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Journalist Sues SEC to Get Naked Short Selling Files
Journalist Sues SEC to Get Naked Short Selling Files Lawsuit Filed in Chicago Seeks to Tear Down SEC's Veil of Secrecy CHICAGO, IL--(Marketwired - May 29, 2014) - A lawsuit has been filed under the Freedom of Information Act against the Securities and Exchange Commission (SEC) to obtain the agency's investigative files relating to more than a dozen aborted investigations and cases involving naked short selling. The complaint was filed on behalf of Mark Mitchell, an investigative journalist who publishes on www.deepcapture.com, a website that offers in-depth reports on the extent to which naked short selling pervades the US capital markets. According to the complaint, naked short selling has flourished over the past decade because of regulatory loopholes designed by Wall Street and embedded into law by the SEC. Although the SEC created a regulation in 2005 -- Regulation SHO -- that was supposed to stop the practice, Mitchell claims the SEC's Enforcement Division rarely enforced the regulation. "The SEC has opened multiple investigations and filed a few administrative cases focusing on naked short selling, but has released little information regarding its findings in those investigations," says Mitchell. "The few cases which the SEC has filed for naked short selling involve minor market participants or trivial violations by major financial institutions." Regulators assumed that Reg SHO had contained naked short selling until the financial crisis fully blossomed in 2008. As the stock prices of the nation's biggest investment banks, such as Lehman Brothers and Morgan Stanley, collapsed, their CEOs claimed that naked short selling -- which had flooded the market with counterfeit stock -- was to blame. Mitchell's complaint tells how the SEC then frantically issued a half a dozen emergency orders and revisions to Reg SHO in 2008 and 2009 to stop naked short selling. Mitchell says the SEC has never made public the result Less
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