23 Sep 2008

SEC Adds to the (Long) Short List, But Allows Firms to Opt Out

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The SEC added another 40 stocks to its “no short” list, but at least it is allowing firms to take themselves off the list:

Meanwhile, two companies JMP Group [JMP]…the parent of JMP Securities, and Diamond Hill Investments [DHIL]…have been removed from the list.

This is great. A libertarian writer (I want to say Boaz but not sure!) once discussed the idea of allowing vendors to sell things marked “UNREGULATED.” I.e. all of the government’s purity laws etc. would be the default, and only if a manufacturer clearly labeled something as unregulated, would those liability laws etc. not apply.

I am really curious to watch this play out. In the beginning it might just be a few purist firms who opt out–and our partner in exposing crime, Robert Wenzel, tells me that Diamond Hill did it for philosophical reasons as much as pragmatic ones. But if this trend picks up, then choosing to remain on the list will come more and more to be seen as an admission of weakness.

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