The SEC has also finalized two other proposed changes. It looks like this will serve to eliminate an exception from the close-out rules for options market makers. The other change was where the SEC approved a new rule targeted at curbing short sales where sellers misrepresent their ability to deliver borrowed shares. This second change goes into effect immediately.

Short selling is a practice in which there is nothing wrong with, and it is also a practice which makes for efficient markets. After all, a sale does mean that someone else bought the other side of the trade. But this wholesale naked short selling that has been allowed to prevail of late has been absolutely atrocious and nothing short of a disaster. When you go gamble in Las Vegas they make you put your bet on the table rather than just allow you openly throw out numbers with no proof you can cover your bet. There are exceptions, but what has been going on lately has to stop. Traders have been able to sell with no regard of the bet.

What you have to wonder about is just exactly why the SEC has allowed this to go on in the manner it has. Markets should not be rigged. But they should have safeguards in place that prevent groups of investors from targeting stocks without having to put anything up.

SEC head Christopher Cox is now finally tying to show a zero tolerance policy. All we can say to that is "It's about time."