The SEC just issued a Rule prohibiting entities, which package and sell to the public asset-backed securities (ABSs), from taking market actions which would profit from a decline in value of those very same ABSs.  It is a usual practice to take certain classes of assets (home mortgages, credit card receivables, student loan obligations are typical), and bundle them together and sell the bundle to investors.

The evil to be prevented is for those entities who underwrite, sell or sponsor the creation of these bundles to take securities positions that will profit if the value of the bundle decreases (e.g. a short position).  The perceived conflict is that these parties are selling to the public a bundle the value of which they themselves believe will prove to be less valuable than the sale price from which they profited  upon issuance.

There are some technical exceptions; shorts are permitted if driven by general changes in interest rates or in currency values, and for certain investors who were holders of the security from the onset.

Those who accuse the SEC of being overly aggressive will smile upon learning that this marketplace limitation took a dozen years to promulgate, following a Congressional directive following market abuses in the 2008 financial melt-down.  It is notable that, on this new Rule, one of the two Republican SEC commissioners voted in favor, a rare instance of inter-party agreement on any matter of securities market regulation.