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 ?
A number of studies have suggested that the source of most delivery failures are due to naked shorting (Fotak, Raman, & Yadav, 2009; Boulton & Braga-Alves, 2010; Stone, 2010).
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.
This is basically what naked shorting is all about; selling what you do not own and which you never deliver to the buyer," Mr.
Naked shorting shifts out the supply curve, dropping the price.
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?
Pink Sheets: CSTJ) announced today that they have ordered a NOBO list in an effort to identify any naked shorting that may be occurring.
The Company believes the naked shorting of its shares on each market day over the past 10 years to be in excess of 20 times its outstanding shares, on a regular basis, during this period," concluded Mr.
The current naked shorting of our company's stock will hopefully be addressed and corrected by the SEC, NASD, and DTCC.
Our shareholders are again encouraged to demand delivery of their preferred dividends on March 31 as a means to prove any past naked shorting of PAIM.
Naked short selling, or naked shorting, is an illegal practice of selling shares that have not been affirmatively determined to exist.