Kass: Stop Pointing Fingers at Short-Sellers

I agree with Denny the K, that it was a good thing that the SEC nailed Berliner, but I strenuously disagree with the finger-pointing against short sellers for the following three reasons:

1. As I have often written, investors and policymakers should have taken a cue from the early read by short sellers in their analysis of the housing, subprime, rating agencies and credit issues, which substantially presaged the problems before they surfaced. A lot of money would have been saved. As has been documented in numerous academic studies, stocks with high short interest ratios, typically underperform the market dramatically, as it is often a sign of systemic problems. Consider Overstock OSTK, Ambac, MBIA MBI, MGIC Investment MTG, Biovail BVF and many others.

2. For every stock that is rumor-mongered to go down, there are a hundred that are rumor-mongered to go up. When will the SEC go after the latter?

3. And what about corporate executives (especially of a tech kind) who routinely cheerlead and then dump shares? Shouldn't the SEC address this as well?

Doug Kass is the author of The Edge, a blog on RealMoney Silver that features real-time shorting opportunities on the market.