Well, that didn’t take long.
Effective immediately and until October 2:
SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets
The Securities and Exchange Commission, acting in concert with the UK Financial Services Authority, today took temporary emergency action to prohibit short selling in financial companies to protect the integrity and quality of the securities market and strengthen investor confidence.
The Commission’s action will apply to the securities of 799 financial companies. The action is immediately effective.
SEC Chairman Christopher Cox said, “The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets. The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”
Today’s decisive SEC action calls a time-out to aggressive short selling in financial institution stocks, because of the essential link between their stock price and confidence in the institution. The Commission will continue to consider measures to address short selling concerns in other publicly traded companies.
The SEC’s emergency order, pursuant to its authority in Section 12(k)(2) of the Securities Exchange Act of 1934, will be immediately effective and will terminate at 11:59 p.m. ET on October 2, 2008. The Commission may extend the order beyond 10 days if it deems an extension necessary in the public interest and for the protection of investors, but will not extend the order for more than 30 calendar days in total duration.
Paul Kedrosky‘s already started going through the list of no-shorts-please-we’re-financials, and has noted, wryly:
- Some SEC dyslexic likely meant MPB, which is Mid Penn Bancorp, and they blocked shorting of MBP instead, which is Metabolic Pharmaceuticals.
- Lehman is on the list, which is hugely reassuring given its current bankruptcy status.
- The SEC is blocking shorting of NAHC, which is Nigerian Aviation Holding Company. Damn Nigerians. It’s not enough they have all the best scams; they get shorts blocked too.
- Silver State Bancorp is on the list. Recall, it’s a failed bank already seized by the FDIC
All perfectly structured and properly thought out, then.
Related links:
Russia bans short-selling – FT Alphaville
The FSA’s endangered species list – FT Alphaville