I see more to it than that. We can agree that corporate law is good, maybe even that derivative trades like shorts are good --but shorts create shares. Whenever money is loaned and the bond is used as collateral for another loan, then we say money is created (not counterfeited) --even though some people will object that the money was created out of 'thin air'. This same argument is used to justify a naked short sale, because when a borrowed stock is sold, it makes it so twice as many people now have those shares registered in their portfolios. The additional shares have been well, created.
I got no problem with the SEC saying it's illegal, but then they have to enforce their regs. I'd have no problem with the SEC voiding the reg either. IMHO what's important is consistency and transparency.
I am somewhat confused by your comments. It would be sensible if you were addressing 'shorting'. But naked shorting seems to me to be quite different in that the shares are not 'borrowed' as they are when a short position is taken.
I am not trying to be argumentative but for sure one of us is confused or mistaken. Specifically the point of 'counterfeiting' vs. 'creating' is one of a legal distinction.
A counterfeiter 'creates' with the intent to defraud. Does not a naked shorter do the same?
All authorized, registered and issued shares of publicly traded companies are registered with serial numbers in the same manner as currency. Naked shorted shares are neither authorized, registered nor issued. Naked short positions have no traceability to any share with a proper serial number. They are therefore seemingly counterfeit as the Financial Times article describes them.
There is only one instance that I am aware of in which naked shorting is allowed under the law and that is when a specialist or market maker finds it necessary to close out a losing long position which they have taken with their own inventory. This is done presumably to ensure an orderly market. It is a priviledge accorded them. They are licensed and regulated by the SEC and markets so their special position of trust is backed by law to allow their capacity to naked short.