Related: The Short Sellers of 9/11
Seeking to restore investor confidence in the markets, securities regulators made several proposals yesterday that would restrict investors from betting on a stock's decline at specific times. The proposed rules are meant to curb potentially abusive market activity and have been supported by financial institutions and other companies....
Short-selling involves borrowing stock and selling it in the hope that the price declines. If the stock drops, the investor benefits from buying it back at a lower price....
"This is an issue that has both strong supporters and detractors, and we will be very deliberative in our effort to determine what is in the best interest of investors," the SEC's chairwoman, Mary L. Schapiro, said in a speech this week. "In addition to seeking comments on the new proposals, we will also convene a roundtable to seek a range of views from many experts on the topic."
Many market participants, including hedge funds and others, have maintained that short-selling adds liquidity to the market and serves an important function in ensuring that stock prices accurately reflect investor demand....
And they wanna make a killing on the next attack.
Reinstatement of the prior uptick rule "is only a partial solution" to abusive short-selling because it does not cover equity swaps and other financial derivatives that provide the same economic benefit as short-selling, said an SEC commissioner, Luis A. Aguilar....
Loophole?
Last year, the commission imposed a series of temporary and hastily drafted bans on short-selling for certain financial companies after pressure from Wall Street firms and the Treasury secretary at the time, Henry M. Paulson Jr.
But researchers at the University of Southern California and the University of Alberta argued in a recent study that the short-sale ban caused price inflation of at least $4.9 billion in the stocks covered, which at the time included Fannie Mae and Freddie Mac.The inside information looters and murderers win either way, huh?
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