SEC Emergency order

Posted: 7/16/2008 3:43:50 PM EDT

This was given Tuesday:
www.sec.gov/news/press/2008/2008-143.htm

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.

# # #

The securities identified in the Commission's order:

Company Ticker Symbol(s)
BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM

What to make of it?

Posted: 7/16/2008 4:27:33 PM EDT

[#1]

Don't speculate by trying to sell in-trouble banks short.

If you're going to do it, you better have your ducks in a row (and shares committed).

Posted: 7/18/2008 6:01:20 PM EDT

[#2]

Moves like this reek of desperation.

This is the kind of stuff we haven't seen since the Great Depression.

Not that we are headed for GD2 necessarily, but geez, do we have free markets or are we some cheezy third world backwater that has to ban shorts? Unbelievable.

Posted: 7/18/2008 6:34:53 PM EDT

[#3]

IMO, it means all those banks have bought heavily into our subprime market and can take a big hit if the bottom drops out. The two Swiss ones are among the biggest banks in Switzerland.

Posted: 7/19/2008 5:44:03 AM EDT

[#4]

Quoted:
IMO, it means all those banks have bought heavily into our subprime market and can take a big hit if the bottom drops out. The two Swiss ones are among the biggest banks in Switzerland.

Or that like Freddie and Fannie they are being tarred when there is NO evidence they are in actual trouble.

Some of them probably DO have exposure, but this dive for the bottom is a self fulfilling prophecy.

Posted: 7/19/2008 5:51:21 AM EDT

[#5]

A check on the on-line financial news will show that 4 board of directors of UBS AG are tendering their resignation. Its president is also stepping down as a result of their loss resulting in their investment in the US subprime market. Even the Swiss have a

because of our financial practices.

Posted: 7/19/2008 6:24:26 AM EDT

[#6]

Some free market we have here. I don't short stocks, but this along with the bailouts of Bear Sterns, Fannie, Freddie, and the subprime borrowers is just wrong. The government needs step back and let the market work.

Posted: 7/19/2008 9:55:01 AM EDT

[#7]

bailouts of Bear Sterns, Fannie, Freddie, and the subprime borrowers

Bail out?
Do you own any Bear-Sterns stock?
It was purchased at $10 a share, up from the initial offer of $8 by JP Morgan.
Bear Sterns is GONE.

Fannie & Freddie are having problems rasing capital since the market is running in adject fear from mortgage bonds.
There is NO evidence that Freddie or Fannie have significant exposure to the sub prime fiasco but they are tarred with the same brush.

So far nothing has happened to bail out the sub prime borrowers.
The bill remains stalled in congress.

If the banks would write down the loans they could be made conforming, but the banks are scared of a massive write down.

If there is any chance of a market recovery mortgage money must be available.

Posted: 7/19/2008 6:19:44 PM EDT

[#8]

Quoted:
Not that we are headed for GD2 necessarily, but geez, do we have free markets or are we some cheezy third world backwater that has to ban shorts? Unbelievable.

R.I.F..... Shorting isn't banned...Naked shorting is and there is a difference.

Posted: 7/19/2008 7:44:55 PM EDT

[#9]

Quoted:

Quoted:
Not that we are headed for GD2 necessarily, but geez, do we have free markets or are we some cheezy third world backwater that has to ban shorts? Unbelievable.

R.I.F..... Shorting isn't banned...Naked shorting is and there is a difference.

I thought that this was obvious to everyone, hence the abbreviation. Now do you have a disagreement with something I said? Perhaps you would like to defend the policy?

Posted: 7/19/2008 8:39:15 PM EDT

[#10]

Quoted:

bailouts of Bear Sterns, Fannie, Freddie, and the subprime borrowers

Bail out?
Do you own any Bear-Sterns stock?
It was purchased at $10 a share, up from the initial offer of $8 by JP Morgan.
Bear Sterns is GONE.

Fannie & Freddie are having problems rasing capital since the market is running in adject fear from mortgage bonds.
There is NO evidence that Freddie or Fannie have significant exposure to the sub prime fiasco but they are tarred with the same brush.

So far nothing has happened to bail out the sub prime borrowers.
The bill remains stalled in congress.

If the banks would write down the loans they could be made conforming, but the banks are scared of a massive write down.

If there is any chance of a market recovery mortgage money must be available.

The taxpayers assumed the risk of Bear Stearns assets not JP Morgan Chase. If the FED had not loaned the money the share price would have been $0. It sounds like a bailout to me.

Whether Fannie and Freddie have sub-prime exposure is irrelevant. There are plans to use tax payer money to buy stock and make loans.

They may not have passed a sub-prime bailout yet, but it's only a matter of time. The two parties only disagree on small points.

If companies and people aren't allowed to make stupid decisions and fail because a nanny state government is always ready to ride to the rescue, people will take greater risks in the future.

Posted: 7/20/2008 2:45:42 PM EDT

[#11]

Quoted:

bailouts of Bear Sterns, Fannie, Freddie, and the subprime borrowers

Bail out?
Do you own any Bear-Sterns stock?
It was purchased at $10 a share, up from the initial offer of $8 by JP Morgan.
Bear Sterns is GONE.

Fannie & Freddie are having problems rasing capital since the market is running in adject fear from mortgage bonds.
There is NO evidence that Freddie or Fannie have significant exposure to the sub prime fiasco but they are tarred with the same brush.

So far nothing has happened to bail out the sub prime borrowers.
The bill remains stalled in congress.

If the banks would write down the loans they could be made conforming, but the banks are scared of a massive write down.

If there is any chance of a market recovery mortgage money must be available.

The taxpayers assumed the risk of Bear Stearns assets not JP Morgan Chase. If the FED had not loaned the money the share price would have been $0. It sounds like a bailout to me.

Whether Fannie and Freddie have sub-prime exposure is irrelevant. There are plans to use tax payer money to buy stock and make loans.

They may not have passed a sub-prime bailout yet, but it's only a matter of time. The two parties only disagree on small points.

If companies and people aren't allowed to make stupid decisions and fail because a nanny state government is always ready to ride to the rescue, people will take greater risks in the future.

JP Morgan Chase assumed a huge amount of the risk.

They appear to have not had enough liquid cash, so they got some from the FED.

Bear-Sterns crashed and burned.
The ASSETS they had got spread around.

You would rather have the entire secondary market lock up?

The lock up is what caused the great depression.
Not enough cash available.

While the FED ended up with some of the poorer assets, Bear-Stearns ended up DEAD. GONE.
A huge loss to the investors, let alont eh employees.

Posted: 7/21/2008 4:28:58 PM EDT

[#12]

Quoted:

Quoted:
Not that we are headed for GD2 necessarily, but geez, do we have free markets or are we some cheezy third world backwater that has to ban shorts? Unbelievable.

R.I.F..... Shorting isn't banned...Naked shorting is and there is a difference.

I thought that this was obvious to everyone, hence the abbreviation. Now do you have a disagreement with something I said? Perhaps you would like to defend the policy?

Read your own post again and let me know how that was inferred? As for the policy, if this available to the general stock trading public (retail), then fine. If limited only to large brokerage houses etc for the purpose of manipulating price, then by definition it is not "free market." And somehow, even if it was banned, I hardly consider it a third world policy as third worlds don't really have stock exchanges

.

Posted: 7/22/2008 11:17:52 AM EDT

[#13]

Quoted:
Perhaps you would like to defend the policy?

I would. People are using a loophole in the settlement rules to short stock that may not even exist.

Good luck trying to do this with your Scottrade account.

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