Short Selling Ban

Update: An official from the SEC called me at 9:35 am and informed me on the clarifications that I had sought. Those answers are added below my questions in this post in BLUE COLOR. I will have to say that I am impressed with the fairly quick response (within 30-40 mins) by this government agency. I am happy that the response was quick, although I question the logic of the SEC's decision on banning shorting. What they should have done is merely get the uptick rule back in place, that's my personal opinion on this issue. Please read on.

Dear Chairman Cox

REFER: http://sec.gov/news/press/2008/2008-211.htm

I need some immediate clarification regarding SEC ruling 2008-211. In fact I *desperately* need the clarification before markets open today at 930 am. My question is this, the SEC has banned short selling of financial securities till Oct 2 as I notice in the ruling. Q1) Does this affect companies like General Electric (GE) (as an example) that have substantial financial sector involvement. Or does it involve only the purely financial companies?

>> Read funny note at the end on financials.

Q2) SUPER IMPORTANT: If I am short on any financial security as of yesterday (i.e not a newly initiated position but a previously held position), do I need to cover or can I continue holding that position short?


>>the SEC has not issued any guidelines on existing short positions. As long as are legally short, it is your decision alone to hold or cover.

In case I do not cover, will the SEC or the Treasury guarantee my margin position even if the stock price rockets up?

>> The SEC or the government will not guarantee any margin positions of individual investors.
What they did not add but I am saying is that, they might cover you if you are in the league of Bare Sternums or Fanny May or Fretty Mac (BSC, FNM, FRE). Names misspelled on purpose.

I am also concered if the Stock exchanges will halt trading if the rise is too fast in the indexes (they did this in RUSSIA yesterday).

>> No comments on this issue.

This email may not sound very professional, but I need the clarifications as soon as possible, at least before 930 am.

Thanks a lot.

A concerned investor

Investor in NYSE, NASDAQ, AMEX.


Phone

Currently residing in the state of _____________


FINANCIALS AS IN:
for the blog alone: purely financial companies as in the ones that just push paper form one place to another and do not add any real material value or create any goods. Companies that are just middle men, that get to hold your money for 3 business days or charge you wire transfer fees for moving your money immediately. Or companies that charge 21% interest for providing your loans more than 20 days (for purchases) or 23% interest for cash loans the moment you take them out.
END OF POST, please feel free to add comments