David Kirkpatrick

April 7, 2009

Short-selling regulation

I see the SEC is looking into placing new restrictions on short-selling. A terrible idea and one that sends the entirely wrong idea to the market. Do we have a capitalist economy, or not?

I agree some regulation [ … kills me to write that] in the financial and public sector needs to come to pass, but this accomplishes nothing aside from cheap public relations. If the markets are so weak selling short is capable of breaking them, maybe they should be broken.

From the link:

The Securities and Exchange Commission is carefully weighing options for reining in rushes of short-selling that can sink stock prices and will work seriously on a plan to give shareholders access to annual corporate ballots for directors, the agency’s chief said Monday.

SEC Chairman Mary Schapiro and the other four SEC commissioners are scheduled to vote Wednesday on new short-selling rules _ a change being pushed by investors and lawmakers _ and are expected to put forward several separate proposals for public comment.

“We will be very deliberative in our effort to determine what is in the best interest of investors,” Schapiro said in an address to a conference of the Council of Institutional Investors, a group representing public, corporate and union pension funds that together have an estimated $3 trillion in assets.

The SEC will open for comment a proposal to reinstate the so-called uptick rule or take other measures designed to stem market dislocation caused by excesses of short selling, which involves betting against a stock.