Austin American-Statesman – The dispute had all the markings of a classic battle between a company and short sellers.
On one side was a well-known shipping firm complaining about speculators spreading rumors as part of a “dirty scheme” to depress its share price.
On the other was a group of businessmen who claimed the company had no one but itself to blame for its flagging shares. They pointed to the sinking of several vessels, substantial losses and excess inventory as reasons.
Sound like a tale from today’s New York Stock Exchange? Try the Amsterdam Stock Exchange, circa 1610.
Dutch authorities ultimately banned short selling after the scandal involving the Dutch East India Co. and a group of speculators. It probably was the first instance of investors in an established stock market betting shares would fall in price. But it was far from the last.
Short selling  selling shares of borrowed stock in anticipation of repaying them with shares bought at a lower price and pocketing the profit  has been around for 400 years. During that time, the practice has been pilloried and promoted, banned and restricted.
These days, the spotlight again is on short selling. Lawsuits and insults are flying. Conspiracies and manipulations are floated. Regulators are investigating. Lawmakers are outraged. The very fabric of the country’s financial markets, some say, is at stake.
Proponents say the practice helps maintain an efficient marketplace, and short sellers often are the first to raise concerns about fraud. Critics say abusive short sellers can conspire to crush companies and, some claim, threaten the foundation of the country’s financial markets.
A lawsuit accuses one of the industry’s most well-known short sellers, David Rocker, of participating in a conspiracy to drive down the price of Internet close-out retailer Overstock .com Inc. Biovail Corp., a Canadian pharmaceutical company, is suing other hedge funds and analysts on similar allegations.
