U.K.'s Surprise Short-Selling Rules Spark Outcry

Law360, New York (June 16, 2008, 12:00 AM EDT) -- The United Kingdom's securities regulator, the Financial Services Authority, shocked the hedge fund industry when it announced late last week that it would be tightening its short-selling rules. Now short sellers spooked by the watchdog's surprise move are racing to make changes on just one week's notice.

Short sellers operate by borrowing shares and then selling them; they essentially make bets that a stock's price will drop. If the share price does drop, they can make a profit by buying the shares back at the lower...
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