Short Selling Rules In U.S. Have Australians Steamed

Australian hedge fund players have come out swinging against the United States' efforts to curb short selling, arguing that hedge funds are being targeted as the scapegoat for falling markets.

The Australian, a newspaper, reported that local observers believe the Securities and Exchange Commission's decision was a "knee-jerk reaction" to financial volatility.

John Corr, investment manager at hedge fund Fortitude Capital, told the paper that the S.E.C. was attempting to regulate something that had been occurring for years.

Read the full story here

-OR-

Read more coverage of the banking crisis:

::Tony Ressler: Why We Are Where We Are
::SEC Unveils Measures To Limit Short Selling
::Stemming A Banking Crisis: Regulators, Banks Try To Calm Nation

Comments

[TXfemmom]

Naked short selling should never, ever have been permitted anyway. It was asking for disaster.

Now, they should look at the options thing, and make it COMPLETEY clear as to the players involved, by eliminating ICE, and the amount needed to do it should rise to seventy percent of the option. That would take away the fun, and much of the proceeds earned by harming others.

[Pdubya]

huh?

it was the short-sellers that gave notice to the shenanigans of enron et al.

they aren't the cause or the problem - they are the scapegoats.

the federal reserve and its monetary policy is to blame, no other.

http://www.youtube.com/watch?v=vGJBOtUheQ0

[BADEN]

Uh...

"Go to hell"?

Uh....

"You don't live here"

Uh...

"Ruin your OWN economy"

Now do you understand why Clintonian Globalization is UN-American?

[GerryS]

yeah, screw em, and they can keep their cheap wine too. just send the good stuff :-)

[vmonter]

Screw em?

[emerywood]

I hope they know what they are doing. Changing horses in midstream could be risky and the result may be unpredictable. If this actually succeeds in curbing the decline in the financials, what does that tell us about the system we have now ?

[KillTheMessenger]

Except that it won't do a thing. Short selling is a symptom, not the underlying disease. What is targeted, to my understanding, is only naked shorting, anyway. That should have never been allowed in the first place. So we are, partially, undoing an old mistake.

[EinChicago]

" Short selling is a symptom, not the underlying disease'

History and evidence disagree with you. The single most effective part of the 33/34 acts was the prohibition on short selling on a downtick. When that rule was taken away, this mess was set up.

[EinChicago]

The system we have now was fundamentally sound. Between the 33 and 34 acts and the SEC and CFTC jurisdictions, there was pretty could coverage. the problem was that the CMA reduced CFTC regulation and back door repeals of other parts of the 33 and 34 acts (such as the quiet repeal of the rule against short selling on a down tick), caused large regulatory gaps. And Hedge funds popped up like snakes inside these gaps. Free markets only work if everyone is on an even playing field, but hedge funds operate n teh gaps between regulations giving themselves a major advantage over other market participants. effectively, it's like everyone else is playing football while they get to drive around the field in a hummer.

[Veri]

Fundamentally sound as a theory on paper. Communism looks good on paper. However, it does not work. Why not? Communism cannot survive the human ego. Besides, someone has to be in charge.

Capitalism, the propaganda goes, lifts people out of poverty. Ask yourself this, "Why the hell do we have poor people?" Well, there are many factors. The most important being that capitalism cannot abide everyone being rich like many dream. Inflation catches up to you. Also, being poor is relative. There is poor like in Myanmar and there is poor as in America. Being poor in America is much better than being poor in Myanmar.

Having better toys does not mean being the best. That is why America's healthcare sucks.

[EinChicago]

For once the SEC was right. naked shortselling is nothing more than de facto futures trading and its a slimey tactic used by hedge funds to escape regulation. Hedge funds have been a problem for the markets for years; including during the "boom". Hedge funds need to be regulated. It's that simple.

[WIpatriot]

Totally agree, E.

[outnow]

Many hedge funds will go broke. But there should be regulations to prevent their circumvention of the 1933 and 1934 Acts. So much of these acts have been repealed or modified. Updating and modernizing the entire regulatory scheme is being called for internationally. Basically, the international financial system has expanded much faster that the legal and regulatory schemes under international law. Computer technology has enabled this. The worse problem is that there is no international "social contract." The politics are so far behind the "financialization" of the global environment that policy decisions cannot be made effectively.

An example was the slave trade or the opium trade. Modern examples are not necessary so I will spare you from them. They are numerous and profound.