Penson was not holding any "naked short" position speculatively, they were simply SLOW to deliver the shares because of their process, and Penson didn't go beyond T+6 for settlement. They simply delivered the shares at the END of the trading day T+6 and not at the BEGINNING of the trading session on T+6.
Rule 204, adopted in response to the financial crisis, addresses the negative effects that fails to deliver have on markets. Penson violated the rule when it loaned securities held in customer margin accounts to third parties and the margin customers sold those securities, but waited until the settlement date (T+3) to recall the stock loans.
“This practice resulted in serial failures to deliver at the firm level. Rule 204 required Penson to purchase or borrow sufficient shares to close out those failures to deliver no later than the beginning of regular market hours on the sixth business day after the sale (T+6),” according to the SEC.
Johnson and Wetzig allowed the firm-level failures to deliver to persist until the borrowers returned the recalled shares, which often did not happen until the close of business on T+6.
So this is nott what you've been claiming is 'naked short selling' by MMs for speculation, it's lazy brokers who are delivering literally HOURS late.
