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The End of Naked Shorting?

July 31st, 2008 · 2 Comments

Moves are getting just a little bit nearer. This could be a huge boon to InterOil if it became law…

The SEC has introduced rules prohibiting ‘naked shorting’, that is, selling shares one does not own, without first borrowing them. They are extending the rules up until August 12 for the 19 financials for which they apply, but they are considering extending the rule to the general market.

Here from MoneyNews:

  • “In addition to continuing the existing order against naked short selling, the commission will continue exploring other remedies for the broader marketplace to further protect investors from ‘distort and short’ artists,” Cox said in a statement.
  • The SEC said that extending the restrictions on short selling will allow regulators more time to collect and analyze data on the order’s impact and effectiveness.
  • After ban runs out, regulators will move to draw up formal rules to provide additional protections against abusive naked short selling in the broader market, while allowing legitimate short selling, the SEC said.

While some distortionist artists even deny naked shorting existed in the first place, their days could be numbered. What triggered this long inaction in the cosy relations between the SEC and the financial world is that they started to nakedly short the wrong companies, threatening to accelerate the downfall of the whole financial system.

There is a saying (Chinese, no doubt) that every crisis brings new opportunities…

Tags: IOC · The Markets

2 responses so far ↓

  • 1 Jim Tate // Jul 31, 2008 at 3:34 am

    The SEC is slow. The rule which I agree will be proposed in Aug. Will require a follow up with a 60 day comments period. The brokerage houses make $4 billion a year off this activity. Loaning the same shares out 6-10 times and all at a nice fee for them..Many will fight losing part of that fee I fear. Hopefully we get a stop to this nonsense sellig shares that dont exist, Geez.

  • 2 claude // Jul 13, 2009 at 1:48 pm

    SEC is slow and inefficient to apply existing rules.The biggest exemple at this time is with BCIT stock, global lock since 4 years by DTCC, for more info anf to support shareholders, take a look at :www.let-bcit-trade.com