Bed Bath & Beyond Inc. said Monday it has received several inquires from shareholders related to naked short selling, but that it has no specific access to information on share lending for short selling transactions. “While the company is unable to confirm such activity, the company denounces any market manipulation of its stock,” the troubled home goods retailer said in a statement. In regular short trading, an investor borrows shares from someone else, then sells them and waits for the stock price to fall. When that happens, the shares are bought cheaper and returned to the previous owner, with the short seller pocketing the difference as profit. In naked short selling, investors don’t bother borrowing the stock first and simply sell shares with a promise to deliver them at a later date. When that promise is not fulfilled, it’s known as failure to deliver. The statement was issued to update shareholders on its plan to hold a special meeting for a vote on a proposal to conduct a reverse stock split. That meeting will be held on May 9 and shareholders who owned about 428 million shares that were outstanding as of March 27 are eligible to vote. “We understand the choices we have had to make to improve our liquidity have led to speculation both about our business and our stock,” CEO Sue Gove said in the statement. We are taking the necessary steps as part of our financial strategy to sustain and grow our business.” The stock was up 1.4% premarket but has fallen 98% in the last 12 months as the company has struggled to stay in business.
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