Flailing around...

...like I told you, dear readers, on 9/14. The below link is further evidence of the need for government to be seen doing "something". The SEC is now flailing around in an attempt to remain relevent in the post-nationalization era that has seen the Treasury and the Fed defenestrate much of its authority.

If only they studied the effect on volatility ad-hoc regulatory responses had on the markets. Limiting ANY kind of price discovery at this point is tantamount to a declaration of war in the eyes of the markets.

http://www.bloomberg.com/apps/news?pid=20601087&sid=acrJlH57GgO4&refer=home

SEC Stiffens Rules Limiting Short-Selling Amid Market Turmoil

By Jesse Westbrook and Edgar Ortega

Sept. 17 (Bloomberg) -- The U.S. Securities and Exchange Commission stiffened rules against manipulative short-selling after a market rout pushed American International Group Inc. to the brink of collapse and triggered Lehman Brothers Holdings Inc.'s bankruptcy.

The SEC adopted two regulations today forcing traders and brokers to close out short sales, amid concern investors are driving down share prices by flooding markets with sell orders. A third rule makes it a securities fraud when short sellers deceive brokers about delivering borrowed shares to buyers.

``These several actions today make it crystal clear that the SEC has zero tolerance for abusive'' short-selling, SEC Chairman Christopher Cox said in a statement.

Lawmakers and regulators are questioning whether short sellers have contributed to a crisis by spreading false information and using abusive tactics to attack companies. Hedge funds and other investors argue that poor business strategies are to blame, not short sellers.