Naked-Shorts Ban Gets Chilly Reception

Updated from Wednesday, Sept. 17

The Securities and Exchange Commission on Wednesday outlined restrictions on "naked" short-selling in an effort to prevent pessimistic investors from driving down stock prices too far, too fast.

However, critics said that the SEC has not gone far enough to prevent stock manipulation, and some short-sellers said the rules will do little to stem the market's decline.

A new "close-out" requirement will force short sellers and their broker-dealers to deliver borrowed securities within three days of the transaction date. In addition, options market makers are no longer immune from the naked short rules. A third rule makes short sellers liable for fraud to lie about their intention or ability to deliver securities in time for settlement. ...