Feeling Shorted, Investors Turn to Ogilvy

Alleged market manipulation by short sellers is the bête noire of many small cap stocks, with companies blaming the practice—essentially, betting against shares that don’t necessarily exist—for engineering declines in their stock price.

Companies like Overstock.com have filed suit against alleged manipulators in recent years, but investors in Bidz.com, an online jewelry auctioneer, have taken a new approach: They’re lobbying. They’ve hired Ogilvy Government Relations to argue in Washington that naked short sellers, coupled with biased investment analysts, have caused Bidz.com’s stock price to tank.

Ogilvy lobbyist Stewart Hall described the work as “a whole new policy arena.” The goal of the lobbying campaign, aimed at Capitol Hill and the Securities and Exchange Commission, is to spur federal review of the Bidz.com short selling and potential legislation restraining the practice.

Hall says attention helps the cause. “Sunlight is a very good disinfectant here,” he says.