Everyone wants in on the short sell ban list
Firms are being added left and right to the list of companies that cannot be sold short due to the market meltdown. GM, GE and Ford wanted in. Blackrock now has in too. If there is one feature about the new crisis protections put in place by the Fed, the SEC and the Treasury that I find manipulative, it is this short-selling ban.
The list of companies that regulators are protecting from short-sellers keeps growing, as do the questions surrounding it.
By Monday evening, the number of companies on the list rose to nearly 900, from 799 on Friday, when the Securities and Exchange Commission sought to restrict bearish bets against financial companies to help stabilize the markets.
Nearly every major bank is now included, along with large insurance companies and others. Trading in bank stocks withered on Monday amid uncertainty over the rules and the sweeping bailout that the Bush administration has proposed for financial companies.
But many questions remain. Some analysts — and a few firms initially left off the list — complained that the initial S.E.C. roster was incomplete.
By the weekend, the S.E.C. delegated the task of adding more companies to the initial 799 to financial exchanges like NYSE Euronext and the Nasdaq. On Sunday afternoon, NYSE Euronext, which operates the New York Stock Exchange, sent out an e-mail message to all of its listed members, asking them to submit reasons why they should be given short-selling protection. Companies had to fit one of seven categories of financial firms listed by the S.E.C. Applications were reviewed by NYSE Euronext’s listings division.
Many financial firms that might seem like natural members of the list — banks like Credit Suisse, the money managers AllianceBernstein and Legg Mason and American Express — did not make the cut until Monday. BlackRock, the big investment firm that has done work for the government during several crises this year, was not added until Monday evening.
A few additions seemed a bit more puzzling. Both General Electric and General Motors were added Monday morning, prompting a few jokes from pundits. But the companies argue that they fall under the guidelines set out by the S.E.C.
General Motors, for example, notified the regulator on Friday that it owned the National Motor Bank, a savings and loan that qualifies it for inclusion on the list, according to Julie M. Gibson, a G.M. spokeswoman. The S.E.C. responded and, after a series of talks between the two, added the carmaker to the list by Monday.
By Monday evening, the Ford Motor Company, which also owns a bank, was added to the list.
Yet as others sought to be added, one company chose to remove itself from the list.
The Diamond Hill Investment Group, a small investment manager that is listed on the Nasdaq, said Monday that it opted out of the protection program. When the firm learned on Friday that it was a part of the no-short list, it asked to be removed, according to Rob Dillon, the firm’s chief executive.
Short-Sell List Grows, and So Do Questions – NY Times