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SEC Orders Halt to “Short Stock Sales”

33 minutes ago

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission issued an emergency order on Friday temporarily halting the short selling of 799 financial stocks in an effort to protect investors and markets.


The SEC order will end at 11:59 p.m. EDT on October 2, and may be extended for 10 days if the agency deems it necessary. The SEC measure can only last a total of 30 calendar days.

Under the emergency order, institutional money managers will be required to report their new short sales of certain publicly traded securities. Investors are already required to report significant long positions.

The SEC also temporarily eased restrictions to give companies more flexibility to repurchase their stock.

A widely followed exchange-traded fund that tracks the S&P 500 financial sector, the Financial Select Sector SPDR (XLF.A), rose 7.5 percent in U.S. premarket trading.

The SEC order followed similar action by the U.K. Financial Services Authority, which imposed a temporary four-month ban on short-selling of financial stocks on Thursday.

The U.K. ban drove up stocks there by as much as 40 percent. Ireland also announced a ban on short sales, while Australia said it would ban so-called naked short-selling starting next Monday.

(Reporting by Rachelle Younglai and Christopher Kaufman; Editing by Lisa Von Ahn/Jeffrey Benkoe)

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