[Axenolith]

I followed that site for a while but tapered off as it was redundant in a lot of aspects to some of the other stuff I was reading and with respect to the naked shorting issue, it didn’t look like there’d ever be any action. He focused on the shorting, and the complacency of the SEC, which was allegedly causing the looting and cratering of a lot of small cap American companies.

In a nutshell, the SEC was/is getting a small fee off each of the shares in stock transactions and apparently reigning in the “failures to deliver” was going to put a dent in their cash flow. I’d surmise that once the real cratering of financial institutions got going the bureaucratic momentum from turning a blind eye for so long left them flat footed when some of these institutions were being shorted.

In the great scheme of things, the shorting aspect of this mess is probably not contributing significantly to how it’s unfolding...

[supercat]

In a nutshell, the SEC was/is getting a small fee off each of the shares in stock transactions and apparently reigning in the “failures to deliver” was going to put a dent in their cash flow.

What problems would exist with the following rule:

1. Anyone selling a stock will be expected to demonstrate that they had possession at the time of sale.
2. If someone fails to demonstrate possession at the time of sale, the buyer shall have the option, within 24 hours of delivery, to either:
   1. Accept the stock at the lowest price that it traded between the time of sale and the earliest time at which possession can be proven, or
   2. Reject the sale and demand a refund of the purchase price.
3. Traders who are in default on any trades are forbidden from engaging in future trades until the default is cleared; if they have to go through a broker to get the assets necessary to clear the default, that's their problem.
4. Naked short selling would be criminal in cases where the prosecution could show there was no intention of actually proceeding with the sale, but it would otherwise be 'legal' if conducted according to the above rules. Note, however, that the above rules would cause naked short selling to be in almost every scenario no more profitable and no less risky than legitimate short selling.

How do those sound for rules?