Naked short selling is an illegal practice. It involves short selling securities that you haven't borrowed from someone else or aren't confirmed to exist. This means that you haven't assumed the risk of borrowing the security before selling it. It is a very risky practice, which can result...
The best-known modern example of naked short selling is from the collapse ofLehman Brothersin 2008. SEC data indicated a more than 57-fold increase in FTD in Lehman Brothers’ shares that year, compared to 2007. This could indicate naked short selling. Lehman’s CEO Dick Fuld testified befor...