Wall St. Firms Not Fans of "Uptick Rule"

(AP Photo/Richard Drew)
Wall Street investment giants are not happy with the SEC's proposed rules to restrict short-selling, according to a Wall Street Journal report ($) Tuesday.

Firms from Vanguard Group and Goldman Sachs filed several letters with the SEC last week, arguing that limits on short-selling, including the reinstatement of the so-called "uptick" rule, would bog down the market and hurt individual investors.

"We've always felt that short-sellers enhance liquidity and provide a positive impact on the marketplace," Gus Sauter, chief investment officer at Vanguard, told the Journal.

Short-selling involves borrowing stock from a third party to sell. If the stock price goes down, which short-sellers are betting on, they buy back the stock, return it to the original owner and pocket the difference.

Under the "uptick rule," investors can only short a stock after its price goes up. The rule was tossed aside in 2007 and many in the business world, including some money managers, felt its absence fed the financial crisis.

Now the SEC is considering instituting a modified rule.