According to Patrick Byrne, CEO of Overstock (OSTK), The Depository Trust and Clearing Corporation (DTCC), which assumes a role that requires government oversight, is completely unregulated.

In a message posted on the Deep Capture business blog, Byrne says he hired two securities lawyers to find out who actually regulates The Depository Trust and Clearing Corporation, the company that clears and settles securities transactions in the United States.  They apparently found no definitive answer, suggesting that the DTCC is possibly unregulated.

Byrne, a prominent activist against illegal naked short selling, noted that the Congressional Research Service put out an extensive report on February 24, 2009 about the financial regulatory system, entitled “Who Regulates Whom? An Overview of U.S. Financial Supervision” and curiously made no mention of the DTCC or the subject of securities settlement.

This is despite the fact that the Securities Exchange Act of 1934  prominently discussed a "National System for Clearance and Settlement of Securities Transactions" which would require government oversight.

"It seems that in 1934 Congress thought having securities transactions clear and settle promptly was pretty important," writes Byrne.

Indeed, the SEC act called the institution “necessary for the protection of investors.”

This is not the first time Byrne and his colleagues have discussed and criticized the DTCC and its lack of oversight.  A journalist at Deep Capture, Judd Bagley, had earlier discovered through an Internet Protocol (IP) address, that someone from the DTCC's corporate office had been trying to smear Patrick Byrne on Wikipedia and various message boards and was also trying to downplay the significance of naked short selling.  According to Bagley, the DTCC actually hired a person to do this in order to improve their public relations and was caught doing it from their corporate office.  The DTCC is also involved in several unrelated lawsuits involving naked short selling.

All of that aside, if Byrne's suggestion that the institution which clears and settles securities transactions in the United States is, in fact, unregulated, it would mean that short selling is also unregulated.  More specifically, it would mean that illegal naked short selling, which the SEC has said it has banned, still has a wide loophole in the DTCC, a powerful unregulated corporate institution that monopolizes clearance and settlement of all United States securities transactions.