The American Bankers Association (ABA) has called on the U.S. Securities and Exchange Commission (SEC) to investigate a recent surge in short sales of banking equities, which it believes are “abusive” trading practices that have no connection to the actual financial performance of these companies. The ABA is concerned that this type of trading could lead to significant losses for investors who may be unaware or misinformed about their investments’ true value.
The ABA’s request comes at a time when stock prices for many banks have been under pressure due to economic uncertainty caused by the coronavirus pandemic, making them vulnerable targets for abusive traders looking to make quick profits from short-selling activities without considering potential long-term risks associated with such trades. In addition, the association noted that some large institutional investors may also be taking advantage of smaller retail investors through manipulative tactics involving high-frequency trading strategies and other market manipulation techniques designed specifically for short-selling purposes.
Ultimately, the ABA hopes that its call will prompt federal regulators like SEC to take action against these types of potentially damaging practices so as not only to protect individual investor interests but also ensure fairness across all markets, in general, going forward into 2021 and beyond.
Read more at Reuters
