Potentially Stricter Short-Sale Rules
Last week, the emergency temporary restrictions on naked short selling of 19 stocks expired and the Securities and Exchange Commission is looking to tighten up the rules for short selling. The temporary restrictions prevent naked short selling, meaning short sellers had to actually have the shares ahead of shorting them, and those rules applied to Fannie Mae & Freddie Mac, along with other financial institutions like Lehman, Goldman Sachs, Merrill, and many others. The idea was that this would help minimize the volatility at a time when volatility was at historic levels.