Timeline
| 1606 | The Dutch East India Company protests to the Amsterdam Exchange after short sellers make enormous profits on its stock. That leads to the first ever regulations on shorting in the following year |
| 1733 | Britain bans naked short selling |
| 1917 | The New York Stock Exchange implements restrictions on shorting and requires a list by noon every day of speculators |
| 1929 | Short sellers are among those blamed for Wall Street crash |
| 1932 | President Herbert Hoover condemns short selling for speculative profit on the New York Stock Exchange |
| 1938 | The Securities and Exchange Commission seeks to restrict short selling by only allowing itwhen a stock’s price is rising, the “uptick rule,” which is repealed in 2007 |
| 1940 | The Investment Company Act is passed and restricts mutual funds from short selling |
| 1949 | Alfred Winslow Jones, a financial journalist, creates the first modern hedge fund by forming an unregulated fund that buys stocks while shorting others to hedge some of the market risk, and thus was born the “hedge fund” |
| 1987 | Congress investigates short selling following market break |
| 1997 | Malaysia charges Credit Lyonnais with short selling following the collapse of the country’s currency and stock market |
| 2001 | Wall Street firms ask short sellers not to try to profit from falling shares following the Sept. 11 attacks. |
| 2001 | Within two weeks of the Sept. 11 attacks, financial regulators investigate whether groups linked to Osama bin Laden tried to profit by shorting the shares of an insurance company exposed to claims from the destruction |
| 2004 | The SEC approves a new rule called Regulation SHO, which seeks to reduce naked shorting by requiring the publication every day of a list of the securities with significant delivery failures. In a naked sale, the seller does not borrow the stock in time to deliver the stock to the buyer within the required three-day settlement period. Reg SHO comes into effect in January 2005 |
| 2007 | The SEC unanimously repeals the uptick rule in June |
| 2008 |
The SEC imposes a series of emergency orders between July and October restricting short selling. The SEC also implemented several new rules. One rule made it fraudulent for short sellers to deceive broker-dealers about their intention or ability to deliver securities in time for settlement. Another required that short positions be disclosed temporarily to SEC staff. |
| 2009 |
Several academic studies find that the SEC’s 2008 actions to restrain short selling worsened market quality to the disadvantage of investors. |
