Posted: Feb 24, 2010 9:59 AM by Associated Press
Federal regulators have imposed new curbs on the practice of short-selling, hoping to prevent spiraling selling sprees in a stock that can stoke market turmoil. A divided Securities and Exchange Commission voted 3-2 Wednesday to adopt new rules.
The rules put in a so-called circuit breaker for stock prices, restricting for the rest of a trading session and the next one any short-selling of a stock that has dropped 10 percent or more.
Short-sellers bet against a stock. They borrow a company's shares, sell them and then buy them when the stock falls and return them to the lender - pocketing the difference in price.