A single sentence can halve stock prices! Amidst the frequent slaughter of bank stocks, are short sellers "making a fortune daily"? JPMorgan Chase CEO calls for: Ban short selling of bank stocks! Severely punish those involved!
JPMorgan Chase CEO Jamie Dimon believes that U.S. regulators should consider banning the short selling of bank stocks.
In an interview on Thursday, Dimon stated that the SEC (U.S. Securities and Exchange Commission) has the ability to investigate potential collusion among short sellers who may be incentivized to spread false information, and therefore the SEC should do so (referring to banning short selling of bank stocks).
Dimon made the aforementioned remarks at a time when Silicon Valley Bank, First Republic Bank, and Signature Bank have collapsed, and regional banks are facing a crisis of confidence.
When asked whether regulators should focus on short sellers of bank stocks, Dimon responded:
"Yes. Listen, my partners will tell me this is not a problem... but I think they might be partially (wrong). Some people are unscrupulous; they use other means to short sell. If you look at the details, you will find that the SEC has enforcement capabilities; they can investigate people's actions in options, derivatives, and short selling. If someone has done something wrong, if someone has colluded, or if someone short sells bank stocks and then publicly releases information about a bank, the SEC should investigate these individuals and should impose the harshest punishments within the limits allowed by law."
In a world where information, whether true or false, can spread rapidly on social media platforms and severely affect a company's stock price and underlying business, bank executives are feeling nervous and uneasy.
On Wednesday, West Pacific United Bank stated that a report last week indicated that the company was considering selling to a larger bank, which led to a 10% decrease in its deposit base, and on Thursday, its stock price fell by more than 20%.
Last week, a report in the UK stated that Alliance Western Bank was considering options including selling (assets), including considering the sale of all or part of the business. The report led to a rapid 60% drop in Alliance Western Bank's stock price.
Less than an hour after the report was published in the UK, the bank denied the report and stated in a statement that short sellers should be held responsible. The statement said:"It is shameful and irresponsible for British reports to be exploited by short-sellers, publishing false reports and becoming a conduit for spreading false narratives about a bank with sound finances and strong profitability."
According to reports, Western Alliance Bank is considering using legal means to claim compensation from British reports. Last week, data from ORTEX, a financial analysis platform that monitors short positions, showed that on Thursday, short-sellers made nearly $400 million in returns from short-selling transactions involving regional banks such as Westpac Banking Corporation and Western Alliance Bank.
Although short-sellers play an important role in improving market efficiency, and corporate fraud cases have been discovered in the past, some bank executives hope to temporarily halt this chaos at least until the end of the regional banking crisis.
- 8 August'24
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