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Clamping Down on Naked Short Selling

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At a glance:

The State of Utah is enacting a law that would protect businesses registered there, such as Overstock.com, from illegal naked short selling. 
 
Short selling itself is legal but in these cases, the stocks sold are not delivered, which leads to artificially inflated volumes that can drive down actual share prices. In other words, it's market manipulation. 
 
Brokers, traders and investment advisors who engage in this practice would incur steep fines and be vulnerable to lawsuits.  
 
While this bill only applies in Utah, the hope is that this type of legislation will become widespread.

Bill would crack down on illegal 'naked short selling'

Salt Lake Tribune - 5/25/2006 2:17 AM

Overstock.com and other small, publicly traded Utah companies concerned about so-called "naked short selling" got a boost when state legislators voted Wednesday to crack down on the illegal practice.
 
With little debate, SB3004 quickly wound its way to overwhelming approval in both the Senate and House during Wednesday's special session.
 
· Read The Full Illegal Investment Practices Article From Salt Lake Tribune -->

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