Posted on 09/18/2008 4:46:35 PM PDT by HAL9000
Breaking News: SEC intends to temporarily ban short selling, but it's not clear if the commission has approved the move. Cox is briefing congressional leaders. Separately, the government is seeking congressional authority to buy distressed assets.
(Excerpt) Read more at online.wsj.com ...
There is no disaster so bad that the government can’t make it worse..
...it’s about time!!! Now FIRE COX!
Amen.
Government is not the solution; it is the problem. — RR
Don’t have a subscription so can’t view. But are they talking about simple shorting or naked shorting because the naked shorting ban went into effect today at noon on all listed securities.
fire Obama and Barney Frank...you know...the ones who were actually responsible for this mess
I will not believe this until the sell short option disappears from the menu of my order screen.
Naked shorts was what I heard earlier...
naked shorting was not banned. “abusive naked shorting” will be banned if the T+3 rule is not followed. they can still naked short, but they must cover in trade+3 days.
We’re the government,and we’re here to help you.
And Andrew Cuomo who got it rolling at Freddie and Fannie.
Democrats have been on TV all day saying the government must take over the distressed mortgages and or restructure them so the struggling “middle class” homeowners don’t lose their homes. Middle class my butt. The middle class taxpayers will be the ones footing the bill for the government subsidised deadbeat permanent Democrat “victim class.”
Short selling or naked short selling? There is a huge difference.
And what if they don’t? Where I grew up if a person tried to sell something he or she did not own, they were called a crook.
P.S. Pretty soon we may be drinking that free bubble up and eating that rainbow stew;)
The rumors are pointing towards a blanket ban on all short selling of bank shares, similar to what was implemented in the UK today.
Cover in 3 days? ... no way, that cant be the rule. Only day traders would short stock if they had to cover in 3 days. Has to be something else.
Is it me or is this an indication of further drops in the market?
This was too funny. I just couldn't resist.
me too...it has been the rule all along, but the SEC has failed miserably to enforce it. i suspect if they do not follow the rule now we will se them perp-walked in an orange suit. also ny ag cumo is after them also. if i were a short seller, i wouldn’t.
I was thinking about my Mini Me. Dangit. Now I’ll never get rid of him!
I hereby decree that stupidity be banned.
The SEC has now introduced three new rules and they apply to the securities of all public companies. Short sellers and their broker-dealers will now be required to deliver the securities on the T3 settlement date (three days after the sale). If this requirement is violated, any broker-dealer acting on a short seller's behalf will be prohibited from shorting any further shares in the same security unless they are pre-borrowed. The SEC is seeking comment on this rule during a 30-day period and expects "further rule-making procedures" after that period. The SEC has also removed an exemption that was available to options market-makers and they will now be treated the same way as all other market participants and required to abide by the T3 delivery requirements. The SEC has also adopted a rule that makes it fraudulent, and a violation of the law, if short sellers deceive broker-dealers or any other participants as to their ability to delivery securities within time for settlement. The new rules apply until October 1 unless further extended.
I disagree with this. Selling short is about taking risks and living with the reward or failure. It also puts pressure on companies to prove the bettors wrong.
Short selling is how papa Joe Kennedy made his family fortune during the stock market crash of ‘29. Wonder if they’ll cut Teddy some slack on the short selling ban this time around, just for old time’s sake.
rob, shorting was not banned. naked shorting will be watched closely. as long as you can cover your short position, it is perfectly legal.
Nice pic, but I thought it was “naked shorts”???
OK, ... the short seller has to deliver the borrowed stock to the purchaser within 3 days ... but the short seller can still cover the short by buying the shares back any time he wants.
This makes sense ... but they should go one step further. All shares short must be accounted for. It is certainly possible that some entities would have more shares short than they have on hand to lend out. Make them balance the short book.
And extend this rule to the BB stocks too. There are almost no rules on the BB exchange and many penny stocks are easily manipulated.
Major changes need to be made to current rules.
Naked shorting has been illegal for a long time. Happened anyway.
I remember learning about the stock market in grade school, and hearing stuff about ‘capital formation’ and all that nonsense. Short selling (and about a dozen other things that are commonly done) are simply about gambling, and have little or nothing to do with capitalism.
The PDF from the SEC on the new rules is available here.
Perhaps the most interesting bit is the final sentence on page 8:
This Order shall be effective at 12:01 a.m. EDT on September 18, 2008, and shall terminate at 11:59 p.m. on October 1, 2008 unless further extended by the Commission.
This could make for some interesting, exaggerated 3-day swings.
Yes it could. However, on the WSJ website a new story was just posted that COX is considering banning ‘ALL’ short sells, which I think is a mistake. I am not sure how that will work, but there is a big story on wsj.
With all due respect...
Short selling of the normal kind -- sales backed by borrowed shares -- is an extension of people's right to contract among each other to sell, rent and lend property. Shorting has great side effects, including greater liquidity and tighter spreads (difference between bid and ask). It increases trade volume, which should help drive down commissions for all participants. Naked shorting is something different: shares are effectively invented out of thin air, sidestepping the process through which securities are created. The SEC is right to tighten the settlement process to make naked shorting impossible.
If they restrict true, legit short selling, then we’re nothing more than a banana republic at that point.
Chris Cox is an utter fool and a complete tool. If I were McCain, I wouldn’t be slamming him on the campaign trail - I’d be calling for his severed, bloody head on a pike on the front of my campaign bus.
Fully agreed.
And, we should NB, that the public, despite the pain and cost of the mis-steps of the Fed this year, should thank guys like David Einhorn and Bill Ackman for exposing the pyramid scheme in mortgages with their short campaigns - before they got any worse.
The beauty of short sellers is this: if they’re right - the stock goes down and stays down. If they’re wrong (and they often are), they get their clocks cleaned when people go in to do fresh analysis of the underlying company, pronounce the stock a bargain and start buying with both hands.
Define gambling is an activity where one attempts to assess risk and reward, and then allows circumstances beyond one’s control to determine the outcome.
By that definition, almost all human activity is gambling.
Gambling is bad when it is unintelligent or uninformed. Otherwise, it is good.
Planting a crop is gambling. Choosing a major is gambling. Picking a spouse is gambling. Picking a stock to buy is gambling. Shorting a hot stock is gambling.
Is it me or is this an indication of further drops in the market?
I’m thinking that the market may have a couple more thousand to drop yet.
The mutual funds that specialize in shorting the market are taking it in the shorts today.
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