Naked short selling refers to an investment method in which investors sell non-existent stocks directly in the market without borrowing stocks, and then buy back stocks for profit when the stock price falls further. As long as naked short sellers buy stocks before the delivery date, the transaction is successful. Because "naked short selling" sells non-existent stocks, the amount may be very large, so it will have a dramatic impact on the stock price. Some analysts believe that Lehman Brothers is one of the victims of naked short selling.

First of all, short sellers choose a company with active trading as a potential short-selling object, such as Bodison, a listed company in three places, or Lehman Brothers, which is affected by various unfavorable information;

Second, with the rapid growth of the company's performance and the rapid rise of the stock price, one or several hedge funds jointly sell shares at high prices and sell them in the option market. After shorting positions, they began to hire tabloid media or so-called "stock review experts" to plan negative news against the company.

Third, immediately afterwards, a large number of unconfirmed negative news about the target company will suddenly appear in the media, accompanied by some negative comments from "expert stock reviews". Because investors don't know the truth, they have sold the shares of the target company, resulting in a sharp drop in the stock price (Bodison, Lehman Brothers, Bear Stearns, etc. Have experienced this process). The financing plan of the target company went up in smoke, and Lehman Brothers and Bear Stearns had to die.

Fourth, due to the stock price crash and rumors, the US Securities and Exchange Commission intervened in the investigation. American listed companies have public disclosure requirements for the formal or informal behavior of such regulatory authorities, which has a worse impact on stock prices. After the disclosure of such news, the Short-selling Foundation arranged a group of small American law firms specializing in class actions and small shareholders who had been found in advance to sue the listed company on behalf of the majority of shareholders on the grounds that the target company published false information, and continued to suppress the stock price of the target company through the negative impact of litigation. If the target company is finally forced to go bankrupt and liquidate, this is exactly what the "bears" want to see, because the cost of borrowing shares is close to zero at this time.