Naked Short Selling

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Naked Short Selling

The sale of shares one has neither borrowed nor made arrangements to borrow. Under Regulation SHO, investors engaging in naked shorting much abide by a "locate" requirement and a "close-out" requirement. The locate requirement forces brokers to have reasonable grounds to believe that the short-sold security can be borrowed; the broker must document this prior to the security's sale. With some exceptions, the close-out requirement means that brokers who have failed to deliver a short-sold security for 13 days must purchase similar securities and present those instead. Naked shorting is very high risk.
References in periodicals archive ?
Naked shorting is even more controversial than regular shorting because it seems so improper to sell something that the seller doesn't possess, but again, many academics argue that naked shorting helps to reduce irrational exuberance.
The SEC further tightened its rules against naked shorting just hours before Mr.
The SEC needs to make sure that the rules are strictly and aggressively enforced -- both for failures to deliver that occur within the CNS system and outside the CNS system in ex-clearing trades, where, I suspect, there is naked shorting that makes the object of current SEC concerns look like small potatoes.
This is basically what naked shorting is all about; selling what you do not own and which you never deliver to the buyer," Mr.
Now that we are experiencing systemic failure, precisely as naked shorting activists predicted, we should ask the SEC: Why should two corporations alone deserve the protection for which hundreds of other firms have been unsuccessfully clamoring?
Naked shorting shifts out the supply curve, dropping the price.
Our shareholders have expressed fear that our stock is a target of naked shorting activity," said Armando Russo, President of New Wave Mobile Technologies, Inc.
The naked shorting of MRDY stocks has been a problem," said Craig Mora, CEO of MRDY.
Was it selected brokers, market makers and other Wall Street interests who wallow their gluttony through the naked shorting scandal at the expense of ordinary investors?
In addition to the naked shorting problem, we are also viewing the costly SOX 404 compliance as an anti-small-cap-activity and this is another reason why moving seems like a good idea and also a way of saving money.
Pink Sheets: CSTJ) announced today that they have ordered a NOBO list in an effort to identify any naked shorting that may be occurring.
Investors' support for cracking down on naked shorting could play a role in upcoming congressional elections with 38% of investors saying they would be more inclined to vote for a congressional candidate who addresses the issue of naked shorting.