SEC Votes Against Short Sellers (GS, GE, SCHW)

The US Securities and Exchange Commission voted against short sellers today. The SEC commissioners voted 3-2 in favor of a restriction on short selling a stock that has fallen 10% from its previous closing.

With this, the SEC has defied Goldman Sachs (NYSE: GS), and hedge funds such as Citadel, and D.E. Shaw & Co., who are against such a rule. The SEC had a received a signed petition from 5,600 firms, which included the likes of General Electric Co. (NYSE: GE), and Charles Schwab Corp. (NASDAQ: SCHW), to restrict short selling.

Short sellers have come under the hammer from regulators on both sides of the Atlantic since the financial crisis. It may be recalled that after the collapse of Lehman Brothers in September 2008, SEC, under pressure from the government, had banned short selling in 1,000 financial stocks.