Two Senators Say S.E.C. Panel is Stacked Against Banning Naked Short Sales
September 29, 2009
On the eve of a second day of roundtable discussions of securities practices, Sens. Ted Kaufman (D-DE) and Johnny Isakson (R-GA) said Tuesday evening that the Securities and Exchange Commissions has, in effect, stacked discussions on the practice of selling stocks short before first buying the shares.
Tomorrows SEC roundtable is long awaited, the two senators said. But it is clear that the panel is stacked against the need for restrictions on naked short selling. In the recent financial decline, there was abusive short selling enabled by the repeal of the 70-year-old uptick rule and a lack of so-called pre-borrow or hard locate requirements.
The recent bull market, however, has lulled us into a false sense of security, the pair, said in a statement. If we do not enact these proposals the uptick rule and either a pre-borrow or hard locate requirement the same people who drove down certain stocks in the past will just do it again.
Their conclusion: We need to focus on giving the SECs Enforcement Division the tools to end naked short selling once and for all.
Heres a summary of the panelists at the S.E.C. roundtables.