Yahoo Finance
September 18, 2008
If the effort was primarily aimed to stem declines in Morgan Stanley and Goldman Sachs, as was widely reported, the new SEC rules to prevent “naked shorting” are shaping up to be a miserable failure. (Which may explain John McCain’s calls for SEC Chairman Cox to be fired.)
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Update: To be fair, the new SEC rules will penalize anyone who doesn’t deliver shares within three business days of the effective date (today), so it’s premature to judge their success or failure.
Still, the new SEC rules will penalize anyone who doesn’t deliver shares within three business days, so it’s premature to
After rallying Thursday morning, when the new restrictions went into effect, Morgan and Goldman shares slumped midday in concert with the broader market.
Update: At approximately 2:25 p.m. EDT, Morgan shares were down more than 20% and Goldman by 11%, adding to massive declines in recent days.
The new rules against naked shorting — the already illegal practice of betting against a stock without a contract to borrow the shares — will “change the structural DNA” of the capital markets, says Todd Harrison, CEO of Minyanville.com, who has no positions (long or short) in Goldman or Morgan.
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