SEC Extends Naked Short Selling Order On Financial Stocks, Looks For Permanent Solution For Broader Market
The SEC extended its order against naked short selling in the securities of financial institutions to which the Federal Reserve has granted temporary access to liquidity facilities on an emergency basis.
The extended order will be in effect until 11:59 p.m. EDT on Aug. 12, 2008, and will not be further extended.
The SEC said the extension will permit the staff to collect and analyze additional data on the impact and effect of the order. The SEC said, following the expiration of the extended order, it will consider a more permanent rule to protect investors from naked short selling in the broader market.
The SEC order requires short sellers arrange to borrow the securities at the time of sale.
SEC Chairman Christopher Cox said the order is designed to protect legitimate short selling, but prevent naked short selling and potential market manipulation. He also said, "In addition to continuing the existing order against naked short selling, the Commission will continue exploring other remedies for the broader marketplace to further protect investors from 'distort and short' artists."
Stocks on the SEC naked short list include: Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), Bank of America (NYSE: BAC), Citigroup (NYSE: C), J. P. Morgan Chase (NYSE: JPM), Lehman Brothers Holdings (NYSE: LEH), Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS) and Goldman, Sachs Group (NYSE: GS).
Others on the list include: BNP Paribas Securities Corp (OTC: BNPQF) or (OTC: BNPQY), Barclays PLC (NYSE: BCS), Credit Suisse (NYSE: CS), Daiwa Securities Group (OTC: DSECY), Deutsche Bank Group AG (NYSE: DB), Allianz SE (NYSE: AZ), Royal Bank ADS (NYSE: RBS), HSBC Holdings PLC ADS (NYSE: HBC) and (NYSE: HSI), Mizuho Financial Group (NYSE: MFG), UBS AG (NYSE: UBS).
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- Credit Suisse
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- Citi
- Morgan Stanley
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- Lehman Brothers
- Bank of America
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