Can I add my two cents? These terrorists could organize a large scale of terrorist campaigns to American vital center financially or military wise? I read WTC handle 1/3 of total transactions of bonds, etc. I am not sure of how much percentage of stock transactions long or short.
I believe terrorist networks who cooperate these attacks with intelligence and/or money would know what happen. They would short or buy put at large scale if not here. Then in Europe. SEC and other European countries should investigate in a grand scale.
For an another matter, no more secret foreign bank account. No more tax haven from Bahamas to Switzerland to independent small island countries where all crooks, drug dealers, tax cheaters, and terrorists hide all their money. I think cutting off financial sources is more important than to keep all secret finacial sources of intelligent organizations of all countries in offshore banks. Last part of my two cents is nothing to do with SEC.
Overall I like your proposal that there should be some circuit breaker for short-selling too.