NetList Inc (NLST)

[AllinFun]

I'm not sure how much I believe in naked shorting without having any time limit on covering. I've heard that many times over the last couple of years but it seems far-fetched. The groups doing so would get too greedy and just naked short everything to worthless to cash in which would destroy the market entirely. It cost them nothing to take the short position and they gain in a big way by buying back at a fraction of their sale price. In theory they were aloud to naked short for unlimited amount of time to cover the shorted shares, there would never be a stock worth buying because they would bang it down to worthless. Also the trading float would be much higher than the OS or even AS structure. Not to mention if naked shorting to oblivion with no time limit was aloud, we would never see short squeezes, because why would anyone take a loss when they can just hold the shorted shares forever.

I think there is definitely abuse in the system for covering the short interest in proper time frames and there is definitely naked shorting where they do not need "available" shares to short - they just short shares which itself raises the OS above it's real count. And it's very easy to see NLST has been shorted heavily just by watching the daily action and volume. I get the feeling they are getting worried here though because the volume is trending up in line with the SP lately.