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Regulators Enforce Immediate Ban on Stock Short Selling

WASHINGTON -- Effective immediately, the Securities and Exchange Commission and the U.K. Financial Services Authority banned short selling at financial institutions in an effort to protect the integrity and quality of the securities market and strengthen investor confidence.

By Michelle A. Samaad | Updated on September 19, 2008

WASHINGTON — Effective immediately, the Securities and Exchange Commission and the U.K. Financial Services Authority banned short selling at financial institutions in an effort to protect the integrity and quality of the securities market and strengthen investor confidence.

Under normal market conditions, short selling contributes to price efficiency and adds liquidity to the markets, according to SEC. However, the current market conditions have led to “unbridled” short selling contributing to the recent, sudden price declines in the securities of financial institutions unrelated to true price valuation.

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