Hey Deputy,

That pro bono thing is a novel idea, since PSU does not have the dough.

Perhaps, the law suit can start with the brokerage firms where the illegal activities (naked shorting) are allowed to take place. It would be easier to take aim at a fixed targets rather than the moving naked shorters.

Even the threat of a lawsuit would "encourage" the brokerage firms to be more vigilant and enforce the rules more strictly. My understanding is that the security regulations/rules/guidelines don't allow naked short practices and it is the responsibility of brokerage firms to enforce the rules...can you, or someone who is familiar with the security rules, confirm this?

It should not be difficult to have an audit of the trading activities, especially naked shorting, to see if the brokerage firm has deligently carried out their responsibilties.

Brokerage firms are merciless in enforcing the margin rules, especially with retail investors (a margin calls would come out the moment your margin is breached, and they are prepared to liquidate your holdings to cover the margin). So, why not do the same with naked shorting with some simple check? Shorting is easy to detect by definition: Selling stocks that you don't have in your account, but perhaps you can cover that later by some means, e.g. options, wts, or solid evidence of having the stocks for delivery when required..., i.e. having some kind of collaterals. But naked shorting would be even easier to detect, since, there no collateral is apparent. It should be simple enouh for the brokerage firms to require the short sellers to put up some solid collateral (their houses would do?) to cover their shorting activities.

It seems that the main culprits are those firms that do not provide strict enforcement of the security rules. Hence, the legal case should first start with them.

Pro bono is a good way to build the law firm's reputation. In addition, they should be given at least say 50% of the spoil, if they win the case, or get an out-of-court settlement.

goldhunter