SEC Takes Aim At Short Sellers With Rule Changes

Law360, New York (December 5, 2006, 12:00 AM EST) -- The U.S. Securities and Exchange Commission has voted unanimously to rein in short sellers by tightening rules governing the practice.

The agency voted on Monday to revise the regulation that prohibits traders from covering short sale purchases with shares purchased in advance of a stock offering.

Short selling takes place when investors borrow stock they hope will decline in value so they can return it to brokers and keep the difference. Short selling itself is considered by many to be blatant manipulation, but illegal naked short...
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