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SEC proposing long-term changes on short-selling…..

July 15th, 2008

     Hopefully this isn’t an empty action on the part of the SEC, but today they announced specific actions against the short-sellers of Fannie Mae and Freddie Mac stock.  The SEC announced that they would immediately and aggressively enforce naked short selling, in that the sellers of these stocks must pre-borrow shares to initiate their positions.  The SEC also announced that they may possibly extend this effort towards to greater market as an investigation over the last few months has shown that individual investors have been hit hard by the increased volatility caused by naked short-selling.  Fingers are being pointed at the hedge funds, who many say are a major contributor to this situation.

      This action comes on the latest news that short interest had reached a record high of 17.7 billion shares in June.  While they’re at it, perhaps the SEC should also look at bringing back the “uptick rule” for short-sellers…..

Thanks for reading…..

Jeffrey Ishmael

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