You’re right - naked shorting has been a HUGE problem!
The SEC (Securities & Exchange Commission) is unquestionably partially responsible for the recent volatility and drop in the stock markets. They have done a terrible job protecting American investors and need to be reprimanded loud and clear by the Senate Banking Committee.
Here are some of the most glaring problems with the SEC that need to be addressed immediately:
1) On, July 6, 2007 the SEC got rid of the Uptick Rule regulating short sellers which had been in place since 1938 because of short selling bear raids during the Great Depression. Since the Uptick Rule was taken out, the volatility on the stock market has increased by 70% as measured by the VIX Index.
2) On November 2, 2007 the SEC allowed the NYSE to get rid of the Program Trading Curbs that had been in place since the 1987 stock market crash. The NYSE formerly implemented a curb on program trading whenever the NYSE Composite Index moved 190 points or more from its previous close, and permitted program sales to be executed only on upticks and program buys on downticks.
3) TODAY, SEPTEMBER 18, 2007 FINALLY - The SEC has issued a ruling to stop the abusive and criminal practice of Naked Short Selling, which is simply counterfeiting the shares of publically traded stock. WHY DID IT TAKE THEM UNTOLD YEARS AND A FINANCIAL CRISIS TO DO THIS???
These are major problems that NEED TO BE FIXED IMMEDIATELY BY THE SEC. These problems have resulted in a massive amount of increased volatility and instability in the equity markets, reducing the net worth of American investors, driving companies out of business, substantially raising the cost of capital, and costing American taxpayers billions in government funded bailouts.
Because the SEC is regulated by the Senate Banking Committee, I urge FReepers to send letters & emails to the Senate Banking Committee demanding that the SEC reinstate the Uptick Rule and Program Trading Curbs, and ensure that the criminal practice of Naked Short Selling is truly stopped once and for all.
In addition, a full investigation needs to be made into corruption at the SEC - and some heads definitely need to roll at the SEC for their gross incompetence.