Naked Short Seller

Naked Short Seller

An investor who sells shares that he/she has neither borrowed nor made arrangements to borrow. Under Regulation SHO, naked short sellers must 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.
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Additionally, if you purchased shares from a person engaged in naked short selling, you have what might be called "phantom shares" - the shares do not exist since the naked short seller sold shares he did not own.
If a naked short seller does not borrow the stock he sells, he will be unable to deliver that stock to the buyer to settle the trade.
Naked short selling is simply the short sale of a share that does not exist (as opposed to "short selling" where the actual shares do exist) in hope that the price will go down, allowing the naked short seller to find and then buy stock at a lower price to fill his short order.
Even with the academic support for short selling, the perception of wrongdoing by naked short sellers continues to exist.
Shares are often unavailable, however, for securities that are most popular with naked short sellers.
However, as this study has shown, when there is actionable intelligence using available information, naked short sellers are taking action despite current regulations.
These naked short sellers profit by repurchasing the stock following the downturn.
OTC:ETMO) ("Extreme" or the "Company") is appealing to shareholders to participate in an effort management believes will significantly increase shareholder value and create a "share vacuum" for illegal naked short sellers.
Naked short sellers (shorts that have not borrowed shares correctly) have also reached the 13th consecutive trading day of failure to deliver.
This not only serves as a method to combat existing naked short sellers but also as a deterrent to future short selling in the shares of a stock.
The Company assumes that a lot of Naked Short Sellers are covering their positions and the Company is of the opinion that the Company's share price remains enormously undervalued.
The best case scenario would be for all SVSN shareholders to hold their shares in certificate form, as this would eliminate legal short selling, and cripple the illegal naked short sellers.