Friday, September 19, 2008

Flailing around, cont.

The SEC is, as we are quickly learning, wholly ignorant of the consequences (I will not proffer any mens rea their actions) that ad-hoc "solutions" to the "problem" that is short-selling.

Short selling adds to liquidity. Short sellers must COVER shorts and BUY BACK the underlying stock at some point.

Again, in its struggle to remain relevant, the SEC believes the perception of "doing something" is more advantageous than a sober look at the effectiveness of any putative action.

WASHINGTON (Reuters) - The head of the U.S. Securities and Exchange Commission said the agency would have more to say on short-selling rules "as early as tomorrow" and commissioners were meeting on Thursday night to address the Bush administration's proposal to calm financial markets.

"We are likely to take additional steps in the days ahead that are more particularly addressed to this urgent situation," SEC Chairman Christopher Cox told reporters after a meeting between senior administration officials and top lawmakers.

Cox said the SEC is coordinating with the United Kingdom's Financial Services Authority, which on Thursday imposed a temporary ban on short sales of financial stocks.

(Reporting by Kevin Drawbaugh and Karey Wutkowski; Editing by Tim Dobbyn)

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