July 18, 2008
The past actions of the SEC on naked shorting are a disgrace. It has allowed multiple and repeated violations of even the excessively long periods of time allowed market makers to actually find the shares they are shorting.
Shorting of stocks is useful to keep markets liquid and efficient.
Naked shorting serves no purpose except to enrich big speculators at the expense of the average investor. In this day of electronic transactions the present rules allow excessive time. Physical shares aren't used anymore, there isn't anyone hauling physical shares back and forth. And even these archaic rules remain unenforced by the SEC.
The statements that naked shorting isn't common are nonsense if it's concentrated in a few stocks and those are ones you own.
It's past time for the SEC to stop ALL naked shorting in ALL stocks, to put some real penalties against brokers or dealers that allow it. The way the rules are now it's an invitation for big investors to manipulate price.