Just a day after banning “naked shorting” in financial stocks, the Chris Cox and his decides it is necessary to let some people do it. You know what? Just shut them down….the SEC that is. They are more aggravation than they are worth. Let’s get our act together over there kids…
The WSJ reported today:
“By putting the kibosh on so-called naked short-selling in companies like Fannie Mae and Freddie Mac, the SEC would complicate life for market makers who take the opposite side of orders to trade stocks and options.
Early Wednesday, one day after the SEC issued the order for 19 financial companies, representatives from the seven U.S. options exchanges contacted SEC officials to convey concerns and raise the possibility of an exemption.
The SEC is now considering such a move, an agency spokesman said, although no decision had been made at press time.
The SEC’s order stirred immediate panic in the options market. Market makers often short-sell companies’ stock in order to hedge positions they take in options contracts. If they sell put contracts, they turn around and sell stock in the same company.
“If market makers can’t hedge themselves,” said Andy Schwarz, founder of AGS Specialist Partners, “they will be unable to sell puts and buy calls.”
Ooops!!
Did anyone over there actually think this thing through? How can this happen? We are now going to need a scorecard just to tell who can do what in what stocks.
As I watch Cox sit in front of Congress doing his best impersonation of a constipated toll collector contemplating a potentially lethal dose of Metamucil, I get angry. He has let this stuff go on for years and only now, when the shorts are actually right, decided to jump in with both feet and screw things up even more.
Again, why not investigate Lehman’s (LEH) Erin Callan, citi’s (C) Chuck Prince, Merrill’s (MER) Stan O’Neil, Wachovia’s (WB) Ken Thompson and on and on. They all told shareholders “things were great” only to have those who bought shares listening to them get slaughtered. What does Cox do? Investigate the guys who were screaming “things are not alright” the whole time and oh yea……were right!!
Chris, just please go back to whatever it is you have been doing for the past 4 years and get out of our way please…. we really don’t need you
Disclosure (“none” means no position):Long C,WB none
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