Overstock.com - Goldman Sachs Documents Naked Short Selling

Goldman Sachs Documents Naked Short Selling

In May, 2012, Matt Taibbi of Rolling Stone wrote an article, Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al. Engaged in 'Naked Short Selling'

The article discusses how in the course of discovery of lawsuits between Goldman Sachs, BankAmerica versus Rolling Stone, Overstock, the Economist, Bloomberg, and the New York Times Goldman Sachs accidentally filed an "unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed."

The material released purports to show that at the highest levels within Goldman Sachs, naked short selling was known, facilitated, and encouraged, and that Goldman Sachs would reveal non-public information about the overall positions of naked short selling on specific businesses to its large hedge fund partners.

Was Goldman really disclosing “nonpublic data concerning customer short positions” to its big hedge fund clients? That would be something its smaller, “Muppet” customers would probably want to hear about.

When I contacted Goldman and asked if it was true that Masterson had shared nonpublic customer information with a big hedge fund client, their spokesperson Michael Duvally offered this explanation:

"Among other services it provides, Securities Lending at Goldman provides market color information to clients regarding various activity in the securities lending marketplace on a security specific or sector specific basis. In accordance with the group's guidelines concerning the provision of market color, Mr. Masterson provided a client with certain aggregate information regarding short balances in certain securities. The information did not contain reference to any particular clients' short positions."