You appear to have a good sense of what makes the market tick pej. The naked shorting "is" illegal..its just been hard to control apparently. I think one of the problems is the length of time the brokerage houses are taking to collect the required payment for the shares shorted (I'm don't understand the actual transaction of shorting very well).

Normally when you purchas stock long (you want it to go up) you have three business days to pay for it. Normally when I have purchased my shares they have given me longer than that to make payment. The only difference is I can't purchase more shares after the three day period. So.... when thinking in reverse my guess is the shorters know they can make a short transaction and can trick the clock when timing the covering of the short before the transaction closes. I would assume that is how they are able to naked short in the first place. In any case it is illegal. Maybe someone more knowledgeable on shorting stocks can add their comments here.

As far as your other comments are concerned..you appear to be right on the mark..you are missing absolutely nothing.

Have a great day.

Mustangman