"It's all GWB's fault!"

Probligo says.

Seen the front page of the Wall Street Journal today? The SEC's getting into the act.

First the Fed, then Treasury and now this. Whose administration is it?

Curbing short-selling will only artificially support irrationally high stock prices and make The Market less transparent. Short-sellers have reason to believe that a particular stock is going to drop: the company's fundamentals don't match its price. It deserves to be taken down a peg.

Short-sellers deserve our support.
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Wait a minute! What?!

Under current rules, a short seller must first locate shares to borrow, but does not have to enter into a contract with the share lender. Often, more than one trader is able to borrow the same shares, creating a multiplier effect in the size of the total short position.

That ain't how my informants told me how it's done! That sounds like fraud to me!

Under the emergency order, a short seller would be required to have an actual agreement to borrow the shares. The new move would effectively take shares out of the market for borrowing, which could reduce the amount of stock available for selling short.

The only trouble with that is that it will take shares out of the game that ought to be in it. Typical ham-handed beaurocracy. But I agree that two or more people selling the same shares at the same time is fraud. It's a con game. Real people bought those shares and lost money on them! And you never even had them to sell!

Is there really a lot of that "naked shorting" going on?

On Sunday, the SEC said it would crack down on firms or individuals that illegally spread false rumors. In its various short-selling investigations, the SEC has sent subpoenas to more than 50 hedge funds, some as recently as Monday.

Critics of the SEC's move Tuesday asked why certain financial firms were being protected -- but not the broader market -- especially when many of those firms are also active short sellers.

"For heaven's sakes, they're the very ones we believe have been doing this...to thousands of public companies," said James "Wes" Christian, a lawyer with Texas law firm Christian, Smith & Jewell, who represents companies who have filed lawsuits relating to short selling.

I thought TR and FDR fixed all this crap early in the 20th Century.

New York hedge-fund manager Whitney Tilson called the proposals a "desperation move" that could end up silencing investors who are among the first to point out problems at troubled companies.

Agreed, but you can't do it by selling pretend stocks! Or am I reacting to a misimpression? If the shorters are doing it sequentially, then there's no fraud. The overseers only need to make sure that only one entity is disposing of the stock at a time.