The Securities and Exchange Commission's temporary ban on short selling of almost 1,000 financial companies expires at midnight, bringing to a close a key part of the agency's effort to restore market equilibrium.
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The companies covered by the ban, which began on Sept. 19, include some of the nation's largest financial institutions, many of which are troubled themselves or stretched thin by their efforts to bail out the industry. The SEC on Oct. 1 extended the short-selling prohibition until three business days after Congress and the White House passed a $700 billion mortgage asset purchase plan, which was approved Friday. The agency does reserve the right to extend the ban until Oct. 17, but there is no indication it will exercise that right.
Large investment banks such as Goldman, Sachs & Co. and Morgan Stanley were included in the prohibition, as well as giant commercial banks like Bank of America Corp. Also on the list were smaller regionals such as Bancorp of Rhode Island, and other financial institutions such as SLM Corp., which is known as Sallie Mae and is the biggest U.S. student lender, NYSE Euronext, Charles Schwab Corp. and Berkshire Hathaway Inc. A number of other banks and companies with financial divisions that were left off the list were added in the following days, including CIT Group Inc., General Electric Co. and American Express Co. - Ron Orol
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See Dealscape: NYSE Euronext sees extension in short sale banSee Dealscape: GE behaves like a bank for the SEC, ratings agenciesSee Dealscape: A club everyone wants to belong toRon Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
