SEC extends short sale ban to give Congress more time

October 1, 2008 by · 1 Comment
Filed under: Stock Market News 

All I have to say is the biggest drop for the Dow Jones Average happened with a short sale ban in place. It looks like our government is set on saving and propping up these failed banks instead of letting the market re-balance itself. I hope the SEC does adopt the “uptick” rule again. I was doing some reading on it and it did seem reasonable enough of a regulation that looks to do what it is set out to do.

Press Release:

U.S. securities regulators on Wednesday extended an emergency ban on short selling in more than 950 financial stocks to give Congress time to finish legislation to rescue the financial system.

The Securities and Exchange Commission said the ban would expire three business days after a $700 billion federal bailout bill was enacted, but would not last beyond October 17.

The SEC emergency rules are part of a series of government measures designed to restore confidence in battered markets and the ailing financial system, which has been rocked by bank failures and fears of economic recession.

Congress is currently trying to hash out a plan to allow the Treasury Department to buy distressed assets from financial firms — a move designed to thaw frozen credit markets. The first bailout bill failed, triggering a massive sell-off in markets around the world. The U.S. Senate was expected to vote on a new bill later on Wednesday.

The SEC rules, issued on September 19, include one that requires big money managers to publicly disclose their short positions. That temporary order will expire on October 17, but the SEC said it intends to make that rule permanent.

In a nod to the $2 trillion hedge fund industry, the SEC said the short positions will not be made public for the duration of the emergency rule. It is not clear, however, whether the information will be kept secret under a permanent rule.

The short sale ban has been deeply unpopular with the hedge fund community, which says it has not prevented price declines of financial institutions, volatility in the securities of these firms, or the failure of a financial institution.

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Comments

One Response to “SEC extends short sale ban to give Congress more time”
  1. Stock Market says:

    The short sell list artificially keeps failing companies propped up. Consumers have all of their money insured anyway by the SEC, and wiser rich people spread it around so why issue more handouts?

    Banks and financial gambling institutions should not have any kind of short selling halt, or extra cash from the taxpayers. A list of financial here shows banks and how the share prices have dropped, it is healthy:

    http://www.stockmarketquotelist.com

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