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Released: February 25, 2010

SEC passes rules to prevent stock meltdowns

Source: Zachary Goldfarb, Washington Post (Free Registration)

The Securities and Exchange Commission enacted new restrictions on short selling on Wednesday aimed at restoring investor confidence by preventing speculators from pouncing on stocks already in a tailspin.

The rules, which were approved in a 3 to 2 party-line vote, come as the agency has faced intense pressure from lawmakers and investors to crack down on the practice, which some on Wall Street have blamed for crashing the stock values of major financial companies during the 2008 market crisis.

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