What if they passed a law and no one followed it?
Not one of those bizarre, outdated laws you hear about -- like in Maine, where people are required to bring shotguns to church -- but a brand new law with an entirely sensible goal, like keeping people from selling equities that don't exist.
Since January, Regulation SHO has required self-regulatory organizations like the NYSE or the NASD to keep a "threshold list" of securities that have a sizable failure-to-deliver position. That is, they must disclose daily the stocks that someone sold without either owning them or borrowing them.
Selling stocks that nobody owns, called naked short-selling, isn't necessarily illegal. Broker-dealers may sell imaginary shares to maintain liquidity in a stock that sees a sudden surge in demand. So the Securities and Exchange Commission gives broker-dealers a 13-day grace period before they are required to close out those naked-short positions. After 13 days, it's safer to assume there must be at least some abusive shorting going on.Last month, TheStreet.com
|Overstaying Their Welcome?
It's not just micro-caps that languish on NASD's threshold list
|Ticker||Name||Days on List||Market Cap (millions)||Short Ratio||Shares Short as % of Float*|
|9||IIJI||INTERNET INITIATIVE JAPAN||39||$777||0.2||N/A|
|Source: buyins.net, yahoo finance
*as of 7/12/05.