SEC Halts Short Selling of 799 Financial Stocks — Here’s the List
The SEC just put out a press release detailing the temporary ban on short selling of a huge list of financial stocks. I took the liberty of copying & pasting the text of the PDF that lists all the stocks that can’t be shorted from now until October 2, 2008. The list , which is below, may be easier to scan & search than the PDF (use CTRL-F on your browser to find a specific ticker or company name)
It’s interesting that none of the ETFs are on the list. Can one still short XLF? How about buying the inverse financial ETF (SKF)? Ah, you’ve gotta love a hastily put together list. Hopefully this is as far as they’ll go and they won’t try to ban short selling across the entire market.
SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets
FOR IMMEDIATE RELEASE
2008-211
Commission Also Takes Steps to Increase Market Transparency and LiquidityWashington, D.C., Sept. 19, 2008 — The Securities and Exchange Commission, acting in concert with the U.K. Financial Services Authority, today took temporary emergency action to prohibit short selling in financial companies to protect the integrity and quality of the securities market and strengthen investor confidence. The U.K. FSA took similar action yesterday.
The Commission’s action will apply to the securities of 799 financial companies. The action is immediately effective.
SEC Chairman Christopher Cox said, “The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets. The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.â€
Today’s decisive SEC action calls a time-out to aggressive short selling in financial institution stocks, because of the essential link between their stock price and confidence in the institution. The Commission will continue to consider measures to address short selling concerns in other publicly traded companies.
Under normal market conditions, short selling contributes to price efficiency and adds liquidity to the markets. At present, it appears that unbridled short selling is contributing to the recent, sudden price declines in the securities of financial institutions unrelated to true price valuation. Financial institutions are particularly vulnerable to this crisis of confidence and panic selling because they depend on the confidence of their trading counterparties in the conduct of their core business.
Given the importance of confidence in financial markets, today’s action halts short selling in 799 financial institutions. The SEC’s emergency order, pursuant to its authority in Section 12(k)(2) of the Securities Exchange Act of 1934, will be immediately effective and will terminate at 11:59 p.m. ET on October 2, 2008. The Commission may extend the order beyond 10 days if it deems an extension necessary in the public interest and for the protection of investors, but will not extend the order for more than 30 calendar days in total duration.
The Commission notes today’s similar announcement by the U.K. FSA. The SEC and FSA are consulting on an ongoing basis with regard to short selling matters and will continue to cooperate in carrying out regulatory actions.
The Commission also has taken the following steps to address the recent market conditions:
* Temporarily requiring that institutional money managers report their new short sales of certain publicly traded securities. These money managers are already required to report their long positions in these securities.
* Temporarily easing restrictions on the ability of securities issuers to re-purchase their securities. This change will give issuers more flexibility to buy back their securities, and help restore liquidity during this period of unusual and extraordinary market volatility.
Appendix A
This list, prepared on a best efforts basis, includes banks, insurance companies, and
securities firms identified by SICs 6000, 6011, 6020-22, 6025, 6030, 6035-36, 6111,
6140, 6144, 6200, 6210-11, 6231, 6282, 6305, 6310-11, 6320-21, 6324, 6330-31, 6350-
51, 6360-61, 6712, and 6719.Edit on 9/22/2008 — Here are some new additions to the list which, as of now, bring the list up to 829 companies:
LG……GLG Partners
GE……General Electric Co.
OCN….Ocwen Financial Corporation
KBW….KBW, Inc.
GFG….Guaranty Financial Group Inc.
MFG…. Mizuho Financial Group, Inc.
FMR…. First Mercury Financial Corporation
STC….Stewart Information Services Corporation
FCF…. First Commonwealth Financial Corporation
MTB…M&T Bank Corporation
DFS…Discover Financial Services
BMO….Bank of Montreal
TD….. Toronto Dominion Bank
CM…..Canadian Imperial Bank of Commerce
FMD….The First Marblehead Corporation
BBV…..Banco Bilbao Vizcaya SA
CIB….. BanColombia SA
LM….. Legg Mason, Inc.
NFP…..National Financial Partners Corp.
AXP…..American Express Company
CIT….. CIT Group Inc.
GM…..General Motors Corporation
HIG…..The Hartford Financial Services Group
ADS…..Alliance Data Systems Corporation
ALD….. Allied Capital Corporation
RAS…..RAIT Financial Trust
DRL….. Doral Financial Corporation
FSR……Flagstone Reinsurance Holdings
MCO….Moody’s Corporation
COF…..Capital One Financial Corporation
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This post has 20 comments
September 19th, 2008
Mike, What will happen with put? I mean, the writer of a put contract usually also short the stock to some extent to hedge their position. Is this considered naked short?
Or how about the ultra short or inverse ETF (like QID or SKF and such)? Don’t they short the market to operate? Is this considered naked short selling?
Or how about hedge funds that short to balance out their long position?
This new rules is truly mind boggling, why not just reinstate the old uptick rule?
September 19th, 2008
I wonder what happens to the current short holding.
I mean happens to people holding short positions? Does this mean they are liquidated or kept on hold (stop trading) until the ban gets lifted.
I have a few QIDs for past 3 months. I am glad it is not on the list.
September 19th, 2008
What a sad day. We have been screwed by greedy people who have put us in this situation, and now we are being screwed again by people who are going to “fix” it.
I feel like I am in the Twilight Zone.
September 19th, 2008
just put your list into xls and it only had 797 names…what’s missing?
September 19th, 2008
Thought this was worth sharing:
The Pakistani example of banning short sales:
By notablecalls
A smart hedgie pinged me with the following:
An extreme example comes from Pakistan where the local SEC responded to a stock slump last month by banning short selling and limiting daily price declines to 1% while allowing them to rise by 10%. The initial reaction was a massive 8.6% one day rally followed by 15 straight days of slumping prices amid extremely low turnover, the worst such period for that market in several years. As rioting investors stormed the Karachi Stock Exchange last week, the rules were rescinded.”
September 19th, 2008
Kristin on Sep 19, 2008:
>> just put your list into xls and it only had >> 797 names…what’s missing?
Could be because some issues are shown twicein the list, e.g. BRK.
September 19th, 2008
There’s only 797 names on this list. I cross checked against the PDF on the SEC website. Where are the other 2?
September 19th, 2008
That would make 796.
September 19th, 2008
I guess it would have been too obvious to extend the ban to the exact date of the election.
September 19th, 2008
I know that people disagree on the issues, but how can the people in charge of decision-making and policy-making be so ignorant.
If people really believe short sellers are the evil enemy, do they also believe the moon is made out of cheese?
Unbelievable.
September 19th, 2008
how the hell can this be done,
fuck!!!!!!!!!!!!!!!!!!!!!!!!
September 19th, 2008
Here’s some info on the inverse financial ETFs (via Briefing.com)
September 19th, 2008
My husband and I are considering doing a short sale on our house….it’s either that or go into foreclosure. Does this include mortgages, or stocks?? Help!!
September 19th, 2008
Alexa,
This just applies to stocks. Real estate short sales is a whole different thing.
Good luck to you & your husband.
September 19th, 2008
Can anyone explain to me why AHD and NSH is at the list? Last time I checked they were in the oil industry…
September 19th, 2008
What will happen with property short sales in florida. And what is contry wide not on the list?
September 19th, 2008
Again, real estate is a whole different animal.
Countrywide got bought by Bank Of America (BAC)
September 21st, 2008
They have changed the rules on Fri. before options expiry. Ozzie, a put buyer has the right to sell the stock at or below a fixed price within a set period of time, and the writer (seller) of a put similarly has the obligation to buy the stock if assigned. If i am short a call (obligation to sell) and do not own the stock normally the bank shorts the stock upon assignment, now what happens? You account is now deducted the cash??? I’m not sure but by the way you can very likely short the XLF,QID,SKF which likely contain the bulk of the above list effectively shorting them anyway. Whats up with that? Not to mention going long double inverse financial ETF’s etc? Confusing to say the least. It would appear that neither the SEC, Hank Paulson, and Dr. Ben Bernanke understand the options instruments. I am very glad I did not go to Harvard, … too clever is dumb. This is probably the worst financial crisis in US history.
September 22nd, 2008
The first addition is symbol LG, which is Laclede Group (a utility),not GLG Partners (which is GLG). I wonder which one is right.
September 22nd, 2008
What gives with down slide on closed end muni funds, e.g. LEO or MUI??