The Whiners

Here's shocking news: Hedge fund operators that do a lot of short-selling are complaining to the Securities and Exchange Commission that recently imposed restrictions are making it tough to do business. Are we surprised? The SEC put in a rule last week requiring short-sellers to secure borrowed shares before shorting them, preventing "naked" short-selling, in which a trader doesn't necessarily have the shares in hand to borrow. Such shorting can add extra downward pressure on a stock, since without being forced to borrow the shares first, traders can short a limitless amount of stock. Following complaints from Wall Street trading firms and stock and option exchanges, the SEC caved and made an exception for market makers, who are now back doing business as usual. Others have urged that the rule should be extended to all... [read full story]