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SEC May Finally Crack Down On Naked Short Selling
SUMMARY: The Securities and Exchange Commission ("Commission") is adopting amendments to Regulation SHO under the Securities Exchange Act of 1934 ("Exchange Act"). The amendments are intended to further reduce the number of persistent fails to deliver in certain equity securities by eliminating the grandfather provision of Regulation SHO. In addition, we are amending the close-out requirement of Regulation SHO for certain securities that a seller is "deemed to own." The amendments also update the market decline limitation referenced in Regulation SHO... To explain, brokerages were driving hundreds of small cap businesses out of business by selling shares they didn't own and that in many cases even hadn't been issued by those companies, then shuttling these worthless shares among themselves at 15 day intervals to conceal them. This meant pure profits to the broker as long as the companies eventually went bankrupt, which they would do when their stock price was collapsed out from under them. For years, the SEC refused to enforce the law against these brokerages for "naked short selling", until it has started to threaten the economy itself. Now, it may all come to an end this October 15. Posted by: Anonymoose 2007-08-15 |
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