July 28, 2008
Naked short selling is illegal. The same types of punishment that currently exist for counterfeiting US Currency, should exist for Counterfeiting US Company Stock. When a short position is in a "Failure to Deliver" scenario, that firm should not only have to be forced to deliver the funds, but should also be prohibited from any future trades on that security. In fact, penalties should be assessed against any brokerage house or exchange that allows trades that "Fail to deliver" stock or payment in the required 3 days.
Even better, you should never be allowed to short a stock without first purchasing the borrowed securities. Naked shorting is destroying the US financial markets and good solid companies.