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    Home » News » Bare-Knuckle Finance: The Fight to Stop Naked Short Selling

    Bare-Knuckle Finance: The Fight to Stop Naked Short Selling

    How Devin Nunes and Terry Lynch Are Battling a Financial Predator to Save Small Companies

    Editorial Team (ET)May 15, 2025



    Naked short selling—a financial practice as shadowy as it sounds—has emerged as a contentious issue, with accusations flying that it’s kneecapping smaller companies and rigging the market against retail investors. Devin Nunes, CEO of Trump Media & Technology Group (TMTG), which operates Truth Social, has thrust this issue into the spotlight, alleging that his company’s stock (DJT) is a prime target. With whistleblowers reportedly stepping forward, Nunes is rallying Congress, state attorney generals, and even invoking the RICO statute to combat what he calls a systemic problem. Meanwhile, crusaders like Terry Lynch of Save Canadian Mining are waging a parallel battle, estimating billions in losses for small-cap firms. But is naked short selling the market’s great villain, or are critics like Citadel Securities right to call these claims a scapegoat for poor performance? Buckle up as we dive into the murky world of stock manipulation, its devastating effects, and the high-stakes fight to stop it.

    What Is Naked Short Selling, and Why Does It Matter?

    Naked short selling is the practice of selling shares you haven’t borrowed or don’t own, essentially flooding the market with phantom shares. Unlike legal short selling, where traders borrow shares to sell and later buy them back (hoping for a price drop), naked shorting skips the borrowing step, which is often illegal in the U.S. and Canada. The result? Artificial downward pressure on stock prices, diluted shareholder value, and a market that feels like a rigged casino for retail investors.

    The Securities and Exchange Commission (SEC) notes that while appearing on the Regulation SHO threshold list—indicating failed trade deliveries—doesn’t always mean illegal activity, persistent failures can signal naked shorting. For smaller companies, the impact is brutal: depressed stock prices make it harder to raise capital, fund projects, or even survive. A 2024 report by Save Canadian Mining pegs the damage at $40 billion for Canadian junior mining firms alone, with losses potentially exceeding $500 billion across small-cap sectors globally. This isn’t just a Wall Street game—it’s a wrecking ball for innovation and economic growth.

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