Alabama is bringing in help in its battle against financial crime. Harvey Pitt, former chairman of the U.S. Securities and Exchange Commission, has been appointed as a deputy attorney general for Alabama. This allows him to assist the state in its investigation of a controversial investment tactic known as naked short selling. Joe Borg, chairman of the Alabama Securities Commission, wanted Pitt and calls him “the best around” for the job.
Attorney General Troy King appointed Pitt to focus on a case involving Montgomery-based Colonial BancGroup, which has seen its shares plummet under pressure from investors who profit when stock prices fall. These investors profit through a practice known as “short selling,” which is discussed in another part of this issue. Borg’s office is investigating whether some of those investors spread lies and malicious rumors in order to manipulate the stock price — a scheme often employed by “naked” short sellers, who illegally trade shares they do not own. Pitt is known to be one of the most knowledgeable people available when it comes to securities law. And he has a particular expertise on naked short selling, which is now a major target of the SEC, according to Borg. Colonial has been stung by mortgage losses across its network of 340 branches in Alabama, Florida, Georgia, Nevada and Texas.
Source: Associated Press and Mobile Press Register
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