- Citigroup Lost $20 Million on Facebook IPO Trades
- Sticker Shock: What College Is Likely to Cost in 18 Years
- JPMorgan to Shake Up Risk Team After Big Loss: Report
- Icahn Raises Stake in Chesapeake, Wants Board Seats
- Marc Faber: Chance of Global Recession Is Now 100%
- Week Ahead: Europe Has Wall Street Bull on Short Leash
- What Happened to Stocks? Most Unloved in 50 Years
- Cool Jobs: From Gold Stacker to Bed Tester
- Many Greeks Moved Their Money Abroad Long Ago
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Option Bulls Take Another Shot on Idenix
MOST SHARED
- Marc Faber: 100% Chance of Global Recession
- Time for Flash Sales to Adapt or Die
- Citigroup Lost $20 Million on Facebook IPO Trades
- How to Trade on the Jobs Report
- Facebook: The Song — Yes, We're Serious
- China Growth Risks Signal Need for Fiscal Action
- 5 Spots Where the Dollar Buys a Great Vacation
- Spanish Lender Seeks 19 Billion Euros; Ratings Cut on 5 Banks
- Buy Broken Stocks, Not Broken Companies
MOST POPULAR
HOT ON FACEBOOK
SEC Continues Short-Selling Curb Through Aug. 12
Text Size 
U.S. securities regulators have extended through Aug. 12 an emergency rule aimed at curbing abusive short selling in the stocks of 19 major financial firms, including mortgage giants Freddie Mac [FRE
Loading...
()
] and Fannie Mae [FNM
Loading...
()
] .
The Securities and Exchange Commission rule is part of an agency crackdown on possible market manipulation that some blame for steep declines in the shares of financial companies.
The emergency measure, that first took effect July 21 and will not be further extended, requires investors to borrow a stock before selling it short and to deliver the stock on the settlement date.
The SEC said it would use the additional time to collect more data on the rule's impact and then start a rule-making aimed at providing additional protections against abusive naked short selling in the broader market.
"The order is designed to protect legitimate short selling in these securities, but helps prevent illegitimate naked short selling and potential 'distort and short' manipulation," SEC Chairman Christopher Cox said in a statement.
Cox told a congressional hearing last week that the agency would soon propose a rule extending the emergency short sale requirements to the entire market.
Short sellers arrange to borrow shares they consider overvalued and sell them in hopes of making profit when the price drops.
When an investor does not pre-borrow the shares before shorting the stock, it's called naked short selling, which is illegal if done intentionally.
The temporary rule applies to Lehman Brothers [LEH
Loading...
()
] , Goldman Sachs [GS
Loading...
()
] , Merrill Lynch [MER
Loading...
()
] , Morgan Stanley [MS
Loading...
()
] , JPMorgan Chase [JPM
Loading...
()
] and Citigroup [C
Loading...
()
] , among others.
Henry Klehm, a securities lawyer at Jones Day representing financial companies, said it he believed it was important the SEC continue to enforce the rules against naked short selling.
"This orders seems to have dampened the volatility in many of the financial stocks," said Klehm.
The American Bankers Association has been lobbying the SEC to include all publicly traded banks and bank holding companies, such as Washington Mutual [WM
Loading...
()
] and Wachovia [WB
Loading...
()
] , whose stocks have been under selling pressure.
Short sellers, meanwhile, have protested that they are being unfairly scapegoated, although the SEC has said it is not looking to outlaw short selling, a type of investing that can keep stocks from becoming overvalued.
The Securities Industry and Financial Markets Association says a broad expansion of the rule would be burdensome.
"Expanding the requirement to pre-borrow for every one of the thousands and thousands of publicly traded companies would involve serious operational challenges, not to mention a likely impact on liquidity and market performance, all of which we are still quantifying," said Ira Hammerman, SIFMA's general counsel, in an e-mailed statement.
The SEC's emergency rule has exempted market makers from the pre-borrow requirement so they can continue to facilitate trading in certain stocks.
But market makers are still required to deliver securities by the settlement date.
- The Nasdaq has suffered the most from the EU crisis showing there's risk in the usual tech stocks.
- Targeting more Millennials is just one of the items brewing for consumers in the world of spirits.
- It seems many people may need a reminder of how NOT to act on a plane. Here are a few tips.
- Here are some very unusual roadside stops along American highways that might peek your interest.
- How three generations of Americans are dealing with the finances of retirement.
Data is a real-time snapshot *Data is delayed at least 15 minutes
