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The Complexity of Short Interest and Stock Market Regulation
This chapter delves into the extreme short interest on a stock, causing brokers to short more shares than exist and face significant margin requirements. It discusses the NSCC imposing excess capital premium charges, freezing stock buying, and the impact of short squeezes and naked short selling on the financial system. The chapter also explores the GameStop situation, regulatory capture in the financial industry, and the challenges of enforcing rules to prevent fraudulent practices like short selling beyond available shares.