I always thought it was illegal to short shares you had not already borrowed, but now it is, once again as the SEC rules out naked shorts for all publicly traded shares. Shorted shares must be delivered by the settlement date. Perhaps this will spark a short-covering rally that will prop some of the beleaguered financial shares.
The SEC is most assuredly not refering to this naked strategy… While dumb, dumber things have happened on Wall Street of late…