Corporate Stock Market

Has Naked Short Selling Affected AgriFORCE?

Naked short selling or naked shorting

AgriFORCE Growing Systems Ltd. has provided a report on its ongoing investigation into potentially improper and/or illegal trading activities, including naked short selling, of the company’s common stock.

Naked shorting, or naked short selling, is an illegal practice where a trader would short shares that do not exist or cannot confirm if they possess the said shares. This technique was legal until the 2008-2009 crisis and despite its high risk had high rewards for the traders that would operate using the technique. To illustrate with an example, Investor A wouldn’t borrow shares from Investor B as it would normally do, but simply sell shares with a promise to deliver them at a later date.

On November 15, 2022, the company engaged Shareholder Intelligence Services, LLC (ShareIntel) to utilize their patented, proprietary service offerings to obtain share trading analytic metrics designed to help coordinate, monitor and enhance corporate governance, shareholder communication, regulatory compliance, and surveillance of trading in the company’s shares. This effort was in an effort to allow the company to better monitor trading activity, including potential violations of SEC Regulation SHO, which governs stock and options share locate, closeout, and failure to deliver requirements.

Based on an initial analysis of the company’s historic stock trading activity, AgriFORCE Growing Systems believes that it may have been the target of market manipulation and potentially illegal trading activities, including the naked short selling of its stock. As such, the company is exploring all of its potential options and remedies.

This is not uncommon as recent months have seen a sudden surge in the number of small-cap companies reporting potential illegal trading activities and/or being the target of naked short-sellers. In fact, an article published on Market Watch highlighted this trend as a growing number of small-cap companies had their stocks artificially depressed which is of course, completely illegal.

Photo by m. on Unsplash 

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