How would I prove my claim in a class action settlement on a “stock misconduct” case when I shorted the stock?
No. You shorted the stock so you are not a shareholder. If you covered your short, again you are not a shareholder as you statement of account must show. You cannot participate in the net settlement fund.
How so? If i sell short, then i make a profit only if the price goes down so i can buy back at a lower price. Yes, but if the price is going up then you would go long instead. Shorting a stock (or any other asset) allows you to profit when the price is going down. Going long allows you to profit when the price is going up. In the opposite cases, you lose money. In order to make a profit in either of those situations, you have to accurately assess which way the price will trade over the period of time you are dealing with. If you make the wrong judgment, then you lose money because you'll either sell for a lower price than you bought (if you went long), or have to buy back at a higher price than you sold for (if you went short). In either case, unless the trader can live with making a short-term loss and recouperating it later, one needs a good stop-loss strategy. When you buy a stock, the worst case scenario is that it drops to 0.  Therefore, the most you can lose when buying a stock is 100% of your investment. When you short a stock, however, there's no limit on how high the stock can go.  If you short a stock at 10, and it goes up to 30, then you've lost 200% on your investment.  Therefore shorting stocks is riskier than buying stocks, since you can lose more than 100% of your investment when shorting. because the price might go up, but it will never be as big of a change as a regular price drop i suppose... That is not true.  Stocks can sometimes go up significantly (50-100% or more) in a very short amount of time on a positive news release (such as an earnings or a buyout announcement).  A famous example occurred in 2008, when Volkswagen stock quintupled (went up 400%) in less than 2 days on some corporate news: Porsche, for some reason, wants to control Volkswagen, and by building up its stake has driven up the price. Hedge funds, figuring the share price would fall as soon as Porsche got control and stopped buying, sold a lot of VW shares short. Then last weekend, Porsche disclosed that it owned 42.6 percent of the stock and had acquired options for another 31.5 percent. It said it wanted to go to 75 percent. The result: instant short-squeeze. The German state of Lower Saxony owns a 20 percent stake in VW, which it said it would not sell. That left precious few shares available for anyone else. The shorts scrambled to cover, and the price leaped from about €200, or about $265, to above €1,000. "Some of the other answers recommended peer-to-peer lending and property markets. I would not invest in either of these. Firstly, peer-to-peer lending is not a traditional investment and we may not have enough historical data for the risk-to-return ratio. Secondly, property investments have a great risk unless you diversify, which requires a huge portfolio. Crowd-funding for one property is not a traditional investment, and may have drawbacks. For example, what if you disagree with other crowd-funders about the required repairs for the property? If you invest in the property market, I recommend a well-diversified fund that owns many properties. Beware of high debt leverage used to enhance returns (and, at the same time, risk) and high fees when selecting a fund. However, traditionally it has been a better choice to invest in stocks than to invest in property market. Beware of anyone who says that the property market is ""too good to not get into"" without specifying which part of the world is meant. Note also that many companies invest in properties, so if you invest only in a well-diversified stock index fund, you may already have property investments in your portfolio! However, in your case I would keep the money in risk-free assets, i.e. bank savings or a genuine low-cost money market fund (i.e. one that doesn't invest in corporate debt or in variable-rate loans which have short duration but long maturity). The reason is that you're going to be unemployed soon, and thus, you may need the money soon. If you have an investment horizon of, say, 10 years, then I would throw stocks into the mix, and if you're saving for retirement, then I would go all in to stocks. In the part of the world where I live in, money market funds generally have better return than bank savings, and better diversification too. However, your 2.8% interest sounds rather high (the money market fund I have in the past invested in currently yields at 0.02%, but then again I live in the eurozone), so be sure to get estimates for the yields of different risk-free assets. So, my advice for investing is simple: risk-free assets for short time horizon, a mixture of stocks and risk-free assets for medium time horizon, and only stocks for long time horizon. In any case, you need a small emergency fund, too, which you should consider a thing separate from your investments. My emergency fund is 20 000 EUR. Your 50 000 AUD is bit more than 30 000 EUR, so you don't really have that much money to invest, only a bit more than a reasonably sized emergency fund. But then again, I live in rental property, so my expenses are probably higher than yours. If you can foresee a very long time horizon for part of your investment, you could perhaps invest 50% of your money to stocks (preference being a geographically diversified index fund or a number of index funds), but I wouldn't invest more because of the need for an emergency fund." "First, I'd like to congratulate you on your financial discipline in paying off your loans and living well within your means.  I have friends who make more than twice your salary with similar debt obligations, and they barely scrape by month to month. If we combine your student loan debt and unallocated income each month, we get about $1,350.  You say that $378 per month is the minimum payment for your loans, which have an average interest rate of about 3.5%.  Thus, you have about $1,350 a month to ""invest."" Making your loan payments is basically the same as investing with the same return as the loan interest rate, when it comes down to it.  An interest rate of 3.5% is...not great, all things considered, and barely above inflation.    However, that's a guaranteed return of 3.5%, more or less like a bond.  As noted previously, the stock market historically averages 10% before inflation over the long run. The US stock market is right around its historic high at this point (DJIA is at 20,700 today, April 6th, 2017 - historic high hit just over 21,000 on March 1, 2017).  Obviously, no one can predict the future, but I get the feeling that a market correction may be in order, especially depending on how things go in Washington in the next weeks or months.  If that's the case (again, we have no way of knowing if it is), you'd be foolish to invest heavily in any stocks at this point. What I would do, given your situation, is invest the $1,350/month in a ""portfolio"" that's 50/50 stocks and ""bonds,"" where the bonds here are your student loans.  Here, you have a guaranteed return of ~3.5% on the bond portion, and you can still hedge the other 50% on stocks continuing their run (and also benefiting from dividends, capital gains, etc. over time).  I would apply the extra loan payments to the highest-interest loan first, paying only the minimum to the others.  Once the highest-interest loan is paid off, move onto the next one. Once you have all your loans paid off, your portfolio will be pretty much 100% stocks, at which point you may want to add in some actual bonds (say a 90/10 or 80/20 split, depending on what you want).  I'm assuming you're pretty young, so you still have plenty of time to let the magic of compounding interest do its work, even if you happen to get into the market right before it drops (well, that, and the fact that you won't really have much invested anyway). Again, let me stress that neither I nor anyone else has any way of knowing what will happen with the market - I'm just stating my opinion and what my course of action would be if I were in your shoes." In this example, Client A has to buy shares to return them to Client B for his sale (closing Client A's short position).  Client B then sells the shares.  The end result is there are no shares within the brokerage clientele anymore, so Client A can't borrow them anymore.    The broker is just an intermediary, they wouldn't go out and acquire securities on their own for the benefit of a client wanting to short it, as they would be taking on the risk of the opposite position.  This would be in addition to the risk they already take on when allowing people to short sell -- which is that Client A won't have the money to buy the shares it owes to Client B, in which case the broker has to make Client B whole. This shows the impact of the inquiries. It's from Credit Karma, and reflects my inquiries over the past two years. In my case, I refinanced 2 properties and the hit is after this fact, so my score at 766 is lower than when approved. You can go to Credit Karma and see how your score was impacted. If in fact the first inquiry did this, you have cause for action. In court, you get more attention by having sufficient specific data to support your claim, including your exact damages. Is there any precedent for companies trading on their own insider information for the benefit of stockholders?  Said another way, if a company were to enter a new market where they were very confident of their ability to steamroll a public competitor, could they use a wholly-owned special-purpose investment vehicle to short that competitor in order to juice the benefit of that move? Brokerage firms are required to report the number of shares being shorted.  This information is reported to the exchange (NYSE of NASDAQ) and is made public.  Most financial sites indicate the number of shares being shorted for a particular stock.  The image below from Yahoo finance shows 3.29 million shares of CMG were being shorted at the close of 9-28-2012.  This is over 12% of the total outstanding shares of CMG.  For naked short selling additional information is tracked.  If the brokerage is unable to borrow shares to deliver before the settlement date of a short sale then the transaction is recorded as fails-to-deliver.  No money or shares are exchanged since the brokerage is unable to deliver the shares that were agreed upon.  A large amount of fails-to-deliver transactions for a stock usually indicates an excessive amount of naked shorting.  When investors and brokerage firms start to aggressively short a stock they will do so without having borrowed the shares to sell.  This will result in a large amount of naked short selling.  When there are a large number of naked short sellers not all the sellers will be able to borrow the necessary shares before the settlement date and many fails-to-deliver transactions will be recorded. The SEC records the number of fails-to-deliver transactions. The table below summarizes the fails-to-deliver transactions from 1-1-2012 through 9-14-2012 (data obtained from here). The “Ext Amount” column shows the total dollar value of the transactions that failed ( i.e. Fail Qty * Share price ).  The “Volume” column is the total number of shares traded in the same time period.  The “% Volume” shows the percentage of shares that failed to deliver as a percentage of the total market volume. The table orders the data in descending order by the quantity of shares that were not delivered.  Most of the companies at the top of the list no longer exist.  For many of these companies, the quantity of shares that failed to deliver where many multiples of the number of shares traded during the same time period.  This indicates massive naked short selling as many brokerages where unable to find shares to borrow before the settlement date. More information here.