Naked Truth Dressed to Baffle

"If you deal with a major brokerage firm, they won't tolerate this," says David Rocker, who heads hedge fund Rocker Partners (which owns about 8% of TheStreet.com.) "This business that it's this fantasy world of dealing in Europe and German listings, it's all horses---."

"From a functional matter, it is almost impossible to do a naked short. We don't do any -- first of all, if you dealt with Goldman Sachs, you would know they are not about to risk their charter for David Rocker -- or for any other client for that matter," Rocker says.

So what's causing the failed deliveries? Rocker has his own theory: "What you need to make clear is that 'fails-to-deliver' are fails for longs as well as shorts, and that it can be done for manipulative purposes to create the impression that the stock is a tight borrow," Rocker says. "In this instance, it's not the failure of shorts to deliver but a failure of a long to deliver."

Right now, who knows for sure what caused the surge in Global Links' trading. Even after the good intentions of Regulation SHO, so scant is the disclosure on failed deliveries that getting everyone to agree on what's happening is like getting conspiracy buffs to agree on who shot JFK. Only with naked- shorting, the problem isn't what anybody saw, it's what nobody is allowed to see.

Put people in a dark room and they tend to either do nothing, or they do something that they don't want to be seen doing. Reports in the New York Post and elsewhere suggest that regulators are finally looking into the failed deliveries on threshold lists. If so, any light shed on naked-shorting may show once and for all whether all of this controversy is about nothing, or about something unseemly in the dark.