Let’s Talk about Naked Shorts …

So one of the major stock market topics of 2021 was most certainly the practice of “naked shorting”. I've done my own independent research but I keep falling flat on some things. For example, I understand what they are and how they're typically implemented …

… but why are they bad? And are they even illegal?

I can't find any laws or rules that state why they can't be done, and I don't really understand how it has a negative impact on anybody else besides the person who lent out the naked shorts. How is it considered “stealing”?

On the S.E.C. page it reads:

“Naked” short selling is not necessarily a violation of the federal securities laws or the Commission’s rules.


So yeah … why is naked shorting bad, and is it or isn't it illegal?


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