Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Compliance

08:39 PM
Harlan Platt, Ph.D, Northeastern University
Harlan Platt, Ph.D, Northeastern University
Commentary
50%
50%

Why Are We Letting the Shorts Kill the Market?

Remember the bullies in the school yard, all picking on a defenseless youngster. They all piled on and took shots at hurting the kid. That’s what’s happening on Wall Street.


In July 2007 the SEC lifted its “uptick rule” which had been in place since 1938. The uptick rule said that you could only sell a stock short if it prices had gone up on the prior sale. The SEC’s decision was based on the 1st statement in this paper: Markets work smoothly when everyone plays fairly.

Unfortunately, everyone is not playing fairly. Remember the bullies in the school yard, all picking on a defenseless youngster. They all piled on and took shots at hurting the kid. That’s what’s happening on Wall Street. Investors are selling stocks short, not because they know something bad about these companies but because everyone else is.

If they drive companies into bankruptcy these investors come out winners. The losers are everyone else in the country.

The solution is simple: the SEC needs to reinstate the uptick rule. That’s all. The market will recover, the economy will recover, and the shorts will take a bath.

Harlan Platt, Ph.D., is a business turnaround expert and finance professor at Northeastern University College of Business Administration.

More Commentary
A Wild Ride Comes to an End
Covering the financial services technology space for the past 15 years has been a thrilling ride with many ups as downs.
The End of an Era: Farewell to an Icon
After more than two decades of writing for Wall Street & Technology, I am leaving the media brand. It's time to reflect on our mutual history and the road ahead.
Beyond Bitcoin: Why Counterparty Has Won Support From Overstock's Chairman
The combined excitement over the currency and the Blockchain has kept the market capitalization above $4 billion for more than a year. This has attracted both imitators and innovators.
Asset Managers Set Sights on Defragmenting Back-Office Data
Defragmenting back-office data and technology will be a top focus for asset managers in 2015.
4 Mobile Security Predictions for 2015
As we look ahead, mobility is the perfect breeding ground for attacks in 2015.
Register for Wall Street & Technology Newsletters
Video
Stressed Out by Compliance, Reputational Damage & Fines?
Stressed Out by Compliance, Reputational Damage & Fines?
Financial services executives are living in a "regulatory pressure cooker." Here's how executives are preparing for the new compliance requirements.