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Short Sale Rule Blunted

Traders Magazine, March 2001

Editorial Staff

The SEC has softened a Depression-era anti-fraud rule that prohibited selling a stock short when its share price is dropping.

The agency granted a limited exemption to the "short sale rule" in listed trading, in response to requests from specialists and market makers. These included Bernard L. Madoff Investment Securities. Some of the dealers said that in a decimal environment, with additional price point movements, it became easier to unintentionally violate the rule.

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