Effective October 15th, the SEC will change the rules of Reg SHO, requiring that all naked short positions must be closed out within 35 consecutive settlement days of October 15th. If a security becomes a Threshold Security after October 15th, all fails to deliver must be closed out within 13 consecutive settlement days.
What are the details and penalties? (apologies, but too lazy to look it up right now.) Gamers will always try to find a way to keep gaming - just like bashers and pumpers never quit trying to game the message boards. On the face of it, it seems that this "restriction" might be circumvented by quickly closing and reinstating the basic naked position every 12 days (under different names or two houses operating in cooperation).
I'm wondering what the teeth are in this regulation to prevent such and what real punishments are in store for those who try to keep gaming the system. Without those, it's just papering over the problem.