Does the SEC have it in for hedge funds?

One can make a strong case for greater oversight of hedge funds. Short selling, however, is not one of them. There appears to be a mindset in the marketplace that a short-seller is somehow less honorable than someone who is primarily long-only. The stock market exists to be a free exchange of capital, one that in the long run functions best when asset values are accurately reflected. Asset values are accurately reflected when they can be tested by speculators who seek to make a profit.

This is all well understood when it comes to money managers who seek to buy undervalued stocks, yet somehow when someone seeks to short over-valued stocks, he is portrayed as a villain. Yes, there are short-sellers who aggressively try to drive the stocks down, but this is no better or worse than the endlesspumping of stocks by Wall Street.

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