The first thing I want to address tonight is the statement made today by
Christopher Cox, Chairman of the Securities and Exchange Commission (SEC) at the
Senate hearing. Mr. Cox stated that he will issue an emergency order to "Protect
Investors" from what is called "naked short selling".
SEC Enhances Investor Protections Against Naked Short
Selling
FOR IMMEDIATE RELEASE
2008-143
Washington, D.C., July 15, 2008 - The Securities and
Exchange Commission today issued an emergency order to
enhance investor protections against "naked" short selling in the securities of
Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks.
The SEC’s order will require that anyone effecting a
short sale in these securities arrange beforehand to borrow the securities and
deliver them at settlement. The order will take effect at 12:01 a.m. ET on
Monday, July 21. In addition to this emergency order, the SEC will undertake a
rulemaking to address these issues across the entire market.
"The SEC’s mission to protect investors, maintain orderly
markets, and promote capital formation is more important now than it has ever
been," said SEC Chairman Christopher Cox. "Today’s Commission action aims to
stop unlawful manipulation through ‘naked’ short selling that threatens the
stability of financial institutions. We will continue our vigorous commitment to
investors by working within the SEC and in close cooperation with our regulatory
counterparts to promote the continued health and vibrancy of our markets."
The Commission’s emergency order, pursuant to its
authority under Section 12(k)(2) of the Securities Exchange Act of 1934, will be
effective at 12:01 a.m. ET on July 21, 2008 and will terminate at 11:59 p.m. ET
on July 29, 2008. The Commission may extend the order to continue it in effect
thereafter if the Commission determines that the continuation of the order is
necessary in the public interest and for the protection of investors, but for no
more than 30 calendar days in total duration.
