See the link below Says Reg-Sho starts off "NAKED Shorts" http://en.wikipedia.org/wiki/Reg_SHO Naked short selling, or naked shorting, is the practice of short-selling a financial instrument without first borrowing the security or ensuring that the security can be borrowed, as is conventionally done in a short sale. When the seller does not obtain the shares within the required time frame, the result is known as a "fail to deliver". The transaction generally remains open until the shares are acquired by the seller, or the seller's broker, allowing the trade to be settled.[1] Short selling is used to anticipate a price fall, but exposes the seller to the risk of a price rise. Naked short selling has been illegal in the United States since 2008, as well as some other jurisdictions, as a method of driving down share prices. Failing to deliver shares is legal under certain circumstances.[