Investor Help (NO Ihub questions)

[janice shell]

You need to distinguish between legal naked shorting, which is done every day, and abusive naked shorting.

Market makers are allowed to sell naked in order to meet demand for an issue. Normally--and this is something the NSS conspiracy folks refuse to understand--they cover those short sells almost immediately. Contrary to a belief popular with some, MMs generally don't like to hold inventory, long or short, for any length of time.

What's now called abusive naked shorting is not actually illegal, thanks to a very interesting Federal appellate decision from the 1990s:

https://scholar.google.com/scholar_case?q=Sullivan+%26+Long+v.+Scattered+Corp&hl=en&as_sdt=2,39&as_vis=1&case=8171030952991497392&scilh=0

But in 2005, the SEC, having begun to see it as a problem, introduced Regulation SHO, which made that abusive naked shorting against the rules. Then and now, abusive naked shorting affects exchange-listed stocks, not OTC issues. Especially not OTC issues trading in the triple zips.

But there are those who'd have you believe the ONLY reason stock price ever drops is because of shorting of one kind or another. That is simply not true.