That is held to result when the market suffers from inadequate or inaccurate information delivery, inadequate or insufficient competition, principal-agent problems (where agents fail to represent the interests of their principals), and externalities (where market actors fail to bear the costs of their actions or choices), among other problems.
"Defendants effectively operated in a tag-team fashion--rotating in the roles of prime broker, clearing agent or counterparty that enabled the short sale transaction to go forward without the expectation of delivery, " the complaint says.