Uptick Rule to Beat Back the Bear, Cries Bernanke

Uptick rule to save share prices?

When stock prices fall during a bear market, what happens? Depending upon the severity of the dive and the overall state of the economy at the time, it’s fairly easy to predict. Typically, investors will go into a panic and rush to sell off as many shares as possible in the shortest period of time. If such behavior occurs on a wide scale - across the stock market - the economy is locked in a stranglehold and brought to the ground.

This is what Federal Reserve Chairman Ben S. Bernanke wants to avoid, and he’ll do it with an uptick rule.

Jesse Westbrook reports for Bloomberg that Bernanke said “there may be a benefit in resurrecting a rule that restricts short-selling stocks when share prices are falling amid the current bear market.”

“No longer relevant?” Please…

Bernanke told the House Financial Services Committee that the uptick rule could be of benefit to the nation right now. In essence, the uptick rule prevents investors from “betting against a stock until it sells at a higher price than the preceding trade.” Not seeing the need for it at the time, the U.S. Securities and Exchange Commission removed this rule in 2007. Interestingly, that’s the year most experts say that the current recession officially began…

The SEC originated the uptick rule in 1938 to prevent what’s happening now from occurring. Once E-trading became popular in recent years, the SEC decided that it was “no longer relevant.” ... click here to read the rest of the article titled "Uptick Rule to Beat Back the Bear, Cries Bernanke"