In an interview today At Yahoo Finance, American Bankers Association President and CEO Rob Nichols reiterated the recent call of the association for the Securities and Exchange Commission to investigate the short sale of bank shares for possible illegal activity. The ABA sent a letter to SEC Chairman Gary Gensler on Thursday, pointing out the disconnect between some banks’ earnings reports and recent declines in their share values. That same day, Gensler issued a statement saying the agency is focused on identifying and prosecuting any misconduct that takes advantage of increased volatility and uncertainty in the markets.
Nichols said he was pleased to see Gensler’s statement. “We’ve asked the SEC … to use all of their enforcement tools to make sure that you’re not looking at market manipulation or any predatory short selling, which would be illegal activity, frankly, that we’re concerned about, because some of those stock price movements just don’t make any sense.” As an example, he pointed to a report in a UK news outlet that cited unnamed sources claiming a US bank was exploring a sale, a claim the bank said was was false.The report caused the value of the bank’s shares to fall briefly.
Nichols also reiterated that the US banking sector remains strong and resilient. “Obviously we’ve been in a period of turmoil,” he said. “But a lot of what we’ve seen regarding those two [failed]institutions was really idiosyncratic and local to those institutions, not representative of the entire US banking industry, which is on solid footing.”