Stock Lending Comes Under Scrutiny

John Tabacco, CEO of Locatestock, a company that invented a software program that helps small brokerages and hedge funds find hard-to-borrow shares, says the stock-loan business needs more openness. Tabacco, a former stock finder, says he started Locatestock in 2005 because he saw how the business was changing and that regulators were demanding more pricing clarity -- making it difficult for traditional stock finders to continue to operate.

But Tabacco believes the investigation into the practices of his former colleagues is going too far.

"I feel, as citizens, there is a grave danger if the government and regulators can go back and criminalize behavior for violating policies that never existed," says Tabacco.

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