SEC Says No Extension of Short-Selling Ban
Wednesday, August 27, 2008
The Securities and Exchange Commission (SEC) let its emergency order to protect shares of 19 financial companies from aggressive short-selling expire last week with no announcement of an extension. The SEC says it will not continue the rule barring such trades until new proposals against abusive short-selling across all U.S. markets take effect, a gap of at least two months.
As we reported last month, the SEC enacted its no-short-sale rule on July 16. According to SEC Chairman Christopher Cox, the emergency order was intended as a preventative step to help restore market confidence at a time when it was sorely needed. The rule against "naked" short-selling slowed down trading because traders had to borrow shares before shorting the 19 companies, which included mortgage groups Fannie Mae and Freddie Mac, and Wall Street investment banks such as Lehman Bros, Goldman Sachs, and Merrill Lynch.
“We will go back to the world as it was the day before Cox testified that the emergency order was coming,” Travis Larson, spokesman for the Securities Industry and Financial Markets Association (SIFMA), commented now that the rule has been lifted.
As we reported last month, the SEC enacted its no-short-sale rule on July 16. According to SEC Chairman Christopher Cox, the emergency order was intended as a preventative step to help restore market confidence at a time when it was sorely needed. The rule against "naked" short-selling slowed down trading because traders had to borrow shares before shorting the 19 companies, which included mortgage groups Fannie Mae and Freddie Mac, and Wall Street investment banks such as Lehman Bros, Goldman Sachs, and Merrill Lynch.
“We will go back to the world as it was the day before Cox testified that the emergency order was coming,” Travis Larson, spokesman for the Securities Industry and Financial Markets Association (SIFMA), commented now that the rule has been lifted.
