Church of England admits profiting from short selling

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3081541/Church-of-England-admits-profiting-from-short-selling.html

[Telegraph] 27 Sep 2008--Managers of the Church's £5 billion investment portfolio have lent shares for a fee. It is possible they were used by traders to make profits by betting that the value of the stocks will fall.

Such trading in the shares of financial companies has been temporarily banned by the Financial Services Authority after it was blamed for driving down the share price of Halifax Bank of Scotland, which came close to collapse before it was taken over by Lloyds TSB last week.

The Archbishop of York, Dr John Sentamu, described short sellers as "bank robbers and asset strippers" earlier this week, while the Archbishop of Canterbury, Dr Rowan Williams, condemned the "basic unreality" of the global trade in debts.

But it has emerged that "a small number of foreign stocks" belonging to the Church have been lent.

Short-sellers borrow shares, sell them to a third party, then wait for the price to drop so they can buy the shares at a lower price and return them to the lender. The difference in the two prices is the trader's profit.

The Church's fund managers have achieved an impressive 9.5 per cent average annual return on their assets over the past decade.