Jim Sinclair says, I'll believe it when I see it.

The SEC Is Targeting “Naked” Short Sellers – Beware!

Short sellers are always on the SEC’s radar.

The agency simply doesn’t want any traders or investors starting a “bear raid” on the stock market. They don’t care if monstrous hedge funds put on “short squeezes” that drive the price of a market to astronomical heights, only to see it crash when the buyers decide to let the air out of the balloon, which they feel is ok.

But if you are a short seller you better watch your P’s and Q’s.

Short sellers enter the market by selling shares they don’t own, hoping to buy them back at a later time for a lower price. The key to short selling is that you must “borrow” the stock from a third party that already owns shares in a reasonable period of time, usually a few days. If you don’t, SEC rules declare it “naked short selling”, and you can face some severe penalties.