For a lot of industries, there's little worse than state-by-state regulation. Some have been known to invite federal regulation if it would pre-empt state regulation. Which brings us to South Dakota and naked short selling. South Dakota voters will weigh in on whether the practice should be banned in the state in November, thanks to a successful push by a law firm to get the initiative onto the ballot. If the measure passes, Financial News Online reports, it might mean that broker-dealers that engage in such shorting in other states could be fined if they register in South Dakota. Critics suggest the measure is a backwoods view of shorting, and may prompt some broker-dealers to leave the state. Interesting. I doubt that most voters even know what naked short selling is. It seems like auction rate securities would be a bigger public draw.

For more:
- here's the Financial News Online article

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