The city comptroller, William Thompson, announced yesterday that he will suspend short-selling through the city's pension funds, joining a slew of other government officials who are blaming speculators for aggravating the finance crisis.
His decision reflected mounting concern that short-selling, where investors bet that a stock will go down, is artificially depressing share prices. The state attorney general, Andrew Cuomo, opened an investigation yesterday into whether short-sellers are illegally hurting companies.
Mr. Thompson said that the city's pension funds will no longer facilitate short-selling by loaning out their securities to traders.
"I am deeply concerned by the damage to the long-term values of the Funds' investments in major financial companies that is being caused by speculators' reckless short sales of those companies' shares," he wrote in a publicly released letter to the city's custodial bank, the Bank of New York Mellon.
Short-selling is legal, though some fear that traders are increasing their profits by illegally spreading rumors about companies to depress the companies' stock prices.