SEC rule on 'naked' short-selling now permanent

[Joanne98]

WASHINGTON – Federal regulators on Monday made permanent an emergency rule put in at the height of last fall's market turmoil that aims to reduce abusive short-selling.

The Securities and Exchange Commission announced that it took the action on the rule targeting so-called "naked" short-selling, which was due to expire Friday.

Short-sellers bet against a stock. They generally borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender — pocketing the difference in price.

"Naked" short-selling occurs when sellers don't even borrow the shares before selling them, and then look to cover positions sometime after the sale.

The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.

Brokers acting for short sellers must find a party believed to be able to deliver the shares within three days after the short-sale trade. If the shares aren't delivered within that time, there is deemed to be a "failure to deliver." Brokers can be subject to penalties if the failure to deliver isn't resolved by the start of trading on the following day.

At the same time, the SEC has been considering several new approaches to reining in rushes of regular short-selling that also can cause dramatic plunges in stock prices.

Investors and lawmakers have been clamoring for the SEC to put new brakes on trading moves they say worsened the market's downturn starting last fall. SEC Chairman Mary Schapiro has said she is making the issue a priority.
http://news.yahoo.com/s/ap/20090727/ap_on_bi_ge/us_sec_short_selling_7

[jpak]

1. Good - send these motherfuckers to the slammer too

:thumbsup:

[barb162]

5. Who? The SEC or the short sellers?

:)

[TheWatcher]

2. Goldman Sachs, however, gets to conitinue to manipulate the Market unabated.

But it's nice they are throwing us a token piece to make us all feel good, and pretend the system actually functions the way we are told.

[JohnWxy]

3. Now if they just make buying a CDS on a security you don't own illegal, then I'll breath a

little easier.

Please tell http://www.congress.org/bio/id/302">Barney Frank, chairman House Financial Services Committee to make buying Credit Default Swaps on a security you do not own ILLEGAL.


# H.R.1754 Bill 'To create a systemic risk monitor for the financial system of the United States, to oversee financial regulatory activities of the Federal Government, and for other purposes. '

[HamdenRice]

4. +1 !!! nt