When is naked short selling illegal? Some say it is legal, some say illegal.?

Question

SEC Chairman Cox, said they are going to narrow in and restrict illegal naked short selling of Fannie Mae and Freddie Mac! What is he talking about? Is some naked short selling legal and others not?

Answer 1

old rules were that you had to have a reasonable expectation to borrow the shares you were shorting.  It was illegal to just short without looking or having any intention to look for the shares you were shorting.  Now the rules are that you have to have a committment for borrowing the shares that you are shorting.  tba

Answer 2

Naked Short Selling is already illegal.

It is just not being enforced. That is the issue on this. The real issue is the the FED jacked rates 17 times in 2 years (2004-2006) and banks went to a "We'll lend to anyone with a heartbeat" for about 5-6 years. The effect of the FED and the banks caused this situation, not the short sellers.

Answer 3

Duh, like who cares if you're wearing clothes or not?