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Fraizer Lauds Ban on Short Selling

A decision by the Securities and Exchange Commission yesterday to temporarily ban short selling prevents "destructive speculation" by traders intent upon driving down stock prices, said Genworth CEO Michael D. Fraizer , whose company was one of the chief victims of the short selling.

The SEC rule halted short selling on 799 financial stocks. (In short selling, traders borrow shares of stock and sell them, hoping the price of the shares declines and the shares can be bought back a lower price.) The ban will last for 10 days, but could be extended for up to 30 days.

"The immediate ban is welcome and should be extended indefinitely," Fraizer said. "The SEC's action will help forestall hedge funds from abusively betting against the stock price of companies like Genworth. While short selling is not the sole cause of the recent market turmoil, I believe it was a major factor and has contributed to the siphoning of billions of dollars of value from American companies. If there is to be any future short selling, it should be accompanied by regulatory safeguards that absolutely prevent the type of abuses the market has seen recently."

Genworth shares, which sold for around $9 at the close of trading Thursday, rose with the rest of the market Friday and then spiked to $15 at the end of the day. More .