- Which Brokerages are Naked-Short Selling?

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Which Brokerages are Naked-Short Selling?

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Which Brokerages are Naked-Short Selling?

Friday, 25 July 2008

By Charles Delvalle
This past week, we sent you my two-part interview with the CEO of Overstock.com, Patrick Byrne. In that interview he exposed how market makers and brokerages use an illegal trading scheme known as naked shorting to unfairly push down the value of a targeted stock.
Many of you were shocked and ticked off to see such blatant manipulation happening. And one of our readers even said…Your article focuses on the brokers using naked shorts as a trading tactic and how that is detrimental to our financial health if we are using these brokers. Then you do NOT even mention who these brokers are, so how can I do something about it?

The truth is there isn’t much you can do to avoid a brokerage engaging in naked shorting. That’s because when you buy stock, you get it from a random individual, another brokerage, or a hedge fund. If it’s either a brokerage or hedge fund, there is a possibility that instead of receiving shares, you received an IOU.

The best thing anyone could do is keep their eye on the Regulation SHO list here. This lists any companies that have at least 10,000 shares (or 0.5 percent of their total shares) naked shorted.

The smaller the company, the more susceptible it will be to being pushed down by a naked shorting attack. So if you are looking to buy into a small or mid-cap stock, check and see if they are on the Reg. SHO list. If they are, be careful. If they aren’t, then you shouldn’t have to worry about any attacks on your shares.

P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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