7.2.1.3.2 Regulation SHO
SEC’s Regulation SHO under the Securities Exchange Act of 1934 was enacted in 2004 to address the potential abuses of naked short selling. Naked short selling occurs when a short seller does not borrow or arrange to borrow the securities in advance of selling them. When sellers do not deliver the sold securities to buyers within the two-day settlement period, it is called a “failure to deliver.” When many sellers choose to naked short sel
