Naked Short Selling

Naked Short Selling is a practice where investors sell shares they do not own and have not borrowed. This practice can lead to an artificial flood of the market with shares, which lowers the price of the stock. It can also result in investors selling more shares than are actually available, which is known as "naked shorting."

The impact of Naked Short Selling on retail investors can be similar to normal Short Selling. When many investors are betting on a price decline, this can lead to significant selling pressure and a decrease in the stock price. Retail investors who own shares in the affected company may experience losses due to the decline in price.

It is also important to note that Naked Short Selling is illegal, as it violates the regulations of the US Securities and Exchange Commission (SEC). However, there are still reports of traders using this practice, which has led to controversies and debates about how it can be best regulated.