Released: July 21, 2008

Regulators thwart ‘bear raids’ on stocks

Source: Adam Shell, USA Today

An emergency order by Wall Street regulators to combat “bear raids” on vulnerable financial stocks, launched by traders that profit when stocks go down, goes into effect today [Monday].

But the rule’s main intent — to help stem quick, steep stock declines that create financial panic — actually kicked in right after the Securities and Exchange Commission announced investor protections on Tuesday night.

Wall Street pros credit the ruling, which makes it harder to engage in a trading technique known as “naked” short selling, with helping fuel a 534-point three-day rally on the Dow Jones industrials and a 21% gain for the S&P 500 financial sector.

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