I was trying to figure out what to make of the SEC's two "interim final temporary rules" going after the shorts, other than to note that the term should horrify administrative lawyers or fans of George Orwell. The rules extend the SEC's ban on naked shorting (a somewhat sketchy practice where you short a stock without actually borrowing it) and require large hedge fund managers to disclose their shorts (which I understood the hedges to be nuts about, since they think it gives away their trading strategies). The interim part means they're being imposed on an emergency basis, the final part means they are enforced now, and the temporary part means that they will expire next year. So "interim temporary final." Ugh. The SEC is willing to receive your comments, you will be glad to hear, about this rule that the agency will not be changing, but good luck getting your client to pay for it. Larry Cunningham has the best contextualization here.
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1. Posted by fedgovernor on October 18, 2008 @ 6:01 | Permalink
"... a somewhat sketchy practice where you short a stock without actually borrowing it."
Let me put that another way that even Joe the Plumber can understand.
On Wall Street, it is common for people to sell stock that they do not own, and haven't even borrowed.
On Main Street, if you try to sell a loaf of bread that you do not own, and have not borrowed from anyone, the police will arrest you.
On Wall Street, fraud is just "a somewhat sketchy practice."
On Main Street, fraud is a felony.
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