Sulja Bros. Building Supplies, Ltd (SLJB)

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$SLJB - The Impact of Naked Shorting

Naked shorting can affect the liquidity of a particular security within the marketplace. When a particular share is not readily available, naked short selling allows a person to participate even though they are unable to actually obtain a share. If additional investors become interested in the shares associated with the shorting, this can cause an increase in liquidity associated with the shares as demand within the marketplace increases.
Regulations Regarding Naked Shorting

The Securities and Exchange Commission (SEC) banned the practice of naked short selling in the United States in 2008 after the financial crisis. The ban applies to naked shorting only and not to other short-selling activities.

Prior to this ban, the SEC amended Regulation SHO to limit possibilities for naked shorting by removing loopholes that existed for some brokers and dealers in 2007. Regulation SHO requires lists to be published that track stocks with unusually high trends in failing to deliver (FTD) shares.