Friday’s episode of NPR’s “Marketplace” program featured an interview with ABA Chief Policy Officer Naomi Camper about ABA’s advocacy with the Securities and Exchange Commission regarding potentially manipulative short selling activity of certain banks’ stocks.
“We’ve been in constant communication with our members, and they’ve shared with us their concerns, including engagement that they’ve seen on social media,” Camper told “Marketplace” correspondent Kimberly Adams. “And many believe that their shares have been manipulated by short sellers. They’re seeing trading in their shares that defy the underlying fundamentals, and they’re worried about it.”
While noting that the current volatility in certain bank stocks is limited to the equity markets, Adams said that short selling that is disconnected to economic fundamentals “can also scare bank customers—and scared customers can go on bank runs.” However, she also cited polling from Ipsos showing a strong majority—78%—of Americans continue to trust their banks.
ABA’s letter to the SEC late last week acknowledged a role for short sales in generating liquidity and price discovery but said that the harm caused by short selling that runs counter to fundamentals falls on small investors. As a result, the association reiterated that it is “unalterably opposed to short-selling practices that distort the markets through manipulation and abuse. We urge the SEC to consider all its existing tools and to take measures to reduce the avenues for abusive trading practices and restore investor confidence.”
