SEC Set To Offer Permanent Short-Sale Restrictions

Aug 21 2008 | 11:16am ET

The Securities and Exchange Commission’s temporary restrictions on naked short-sales expired just over a week ago, but something much more long-term is in the works.

SEC Chairman Christopher Cox said the regulator will propose new rules covering short-selling within the “next few weeks,” and the new restrictions may go much further than the ones that expired on Aug. 12.

“Our proposals will be designed to ensure the smooth functioning of markets and to support equally the important role of bets on the upside and the downside,” Cox said.

The temporary restrictions on naked shorts put into place on July 15 covered only U.S. mortgage giants Fannie Mae and Freddie Mac, as well as 17 brokerages, in an effort to shore up those companies and protect them from market manipulation. The new rules may cover all short-selling, and not just financial names, Cox said.

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