"Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity."
No, it's not technically illegal if done in the spirit of the law, but it is used and abused to make obscene amounts of money for many. It is illegal to short certain sacred cow banking stocks now...but they want commodities to get crushed so I'm pretty sure the SEC won't do anything about the shorting in that sector. It's too bad the laws aren't applied equally.
They should shut down naked shorting altogether for all stocks. Make them actually borrow existing stock before they sell. JMHO.
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