SEC Cracks Down on Naked Shorting

The Securities and Exchange Commission issued three rules today to strengthen investor protections against “naked” short selling. The rules take effect at 12:01 a.m. on Thursday, September 18.
 
A short sale occurs when a short seller essentially borrows a stock and sells it with the understanding that the loan must be repaid by buying the stock in the market at a later date and hopefully at a lower price.
 
Naked short selling is the practice of selling a stock short without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale.

— PondelWilkinson, investor@pondel.com