'''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. |