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Short selling and the SEC


The subject of short selling can always be counted on to generate a lot of heat. And a proposed Securities and Exchange Commission rule that would put limits on the ability to short a stock–especially in a severe market downturn–is no different.

In all, some 3,700 people submitted comments to the SEC, which officially stopped taking public input on the proposal on June 19. (The comments, however, are still coming in).

And that doesn’t include the 5,000 people, who signed a petition drafted by Jim Cramer, the CNBC television personality and founder of Cramer and his many friends strongly support the SEC proposal to reinstate the ”uptick rule,” which would prevent traders from shorting a stock on downward movement in price.

Not suprisingly, the vast majority of comments are from individual investors who favor limits on short selling. The industry, for the most part, is opposed to the SEC proposal.