Monk's Den

[arvitar]

Anyone in The Den care to comment on this? I suspected the existence of such a regulation, but only came across this a few minutes ago.


"a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal. "

This is from Section 9 on this link to the SEC website:
http://www.sec.gov/spotlight/keyregshoissues.htm

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9. Will close-out purchases required by Regulation SHO drive up a security's price?

Close-out purchases of stock on threshold securities lists will not necessarily drive up prices of such stocks. One of the primary purposes of Regulation SHO is to clean up open fail positions in threshold securities when they reach a relatively low aggregate level, but not to cause short squeezes. The term "short squeeze" refers to the pressure on short sellers to cover their positions as a result of sharp price increases or difficulty in borrowing the security the sellers are short. The rush by short sellers to cover produces additional upward pressure on the price of the stock, which then can cause an even greater squeeze. Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal.

To date, there has been little evidence of rapid and unusual upward price movement in threshold stocks.