Short-sale ban list expanded to include GM

[Hurricane]

Short-sale ban list expanded to include GE, GM

American Express also added; NYSE expands roster by another 30 stocks
By Ruth Mantell, MarketWatch
Last update: 11:28 a.m. EDT Sept. 22, 2008

(MarketWatch) -- Pushing on to shore up the markets, the list of banned short-sale stocks has been expanded to include the likes of General Electric Co., General Motors Corp. and American Express Co.

The three companies' shares are all part of the 30-stock Dow Jones Industrial Average.

GE and GM may not be the most obvious firms to be picked out as financials.

However, GM has a 49% stake in GMAC Financial Services, noted David Healy, an auto-industry analyst.

Meanwhile, GE's commercial finance operations accounted for nearly 20% of revenue for second-quarter continuing operations, while the company's GE Money operations accounted for 14%.

Monday morning, the New York Stock Exchange issued a list of 30 new companies on the short sale ban list. The list is being updated throughout Monday, and possibly through the week, said Scott Peterson, an exchange spokesman.

"Being that we had no easy and quick way to determine if a company met the [SEC's] criteria, we sent a blast email to all of our members asking them to self-certify if they met the criteria," Peterson said.

Late last week, the Securities and Exchange Commission ordered a ban on short selling in shares of 799 U.S. financial institutions until Oct. 2. Short sales -- in which investors take a position in a stock in the belief that the stock's price will go down -- will continue to be prohibited in listings covered by the SEC's prior order.

However, the SEC that said difficulties with classifications led to an incomplete list and that it's now up to exchanges to publish changes.
"We believe that these amendments are necessary in the public interest and for the protection of investors to maintain fair and orderly securities markets, and to prevent substantial disruption to securities markets," according to a statement from the SEC.

Issuers can opt out of being included in their exchange's list, according to the SEC. The order can be extended for up to a total of 30 calendar days.

More here: http://www.marketwatch.com/news/stor...ude/story.aspx

[ronald mcretard]

Does this mean GM's stock price should go up? Because no short-selling means no more people easily profiting from it going down?

[Beau]

Good short sales are the reason people PLAY with the stock market like its a friggin video game, which totally underminds its stability.

I think all shorts should be banned to be honest. When people INVEST into a company or business, you should be able to count on that money at least for a short period of time.

[Clownzilla]

Well, shortselling has always upset me. The idea of the market is to invest in growth and prosperity, not the other way around

[SUPERBADD75]

the bottom line is that the investment game has been full of corruption and get rich quick schemes for a long time, and it's caused the entire economy to finally crumble. Wall St. hasn't had enough accountability to keep those people in check and it's going to haunt the average American now. what a load of crap.

[RamJet502]

I don't see why they allow short-selling at all.

[MonaroSS]

You know when there is a serial killer and the cops think they know whose to blame so they throw him in jail and then another killing happens anyway as it wasn't really the guy getting all the blame.....

Today GM stock fell 11% and all the short sellers were locked up in jail......

If this were an ordinary day with short selling allowed you people would all be blaming it on short sellers, when in fact the stock fell because investors who own GM just wanted to get rid of it. And all those times before when short sellers were being blamed for falls in GM stock a lot of that was just investors wanting to get out of it too.

Like hyenas or sharks or wolves, short sellers serve a real and valuable purpose in the market. They provide liquidity for one and they cull the dead wood and the sick out so the healthy companies can grow and prosper.

When you ban short sellers you risk bad unintended consequences. Just like when they erased wolves from western US states the deer populations grew and they overate the saplings that did not then grow into the trees that beavers made their lodges and dams from; so without the dams the wetlands dried up and the bird and fish populations that relied on them died off and then pest insects increased. When you mess with a balanced eco system like the free markets, by taking out a natural predator, then bad things can and will happen.

So today without any short selling the financials and general market fell enough to put it in the top ten down days in history. But unlike if this was due to short selling, there are no shorts that need to cover their positions, which can lift the market back up again. So the markets may just drift lower and lower and become more and more depressed without the volatility and liquidity the short sellers provide.

[jbernie]

Originally Posted by MonaroSS

You know when there is a serial killer and the cops think they know whose to blame so they throw him in jail and then another killing happens anyway as it wasn't really the guy getting all the blame.....

Today GM stock fell 11% and all the short sellers were locked up in jail......

If this were an ordinary day with short selling allowed you people would all be blaming it on short sellers, when in fact the stock fell because investors who own GM just wanted to get rid of it. And all those times before when short sellers were being blamed for falls in GM stock a lot of that was just investors wanting to get out of it too.

or maybe it was linked to oil going up$16 a barrell by end of day but hitting $130 during the day.


Australia banned all short sales over the weekend, they were concerned that people would short sell the non true financial stocks and some other companies could be pushed under just on people playing games in the markets.

[CJ Thunder]

Originally Posted by Clownzilla

Well, shortselling has always upset me. The idea of the market is to invest in growth and prosperity, not the other way around

Like that commerical for the invest bank...I forgot...but at the art auction wer right after he buys the painting he wants to sell it.

[MonaroSS]

Originally Posted by jbernie

or maybe it was linked to oil going up$16 a barrell by end of day but hitting $130 during the day.


Australia banned all short sales over the weekend, they were concerned that people would short sell the non true financial stocks and some other companies could be pushed under just on people playing games in the markets.

Sorry I don't deal in guesswork. GM had already accrued most of it's losses by 11am and slid down all day from there. Oil rose in the last hour of trade due to a short squeeze caused by the longs refusing to sell to the shorts who needed to deliver contracts before the contracts expired today. So the two were totally unrelated.

The fact Australia and other countries like England Germany etc also banned shorts does not make it a wise action..... It just shows the measure of fear that regulators are experiencing as they don’t know what to do to solve this problem, which the US $700 Billion bailout will certainly not cure.

[gardnet1]

Wow even a diversified conglomorate like GE!

It is obvious that Sen dodd (d) and Sen obama (d) have really allowed the financials to go tlts up in part by their turning the other cheek and receiving millions of dollars in kickbacks from Fannie Mae and Freddie Mac (they are, by far, the top two in kickback dollars received).

That's alright, I'm sure the media will make Bush the culprit again.

[MonaroSS]

Originally Posted by gardnet1

Wow even a diversified conglomorate like GE!

It is obvious that Sen dodd (d) and Sen obama (d) have really allowed the financials to go tlts up in part by their turning the other cheek and receiving millions of dollars in kickbacks from Fannie Mae and Freddie Mac (they are, by far, the top two in kickback dollars received).

That's alright, I'm sure the media will make Bush the culprit again.

You obviously subscribe to this foolish article's view:

http://www.bloomberg.com/apps/news?p...d=aSKSoiNbnQY0

That article is the definition of stupid. The brain needs to think rationally to be of use and this guys brain is of no use to him at all.

For those who don't want to wade through his garbage this is how he constructs his argument:

The Democrats blocked in 2005 a Bill that would have seen Freddie and Fanny limited in the number of mortgage instruments they could purchase. If they could not buy the toxic mortgage derivatives being manufactured by Wall Street then Wall Street would not have also sold them to the rest of the financial world and this mess would not have happened.

That's like saying that if Americans did not buy toys from China then China would not have made toxic lead paint toys that also endangered all buyers of toys. So American consumers are to blame for toxic toys from China.

[Buickman]

could always buy puts.

[TJ95GAGT]

Good. The more short sale bans the better. Its a PITA tricking our accounting software when clients sell short. lol

[sigma]

Originally Posted by MonaroSS

You obviously subscribe to this foolish article's view:

http://www.bloomberg.com/apps/news?p...d=aSKSoiNbnQY0

That article is the definition of stupid. The brain needs to think rationally to be of use and this guys brain is of no use to him at all.

For those who don't want to wade through his garbage this is how he constructs his argument:

The Democrats blocked in 2005 a Bill that would have seen Freddie and Fanny limited in the number of mortgage instruments they could purchase. If they could not buy the toxic mortgage derivatives being manufactured by Wall Street then Wall Street would not have also sold them to the rest of the financial world and this mess would not have happened.

That's like saying that if Americans did not buy toys from China then China would not have made toxic lead paint toys that also endangered all buyers of toys. So American consumers are to blame for toxic toys from China.

I agree. Many of these loans were sold through Frannie and Freddie, however as derivatives they could/would have been sold to other banks which had no idea who the borrowers were or what the property was. It might have been at a higher cost, but we don't know that for sure. The whole system of derivatives was predicated on the continued increase in housing values so when they started to fall, it kicked down the whole house of cards.

Because Frannie and Freddie managed to hold a good deal of both good and bad assets, it helped to contain the damage rather than to spread it around. If I could remind everyone that BearStearns collapsed way before Frannie or Freddie, and that Lehman and Merrill Lynch collapsed after all of that debt the GSE's own was guaranteed by the government.

What we have here is a good old fashion panic which has finally brought home the actual costs of all of the bank deregulation that happened in the 80's (S&L Crisis) and 90's.