(snip)"Short selling is a legal practice in which a brokerages allows investors to borrow a company's stock on the hope its price will drop, so they can buy shares back later at a lower price. Once the shares are purchased, they are returned to the brokerage.
Naked short selling, which is illegal, takes place when a brokerage allows a investor to sell stock without first borrowing it. In market parlance the seller is "naked." The outcome of naked short selling is that it creates an artificially high volume of shares that are for sale, and that can drive down a company's share price.
With naked short selling, the transaction is never truly completed because
the short seller doesn't really possess the stock that was sold. And that means they cannot deliver the shares to buyers - which in market parlance is called a "failure to deliver," or FTD.
Stock brokers argue that such failures to deliver can occur for a number of reasons and actually represent only a tiny fraction of the trades that take place on any given day in the stock market. And they maintain the problem corrects itself over time.
Utah Gov. Jon Huntsman Jr. signed the naked short selling bill into law in May after a special session of the Utah Legislature. At the time he said it would make Utah a more attractive place for small and midsize companies that could be vulnerable to the predatory trading practice"(snip)"



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