The SEC has served subpoenas to a number of financial journalists, claiming that short sellers conspired with research firms and business journalists to drive down the prices of stocks, according to Buyins.net - a company that helps shareholders fight naked short selling.
Overstock.com is claiming that its company stock has been short sold. Those journalists, hedge funds and research companies, which are believed to be involved in this alleged short selling, are saying that Overstock CEO Patrick Byrne is just using this as an excuse to explain the firm's falling stock price.
Traders must borrow a stock before they sell it. Naked short selling is an illegal act consisted of selling shares without making any attempt to buy the stock. On Oct. 29, 2003, the SEC implemented a rule that prohibits naked shorting.