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Hedge Funds Alone In Fight Against Short-Selling Curb

Among the 300 investor comments filed over the past month with the Securities and Exchange Commission about naked short selling, most voiced opposition to the abusive version of it.

Adding to the cry against naked short selling is a new proposal that the SEC is slated to release this week protecting publicly traded companies from abusive naked short selling.

What’s more, South Dakota voters will decide in November whether to approve an initiative that the state’s securities director says would ban all short selling. The group sponsoring that action promises to get similar initiatives on ballots in 18 other states if the SEC doesn’t put more restrictions on short sales.

The hedge fund industry is fighting restrictions on naked short selling, in which securities are sold short without borrowing the stock first. Abusive naked short selling is being blamed for depressing stock prices in financial services stocks as well as stock prices for other companies.

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