Naked Shorts

The Securities and Exchange Commission (SEC) issued an emergency order barring “naked” short selling in the securities of Fannie Mae, Freddie Mac, and those commercial and investment banks that are designated primary dealers in government securities. Under the order, anyone making a short sale in these securities must arrange beforehand to borrow the securities and deliver them at settlement.

Bald-faced Liars

Separately, the SEC announced that it and other securities regulators would conduct examinations aimed at preventing the intentional spread of false information intended to manipulate securities prices. These examinations are in addition to the SEC’s investigations into alleged intentional manipulation of securities prices through rumor-mongering and abusive short selling, which are already underway.

Criminal Investigations

The FBI reports that it is currently investigating 21 companies involved in the mortgage/subprime industry. The agency says it receives mortgage fraud complaints “on a daily basis.” While the agency does not confirm the existence of any specific investigation, it is reportedly looking at practices at IndyMac.