UK regulation: Shorting should be criminalised
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| UK lawyers think criminal punishments are the best way forward |
In the wake of Lehman Brothers and HBOS, the UK Financial Services Authority (FSA) has issued new short selling regulations. But some say this is not enough and that the practice should be made illegal, especially with banks.
"The Chancellor will have to outlaw short selling pretty soon," said one London partner. "I don't see that he has any other choice. The hedge funds have destroyed a perfectly good bank and forced another into a sale just to make a quick buck."
Alistair Darling, UK Chancellor of the Exchequer, was interviewed on radio and passed the buck to the FSA, suggesting it should lead the way on curbing short selling. This was immediately dismissed as soft by political opposition and there is a growing opinion elsewhere that more needs to be done.
The...