South Dakota's Bid To Take Over For The SEC And Other Ballot Measures

Perhaps no state has tapped into the current zeitgeist better than South Dakota, which proposes banning a maneuver some federal officials say contributed to the current Wall Street woes. If approved, the measure would allow the state to prosecute or fine a firm if it engages in naked short selling. Short sellers borrow stock and sell it when they think the price will drop, expecting that they can replace it more cheaply. In the "naked" version, the stock is sold without being actually borrowed, which can put downward pressure on the price.

The practice already is federally regulated, but supporters of the measure say the Securities and Exchange Commission doesn't do enough to enforce the ban.

The South Dakota measure qualified for the ballot nearly a year ago and, at the time, supporters were ribbed by a local newspaper that called the measure "baffling and, probably, unnecessary." But now, the measure's supporters are feeling a touch clairvoyant.

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Read the full text of Measure 9, the South Dakota short selling ban (PDF)

Comments

[Maschine]

its about time....Naked Short Selling is crooked.

So is buying paper barrels oil. If you want it, you must take delivery before you can sell it.....too hard and complicated, oh well. so sad too bad, go play somewhere else.

[research]

Ban ALL SHORT SELLING.

Shorts encourage the destruction of companies...with just a little rumoring.

At the very least:

Ban ALL LEVERAGING AND MARGINS.

If you want to "short" a stock, you have to put up 100% of the price you agree to.

If you want to Gamble, go to a casino.

[proreality]

The problem IS NOT short selling, the problem is NAKED short selling. This was against the law until the current SEC decided not to pay attention to it. Short selling is healthy and keeps the market in check. Naked short selling is selling stock you never intend to take delivery of or own. These are called FTD's Failure to Deliver and it is illegal, it always has been, but the Bushies have been turning a blind eye. This is what brought down Bear Sterns and the SEC knows it. Someone, most likely hedge funds that are completely unregulated, shorted millions of shares of Bear Stearns causing there stock to crash. More shares than even exist. This is an insider game being perpetrated by insiders!

[research]

Naked Shorts, are just 100% leveraged Shorts. So I agree.

If you had to put up 100% of the money for a Short purchase, that would help. But you still have the motivation to ruin the company you are shorting.

[Mike169]

Could South Dakota Punish Short Selling?

Only if it endangers the fetus.

[arvay]

A great first step in the re-regulation of our financial markets. Wring out all the parasites and just leave honest businesspeople who don't invent corrupt schemes to enrich themselves.

[glaze]

Where's all the outrage from those REAL AMERICAN slimeballs who-regardless of political affiliation- make their nefarious living this way?

Or is that some kind of niave, convoluted oxymoron I just hatched?

[Erdgeist]

South Dakota couldn't be more right. Not only is "naked short selling" pernicious (this goes back to the 1600s in Holland) but so to was Cox's decision to get rid of the "uptick rule" that prevented bear runs on a stock which many experts believed was instrumental in causing the financial meltdown. Cox, in my opinion, has done far more damage to America than a hundred Osama bin Ladens. His actions have destroyed much of the retirement hopes of millions of Americans. One final word, Cox is like the grasshopper in Aesop's fable about the grasshopper and the ant. In the version of grasshopper Cox, his grasshoppers steal the ant's food stores.