Replies to post #852 on Cobs NSS Solutions

[BuckeyeMike]

Shorts are going to love this article out from the SEC today:

SEC Can't Bear Naked Short Sellers
Maurna Desmond, 07.15.08, 3:25 PM ET

Naked short-sellers may have no shame, but they're about to take a fall. Chairman Christopher Cox of the U.S. Securities and Exchange Commission told the Senate on Tuesday that he will issue an order creating measures to curb the practice of selling short stock in major American financial firms without borrowing the requisite shares.

The practice of naked short selling is already illegal, but the rules are widely flouted and are not subject to much oversight. Cox said the temporary measures will apply to the shares of government-sponsored Fannie Mae and Freddie Mac, as well as the major commercial banks and brokerage houses that are primary dealers in Treasury securities.

Unrestrained naked short sales can exert significant downward pressure on stock prices, and the news of potential respite bolstered the financial sector on Tuesday. .Primary dealers Goldman Sachs (nyse: GS - news - people ) added 0.9%, or $1.55, to $160.58, Morgan Stanley (nyse: MS - news - people ) added 0.3% to $31.82, and JPMorgan Chase (nyse: JPM - news - people ) gained 1.0%, or 29 cents, to $31.93.

The ultimate short-victim Lehman Brothers (nyse: LEH - news - people ) tacked on 11.9%, or $1.46, to $13.85.

Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) added roughly 10.0% to their troubled stocks, which rose to $8.03 and $5.83 repsectively.

Fannie and Freddie have been under pressure from the fallout of the subprime loan crisis. The ensuing global credit crunch has crimped the earnings and outlooks of many financial-services companies, attracting short-sellers to their shares.

Cox said he will require short sellers to find and borrow shares before taking short positions in the financials and will "undertake a rule making to address the same issue across the entire market." However, he announced that there would be no return of the " uptick rule," a former regulation established in 1934 by the SEC that required that every short sale transaction be entered at a price that is higher than the price of the previous trade