WORLD> America
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WORLD> America
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NY probes for illegal short-selling in financials
(Agencies)
Updated: 2008-09-19 09:38 NEW YORK -- New York on Thursday began a probe into possible illegal short-selling in the stocks of Wall Street companies such as Goldman Sachs Group Inc and Morgan Stanley, Attorney General Andrew Cuomo said.
He said his office was concerned about destabilization of financial markets, which are suffering their worst crisis since the Great Depression of the 1930s. The New York State prosecutor said his office also would look back into illegal short-selling that may have occurred in stocks of Lehman Brothers Holdings Inc and American International Group Inc, two companies at the heart of the crisis. In the past week, Lehman has gone bankrupt and the insurance giant was rescued by the US government. "This investigation will not only encompass short-selling of Lehman Brothers and AIG but also short-selling in other companies that may be occurring, like Morgan Stanley and Goldman Sachs," Cuomo said. The prosecutor said he believes the SEC should freeze short-selling of financial sector stocks on a temporary basis, perhaps for 30 days. In a statement, Morgan Stanley welcomed the investigation to uncover improper short-selling of financial stocks. "We also support his call for the SEC to impose a temporary freeze...given the extreme and unprecedented movements in the market that are unsupported by the fundamentals of individual stocks," the statement said. Goldman Sachs spokesman Lucas van Praag said that "if stocks are in fact driven down by inappropriate activities then it is quite right they be investigated." |
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