The North American Securities Administrators Association Inc. today announced plans to host a public forum to explore possible market manipulation through naked short selling activity.

Naked short selling refers to a stock transaction in which the seller agrees to sell shares of stock that he or she neither owns nor has borrowed in time to make delivery to the buyer within the standard three-day settlement period. When done in large volumes, this sales tactic can be used to manipulate a stock’s share value while allowing the seller to profit.

The SEC adopted Regulation SHO in 2004 to update short-sale regulation and, in part, to address problems associated with abusive naked short selling transactions. Industry compliance with Reg SHO began in January and in May the SEC launched a pilot program to determine the effectiveness of the regulation.

“NASAA commends the SEC for its efforts to address short-selling abuses through Regulation SHO and we encourage the agency to consider additional measures to limit the detrimental impact of abusive naked short-selling of the stock of small businesses, the entrepreneurial engines that drive our nation’s economy,” said NASAA president and Wisconsin securities administrator Patricia Struck.

“Since the pilot program has reached the midway point, we believe this Forum offers a timely opportunity for a thorough discussion of the effectiveness of Regulation SHO from a variety of perspectives,” Struck said.

The forum, which is scheduled for November 30 in Washington, D.C., will bring together a panel of leading financial and academic experts to examine problems associated with abusive naked short selling and the impact of Regulation SHO on naked short-selling transactions. The forum is free and open to the public on a first come, first serve basis.