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SEC Ponders Changes to Short-Selling Provision

Lehman talks spur the regulatory agency to consider greater enforcement of the short-selling rules.

During emergency meetings over the weekend to decide the fate of investment banks

Lehman Brothers



Merrill Lynch



Securities and Exchange Commission

head Christopher Cox reportedly told financial companies the government would soon issue new regulations on short-selling. The regulations could be announced as soon as this week, according to a report on

TheStreet Recommends

The Wall Street Journal's

Web site Monday.

The rules would be aimed at both brokers and traders who abuse short-selling, including brokers and traders who fail to account for stock available in short-sales. The new regulations would make it illegal for traders to misrepresent to their brokers the availability of stock available for short-selling and not delivering on it.'s

Jim Cramer has long criticized the SEC for lax enforcement of short-selling rules. Cramer has called for the SEC to

reinstate the uptick rule

and crack down on naked short-selling.

Cramer: Fed and SEC Dropped the Ball

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However, the SEC has no plans to reinstitute the uptick rule. The SEC recognized the problem of potential manipulation and plans to create circuit-breakers to address aggressive shorting.

SEC spokesman, John Heine, declined to comment on the new rules.