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The part you snipped isn't compelling as to your peeve about naked short-selling (what other kind is there?) and that "insiders run the market".

Even with short-selling, as in any transaction, there is a party on the other side who perceives a benefit from the transaction. Why shouldn't he be allowed to do it?

An ordinary and proper short sale involves borrowing the shares from a stockholder and then selling them into the market. Nothing at all wrong with this practice; the short seller (or his brokerage) must return the shares to the lender when the short seller closes the trade.

A naked short sale, contrarily, does NOT involve the borrowing of shares and simply executes a sale. This has many problems.

1) a naked short sale does NOT deliver shares to the purchasor (the person on the other side of the short sale). This is termed a "fail to deliver" and is a violation of securities rules AND, if repeated or done in sufficient quantity, of Federal statutes. There are now billions of shares of "fails" floating around due to the 'wink-wink, nudge-nudge' attitude of many brokerages toward naked short sales.

2) a naked short sale effectively creates stock shares out of thin air, which is impossible in the practical world and unlawful in the legal world.

Example: suppose a company has issued 10,000,000 shares. Suppose also that someone naked shorts 25,000 shares. Someone else buys these shorted shares. The buyer does not have possession of the shares, but they are carried in his account on the brokerage books as an asset. This trade affects in no way the original 10,000,000 shares issued, yet now 10,025,000 shares can be 'lawfully' sold.

Multiply this transaction by, say, 1000 and you end up with more naked short 'shares' than actually exist in the world. Ridiculous, you say -- can't happen? Sorry, this is the exact state of affairs in AT LEAST 209 listed companies' shares in the US, as of May 1, 2012.

And the authorities do nothing whatever about it.

And you see nothing wrong with this? Sheesh. You must be a goobermint accountant whose job also involves fantasy.

You don’t understand how Naked Shorting is different than Shorting. See Post #17.