SEC is predictable to suggest in the next month the uptick rule which may be restored in the stock market. The uptick rule requires short sellers and only short stocks on an uptick and is designed to prevent bear raiders from driving stocks down with aggressive shorting.
The S&P 500 is down 53% since the rule was scrapped in July of 2007 and Barney Frank and Chris Dodd are among the proponents of bringing it back.
It is not a very bad idea, but it is immaterial. There are plenty of very good causes for the stock market to be down since July of 2007 and it seems doubtful that short sellers are behind it all. Short sellers didn't force banks to make crappy loans and they didn't make consumers overextend themselves.
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