Sunday, March 14, 2010
No Evidence SEC
"What was new about Wednesday's vote to approve new limits on short-selling was that not even Ms. Schapiro claimed there was any evidence that short-selling is harming investors--or that her new rule will help investors. ... In fact, short-sellers make for a more efficient market by allowing all points of view to be expressed in a company's stock price. The SEC came to this conclusion several years ago when it abandoned the so-called uptick rule that had prevented a short-sale unless the last movement in the stock price had been up. ... Ms. Scahpiro's argument is essentially that, even though the SEC staff has studied the issue exhaustively and found bupkus, some investors think it's a problem and therefore they will feel good when they see the SEC regulating it. ... But what if other investors realize that limits on short-selling impede price discovery and reduce liquidity", my emphasis, WSJ Editorial, 26 February 2010, link: http://online.wsj.com/article/SB10001424052748704479404575087762656446670.html.
The SEC never asked me about this. It may be time to send the SEC and the Fed "to sleep with the fish".