03-10-05 Stockgate goes to Congress

[kranker]

March 10, 2005 (FinancialWire) StockGate got its 15 minutes of infamy in the halls of Congress yesterday but it didn’t quite reach the level of intelligible discourse as U.S. Securities and Exchange Commission Chair William Donaldson either expressed or feigned ignorance over the questioning about illegal naked short sales by U.S. Senator Robert Bennett (R-Utah), according to the Dow Jones (NYSE: DJ) Newswires.
Ignorance would be difficult these days to come by since both officials were exposed recently to the full page ad in the Washington Post (NYSE: WPO) that discussed the heavy burden that naked short sales is exacting on the markets and on public shareholders of such companies as Overstock.com (NASDAQ: OSTK) and NovaStar Financial (NYSE: NFI).
Reporter Judith Burns responded to inquiries that the dialogue went like this:
“Bennett said he's worried about naked shorting, Donaldson said short selling is legal, Bennett said I know and I don't have a problem with short selling, which I approve of, it's the abusive naked short selling that concerns me, and I think SHO isn't working.”<br>Observers were left shaking their heads.
However, now that this issue has been raised in the U.S. Senate, Donaldson is sure to be asked again, and is not likely to be caught off guard the next time.
The SEC has pointed to Regulation SHO as a solution, but opponents of the illegal practice are asking why, if it’s illegal, the SEC doesn’t just enforce their regulation.
In the article, Burns said Bennett told Donaldson that the “new SEC rules to combat short-selling abuses aren't working. Bennett said it appears the SEC has failed to stop abusive ‘naked’ short sales, in which sellers don't borrow stock and have no intention of borrowing it.”<br>The SEC’s chief of market regulation, Annette Nazareth, recently was quoted by the New York Times (NYSE: NYT) as passing off the illegal counterfeiting of electronic stock certificates as nothing more than investors who are unhappy their stock isn’t “going up.”<br>For up-to-the-minute news, features and links click on www.financialwire.net
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