Rule 10b-21

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TermRule 10b-21
What does Rule 10b-21 mean? This SEC rule prohibits abusive naked short-selling, or the purposeful misleading of a broker/dealer by a short seller with no intention of acquiring, locating, or delivering the borrowable security by the settlement date.

How the exam might test Rule 10b-21: also prevents short sellers from deceiving broker/dealers about their source for the borrowable security due to the locate requirement of Regulation SHO.