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Reply #82: Bernanke Says There May Be Benefit to Uptick Rule [View All]

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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Feb-25-09 05:07 PM
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82. Bernanke Says There May Be Benefit to Uptick Rule
Feb. 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said there may be a benefit in resurrecting a rule that restricts short-selling stocks when share prices are falling amid the current bear market.

In the kind of environment we have seen more recently the so-called uptick rule might have had some benefit, Bernanke said in testimony before the House Financial Services Committee today. The rule, scrapped by the U.S. Securities and Exchange Commission in 2007, barred investors from betting against a stock until it sells at a higher price than the preceding trade.

Bernankes comments may give credence to lawmakers such as U.S. Representative Gary Ackerman, a New York Democrat, who blamed the rules elimination for triggering attacks on financial stocks.

. . .

The SEC approved the rule in 1938 to prevent bear raids on companies. The agency eliminated the regulation after studying its effect on share prices and determining it was no longer relevant in markets dominated by fast-paced electronic trading.

There can be no recovery if the vultures are allowed to jump on every positive sign and short it to death.

Of course Cox fought hard against re-instating the rule.

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