STA: Reg SHO Should Be Enough
Seeking to stabilize volatile markets, the Securities and Exchange Commission on July 15 announced an emergency order mandating that broker-dealers have a bona-fide borrowing arrangement in place before shorting the stocks of 19 of the biggest financial services firms. That order, which became effective July 21 and initially was set to expire July 29, lasted until Aug. 21.
Of course, almost one month later, in the wake of market upheaval due to the demise of Lehman Brothers, Bank of America Corp.'s agreement to purchase Merrill Lynch & Co. and the government's buyout of American International Group, the SEC placed new limits on short selling for hundreds of securities.
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