SEC Prohibits Some Short Selling

In some corners of Wall Street and Washington, short sellers have become about as unpopular as Red Sox fans at Yankee Stadium.

Short sellers, who bet that a stock will fall in value, have made a lot of money lately, especially in the financial sector. On Tuesday, hoping to calm the markets, Securities and Exchange Commission Chairman Christopher Cox announced tighter rules on a certain kind of short selling in a group of 19 stocks.

The merits of that move are being hotly debated. But this much is already clear: Many of the financial stocks covered by Tuesday's action aren't the ones most targeted by short sellers.

Read the whole story here.

Comments

[nomoredead]

Check out the new Vanity Fair article on the collapse of Bear Stearn and see what you think of short sellers.

[Henry]

I think the blackjack tables are fixed. And Cox is one bad expletive deleted. You've just got to love it! A b rated movie would have more reality than what we are watching unfold. Beyond unbelievable!

[dadw5boys]

AND THEY HAVE THE NERVE TO CALL THE CHINESSE COMMUNIST!!!!!

THIS WHOLE BAILOUT IS ONE BIG TRANSFER OF WEALTH TO THE INVESTMENT BANKERS!!!!!!!

[WIpatriot]

This financial meltdown gets funnier every day. And you think you should be playing the market with these a$$clowns?

[Rule Of Law]

gosh Patriot, how can you say that? Don't you know that the markets are efficient self regulating mechanisms in which only the strong survive and the weak perish? Haven't you seen how that very thing has been allowed to happen in the financial sector these past weeks? There is no collusion. There is no manipulation. Just good old rough and tumble free market Darwinism. Yep.

[KillTheMessenger]

What's wrong with letting the weak perish? Works in nature. Works in the housing market just as well. Sorry about the mass extinction of baby boomer retirement dreams. Guess grandpa will have to stack shelves for the rest of his natural life. Good news is, he can see his grandchildren every day who can't afford to go to college.

:-)

[KillTheMessenger]

At times when a corporation's stock is low and falling, the prudent thing to do would be to buy it back and increase its share of control. Buybacks also increase share holder confidence. With the business cycle turning the result is a strengthened corporation that has much more market leverage.

Now, if a corporation can't do that, it probably just shows that they are either not operating efficiently or have bet the house on something other than themselves. No need to cry if they go out of business. Markets, after all, are operating according to the principles of Darwinism. The strong live and the weak fall. And that is how it should be.