Short Ban Expands As Mkts Get Leeway To Add Firms 09/22 6:30 am (ON) Story 0658 (AB, BLK, COF, CS, DHIL, F, FBR, GE, HBC)
(Updated, notes that NYSE added another 40 stocks to the no-short list, including Ford Motor Co.)
By Judith Burns
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- A list of 799 financial stocks that cannot be sold short under an emergency ban issued Friday by the Securities and Exchange Commission is expanding by the hour.
The SEC modified the emergency order over the weekend to permit exchanges to add firms that might have been omitted from the original list. The list, created based on the U.S. government's industry classification codes, didn't capture all financial firms, or firms with significant financial subsidiaries, resulting in some glaring omissions from the short-sale ban. U.S. authorities also built in leeway for the list to shrink, allowing firms to opt out of the ban by notifying exchanges to that effect.
Exchanges are using their authority to add firms subject to the ban. The New York Stock Exchange announced earlier Monday that it has added 31 companies to the no-short list, including Capital One Financial Corp. (COF), Credit Suisse (CS), General Electric Co. (GE) and Moody's Corp. (MCO).
Later Monday, the NYSE added another 40 stocks to the list, including Alliance Bernstein Holding LP (AB), Blackrock Inc. (BLK), Ford Motor Co.(F), Freidman Billings Ramsey Group Inc. (FBR), HSBC Holdings (HBC), Invesco Ltd. (IVZ), McGraw-Hill Cos. Inc. (MHP), MetLife, Inc. (MET) and SLM Corp. (SLM).
Blast emails were sent to more than 2,500 NYSE-listed companies Sunday afternoon asking if they qualified to be on the short-sale ban because they are in the banking, insurance or financial-service business. Since the NYSE had no quick way to determine which of its members are in the financial business, it asked firms to self-certify that they are financial companies, subject to verification by the NYSE.
Further expansion of the list appears likely.
"We may be adding companies in the hours and perhaps the days to come," NYSE Regulation Inc. spokesman Scott Peterson told Dow Jones Newswires.
The Nasdaq OMX Group (NDAQ), parent of the Nasdaq Stock Market, added 66 Nasdaq-listed companies to the no-short list on Monday and subtracted one, Diamond Hill Investments (DHIL), an Ohio-based mutual-fund company, at Diamond Hill's request. A Diamond Hill spokesman declined to comment.
Nasdaq-listed stocks accounted for 557 of the original list of 799 stocks, or about 69.5% of the list.
Short sellers aim to profit from declining stock prices by borrowing stocks for sale and replacing them later at a lower price. The practice is legal, but in response to market turmoil and concerns about short-selling abuses, regulators in the U.S. and other countries moved last week to impose emergency restrictions on most short sales in specified financial stocks. The SEC ban is set to run through Oct. 2 but could be extended for several more weeks if regulators deem that is necessary.
-By Judith Burns, Dow Jones Newswires, 202 -862 -6692; Judith.Burns@dowjones.com
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