Thursday, July 5, 2007
How serious a problem is naked short-selling, and what can be done about it? The SEC recently tightened the rules about delivery of shares after a sale. But several companies that say they are victims of short-selling campaigns to drive down their stock price have sued Deposit Trust & Clearing Corp., charging that the depository has enabled short sellers to maintain large open "failure to deliver" positions. In one recent suit, the SEC backed DTCC while NASAA filed a brief in support of the company. Many believe more disclosure about how the system works is the answer. See WSJ, Blame the 'Stock Vault'.