Projo Biz Blog

Woonsocket-based CVS Caremark Corp. (CVS:NYSE) was added today to the New York Stock Exchange's list of companies for whom short sales of stock are not permitted.

Short-sellers borrow shares they consider overvalued and sell them. If the price drops, the repurchase the shares, return them and pocket the difference. The U.S. Securities and Exchange Commission last week enacted a ban until next month on the short-selling of nearly 800 financial stocks.

The SEC also began strictly prohibiting naked short-selling. Naked short-selling occurs when sellers don't actually borrow the shares before selling them; it's a practice some say is partially responsible for the huge drop in the shares of investment banks such as Lehman, Merrill Lynch and Bear Stearns, which JPMorgan bought earlier this year.

About 31 million shares, or 2.2 percent of the company's 1.4 billion outstanding shares, were controlled by short sellers at the end of last month, according to the latest available data.

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