Naked Shorting-Hedge Fund & Market Maker manipulation? Message Board

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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?

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From: dvdw©	10/15/2008 8:07:11 AM
	1 Recommendation Read Replies (1) of 5034

SEC Issues Rules in Naked Short Selling The Securities and Exchange Commission yesterday issued two final rules and an interim final rule on naked short selling. The first rule amends SEC short- sale regulations to eliminate the options market- maker exception to the close-out requirement of Regulation SHO, which updates much earlier short-sale rules. The amendment is intended to reduce the number of "fails-to-deliver" in certain equity securities. ABA and others believe that there is a high correlation between "fails-to-deliver" and naked short selling. Read the final rule. The second final rule covers short sellers who deceive broker-dealers or any other market participants. The rule clarifies that it is an antifraud violation for short sellers to deceive others about their intention or ability to deliver securities in time for settlement, and then fail to deliver by the settlement date. Abusive naked short selling has always been illegal under the SEC's general antifraud rules, but the agency believes that a specific antifraud rule aimed at short sellers will help emphasize that these activities are illegal. Read the final rule. The interim final rule addresses potentially abusive naked short selling by requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date -- three days after the sale transaction date, or T+3 -- and imposes penalties for failing to do so. The SEC on Sept. 17 issued an emergency order that accomplished the same result. The interim final rule continues the T+3 closeout requirement while comments are accepted. ABA will use the comment period to call for reinstatement of an uptick rule and to suggest other means for monitoring short selling practices that have detrimentally affected bank stock prices. Read the interim final rule. For more information, contact ABA's Sally Miller.

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