Only about 7 million shares of XTO have been legally shorted, at this time: i.e. borrowed and then sold with the agreement to replace them at some time. I don't have a problem with that. I don't short stocks but used to short commodity futures, both as a speculation (equivalent to a "naked" short) and as a hedge (because I had the goods to deliver at a future time and wanted to lock in a profit and eliminate market risk). The problem I see is with "naked" shorting of equities, and I don't know that that has occurred here, but suspect it has. Naked shorting of equities, with mass collusion or high speed computer trading, with the resources of a financial behemoth (govt. funded) such as Goldman Sachs, can influence markets in disregard of fundamentals, including the veracious supply and demand for shares, which is needed to arrive at fair valuations. Also, it is hidden from public view, and thus deprives investors of critical information. This discourages and alienates investors through insane volatility and irrational price movements and unduly enriches the prime brokers who are not constrained by legal niceties. I've seen a lot more evidence in other stocks, lately: SPWRA, GLW, CPO to name a few, and have lost some big parts of my long awaited gains when the bad boys with black boxes trashed the stock price immediately after earnings, despite positive earnings surprises and forward guidance. Ultimately, profits will determine who wins the dispute regarding the value of a stock, but at an interim cost to the system that will ultimately prove disastrous. Naked shorting only appears to contribute to liquidity, by showing up as high volumes of shares traded. That is an illusion. It does not really contribute to liquidity, it drives real investors away from the stock market. IMHO
Bubs