July 24, 2008
I agree that naked shorting is a huge problem, and can certainly cause some manipulation of stocks. At the same time, requiring a short seller to take posession before shorting does little more than shackle liquidity in the market. A locate should be required. At the same time, a reasonable amount of time, as is already written into the law, should be allowed to take delivery of the borrowed shares. Whaty the SEC SHOULD do is focus on the Reg SHO list. Some of the companies on that list have been on there for weeks, if not months. THAT is a failure of the system.
I believe this current rule, as written, is little more than protectionism - and that of several banks, particularly the Investment Banks - that by most accounting standards are insolvent. Their stocks SHOULD be trading in the single digits, as should any company's stock who have similar debt and negative earnings. Protecting them from this is certainly a slap in the face of capitalism and all that is good about the United States