Part of this article in the Wall Street Journal is about the steps taken to "take back" land from the short sellers; that is not the part I am concerned with. What I simply hate(d) as an investor in mid cap and some small cap stocks was the complete lack of attention the SEC paid to naked short selling. Short selling on its own is a positive; but naked short selling (selling shares that don't even exist) is essentially a fraud. The reality is many of the big players whose prime broker were the Merrill Lynchs, Goldman Sachs, Lehman Brothers of the world - engaged in this. When pressed on this, the brokerages (and their institutional buddies) insisted its an overblown issue... certainly very rarely did a hedgie sit day after day shooting against a defenseless small cap stock as its personal plaything. Nope - all in your imagination folks.

Finally the SEC decided to step up to the plate .... why you might ask? Because the tables got turned on the same players who facilitated the short selling. Government Sachs (GS) and Morgan Stanely (MS) were threatened by the same ploys that year after year people winked winked about. But once the gun was turned on them; the CEO of Morgan Stanley was on the phone with the Administration and SEC and "this has to be stopped". Just another example of how important it is being part of The Club.

Well it's taken catastrophe and carnage across Wall Street but maybe, just maybe the SEC plans on doing it's job. There appear to be plans to strengthen action against naked short selling - sadly there are already regulations against this on the books but they appear to be so loose and very few respect it. There are entire lists of stocks on each exchange filled with stocks that are targets of this ploy, but nothing is done about it.