The main argument against the idea that naked short selling is a problem is based on the fact that it is already illegal (with a few exemptions, one being proposed by and named after Bernie Madoff and the other an allowance for Sharia Compliant Finance). Surely, if this were a problem, the SEC would have already addressed it. This argument falls apart for three reasons, one of which is a recent news item:

1) First, there are exemptions and these have been so broad that they rendered the restriction almost meaningless. The Madoff exemption, for example, allowed market makers to naked short sell, presumably to facilitate liquidity. Unfortunately, due to naked sponsored access rules (pages 153-155), this also meant that almost anyone could get an exemption at will.


I think it is the Naked Sponsored Access Rules that are burying NTEK

Paul