Bill would reinstate uptick rule

Legislation that would require the SEC to reinstate the “uptick” rule was reintroduced today by Rep. Gary Ackerman, D-N.Y., a member of the House Financial Services Committee. The Securities and Exchange Commission eliminated the rule in 2007, and many critics of short-selling practices say that eliminating the rule has resulted in making the markets more volatile. The rule required that short sales could be made only at a price above that of the last trade. The rule was intended to prevent short-sellers from adding to downward momentum when a security is declining rapidly. “In the wake of the elimination of the uptick rule, the value of many volatile stocks have plummeted due to an onslaught [of] manipulative short-sale practices,” Mr. Ackerman said in a statement. “Reinstatement of the uptick rule is essential to rein in these abuses and restore much-needed stability and confidence to our financial markets,” he said in the statement. In an effort to get support for his bill, which he introduced in the last session of Congress in 2008, Mr. Ackerman circulated an editorial written last December by San Francisco-based Charles Schwab & Co. Inc. founder and chairman Charles Schwab calling for reinstatement of the rule.