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Short list continues to grow…

Late Friday, the SEC announced that the short-sale ban that it had put in place on Sept. 19 would end at midnight tomorrow night. So imagine my surprise when I checked the list that came out last night to see that it continues to grow. As of last night, there were 981 companies on the short-sale ban, five more than on Friday. After a quick skim, I couldn’t tell which additional companies had made the cut (for some reason, the three exchanges don’t make it easy to figure that out), but it’s certainly interesting that even though the ban is less than 48-hours away from disappearing, companies are still asking to get on the list that when it launched, was “limited” to 799 companies.

Yesterday, at the Value Investing Congress, I had a chance to ask Pershing Square’s Bill Ackman what he thought about the ban during an hour-long press conference that he gave following his presentation (registration required) on Wachovia (WB) and, perhaps more importantly, what happens Thursday morning when those 981 companies return to the real world.

Ackman called the rule “one of the biggest blunders” by regulators and “one of the most damaging things done to capital markets. It’s done more to destroy investor confidence than anything else done by the Fed or the SEC. One of the reasons that I like investing in American companies is that I’m confident that the rule of law prevails. But here, you woke up one morning and short-selling was legal and then it was not. It was very arbitrary…It is exactly what the SEC is supposed to prevent.” He also criticized the fact that the list has continued to grow.

As for what’s likely to happen come Thursday when the ban ends, Ackman said he wasn’t sure. “I don’t know what the consequences are.”

During the press conference, Ackman also criticized the 13-F rule as “something set up in the 1970s as an experiment” adding that it was a way for “one collection of investors to get ideas from another collection of investors, which seems like you’re giving away intellectual property.”

Finally, while Ackman declined to give Chris Cox a grade for his handling of the crisis, mostly because he’s regulated by the SEC, Bloomberg has a very interesting story today about censorship of the Inspector General’s Report issued nearly two weeks ago on the failure of Bear Stearns.

Image Source: Daniel Barry/Bloomberg News