Changes

'''Naked short selling''', or '''naked shorting''', is the practice of [[Short (finance)|selling a stock short]] without first borrowing the shares or ensuring that the shares can be borrowed. It has been illegal in the [[United States]] since 1934, with an exemption for bona-fide market makers intended to increase liquidity and stabilize markets. In 2004, the [[Securities and Exchange Commission]] (SEC) issued "Regulation SHO" seeking to curb abusive naked shorting.<ref name=secfaq>{{cite web|url=http://sec.gov/divisions/marketreg/mrfaqregsho1204.htm|author=U.S. SEC|title=Division of Market Regulation: Responses to Frequently Asked Questions Concerning Regulation SHO}}</ref> However, SEC Chairman Chris Cox has recently stated publicly that Reg SHO has failed to achieve its intended effects, and has proposed tightening the rule.

'''Naked short selling''', or '''naked shorting''', is the practice of [[Short (finance)|selling a stock short]] without first borrowing the shares or ensuring that the shares can be borrowed. It has been illegal in the [[United States]] since 1934, with an exemption for bona-fide market makers intended to increase liquidity and stabilize markets. In 2004, the [[Securities and Exchange Commission]] (SEC) issued "Regulation SHO" seeking to curb abusive naked shorting.<ref name=secfaq>{{cite web|url=http://sec.gov/divisions/marketreg/mrfaqregsho1204.htm|author=U.S. SEC|title=Division of Market Regulation: Responses to Frequently Asked Questions Concerning Regulation SHO}}</ref> However, SEC Chairman Chris Cox has recently stated publicly that Reg SHO has failed to achieve its intended effects, and has proposed tightening the rule.

==Description==

==Description==

==== Normal shorting ====  

==== Normal shorting ====

{{main|Short (finance)}}

{{main|Short (finance)}}

Short selling is a form of [[speculation]] that allows a [[trader (finance)|trader]] to sell [[security (finance)|securities]] that they do not own, effectively taking a "negative [[position (finance)|position]]". They do this when they expect the value of the securities to decrease in the market, allowing them to sell securities at today's price and then buy the securities back when they decrease in value. With a large enough move in the price, the trader can purchase the securities, "covering" their position, for less money than they received for selling them earlier. The opposite case can also occur; if the price increases they will be forced to cover at a higher cost, a money-losing trade.

Short selling is a form of [[speculation]] that allows a [[trader (finance)|trader]] to sell [[security (finance)|securities]] that they do not own, effectively taking a "negative [[position (finance)|position]]". They do this when they expect the value of the securities to decrease in the market, allowing them to sell securities at today's price and then buy the securities back when they decrease in value. With a large enough move in the price, the trader can purchase the securities, "covering" their position, for less money than they received for selling them earlier. The opposite case can also occur; if the price increases they will be forced to cover at a higher cost, a money-losing trade.

===Regulation SHO===

===Regulation SHO===

The SEC enacted Regulation SHO in January 2005 to target abusive naked short selling by reducing failure to deliver securities.<ref name="keypoints">[http://www.sec.gov/spotlight/keyregshoissues.htm Key Points About Regulation SHO]</ref> It states that a broker or dealer may not accept a short sale order without having first borrowed or identified the stock being sold.<ref>{{cite web|url=http://www.law.uc.edu/CCL/regSHO/rule203.html|title=Securities Lawyer's Deskbook, Rule 203 |author=University of Cincinnati College of Law}}</ref> The rule has the following exemptions:

The SEC enacted Regulation SHO in January 2005 to target abusive naked short selling by reducing failure to deliver securities.<ref name="keypoints">[http://www.sec.gov/spotlight/keyregshoissues.htm Key Points About Regulation SHO]</ref> It states that a broker or dealer may not accept a short sale order without having first borrowed or identified the stock being sold.<ref name="University of Cincinnati College of Law">{{cite web|url=http://www.law.uc.edu/CCL/regSHO/rule203.html|title=Securities Lawyer's Deskbook, Rule 203 |author=University of Cincinnati College of Law}}</ref> The rule has the following exemptions:

#Broker or dealer accepting a [[short sale]] order from another registered broker or dealer  

#Broker or dealer accepting a [[short sale]] order from another registered broker or dealer

#Bona-fide [[Market maker|market making]] - Current legal naked shorting rules allow brokerages to make large profits doing "bona-fide market making" while stock markets are falling.{{Fact|date=April 2008}} The market maker exemption to the rules governing the practice is intended to allow market makers to naked short sell on a very temporary basis, in order to increase liquidity and stabilize markets.

#Bona-fide [[Market maker|market making]] - Current legal naked shorting rules allow brokerages to make large profits doing "bona-fide market making" while stock markets are falling.{{Fact|date=April 2008}} The market maker exemption to the rules governing the practice is intended to allow market makers to naked short sell on a very temporary basis, in order to increase liquidity and stabilize markets.

#Broker-dealer effecting a sale on behalf of a customer that is deemed to own the security pursuant to Rule 200<ref>{{cite web|url=http://www.law.uc.edu/CCL/regSHO/rule200.html |title=Securities Lawyer's Deskbook, Rule 200 |author=University of Cincinnati College of Law}}</ref> through no fault of the customer or the broker-dealer.<ref>{{cite web|url=http://www.law.uc.edu/CCL/regSHO/rule203.html|title=Securities Lawyer's Deskbook, Rule 203 |author=University of Cincinnati College of Law}}</ref>

#Broker-dealer effecting a sale on behalf of a customer that is deemed to own the security pursuant to Rule 200<ref>{{cite web|url=http://www.law.uc.edu/CCL/regSHO/rule200.html |title=Securities Lawyer's Deskbook, Rule 200 |author=University of Cincinnati College of Law}}</ref> through no fault of the customer or the broker-dealer.<ref name="University of Cincinnati College of Law"/>

Regulation SHO also created the "Threshold Security List," which reported any stock where more than 0.5% of a company's total outstanding shares failed delivery for five consecutive days. A number of companies have appeared on the list, including [[Krispy Kreme]], [[Martha Stewart Omnimedia]] and [[Delta Airlines]]. The Motley Fool, an investment website, observes that "when a stock appears on this list, it is like a red flag waving, stating 'something is wrong here!'"<ref name=fool/> However, the SEC states that appearance on the threshold list "does not necessarily mean that there has been abusive naked short selling or any impermissible trading in the stock." <ref  name="keypoints"/>   

Regulation SHO also created the "Threshold Security List," which reported any stock where more than 0.5% of a company's total outstanding shares failed delivery for five consecutive days. A number of companies have appeared on the list, including [[Krispy Kreme]], [[Martha Stewart Omnimedia]] and [[Delta Airlines]]. The Motley Fool, an investment website, observes that "when a stock appears on this list, it is like a red flag waving, stating 'something is wrong here!'"<ref name=fool/> However, the SEC states that appearance on the threshold list "does not necessarily mean that there has been abusive naked short selling or any impermissible trading in the stock." <ref  name="keypoints"/>   

===Enforcement actions under Reg SHO===

===Enforcement actions under Reg SHO===

In 2005, the SEC notified [[Refco]] of intent to file an enforcement action against the securities unit of Refco for securities trading violations concerning the shorting of Sedona stock. The SEC sought information related to two former Refco brokers who handled the account of a client, Amro International, which shorted Sedona's stock. <ref> {{cite web|url=http://money.cnn.com/2005/10/20/news/midcaps/refco/index.htm |title=More woes for Refco, execs: Reports Newspapers say creditors eye over $1B insiders made from stock, while SEC probes "naked shorting"|date=October 20, 2005|author=CNN}}</ref> No charges had been filed by 2007.

In 2005, the SEC notified [[Refco]] of intent to file an enforcement action against the securities unit of Refco for securities trading violations concerning the shorting of Sedona stock. The SEC sought information related to two former Refco brokers who handled the account of a client, Amro International, which shorted Sedona's stock.<ref>{{cite web|url=http://money.cnn.com/2005/10/20/news/midcaps/refco/index.htm |title=More woes for Refco, execs: Reports Newspapers say creditors eye over $1B insiders made from stock, while SEC probes "naked shorting"|date=October 20, 2005|author=CNN}}</ref> No charges had been filed by 2007.

<br />

<br />

In December 2006, the SEC sued Gryphon Partners, a [[hedge fund]], for [[insider trading]] and naked short-selling involving PIPEs in the unregistered stock of 35 companies. PIPEs are "private investments in public equities," used by companies to raise cash. The naked shorting took place in Canada, where it was legal at the time. Gryphon denied the charges. <ref> {{cite web|url=http://www.sec.gov/litigation/complaints/2006/comp19942.pdf |title=SEC Complaint against Gryphon Partners|date=December 12,2006}}</ref>  

In December 2006, the SEC sued Gryphon Partners, a [[hedge fund]], for [[insider trading]] and naked short-selling involving PIPEs in the unregistered stock of 35 companies. PIPEs are "private investments in public equities," used by companies to raise cash. The naked shorting took place in Canada, where it was legal at the time. Gryphon denied the charges.<ref>{{cite web|url=http://www.sec.gov/litigation/complaints/2006/comp19942.pdf |title=SEC Complaint against Gryphon Partners|date=December 12, 2006}}</ref>  

In March 2007, [[Goldman Sachs]] was fined $2 million by the SEC for allowing customers to illegally sell shares short prior to secondary public offerings. Naked short-selling was allegedly utilized by the Goldman clients. The SEC charged Goldman with failing to ensure those clients had ownership of the shares. SEC Chairman Cox commented, "That is an important case and it reflects our interest in this area."<ref>{{cite web|url=http://business.timesonline.co.uk/tol/business/law/corporate/article1519648.ece|title=Goldman Sachs fined $2m over short-selling|date=March 15, 2007|author=TimesOnline and AP}}</ref>

In March 2007, [[Goldman Sachs]] was fined $2 million by the SEC for allowing customers to illegally sell shares short prior to secondary public offerings. Naked short-selling was allegedly utilized by the Goldman clients. The SEC charged Goldman with failing to ensure those clients had ownership of the shares. SEC Chairman Cox commented, "That is an important case and it reflects our interest in this area."<ref>{{cite web|url=http://business.timesonline.co.uk/tol/business/law/corporate/article1519648.ece|title=Goldman Sachs fined $2m over short-selling|date=March 15, 2007|author=TimesOnline and AP}}</ref>

In June 2007, executives of Universal Express, which had claimed naked shorting of its stock, were sanctioned by a federal court judge as “repeated and remorseless violators” of the securities laws. The SEC asserted that the company “appears to exist primarily as a vehicle for fraud.” <ref> "S.E.C. Requests Receiver for Universal Express," The New York Times, June 23, 2007</ref> Referring to a court ruling barring CEO Richard Altomare from serving as an officer of a public company, [[New York Times]] columnist [[Floyd Norris]] said: "In Altomare's view, the issues that bothered the judge are irrelevant. 'Long and short of it,' he said in a statement, 'this is a naked short hallmark case in the making.' Or it is proof that it can take a long time for the SEC to stop a fraud."<ref>[http://select.nytimes.com/2007/06/22/business/22norris.html A Sad Tale of Fictional SEC Filings, The New York Times, June 22, 2007]</ref> Universal Express has claimed that 6,000 small companies have been put out of business by naked shorting, which the company says "the SEC has ignored and condoned."<ref>[http://www.usxp.com/newyorktime.pdf  Universal Express statement, June 28, 2007]</ref> A receiver was subsequently appointed to administer the company.

In June 2007, executives of Universal Express, which had claimed naked shorting of its stock, were sanctioned by a federal court judge as “repeated and remorseless violators” of the securities laws. The SEC asserted that the company “appears to exist primarily as a vehicle for fraud.” <ref>"S.E.C. Requests Receiver for Universal Express," The New York Times, June 23, 2007</ref> Referring to a court ruling barring CEO Richard Altomare from serving as an officer of a public company, [[New York Times]] columnist [[Floyd Norris]] said: "In Altomare's view, the issues that bothered the judge are irrelevant. 'Long and short of it,' he said in a statement, 'this is a naked short hallmark case in the making.' Or it is proof that it can take a long time for the SEC to stop a fraud."<ref>[http://select.nytimes.com/2007/06/22/business/22norris.html A Sad Tale of Fictional SEC Filings, The New York Times, June 22, 2007]</ref> Universal Express has claimed that 6,000 small companies have been put out of business by naked shorting, which the company says "the SEC has ignored and condoned."<ref>[http://www.usxp.com/newyorktime.pdf  Universal Express statement, June 28, 2007]</ref> A receiver was subsequently appointed to administer the company.

In July 2007, Piper Jaffray Cos. was fined $150,000 by the [[New York Stock Exchange]] (NYSE). Piper violated securities trading rules from January through May of 2005, selling shares without borrowing them, and also failing to "cover short sales in a timely manner", according to the NYSE. <ref>[http://www.nyse.com/DiscAxn/discAxn_07_2007.html "Member Firm Disciplined for Violations of SEC Rule on Short Sales and Operational and Supervisory Violations," NYSE Regulation, July 11, 2007]</ref>  At the time of this fine, the NYSE had levied over $1.9 million in fines for naked short sales over seven regulatory actions.<ref> [http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afpYSjiXF7iE "Piper Fined by the NYSE Over Short-Sale Violations", Edgar Ortega, Bloomberg News] </ref>

In July 2007, Piper Jaffray Cos. was fined $150,000 by the [[New York Stock Exchange]] (NYSE). Piper violated securities trading rules from January through May 2005, selling shares without borrowing them, and also failing to "cover short sales in a timely manner", according to the NYSE.<ref>[http://www.nyse.com/DiscAxn/discAxn_07_2007.html "Member Firm Disciplined for Violations of SEC Rule on Short Sales and Operational and Supervisory Violations," NYSE Regulation, July 11, 2007]</ref>  At the time of this fine, the NYSE had levied over $1.9 million in fines for naked short sales over seven regulatory actions.<ref>[http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afpYSjiXF7iE "Piper Fined by the NYSE Over Short-Sale Violations", Edgar Ortega, Bloomberg News]</ref>

Also in July 2007, the [[American Stock Exchange]] fined two options market makers for violations of Regulation SHO. SBA Trading was sanctioned for $5 million, and ALA Trading was fined $3 million, which included disgorgement of profits.  Both firms and their principals were suspended from association with the exchange for five years.  The exchange said the firms used an exemption to Reg. SHO for options [[market makers]] to "impermissibly engage in naked short selling." <ref> [http://www.amex.com/atamex/regulation/discipline/2007/BArensteinALA_Decision_072007.pdf Amex Discplinary Decisions, ALA Trading]</ref> <ref>[http://www.amex.com/atamex/regulation/discipline/2007/SArensteinSBA_Decision_072007.pdf Amex Discplinary Decisions, SBA Trading]</ref><ref>[http://www.amex.com/atamex/news/press/sn_regAA_073107.htm American Stock Exchange announcement of disciplinary action, July 31, 2007]</ref>

Also in July 2007, the [[American Stock Exchange]] fined two options market makers for violations of Regulation SHO. SBA Trading was sanctioned for $5 million, and ALA Trading was fined $3 million, which included disgorgement of profits.  Both firms and their principals were suspended from association with the exchange for five years.  The exchange said the firms used an exemption to Reg. SHO for options [[market makers]] to "impermissibly engage in naked short selling." <ref>[http://www.amex.com/atamex/regulation/discipline/2007/BArensteinALA_Decision_072007.pdf Amex Discplinary Decisions, ALA Trading]</ref><ref>[http://www.amex.com/atamex/regulation/discipline/2007/SArensteinSBA_Decision_072007.pdf Amex Discplinary Decisions, SBA Trading]</ref><ref>[http://www.amex.com/atamex/news/press/sn_regAA_073107.htm American Stock Exchange announcement of disciplinary action, July 31, 2007]</ref>

In October 2007, the SEC settled charges against New York hedge fund adviser Sandell Asset Management Corp. and three executives of the firm for, among other things, shorting stock without locating shares to borrow. Fines totaling $8 million were imposed, and the firm neither admitted nor denied the charges.<ref>[http://www.sec.gov/news/press/2007/2007-216.htm]"SEC Charges New York Hedge Fund Adviser With Short Sale Violations in Connection With Hibernia-Capital One Merger," SEC Press Release, Oct. 10, 2007</ref>

In October 2007, the SEC settled charges against New York hedge fund adviser Sandell Asset Management Corp. and three executives of the firm for, among other things, shorting stock without locating shares to borrow. Fines totaling $8 million were imposed, and the firm neither admitted nor denied the charges.<ref>[http://www.sec.gov/news/press/2007/2007-216.htm]"SEC Charges New York Hedge Fund Adviser With Short Sale Violations in Connection With Hibernia-Capital One Merger," SEC Press Release, Oct. 10, 2007</ref>

===Further regulatory developments===

===Further regulatory developments===

In July 2006, the [[Securities Exchange Commission|SEC]] proposed to amend [[Regulation SHO]], to further reduce failures to deliver securities.<ref>{{cite web|url=[http://www.sec.gov/rules/proposed/2006/34-54154.pdf|author=US SEC|title=Proposed SEC 17 CFR PART 242 (Release No. 34-54154; File No. S7-12-06) RIN 3235-AJ57 Amendments to Regulation SHO}}</ref> SEC Chairman [[Chris Cox|Christopher Cox]] referred to "the serious problem of abusive naked short sales, which can be used as a tool to drive down a company's stock price." and that the SEC is "concerned about the persistent failures to deliver in the market for some securities that may be due to loopholes in Regulation SHO.<ref>{{cite web|url=http://www.sec.gov/news/speech/2006/spch071206cc2.htm|title=Opening Statements at the US Securities and Exchange Commission Open Meeting|date=July 12, 2006|author=Christopher Cox}}</ref>  

In July 2006, the [[Securities Exchange Commission|SEC]] proposed to amend [[Regulation SHO]], to further reduce failures to deliver securities.<ref>{{cite web|url=http://www.sec.gov/rules/proposed/2006/34-54154.pdf|author=US SEC|title=Proposed SEC 17 CFR PART 242 (Release No. 34-54154; File No. S7-12-06) RIN 3235-AJ57 Amendments to Regulation SHO}}</ref> SEC Chairman [[Chris Cox|Christopher Cox]] referred to "the serious problem of abusive naked short sales, which can be used as a tool to drive down a company's stock price." and that the SEC is "concerned about the persistent failures to deliver in the market for some securities that may be due to loopholes in Regulation SHO.<ref>{{cite web|url=http://www.sec.gov/news/speech/2006/spch071206cc2.htm|title=Opening Statements at the US Securities and Exchange Commission Open Meeting|date=July 12, 2006|author=Christopher Cox}}</ref>  

In March 2007, the Securities and Exchange Board of India (SEBI), which disallowed short sales altogether in 2001 as a result of the [[Ketan Parekh]] affair, reintroduced short selling under regulations similar to those developed in the United States. In conjunction with this rule change, SEBI outlawed all naked short selling.<ref>{{cite web|url=http://www.thehindubusinessline.com/2007/12/24/stories/2007122451310200.htm |title=What is short selling? |author=The Hindu Business Line |date=December 23,2007}}</ref><ref>{{cite web|url=http://www.financialexpress.com/fe_full_story.php?content_id=158750 |title=Sebi allows all to sell short |author=The Financial Express |date=March 22,2007}}</ref>

In March 2007, the Securities and Exchange Board of India (SEBI), which disallowed short sales altogether in 2001 as a result of the [[Ketan Parekh]] affair, reintroduced short selling under regulations similar to those developed in the United States. In conjunction with this rule change, SEBI outlawed all naked short selling.<ref>{{cite web|url=http://www.thehindubusinessline.com/2007/12/24/stories/2007122451310200.htm |title=What is short selling? |author=The Hindu Business Line |date=December 23, 2007}}</ref><ref>{{cite web|url=http://www.financialexpress.com/fe_full_story.php?content_id=158750 |title=Sebi allows all to sell short |author=The Financial Express |date=March 22, 2007}}</ref>

In June 2007,  the SEC voted to remove the grandfather provision that allowed fails to deliver that existed before Reg SHO to be exempt from Reg SHO. SEC Chairman Christopher Cox called naked short selling “a fraud that the commission is bound to prevent and to punish.” The SEC also said it was considering removing an exemption from the rule for options market makers.<ref>{{cite web|url=http://www.nytimes.com/2007/06/14/business/14sec.html?ref=business |title=S.E.C. Ends Decades-Old Price Limits on Short Selling |author=Floyd Norris, The New York Times |date=June 14,2007}}</ref> Removal of the grandfather provision and naked shorting restrictions generally have been endorsed by the [[U.S. Chamber of Commerce]].<ref>[http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070914%5cACQDJON200709141137DOWJONESDJONLINE000695.htm  "US Chamber Urges Further SEC Curbs On Naked Short Sales," Dow Jones News Service, Sept. 14, 2007]</ref>

In June 2007,  the SEC voted to remove the grandfather provision that allowed fails to deliver that existed before Reg SHO to be exempt from Reg SHO. SEC Chairman Christopher Cox called naked short selling “a fraud that the commission is bound to prevent and to punish.” The SEC also said it was considering removing an exemption from the rule for options market makers.<ref>{{cite web|url=http://www.nytimes.com/2007/06/14/business/14sec.html?ref=business |title=S.E.C. Ends Decades-Old Price Limits on Short Selling |author=Floyd Norris, The New York Times |date=June 14, 2007}}</ref> Removal of the grandfather provision and naked shorting restrictions generally have been endorsed by the [[U.S. Chamber of Commerce]].<ref>[http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070914%5cACQDJON200709141137DOWJONESDJONLINE000695.htm  "US Chamber Urges Further SEC Curbs On Naked Short Sales," Dow Jones News Service, Sept. 14, 2007]</ref>

In March 2008, SEC Chairman [[Christopher Cox]] in March 2008 gave a speech entitled the "'Naked' Short Selling Anti-Fraud Rule," in which he announced new SEC efforts to combat naked short selling.<ref>[http://www.sec.gov/news/speech/2008/video0030408cc_short.wmv Video of  [[Christopher Cox]]] March 2008 </ref> Under the proposal, the SEC would create an antifraud rule targeting those who knowingly deceive brokers about having located securities before engaging in short sales, and who fail to deliver the securities by the delivery date.  Cox said the proposal would address concerns about short-selling abuses, particularly in the market for small-cap stocks.  Even with the regulation in place, the SEC received hundreds of complaints in 2007 about alleged abuses involving short sales.    SEC Commissioners Paul Atkins and Kathleen Casey expressed support for the crackdown.<ref>[http://online.wsj.com/article/SB120468499197912561.html?mod=googlenews_wsj SEC Proposes Teeth for Short-Selling Rules], By Judith A. Burns</ref><ref>[http://www.reuters.com/article/etfNews/idUSN0446331920080304 SEC proposes tougher "naked" short selling rules], Mar 4, 2008 Reuter</ref>

In March 2008, SEC Chairman [[Christopher Cox]] in March 2008 gave a speech entitled the "'Naked' Short Selling Anti-Fraud Rule," in which he announced new SEC efforts to combat naked short selling.<ref>[http://www.sec.gov/news/speech/2008/video0030408cc_short.wmv Video of  [[Christopher Cox]]] March 2008</ref> Under the proposal, the SEC would create an antifraud rule targeting those who knowingly deceive brokers about having located securities before engaging in short sales, and who fail to deliver the securities by the delivery date.  Cox said the proposal would address concerns about short-selling abuses, particularly in the market for small-cap stocks.  Even with the regulation in place, the SEC received hundreds of complaints in 2007 about alleged abuses involving short sales.    SEC Commissioners Paul Atkins and Kathleen Casey expressed support for the crackdown.<ref>[http://online.wsj.com/article/SB120468499197912561.html?mod=googlenews_wsj SEC Proposes Teeth for Short-Selling Rules], By Judith A. Burns</ref><ref>[http://www.reuters.com/article/etfNews/idUSN0446331920080304 SEC proposes tougher "naked" short selling rules], Mar 4, 2008 Reuter</ref>

===Litigation===

===Litigation===

The [[Depository Trust and Clearing Corporation]] has been criticized for its approach to naked short selling.<ref>[http://online.wsj.com/public/article/SB118359867562957720-5Yb1Y_mpcl9a2nKbc0IaV0tDHyk_20070712.html  "Blame the 'Stock Vault'?" [[The Wall Street Journal]], July 5, 2007]</ref><ref>[http://www.dtcc.com/news/press/releases/2007/wsj_response.php?lpos=3&lid=3 DTCC response to Wall Street Journal Article, July 6, 2007]</ref> DTCC has been sued with regard to its alleged participation in naked short selling, and the issue of DTCC's possible involvement has been taken up by Senator [[Robert Foster Bennett|Robert Bennett]] and discussed by the NASAA and in articles -- disagreed with by DTCC -- in the [[Wall Street Journal]] and [[Euromoney Magazine]].  |date=[[July 5]], [[2007]]}}</ref>

The [[Depository Trust and Clearing Corporation]] has been criticized for its approach to naked short selling.<ref>[http://online.wsj.com/public/article/SB118359867562957720-5Yb1Y_mpcl9a2nKbc0IaV0tDHyk_20070712.html  "Blame the 'Stock Vault'?" [[The Wall Street Journal]], July 5, 2007]</ref><ref>[http://www.dtcc.com/news/press/releases/2007/wsj_response.php?lpos=3&lid=3 DTCC response to Wall Street Journal Article, July 6, 2007]</ref> DTCC has been sued with regard to its alleged participation in naked short selling, and the issue of DTCC's possible involvement has been taken up by Senator [[Robert Foster Bennett|Robert Bennett]] and discussed by the NASAA and in articles—disagreed with by DTCC—in the [[Wall Street Journal]] and [[Euromoney Magazine]].  |date=[[July 5]], [[2007]]}}</ref>

In 2007, WayPoint Biomedical sued DTCC for DTCC's refusal to comply with a [[subpoena]] request for documents Waypoint needs to track trades in the company's shares.<ref name=Gen>{{cite web|accessdate=2007-12-25

In 2007, WayPoint Biomedical sued DTCC for DTCC's refusal to comply with a [[subpoena]] request for documents Waypoint needs to track trades in the company's shares.<ref name=Gen>{{cite web|accessdate=2007-12-25

|url=http://www.genengnews.com/news/bnitem.aspx?name=19497609

|url=http://www.genengnews.com/news/bnitem.aspx?name=19497609

|title="WayPoint Biomedical Holdings, Inc. Files Lawsuit Against The Depository Trust and Clearing Corporation (DTCC)"

|title=WayPoint Biomedical Holdings, Inc. Files Lawsuit Against The Depository Trust and Clearing Corporation (DTCC)

|date=[[June 25]], [[2007]]

|date=[[June 25]], [[2007]]

|work=GEN (Genetic Engineering and Biotech News}}</ref>   

|work=GEN (Genetic Engineering and Biotech News}}</ref>   

Ten suits concerning naked short-selling filed against the DTCC were withdrawn or dismissed by May 2005.<ref> "Nevada Court Dismisses Nanopierce Lawsuit Against DTCC On Naked Short Selling," Depository Trust Clearing Corporation, http://www.dtcc.com/Publications/dtcc/may05/nanopierce.html, May 2005. Accessed February 5, 2007</ref>  

Ten suits concerning naked short-selling filed against the DTCC were withdrawn or dismissed by May 2005.<ref>"Nevada Court Dismisses Nanopierce Lawsuit Against DTCC On Naked Short Selling," Depository Trust Clearing Corporation, http://www.dtcc.com/Publications/dtcc/may05/nanopierce.html, May 2005. Accessed February 5, 2007</ref>  

A suit by Electronic Trading Group, naming major Wall Street brokerages, was filed in April 2006 and dismissed in December 2007.<ref>{{cite news | url = http://www.forbes.com/business/2006/04/13/naked-shorts-lawsuit-cx_lm_0413naked.html | title = Naked Shorts | publisher = [[Forbes]] | first = Liz | last = Moyer | date = [[2006-04-13]] | accessdate = 2007-10-10}}</ref>.<ref>[http://money.cnn.com/news/newsfeeds/articles/djf500/200712201132DOWJONESDJONLINE000859_FORTUNE5.htm US Judge Dismisses Naked Short Selling Suit Vs. Brokers, Dow Jones News Service, Dec. 20, 2007]</ref>

A suit by Electronic Trading Group, naming major Wall Street brokerages, was filed in April 2006 and dismissed in December 2007.<ref>{{cite news | url = http://www.forbes.com/business/2006/04/13/naked-shorts-lawsuit-cx_lm_0413naked.html | title = Naked Shorts | publisher = [[Forbes]] | first = Liz | last = Moyer | date = [[2006-04-13]] | accessdate = 2007-10-10}}</ref><ref>[http://money.cnn.com/news/newsfeeds/articles/djf500/200712201132DOWJONESDJONLINE000859_FORTUNE5.htm US Judge Dismisses Naked Short Selling Suit Vs. Brokers, Dow Jones News Service, Dec. 20, 2007]</ref>

Two separate lawsuits, filed in 2006 and 2007<ref>{{cite news | title = Naked Short Victim Strikes Back | url = http://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html | date = [[2007-02-02]] | accessdate = 2007-10-10 }}</ref> by [[NovaStar Financial, Inc.]] shareholders and [[Overstock.com]], named as defendants ten Wall Street prime brokers. They claimed a scheme to manipulate the companies' stock by allowing naked short selling.<ref>[http://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html A Naked Short Victim Strikes Back, Forbes.com, Feb. 2, 2007]</ref> A motion to dismiss the Overstock suit was denied in July 2007.<ref> {{cite web |url=http://www.forbes.com/wallstreet/2007/07/18/naked-shorting-overstock-biz-wallst-cx_lm_0718overstock.html

Two separate lawsuits, filed in 2006 and 2007<ref>{{cite news | title = Naked Short Victim Strikes Back | url = http://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html | date = [[2007-02-02]] | accessdate = 2007-10-10 }}</ref> by [[NovaStar Financial, Inc.]] shareholders and [[Overstock.com]], named as defendants ten Wall Street prime brokers. They claimed a scheme to manipulate the companies' stock by allowing naked short selling.<ref>[http://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html A Naked Short Victim Strikes Back, Forbes.com, Feb. 2, 2007]</ref> A motion to dismiss the Overstock suit was denied in July 2007.<ref>{{cite web |url=http://www.forbes.com/wallstreet/2007/07/18/naked-shorting-overstock-biz-wallst-cx_lm_0718overstock.html

|title=Naked Shorting Case Gains Traction|date=July 18, 2007|Author=Liz Moyer, Forbes}}</ref><ref>[http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=OSTK:US&sid=aPgnC8667Qbo Overstock Shares Rise on Court Ruling in Broker Suit], Bloomberg News, July 18, 2007</ref>

|title=Naked Shorting Case Gains Traction|date=July 18, 2007|author=Liz Moyer, Forbes}}</ref><ref>[http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=OSTK:US&sid=aPgnC8667Qbo Overstock Shares Rise on Court Ruling in Broker Suit], Bloomberg News, July 18, 2007</ref>

===State legislation===

===State legislation===

|accessdate=2007-12-25

|accessdate=2007-12-25

|url=http://www.rgm.com/articles/bloomberg2.html

|url=http://www.rgm.com/articles/bloomberg2.html

|title="Naked Short Sellers Hurt Companies With Stock They Don't Have"

|title=Naked Short Sellers Hurt Companies With Stock They Don't Have

|author=Drummond, Bob

|author=Drummond, Bob

|date=[[August 4]], [[2006]]

|date=[[August 4]], [[2006]]

|publisher=Bloomberg.com}}</ref><ref name=FinancialWire>{{cite news|accessdate=2007-12-25

|publisher=Bloomberg.com}}</ref><ref name=FinancialWire>{{cite news|accessdate=2007-12-25

|url=http://www.rgm.com/articles/financialwire.html

|url=http://www.rgm.com/articles/financialwire.html

|title="DTCC Chief Spokesperson Denies Existence of Lawsuit"

|title=DTCC Chief Spokesperson Denies Existence of Lawsuit

|date=[[May 11]], [[2004]]

|date=[[May 11]], [[2004]]

|publisher=financialwire.net}}</ref>  

|publisher=financialwire.net}}</ref>  DTCC General Counsel Larry Thompson calls the claims "pure invention."<ref name="FinancialWire"/>  

A study of trading in initial public offerings by two SEC staff economists, published in April 2007, found that excessive numbers of fails to deliver in IPO's were not correlated with naked short selling. The authors of the study said that while the findings in the paper specifically concern IPO trading, "The results presented in this paper also inform a public debate surrounding the role of short selling and fails to deliver in price formation." <ref>{{cite web|url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=981242 |title=Short Selling and Failures to Deliver in Initial Public Offerings |author=Amy K. Edwards and Kathleen Weiss Hanley|date=April 18,2007}}</ref>  

A study of trading in initial public offerings by two SEC staff economists, published in April 2007, found that excessive numbers of fails to deliver in IPO's were not correlated with naked short selling. The authors of the study said that while the findings in the paper specifically concern IPO trading, "The results presented in this paper also inform a public debate surrounding the role of short selling and fails to deliver in price formation." <ref>{{cite web|url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=981242 |title=Short Selling and Failures to Deliver in Initial Public Offerings |author=Amy K. Edwards and Kathleen Weiss Hanley|date=April 18, 2007}}</ref>  

Even though fails to deliver are viewed by some as a way of measuring the degree of naked short sales, the SEC economists said the delivery failures seen in the IPO market "cannot be explained by short selling in general or 'naked' short selling specifically."<ref>{{cite web|url=http://online.wsj.com/article/SB117737153905079711.html?mod=todays_us_money_and_investing |title=SEC Finds No 'Naked Short'-IPO Issue |author=The Wall Street Journal |date=April 24,2007}}</ref>

Even though fails to deliver are viewed by some as a way of measuring the degree of naked short sales, the SEC economists said the delivery failures seen in the IPO market "cannot be explained by short selling in general or 'naked' short selling specifically."<ref>{{cite web|url=http://online.wsj.com/article/SB117737153905079711.html?mod=todays_us_money_and_investing |title=SEC Finds No 'Naked Short'-IPO Issue |author=The Wall Street Journal |date=April 24, 2007}}</ref>

An April 2007 study conducted for Canadian market regulators by Market Regulation Services Inc. found that fails to deliver securities were not a significant problem on the Canadian market, that "less than 6% of fails resulting from the sale of a security involved short sales" and that "fails involving short sales are projected to account for only 0.07% of total short sales." <ref>{{cite web|url=http://investmentexecutive.com/client/en/News/DetailNews.asp?Id=38819&cat=8&IdSection=8&PageMem=&nbNews=&IdPub=|title=No evidence of excessive failed trades on Canadian marketplaces: study |author=Investment Executive|date=April 15,2007}}</ref><ref>{{cite web|url=http://docs.rs.ca/ArticleFileMain.asp?Instance=100&ID=64AAACCA3D8D41B6A20FF49AB7F4770D|title=Results of the Statistical Study of Failed Trades April 13, 2007|author=Market Regulation and Services|date=April 13,2007}}</ref>

An April 2007 study conducted for Canadian market regulators by Market Regulation Services Inc. found that fails to deliver securities were not a significant problem on the Canadian market, that "less than 6% of fails resulting from the sale of a security involved short sales" and that "fails involving short sales are projected to account for only 0.07% of total short sales." <ref>{{cite web|url=http://investmentexecutive.com/client/en/News/DetailNews.asp?Id=38819&cat=8&IdSection=8&PageMem=&nbNews=&IdPub=|title=No evidence of excessive failed trades on Canadian marketplaces: study |author=Investment Executive|date=April 15, 2007}}</ref><ref>{{cite web|url=http://docs.rs.ca/ArticleFileMain.asp?Instance=100&ID=64AAACCA3D8D41B6A20FF49AB7F4770D|title=Results of the Statistical Study of Failed Trades April 13, 2007|author=Market Regulation and Services|date=April 13, 2007}}</ref>

Until at least 2007, most Wall Street financial journalists took the position that naked short selling is not harmful and its prevalence has been exaggerated by corporate officials seeking to blame external forces for their own shortcomings.  

Until at least 2007, most Wall Street financial journalists took the position that naked short selling is not harmful and its prevalence has been exaggerated by corporate officials seeking to blame external forces for their own shortcomings.  

</ref>  

</ref>  

In the ''[[New York Times]]'', several columnists have criticized the campaign against naked short selling. Chief financial correspondent Floyd Norris contended that investors of stocks that are being shorted "might do better to try to understand why some think the shares are overvalued, rather than simply rail about unfair short selling."<ref>{{cite news | url=http://select.nytimes.com/gst/abstract.html?res=F00A16FE3A5E0C7B8DDDAB0894DD404482 | title=A New S.E.C. Rule Fails to Raise Share Prices, and Some Are Angry | first=Floyd | last=Norris | authorlink=Floyd Norris | work=[[The New York Times]] | date=[[2005-02-18]] | accessdate=2007-01-17 }}</ref>.

In the ''[[New York Times]]'', several columnists have criticized the campaign against naked short selling. Chief financial correspondent Floyd Norris contended that investors of stocks that are being shorted "might do better to try to understand why some think the shares are overvalued, rather than simply rail about unfair short selling.".<ref>{{cite news | url=http://select.nytimes.com/gst/abstract.html?res=F00A16FE3A5E0C7B8DDDAB0894DD404482 | title=A New S.E.C. Rule Fails to Raise Share Prices, and Some Are Angry | first=Floyd | last=Norris | authorlink=Floyd Norris | work=[[The New York Times]] | date=[[2005-02-18]] | accessdate=2007-01-17 }}</ref>  

''New York Times'' financial columnist [[Joseph Nocera]] has criticized naked shorting allegations as diversionary complaints, and said that "most people who understand the issue or have looked into it think it's pretty bogus."<ref>Nocera, Joseph, "New Crusade for Master of Overstock," The New York Times, June 10, 2006</ref>

''New York Times'' financial columnist [[Joseph Nocera]] has criticized naked shorting allegations as diversionary complaints, and said that "most people who understand the issue or have looked into it think it's pretty bogus."<ref>Nocera, Joseph, "New Crusade for Master of Overstock," The New York Times, June 10, 2006</ref>

Author, columnist and former ''[[Business Week]]'' investigative reporter [[Gary Weiss]] maintains that the [[Securities and Exchange Commission|SEC]] enacted Regulation SHO in part due to pressure from a handful of small and microcap companies.<ref name=bw-weiss/> He also cites economic justifications for naked short selling and downplays its significance as a problem for the market. <ref name=bw-weiss>{{cite web|url=http://www.businessweek.com/magazine/content/03_49/b3861105_mz020.htm|title=Commentary: Don't Force The Shorts To Get Dressed |author=Gary Weiss|date=December 8, 2003}}</ref><ref>{{cite book | first=Gary | last=Weiss | authorlink=Gary Weiss | origyear=2006 | origmonth=May | title=Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments | publisher=Portfolio | isbn=1-59184-094-5}}</ref>

Author, columnist and former ''[[Business Week]]'' investigative reporter [[Gary Weiss]] maintains that the [[Securities and Exchange Commission|SEC]] enacted Regulation SHO in part due to pressure from a handful of small and microcap companies.<ref name=bw-weiss/> He also cites economic justifications for naked short selling and downplays its significance as a problem for the market.<ref name=bw-weiss>{{cite web|url=http://www.businessweek.com/magazine/content/03_49/b3861105_mz020.htm|title=Commentary: Don't Force The Shorts To Get Dressed |author=Gary Weiss|date=December 8, 2003}}</ref><ref>{{cite book | first=Gary | last=Weiss | authorlink=Gary Weiss | year=2006 | origmonth=May | title=Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments | publisher=Portfolio | isbn=1-59184-094-5}}</ref>

===Naked short selling critics===

===Naked short selling critics===

The SEC hired an economist, Leslie Boni, to investigate this issue. In 2006 she wrote a seminal paper, [http://econpapers.repec.org/article/eeefinmar/v_3A9_3Ay_3A2006_3Ai_3A1_3Ap_3A1-26.htm "Strategic Delivery Failures in US Equity Markets"], showing that delivery failures were much more prevalent than had previsoly been thought, that the mechanisms that were supposed to stop them were triggered in .12% of the relevant cases, and that the distribution of delivery failures showed purpose and could not be explained as random human error. As her paper's summary put it: "Sellers of U.S. equities who have not provided shares by the third day after the transaction are said to have 'failed-to-deliver' shares. Using a unique data set of the entire cross-section of U.S. equities, we document the pervasiveness of delivery failures and evidence consistent with the hypothesis that market makers strategically fail to deliver shares when borrowing costs are high. We then show that many firms that allow others to fail to deliver to them are themselves responsible for fails-to-deliver in other stocks."

The SEC hired an economist, Leslie Boni, to investigate this issue. In 2006 she wrote a seminal paper, [http://econpapers.repec.org/article/eeefinmar/v_3A9_3Ay_3A2006_3Ai_3A1_3Ap_3A1-26.htm "Strategic Delivery Failures in US Equity Markets"], showing that delivery failures were much more prevalent than had previsoly been thought, that the mechanisms that were supposed to stop them were triggered in .12% of the relevant cases, and that the distribution of delivery failures showed purpose and could not be explained as random human error. As her paper's summary put it: "Sellers of U.S. equities who have not provided shares by the third day after the transaction are said to have 'failed-to-deliver' shares. Using a unique data set of the entire cross-section of U.S. equities, we document the pervasiveness of delivery failures and evidence consistent with the hypothesis that market makers strategically fail to deliver shares when borrowing costs are high. We then show that many firms that allow others to fail to deliver to them are themselves responsible for fails-to-deliver in other stocks."

[[Robert J. Shapiro]],  former undersecretary of commerce for economic affairs, has claimed that naked short selling has cost investors $100 billion and driven 1,000 companies into the ground.<ref>[http://www.time.com/time/magazine/article/0,9171,1126706-3,00.html Watch Out, They Bite!] by Daniel Kadlec, Nov. 09, 2005, [[Time magazine]] </ref>  

[[Robert J. Shapiro]],  former undersecretary of commerce for economic affairs, has claimed that naked short selling has cost investors $100 billion and driven 1,000 companies into the ground.<ref>[http://www.time.com/time/magazine/article/0,9171,1126706-3,00.html Watch Out, They Bite!] by Daniel Kadlec, Nov. 09, 2005, [[Time magazine]]</ref>  

The '''North American Securities Administrators Association''', representing state [[stock]] regulators, filed a brief saying that if these claims were correct, its [[shareholder]]s "have been the victims of [[fraud]] and [[stock manipulation|manipulation]] at the hands of the very entities that should be serving their interest."<ref> [http://www.nasaa.org/content/Files/ShortSalesComment.37990-38287.pdf "Letter from North American Securities Administrators Association to Jonathan Katz, Secretary of the [[Securities and Exchange Commission]]," dated January 5, 2004, accessed 23-2-2008]</ref>[http://online.wsj.com/public/article/SB118359867562957720-][http://www.nasaa.org/content/Files/Amicus_Whistler_Brief.pdf]

The '''North American Securities Administrators Association''', representing state [[stock]] regulators, filed a brief saying that if these claims were correct, its [[shareholder]]s "have been the victims of [[fraud]] and [[stock manipulation|manipulation]] at the hands of the very entities that should be serving their interest."<ref>[http://www.nasaa.org/content/Files/ShortSalesComment.37990-38287.pdf "Letter from North American Securities Administrators Association to Jonathan Katz, Secretary of the [[Securities and Exchange Commission]]," dated January 5, 2004, accessed 23-2-2008]</ref>[http://online.wsj.com/public/article/SB118359867562957720-][http://www.nasaa.org/content/Files/Amicus_Whistler_Brief.pdf]

Ralph Lambiase, head of the Connecticut Securities Agency and the NASAA, declared his disappointment at how the industry was handling the issue as a whole.{{Fact|date=June 2007}}  

Ralph Lambiase, head of the Connecticut Securities Agency and the NASAA, declared his disappointment at how the industry was handling the issue as a whole.{{Fact|date=June 2007}}  

In February, 2007 Forbes Magazine published two stories supporting the view that naked shorting is a serious problem in US capital markets. One article, [http://www.forbes.com/free_forbes/2007/0212/068.html "Naked and Confused"], described the naked shorting attack on Sedona, a Pennsylvania software firm. Another article, [http://www.forbes.com/free_forbes/2007/0212/064.html "Sewer Pipes"], explored the apparent involvement of the Russian Mafia in this issue: "Hedge funds are posting nice returns from deals that may involve ex-cons, stock scammers--even the Mob."  

In February, 2007 Forbes Magazine published two stories supporting the view that naked shorting is a serious problem in US capital markets. One article, [http://www.forbes.com/free_forbes/2007/0212/068.html "Naked and Confused"], described the naked shorting attack on Sedona, a Pennsylvania software firm. Another article, [http://www.forbes.com/free_forbes/2007/0212/064.html "Sewer Pipes"], explored the apparent involvement of the Russian Mafia in this issue: "Hedge funds are posting nice returns from deals that may involve ex-cons, stock scammers--even the Mob."  

In March 2007, [[Bloomberg Television]] featured a special on naked short selling, "Phantom Shares" that presented a sharp criticism of naked short selling in the US capital markets. Phantom Shares' was nominated for an Emmmy for Long Form Investigative Journalism. <ref>{{cite web|url=http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vIrfhgQPAJ1s.asf |title=Phantom Shares |author=Bloomberg Television |date=March 12,2007}}</ref> <ref>{{cite web|url=http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=OSTK:US&sid=aEOpTqmLZB7A|title=`Phantom Shares,' Failed Trades and Naked Shorts: (Transcript) |author=Bloomberg Television |date=March 14,2007}}</ref>  

In March 2007, [[Bloomberg Television]] featured a special on naked short selling, "Phantom Shares" that presented a sharp criticism of naked short selling in the US capital markets. Phantom Shares' was nominated for an Emmmy for Long Form Investigative Journalism.<ref>{{cite web|url=http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vIrfhgQPAJ1s.asf |title=Phantom Shares |author=Bloomberg Television |date=March 12, 2007}}</ref><ref>{{cite web|url=http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=OSTK:US&sid=aEOpTqmLZB7A|title=`Phantom Shares,' Failed Trades and Naked Shorts: (Transcript) |author=Bloomberg Television |date=March 14, 2007}}</ref>  

In May 2007, Max Keiser reported on naked short selling as part of a report on [[Al Jazeera English|Al Jazeera]]'s ''People and Power'' show. <ref>{{cite web

In May 2007, Max Keiser reported on naked short selling as part of a report on [[Al Jazeera English|Al Jazeera]]'s ''People and Power'' show.<ref>{{cite web

|url=http://english.aljazeera.net/NR/exeres/71C76C20-1F4F-458B-8FB9-B1FA0A2F60F6.htm  

|url=http://english.aljazeera.net/NR/exeres/71C76C20-1F4F-458B-8FB9-B1FA0A2F60F6.htm  

|title=Rigged Markets

|title=Rigged Markets

On April 3, 2008, SEC Chairman Chris Cox, [http://youtube.com/watch?v=z-aInPKicho testified to the United States Senate] that the SEC is investigating whether or not Bear Stearns was brought down by "illegal naked short selling".

On April 3, 2008, SEC Chairman Chris Cox, [http://youtube.com/watch?v=z-aInPKicho testified to the United States Senate] that the SEC is investigating whether or not Bear Stearns was brought down by "illegal naked short selling".

In May, 2008, The US Chamber of commerce made public [[http://www.uschamber.com/NR/rdonlyres/eelp5twlvfbseijr4jhevkwaxihxp5kqhkpvwswiuwrtse6twczh3keuwi22wdgibjzfey4cqyscfbkge6pljpkddwa/ProposedRule10b215%2e22%2e08.pdf a letter]] in which they said, "We are pleased that the SEC... recognizes the serious problems with naked short selling and is taking additional steps to curb this abusive practice. We agree with Chairman Cox that naked short selling is a serious fraud that needs to be eliminated. However, we remain concerned that the current proposal does not address critical aspects of this disruptive practice."

In May, 2008, The US Chamber of commerce made public [http://www.uschamber.com/NR/rdonlyres/eelp5twlvfbseijr4jhevkwaxihxp5kqhkpvwswiuwrtse6twczh3keuwi22wdgibjzfey4cqyscfbkge6pljpkddwa/ProposedRule10b215%2e22%2e08.pdf a letter] in which they said, "We are pleased that the SEC... recognizes the serious problems with naked short selling and is taking additional steps to curb this abusive practice. We agree with Chairman Cox that naked short selling is a serious fraud that needs to be eliminated. However, we remain concerned that the current proposal does not address critical aspects of this disruptive practice."

On July 15, 2008, "The Securities and Exchange Commission today issued an [http://www.sec.gov/rules/other/2008/34-58166.pdf emergency order] to enhance investor protections against "naked" short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks," as their [http://www.sec.gov/news/press/2008/2008-143.htm press release]  stated.

On July 15, 2008, "The Securities and Exchange Commission today issued an [http://www.sec.gov/rules/other/2008/34-58166.pdf emergency order] to enhance investor protections against "naked" short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks," as their [http://www.sec.gov/news/press/2008/2008-143.htm press release]  stated.

[[:Category:Stock market]]

[[:Category:Stock market]]