July 16, 2008
Surely it is common sense that a short sale of a stock that a practioner does not have verifiable exclusive access to ( via borrowing ), for the duration of the sale, until it is repurchased and returned, is fraudulant and dishonest.
Why should the issue of "naked" short sales of stock be so belaboured?
Simply enforce the requirement that no share can be sold short unless the practioner has it in his exclusive possesion, and that this fact is easily verifiable.
As a private investor, I am sure I could come up with a simple rule that all brokerages must adhere to, such as "No one can sell a share unless it is verifiably in their exclusive possesion.". Else they are complicit with the practioner in fraud and theft.
The step "verifiably in their exclusive possesion" must occur before any sale. Else the sale cannot proceed.
Then the SEC must make it easy to enforce and verify. No loopholes, no looking the other way. It is fraud and theft.