Chanos Blasts SEC On Short Sale Rules

Jim Chanos, who runs the hedge fund lobby group called theCoalition of Private Investment Companies, responded this afternoon to the SEC’s five proposed rules to curb short-selling. His message amounts to: We warned youu about AIG, Lehman Brothers and Enron. Why are you bozos trying to stop us?

Here’s the full text of the statement:

“Rebuilding investor confidence should be the primary objective of any new regulatory effort and it is not clear that today’s proposals will meet that simple goal. sceptics, independent research and critical analysis must continue to play a vibrant role for our markets to grow sustainably and with integrity.  Short selling is integral to improving the efficiency of markets and enhancing market quality through narrower spreads, deeper liquidity, less volatility, and greater price discovery. In recent years, short-sellers have publicly warned the marketplace about the dangers at AIG, Lehman Brothers, and Enron, as well as sounding the alarm over the credit ratings agencies, non-bank subprime lenders, and credit insurers. Proposals to inhibit short-selling have the effect of limiting this vital market-based antidote to corporate fraud and speculative bubbles, and must be carefully weighed against the clear harm that comes from ill-conceived government intervention in basic market functions.”

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