So how big is the illegal naked short selling problem? Nobody knows for sure. Patrick M. Byrne estimates it may be as large as a billion dollars in illegal fails to deliver per day. The SEC thinks it is much smaller.My home state of Utah decided it was enough of a problem that the legislature passed a law making it illegal to do naked short sales on Utah based companies. Wall Street exploded in indignation. The state agreed to delay enforcement of the law until 2007 to give the SEC time to implement new regulations to address the problem. The comment period on a new regulation ends with September. Regulations are supposed to come into effect within 90 days of the end of the comment period. So by the end of 2006 we should be able to see if this problem will go away.In the mean time, beware the jabberwock my son.
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