US acts to curb speculative sales in financial firms

WASHINGTON (AFP) — US stock market regulators will move to curb speculative share sales of big financial firms including Fannie Mae and Freddie Mac in an effort to stabilize the marketplace, the top regulatory official said Tuesday.

Securities and Exchange Commission chairman Christopher Cox told the Senate Banking Committee his agency would seek an emergency action to limit certain types of "short" sales of big Wall Street financial firms as well as mortgage-finance giants Fannie and Freddie, which have seen their shares pounded in the past week.

Short sales are designed to profit from a declining share price by an investor or broker arranging a sale of a share he does not own but has been "borrowed" on an agreement to return the share at a future date.

The new SEC rule is aimed at "naked ...