April 30, 2007
Naked short selling by anyone other than the market maker should be illegal. It hits small companies that make honest mistakes the hardest and their investors. It allows unscrupilous individuals with millions of dollars to manipulate a stock down in their favor by creating a false selling pressure. No doubt there are some conpanies that may fail anyways, but according to experts that have studied the affects of naked shorting, it has also destroyed good companies that may have offered something innovative and new to the market place. It also allows larger rivals to destroy their rival's stock by destroying the share price.