Released: July 30, 2008

SEC extends market-calming short sale limits

Source: Bloomberg News [New York Times] (Free Registration)

The Securities and Exchange Commission extended on Tuesday an emergency limit on short sales in shares of Freddie Mac, Fannie Mae and 17 brokerage firms as it prepares broader rules to thwart stock manipulation.

The commission pushed back expiration of its ban on so-called naked short sales of the firms’ stocks to Aug. 12, it said in a statement. The order aims to keep traders from driving down financial stocks to bolster profits. Bear Stearns and IndyMac Bancorp collapsed amid rumors they were faltering.

The emergency order, focused on companies whose collapse might expose the government to losses, gives regulators time to weigh wider restrictions.

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