Spinal Cord Injury News

The SEC's new emergency order designed to limit short-selling in certain situations and for certain firms is already taking heat from critics. Last week, the SEC announced that it would tighten short-selling rules for 19 financial firms by requiring traders to "pre-borrow" stock before initiating a short sale. While the SEC believes this rule will protect those firms and the overall markets from wild fluctuations in securities prices, those against it claim that it unfairly excludes some firms that need similar protection. However, Gary Distell, a partner in the Financial Services Practice at Katten Muchin Rosenman LLP (New York), who was previously a senior managing director at Bear Stearns, says that the SEC was wise to start out with a relatively small group of securities until they can gauge the rule's effectiveness. "At this early stage, it is unclear what impact the order will have on the trading activity in the included securities," Mr. Distell says. "It may dampen short selling, but may impede overall liquidity which may not be advantageous. Most new rules produce some unintended consequences. Because the SEC only included certain securities within the financial sector, it will be able to gauge the impact of the order by comparing the trading characteristics of like-companies. If the SEC were to make a permanent rule after this order expires, it is likely they would include many or all securities. Mr. Distell is available for interviews on the SEC's new short-selling rule and its possible impact on the financial markets. I am including his bio below for your reference. [07/24/2008]