SEC: Uptick Rule May Be Reinstated

[one...two...tree 2,762]

WASHINGTON — Dramatic changes in the global economy may merit restoring a federal rule aimed at preventing a massive plunge in a stock price caused by a rush of short sellers, the head of the Securities and Exchange Commission said Wednesday.

SEC Chairman Mary Schapiro said the agency "hopefully" will propose for public comment next month reinstatement of the so-called uptick rule.

On another crisis-related issue _ an industry push to scrap the accounting rule that forces banks to value assets at current prices _ Schapiro said the SEC wants revisions that would continue to provide the transparency investors need without excessively hurting banks.

The uptick rule, which the SEC eliminated in 2007, requires short sellers _ those who try to profit from a stock's decline by selling borrowed shares _ to sell at a price above a stock's most recent trading price.

"The world has changed rather dramatically in the past year," Schapiro told a House Appropriations subcommittee. "Hopefully we'll get our proposal out in April."

The SEC could reinstate the rule at some time after the public comment period. Schapiro said the SEC also will consider "other alternatives" related to short-selling, which she declined to specify.

As the market has plunged, pressure has been building from some in Congress for the SEC to reinstate the uptick rule, which was established in 1938 during the Depression in the wake of the 1929 market crash.

Short-sellers bet against a stock. The practice, which is legal and widely used on Wall Street, involves borrowing a company's shares, selling them, and then buying them when the stock falls and returning them to the lender. The short-seller pockets the difference in price.

http://www.huffingtonpost.com/2009/03/11/s...e_n_173936.html

[mawilson 2,133]

Stupid, stupid, stupid.