Michael E Comment On Regulatory Notice 21-19
Recent market activity involving GameStop stock has shed light on misbehavior by hedge funds and other financial institutions involved in a practice called naked short selling. Though naked short selling was made illegal after the 2008 financial crisis, loopholes exist that allow for this practice to continue. (More details here: https://www.investopedia.com/terms/n/nakedshorting.asp). This includes fraudulent activity involving Shorts, Borrowed Shares, and Failures to Deliver. This strategy essentially allows market participants to flood the market with phantom shares, drive the price of a stock down, and prevent public companies from raising capital at fair-market value. Through this strategy, market participants like hedge funds are financially incentivized to bankrupt public companies. Market participants that seek a fair and just financial system demand an end to this misbehavior, and advocate for Strict-Settlement. We must completely outlaw naked short selling ASAP. Thank you for your time.