SEC Extends Short-Sale Ban

Oct 2 2008 | 10:21am ET

Despite the pleas and howls of hedge fund managers, the Securities and Exchange Commission last night extended is ban on short-selling about 1,000 financial stocks as Congress struggles to pass a Wall Street bailout.

The emergency order, which the SEC imposed on Sept. 18, will expire three days after Congress passes a rescue plan. The Senate passed a new version of the $700 billion bailout yesterday, with the House—which rejected another version earlier this week—set to consider the Senate billion tomorrow.

The move came despite a full-court press on the part of the hedge fund lobby to allow the restrictions to expire at midnight yesterday.

“The orders have not prevented the price declines of financial institutions, volatility in the securities of these firms, or the failure of a financial institution,” Richard Baker of the Managed Funds Association said.

One outspoken opponent of the SEC, however, has some—possibly tongue-in-cheek—words of support for the embattled regulator.

“I am confident our regulators at the SEC have a good handle on things," Bulldog Investors’ Philip Goldstein told the New York Post in an e-mail. He called it “nice that the SEC is propping up stocks in these stressful times. That is their mission, right?”

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