Nichols: Regulators should monitor possible bank stock manipulation

In an interview today on Yahoo Finance, American Bankers Association President and CEO Rob Nichols reiterated the association’s recent call for the Securities and Exchange Commission to investigate short selling of bank stocks for possible illegal activity. ABA on Thursday sent a letter to SEC Chairman Gary Gensler noting the disconnect between some banks’ earnings reports and recent plunges in their stock value. That same day, Gensler released a statement saying that the agency is focused on identifying and prosecuting any misconduct that takes advantage of increased volatility and uncertainty in 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 seeing market manipulation or any predatory shorting—which would be illegal activity, frankly—that we’re concerned about, because some of those share price movements just don’t make any sense.” As one example, he pointed to a report in a U.K. media outlet that cited anonymous sources who claimed a U.S. bank was exploring a sale—a claim that the bank said was false. The report caused the bank’s stock value to briefly tumble.

Nichols also reiterated that the U.S. banking sector remains strong and resilient. “Obviously we’ve been in a period of some turmoil,” he said. “But a lot of what we’ve seen with regard to those couple of [failed]institutions was really idiosyncratic and local to those institutions, not representative of the entire U.S. banking sector, which is on solid footing.”