An order by the Securities and Exchange Commission prohibiting the short selling of stock for 799 financial companies includes more than three dozen insurers and one insurance brokerage firm.
The order, issued today by the SEC and the United Kingdom's Financial Services Authority, will prohibit short selling of the companies' stock "to protect the integrity and quality of the securities market and strengthen investor confidence."
"The commission is committed to using every weapon it its arsenal to combat market manipulation that threatens investors and capital markets," SEC Chairman Christopher Cox said in a statement.
The order is temporary and is intended to restore equilibrium to markets, the SEC said.
Short selling involves investors who bet on a stock's falling in price. The SEC said rampant and "unbridled short selling is contributing to the recent, sudden price declines in the securities of financial institutions unrelated to true price valuation."
Among the notable property-casualty insurers on the list of 799 financial institutions are ACE Ltd., American International Group, Allstate Corp., Berkshire Hathaway Inc., Chubb Corp., Progressive and Travelers. Only one insurance broker, Chicago-based Aon Corp., was on the list.
The order terminates on Oct. 2, the SEC said.
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