The No-Short Club Takes a Beating

Rob Curran reports: Stocks protected on the Securities and Exchange Commission’s short-selling restriction list were among the biggest decliners in the stock-market rout Thursday after the rule expired, and some traders say that’s because of pent-up demand to sell. Short sellers borrow stocks in the hopes of a decline that will allow them to profit by buying them back cheaper. On Sept. 19, the SEC banned that practice temporarily, initially for 10 days and 799 stocks. It was later extended to cover roughly 1,000 stocks, many of whom, like General Motors, requested shelter. Among the conspicuous decliners on the market that were protected by the rule: Wall Street bank Morgan Stanley, off by more than 25%; hedge-fund and private-equity manager Fortress Investment Group, off by more than 34%; leveraged-buyout firm Blackstone... [read full story]