SEC to Pursue Limits On Stock Short Sales
Agency Is Under Political Pressure to Act
By Zachary A. Goldfarb
Washington Post Staff Writer
Wednesday, April 8, 2009; Page A13
The Securities and Exchange Commission today holds its first policymaking session of the year, and under political pressure plans to introduce several proposals to restrict the short-selling of stock that many economists, including those inside the agency, say are likely to have little effect.
A number of financial firm executives, investors and lawmakers have blamed aggressive short-selling for collapsing the stocks of banks and other Wall Street companies last fall. In a short sale, traders make money when a firm's shares decline in value.
Today's meeting, the first held under new SEC Chairman Mary L. Schapiro, will examine several proposals to curb short sales. The commission is expected to formalize the proposals, allowing for 60 days of comment before deciding to vote on whether to implement them.
The proposals would try to make it more difficult for short sellers to push down a stock's price when it is already declining. One way to do so would be to allow speculators to bet against a stock only when it moves at a higher price than its last trade. On any given day, a stock may trade more than tens of thousands of times.
A more dramatic proposal would ban short-selling in a stock if it has declined by a set percentage in a day. |
