SEC Chairman Christopher Cox Cox told the Senate Banking Committee that the agency was putting in place an emergency order limiting short sales in Fannie Mae and Freddie Mac with a requirement that the shorted stocks be “preborrowed.”
It’s not immediately clear what this “pre-borrowing” requirement entails, or what sort of authorization short-sellers would need to certify the shares had been preborrowed. Naked-shorting, the practice of shorting a stock without borrowing it first, is currently disallowed in many circumstances. It’s possible the new rule would require investors to show concrete evidence that the shares had been borrowed or eliminate a loophole allowing broker-dealers to accept short trades from other broker-dealers.
Cox didn’t cite any evidence that naked-shorting has become more common in the market for shares of the GSEs. It’s possible that federal officials hope that making shorting more costly, basically weighing down short interest with red tape, they’ll be able to lift the stocks. Yesterday, one prominent Wall Street analyst called for a complete ban on shorting the stocks of these entities.
Cox added that he might go further. “In addition to this emergency order, we will undertake a rule making to address the same issues across the entire market,” Cox said.
Comments (14)
Leave a comment
You can log in with your account or comment as a guest below.
Come on boys, because you don’t know how to play with your toys nicely I’m going to take it away.
-mom
wait, is it still okay to naked-short everything else??
so chris cox is going to enforce an already existing rule?
i don’t bereave it.
easy to locate! lol
this is such a fucking joke.
the head of the the SEC doesn’t know his own regulations?
“preborrowed” is some weird term of art he’s using to hide the facts.
I thought Oil was so high because there weren;t enough shorts to keep the longs in check, no? Are they trying to create a bubble in the equities mkts?
every hedge fund is long commodities and short financials.
i’m suprised they even bother coming to work. lol
Ummm…does this mean that the Naked Short Conspiracy spokeperson (Byrne of Overstock.com) was on to something while the whole street thought he was bat$hit?
It’s a start.
This is getting good. We are now talking about “perp walks” for short sellers who engaging in “rumor mongering”. Like traders whether long or short don’t talk their own books all the time. It seems crazy to me to go after the traders as oppossed to guys like the former CEO of CFC. The traders are merely exploiting the weakness that was caused by the stupidity of said ceo (and others like him). They did the same thing 2 years ago when they exploited strength and NOBODY complained then. The SEC is going to be very busy.
For all the people who lost their jobs or who can’t find jobs as horrible as it sounds i am going to guess that the SEC is hiring.
gov’t intervention rallies are to be shorted (preferably naked).
-retail
hi 2:34,
while i agree with your general sentiment, you can’t have hedge funds organizing bank runs on institutions like LEH, fannie and freddie.
i mean i guess you can, but what’s next?
hitting each other over the head with clubs and eating our children?
how about we do both? punish the cfo’s, the ceo’s and the traders who fuck up.
@ 2:43
They can blame the hedge funds all they want but the bottom line is the Fed f–ked this one up.
They never should have bailed Bear out, they should have let tem fail and the markets react accordingly.
They tried to intervene to manipulate the markets and it didn’t work, in fact it bacfired and now we are all reall f—ed!
“This elevator is overweight. Take the breaks off to make it lighter.”
2:12 – They don’t think of them as “bubbles.” However, they do, before they go to sleep and when they get up, say a little prayer which goes:
“God, please make the equities markets go up today so I don’t look like a fuckhead. Your pal, [Insert Name Here.]”
If hammering the shorts is what it takes to make God’s will manifest, they won’t hesitate.
However, I await with infinite patience their enforcing this rule in the commodities markets, notably silver and gold. The total world naked short position in silver, for instance, is far larger than the total amount of silver taken out of the ground since human civilization began. Nobody seems to care much.
M
M