SEC bans short selling on all financial stocks until Oct 2nd

September 19, 2008 by · Leave a Comment
Filed under: Legal News 

Operation “Calm the Market” is in effect. By that is means as long as the market continues to rise then it is okay but when it falls we have to prevent that. This seems similar to real estate as well, when price continue to climb that is good but when they correct by falling then we need to prop it up. So the lesson to take from all this is “If you going to get your cock up make sure its an enormous cock up so the government will bail you out”. Our representatives do get an “A for effort” though, they are trying to stabilize this mess and time will tell to see if it is futile. If the U.S. government is going to really purchase all these “bad loans” from the financial sector then I will be writing a eulogy for the U.S. dollar.

Release:

U.S. market regulators issued an emergency ban on the short-selling of financial stocks on Friday, igniting big rallies in the sector that has been targeted by sellers as the credit crisis gathered pace.

The U.S. ban came a day after the U.K. Financial Services Authority imposed its own temporary four-month ban on short-selling of financial stocks. National market watchdogs in France, Portugal, and Ireland took similar steps.

The U.S. Securities and Exchange Commission ban came after SEC Chairman Christopher Cox was widely criticized for not acting to control the practice that had led to sharp declines in U.S. and European financial stocks since the onset of the credit crunch.

French regulator AMF said it was also talking to other Eurozone regulators about market dealings, leading to expectations that the ban would snowball.

“Part of this is politics, and part is a view that there was going to be a significant malaise that was going to drag on for a long time, (so) that the government had to do something dramatic,” said George Mazin, a partner at Dechert LLP who advises hedge funds.

The SEC order followed a formal commission meeting Thursday night and a separate extraordinary meeting that Cox and other senior officials attended in the Capitol building the same evening. Senior administration officials asked Congressional leaders for additional authority to soothe turbulent capital markets.

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