SEC reins in ‘naked’ short selling, will check recent trades
Adam Shell
abc, 18 September 2008
Reacting to concerns that many financial stocks were losing value at an alarming rate due to aggressive bets by short sellers who profit when prices fall, federal regulators on Wednesday acted to stem the abusive practice known as “naked short selling.”
In an ordinary short sale, a short seller borrows stock and sells it, with the hope of buying it back later at a lower price to replace the borrowed shares.
