SEC to Make Hedge Funds Report Short Sales Until 2009

Bloomberg – The U.S. Securities and Exchange Commission extended a rule forcing hedge funds to tell the agency about short-sale positions amid concerns investors bet against companies after spreading false rumors they will fail.

Investment managers who oversee more than $100 million must to disclose to the SEC the stocks they’ve bet will fall in price until Aug. 1, the agency said in a statement on its Web site today. Those positions won’t be made public, the SEC said.

The SEC said it’s concerned “about the possible unnecessary or artificial price movements” in stocks “that may be based on unfounded rumors and may be exacerbated by short selling.”

The SEC is investigating hedge funds and cracking down on short-selling after lawmakers questioned whether traders spread misinformation and used abusive tactics to attack companies. The collapse of Bear Stearns Cos. in March and Lehman Brothers Holdings Inc.’s September bankruptcy fueled concerns that investors were manipulating financial markets.

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