I think this is the 64,000 question. It is impossible to know what the markets would have done without the short ban, but that the ban doesn't stop vicious selling has been proved. I am in the column that something needed to be done to remove zero from the working set of possible financial stocks prices, and the solution reached was a reasonable compromise as an emergency measure in the very short term. However, If it is not lifted on the deadline, imo that is a mistake. nitro
Nitro, if Zero is the right price for a security, then why should it be prevented from reaching zero? If you think it shouldn't be zero, then buy it. Short interest was only 6% in the 799 that were put on the short ban list. Explain to me how that tiny amount of short interest could drive the stocks down? The ban was a political move so that Coxucker could hold on to his job. Of course, the ban was so broad that anyone could get on the list (Zales? Really?!). Would it shock you to know that companies hopped on the list just before slashing their earnings outlook? And the ban was supposed to STOP market manipulation? What are you smoking?
the Ban is market manipulation.....imagine if you could short an OTCbb?? there wouldnt be many rich pump and dumpers....
SEC scrutiny of short selling zeroes in on rumors By Kevin McCoy, USA TODAY A Securities and Exchange Commission investigation into whether traders spread misinformation in a bid to drive down shares of financial firms focuses in part on a series of midsummer Wall Street rumors, according to an SEC subpoena. The SEC also extended the temporary ban on short sales of stock of more than 900 financial firms. The ban would have expired Thursday night. BAILOUT NEWS: SEC extends short sale ban to give Congress time on rescue Served on numerous hedge funds, the subpoena identifies two former investment banks â Bear Stearns and Lehman Bros. â that the SEC believes may have been subject to short-selling manipulation aimed at generating trading profits as share prices in the two firms dropped. The subpoena, reviewed by USA TODAY, seeks internal trading data, personnel information and e-mail and other communications relating to June and July market rumors that: â¢Lehman would get access to the Federal Reserve Bank's discount window. â¢British bank Barclays would buy Lehman for $15 a share (its market price was near $20). â¢Major investment firms SAC Capital and Pimco had stopped trading with Lehman. Other SEC subpoenas issued in the investigation cite similar rumors involving Bear Stearns, according to a person with direct knowledge of the investigation who declined to be identified because the case is ongoing. The SEC subpoenaed the information to investigate if traders originated or spread the rumors to profit from short selling Bear and Lehman shares. Lehman filed for bankruptcy protection earlier this month and subsequently sold its core trading operation to Barclays. JPMorgan Chase (JPM) acquired Bear in March. The SEC this month broadened the investigation by ordering dozens of hedge funds to provide similar trading data and communications about trading in the stocks of insurance giant AIG, Goldman Sachs and other firms, according to the person with direct knowledge of the case. The SEC declined to comment. It is legal to sell short by borrowing shares and selling them in the hope of profiting by replacing the shares with equivalents bought later at a lower price. But it is illegal to spread false rumors to try to drive down the share price while short selling. Several financial executives have complained that their companies' share prices were driven down by short sellers spreading rumors seeking to profit from this year's financial crisis. Along with communications related to market rumors, the SEC subpoena seeks all trading positions for Bear and Lehman from June 1 through early July. It also seeks names of officials responsible for approving trades, details of all client relationships with Lehman and Bear, plus information about any changes in those relationships. Separately, the FBI launched preliminary investigations of possible fraud involving Lehman, AIG and mortgage giants Fannie Mae (FNM) and Freddie Mac, (FRE) the Associated Press reported last week. Find this article at: http://www.usatoday.com/money/markets/2008-10-01-short-selling-sec_N.htm Now, who was short Lehman and Bear, and ran their mouths about it? If the SEC finds what they want, it goes to DOJ, no charge.
Isn't it interesting CNBC ignored this story. Maybe now, that the SEC and Buffett saved GE's ass, we'll go back to the "Einhorn to Ackman to Chanos" double play combination, so prevelant until two weeks ago. Great scam while it lasted. Now. Let's see if they get to spend the money. There's a lot of pissed off folks i flyover land.