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Taking the Market Makers short position one-step further, theoretically they could have become trapped in a stock valuation increase at a time when they held, on their books, excessive short positions. They could then force upon themselves additional short selling executions to control stock rises that would impact their pre-existing short position. Doing so would be considered stock manipulation. It would also explain the raiding of stocks on “good news” days.

If by using the short sale exemption, a market maker can sell short into the investors coming into a stock, to protect their economic position they would not be acting in a bona-fide market making strategy but in a self-preservation mode at the expense of the investing public. The first step of a “Bear Raid” would be to control any possible buy-side pressures and that control would show up as settlement failures. For any member to control a stock valuation for house account preservation is in violation of not only securities laws but of the public trust afforded to them in these markets.