You can hardly blame Fat Squirrel Trading Group (FSTG) and Rhino Trading, LLC.

After all, it was 2007, and illegal short selling was almost the norm. The SEC, in passing a toothless Regulation SHO, had demonstrated that it didn’t care much. With just a few exceptions, America’s financial press had made it clear that the shorts were to be believed and their targets attacked or ignored.

And, in the midst of what history would eventually show to be the high-water mark of the greatest bull market of all time, how could a self-respecting short seller possibly be expected to do business in any other way?

What FSTG and Rhino couldn’t have known is that four factors were working against them:

1- In December of 2007, the SEC would appoint a true inspector general, in the form of David Kotz, and that Kotz would hear the cries of untold thousands of shareholders certain that the SEC had ignored their untold thousands of complaints of illegal naked shorting of companies in which they had invested untold millions of dollars, and that before too long, Kotz would issue a scathing report confirming as much, and…

2- In September of 2008, naked short selling would provide the spark that lit the fuse that ignited the greatest financial collapse of all time, and…

3-  In January of 2009, Joe Biden would leave the Senate for the Vice President’s mansion and Ted Kaufman, Biden’s successor, would make a major issue out of demanding the SEC start enforcing long-ignored prohibitions on illegal naked short selling, and, perhaps most unjustly…

4- By November of 2009, FSTG and Rhino would remain…