August 13, 2008
Naked shorting has been banned for more than three years under Regulation SHO, as I understand, but the ban hasn't been enforced uniformly -- to the detriment of the small individual investor particularly. SHO is a good rule and should be enforced uniformly in all markets, so that all investors are on a level playing field. The detrimental effect of naked shorting has been amply demonstrated by market behavior before and after Regulation SHO began to be enforced on the Group of Nineteen financial companies, including Fannie Mae and Freddie Mac. Attention also needs to be paid to equity activity outside the public security exchanges, including hedge fund regulation if necessary.