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Article

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Abstract

On October 29, 1929 the stock market crashed. Congress used the crash as an opportunity to introduce the pervasive regulation of securities markets that exists today. One of many practices for which Congress considered regulation appropriate was short sales. Representative Adolph Sabath of Illinois wanted to ban all short sales' in order to "eliminate what we term 'short selling' . . . the greatest evil that has been permitted or sanctioned by the Government that I know of." Fifty-eight years later, on October 19, 1987 the stock market crashed again. In response to the crash, Congress and other regulators once again have called for increased regulation of the securities markets. And as before, there have been calls for increased regulation of short sales, although now the calls for regulation of short sales extend to the derivative markets as well. For example, Congressman Edward Markey, Chairman of the House Telecommunications and Finance Committee, reportedly considered a plan to limit short sales in the futures market.

Date of Authorship for this Version

1989

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