Earlier today I reported SEC Panic - Shorting Curbs Placed on GSE Stocks.



Big brother has now decided to step in and force the price of all financial stocks up with this SEC short sale order.



The U.S. Securities and Exchange Commission issued an emergency order on Tuesday placing restrictions on the short selling of shares of certain major financial firms.



The SEC's order will require that anyone effecting a short sale in these securities arrange beforehand to borrow the securities and deliver them at settlement.



The order takes effect Monday, July 21, and will terminate at the end of July 29. The SEC said the order may be extended, but for no more than 30 calendar days in total duration.



The agency identified the following securities affected by its order:



BNP Paribas Securities Corp

Bank of America Corp

Barclays PLC

Citigroup Inc

Credit Suisse Group

Daiwa Securities Group Inc

Deutsche Bank Group AG

Allianz SE

Goldman Sachs Group Inc

Royal Bank ADS

HSBC Holdings Plc ADS

JPMorgan Chase & Co

Lehman Brothers Holdings Inc

Merrill Lynch & Co Inc

Mizuho Financial Group Inc

Morgan Stanley

UBS AG

Freddie Mac

Fannie Mae



Bernanke told lawmakers it's "important" for Fannie Mae and Freddie Mac bonds and stocks to rise so they can keep raising capital and aid the mortgage market. Paulson said the two companies are "essential" because they represent the only "functioning" part of the home loan market. The firms own or guarantee about half of the $12 trillion in U.S. mortgages.

The best defense against misinformation is the truth. To paraphrase Jack Nicholson, the market can’t handle not having the truth. Lack of information leads to lack of confidence. ....



The above charts show that short selling intensity is below average in the banking sector and in Fannie Mae’s industry group.



Generally, short interest tends to lend support to price action, though there are times when short sellers can be correct. The existence of short sellers is support for stock prices, because short positions must eventually be covered.



Perhaps Chairman Cox should focus on freedom of fundamental information, so that short sellers and stock buyers can make more informed decisions, and so all can sort fact from any fiction put out there by rumor mongers.

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