'll just get me coat.

[Gromit]

The British regulator, the Financial Services Authority has tonight banned short selling with immediate effect.

[New Judge]

Pension funds and other institutional investors do not get a look in when it comes to the type of Hedge Funds that are causing this. (Nor should they as the risks are too great for them to play around with other people�s money in this way).

Although not the main cause of the Halifax�s demise, �short-selling� is a major problem and I am glad to read today that it has been banned. This practice (which involves the selling of shares not owned by the vendor) does nothing for the companies whose shares are being traded and, as has been seen, can lead to disastrous consequences for some of them.

This is a principle tool of the Hedge Funds and whilst I am not against anybody taking a gamble with their own money, the results for the institutions on whose shares they gamble can be disastrous, especially when their shares are �talked down� by those taking the gamble.

It is not a fair bet. It is rather like those betting on a horse race being allowed to impede some of the runners as the race is in progress.

It is not the sole cause of the current problems, but ending it will help.