How does stopping naked shorts help part 2 here are some additional points to consider about the impact of naked short selling on stocks:
Dilution of shares: Naked short selling can result in an oversupply of shares in the market, which can dilute the value of existing shares. This is because the more shares that are available for purchase, the less valuable each individual share becomes. This can harm the company and its investors by reducing the value of their shares.
Reduced investor confidence: Naked short selling can reduce investor confidence in a company, as it can create an impression that the company is not as valuable as it actually is. This can make it more difficult for the company to attract investment and can harm its reputation in the market.
Unfair advantage for short sellers: Naked short selling can give short sellers an unfair advantage over other investors, as they are able to sell shares they do not actually own or have the right to borrow. This can create a situation where short sellers are able to profit at the expense of other investors.
Regulatory risk: Companies that are subject to naked short selling may be at risk of regulatory intervention, which can harm their reputation and financial performance. Additionally, if a company is found to have engaged in or allowed naked short selling, it may face legal and financial penalties.
Overall, stopping naked short selling can help to promote a more fair and transparent market, can protect the value of existing shares, and can prevent market manipulation and abuse.