RE:Sent a letter to OSC on naked shorting on bondsI think this assertion is incorrect - the idea that bond holders are short the equity - especially because we know that the SCN bonds suffer a structural disadvantage over the equity (i.e. Cuban veto right on ownership). A short equity position against bonds is very risky because 1. to the upside the "hedge" could go offside very quickly and 2. to the downside in a stressed situation the bonds do not have the same structural advantage over the equity as they might in other situations. i.e. - they aren't going to get the equity in the business but rather extended with par reduced as we saw last time around. Bottom line - not a good hedge in either extreme.
Furthermore, there are really no inst'l equity investors in SCN that would have lending agreements with brokerage firms for a borrow and the price precludes borrowing from the margin accounts of retail investors. Naked shorting would create segregation violations at brokerage firms and be subject to forced buy in.
I don't see it.