While the aptly-named baloney brigade (name courtesy of Gary Weiss) makes much of the imaginary naked short selling crisis, there's another story involving short-selling regulations that isn't getting as much attention.

According to The New York Times, thirty-eight current and former employees of major Wall Street firms have been charged with running an elaborate scheme to take advantage of short-sellers looking to borrow shares. The schemes including fraudulent finder's fees and kickbacks -- all designed to increase the costs of borrowing shares,

According to a litigation release from the SEC, the defendants "defrauded the brokerage firms that employed them and others by engaging in collusive loan transactions and causing the firms to pay sham finder fees to companies controlled by the traders themselves or by their friends and relatives. Acting as fronts for the traders, these companies received hefty finder fees on several thousand stock loan transactions even though they did not provide any legitimate finding services and, in many cases, were simply shell companies that were not even involved in the stock loan business. These phony finders included a mailman, a perfume salesman, and a dental receptionist. The defendants shared in the sham finder fees through secret kickback arrangements. In some cases, defendants met monthly at New York City bars and restaurants to exchange thousands of dollars in cash, often wrapped in newspapers or stuffed into envelopes."