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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: basserdan who wrote (3584)	7/21/2008 10:32:52 AM
From: Max Fletcher	Read Replies (2) \| Respond to of 5034

Isn't Cox's conclusion positive, in that he implies we need to get rid of NSS for the entire market? Naked short selling can undermine the market's integrity. For the financial sector in this crisis, certainly, but as soon as possible for the entire market, this is one worry investors shouldn't have.

To: basserdan who wrote (3584)	7/21/2008 11:13:56 AM
From: rrufff	Read Replies (1) \| Respond to of 5034

A paragraph to key on Naked short selling can turbocharge these "distort and short" schemes. In a naked short, the usual process of short selling is circumvented, because the seller doesn't actually borrow the stock and simply fails to deliver it. For this reason, naked shorting can occur even when actual shares aren't available in the market. It allows manipulators to force prices down without regard to supply and demand.

To: basserdan who wrote (3584)	7/24/2008 9:19:41 AM
From: Max Fletcher	Respond to of 5034

Today's WSJ has an Op-Ed by Christopher Cox. Parts of it are similarly worded to the article you referenced. A couple snippets: But Regulation SHO also offers an alternative to these requirements if the broker has "reasonable grounds" to believe that the security can be borrowed. This could create opportunities for evasion of the rule's purpose. That has led the commission to consider simply eliminating the "reasonable grounds" alternative altogether. <snip> We are also exploring other remedies to "distort and short" and naked short-selling abuses, such as the reporting of substantial short positions (akin to the long-standing requirement to disclose significant long positions). All of this comes on the heels of the agency's recent elimination of other exceptions to Regulation SHO, and our March proposal of a new antifraud rule targeting naked short selling.