May 19, 2008
Naked Short Selling is Illegal
In the end, this practice amounts to financial terrorism against the United States. Legitimate companies are forced out of business. Dedicated employees, who often received stock as part of their compensation, lose their jobs and their stock investments. Communities lose out on the opportunity to earn substantial revenues and the employee base that a successful growing business can provide and as a consequence, the stockholders lose their hard-earned money.
Even more, they lose their faith in the stock market as a whole and vow to never invest in a start-up company again. Legitimate lenders stop loaning money to small businesses (which appear to be a much higher risk) and eventually, the entire entrepreneurial spirit of America is put at risk. Make no mistake, lives are literally destroyed by this insidious practice.
Both the SEC and the NASD have known about this practice for years, yet have stood idle while Canadian brokers, offshore financial institutions, and their American co-conspirators have systematically financially raped and pillaged our small businesses, their employees, and small investors. Recently, numerous lawsuits have been filed by victim companies naming dozens of brokerage firms as defendants. Individuals and small independent organizations have attempted to draw attention to the problems, and finally, a few small publications have begun to provide some coverage of the situation.
Proposed NASD and SEC rules don't go far enough to prevent this practice. Until Congress steps in and forces everyone to play by the same rules and makes those rules tougher in regards to short selling in general, and naked short selling in particular, the OTC market will continue to be a rigged game. The well being of America will continue to be threatened by unscrupulous foreign and domestic interests.