SEC mulling curbing limits on short selling

http://finance.yahoo.com/news/Ahead-of-the-BellSEC-poised-apf-4172165911.html?x=0&sec=topStories&pos=3&asset=&ccode=

In addition to restricting short selling, the SEC needs to expand their enforcement of naked short selling, including elimination of the market maker exemption (so-called the "Bernie Madoff exemption" after the infamous Wall Streek crook), which enables them to create phantom shares. This method of "married puts" allows shorts to deploy illegal bear raids on stocks without actually shorting the underlying shares, and keeps their illegal price manipulation activities under the regulatory radar.

See Chapter 2 of Deep Capture on how the "married puts" strategy works. In fact, reading all 15 chapters will help investors understand better how the markets are rigged.

Big news--naked short selling ban

Perhaps government agencies CAN get things right. The SEC made permanent a ban on naked short selling, a tactic used by stock market manipulators to induce a bear raid. The The SEC rule goes into effect July 31, when the temporary rule expires. The uptick rule is also being considered.

http://finance.yahoo.com/news/SEC-rule-on-naked-apf-3523034809.html?x=0&sec=topStories&pos=main&asset=&ccode=

Legislation is also being proposed to ban flash trading, a computer trading program used by Goldman Sachs to achieve unfair millisecond transparency advantages over other traders. A buy or sell order is "pinged", and if there are no fills, Goldman's fast servers can withdraw the orders instantenously, and determine Level III buy/sell order levels before others have access to them.

In any case, with naked short selling now banned, expect heavily shorted (i.e. manipulated) share prices of microcap companies to lift off next week.