But the signatories fail to give evidence why, following a disturbing trend.
Earlier this week, many European regulators banned short selling. The European Securities and Markets Authority (ESMA) issued an official opinion agreeing with the prohibitions.  Spain, Belgium, Italy, Greece, and France now restrict various forms of the practice. The U.K. was forced to follow on certain securities listed in those markets.
Renown New York law firm Wachtell Lipton just called on US regulators to consider the same.  In a memo to clients, signed by five of its partners, the firm cited “long-term failures in securities regulatory regimes … to properly address short selling” and a “lack of accountability for market-moving propaganda attacks – poses risks to companies.” They also reiterated their prior views for reinstatement of the great depression era uptick rule.
Conspicuously absent from the memo was evidence.
To be fair to the firm, the memo didn’t call for an outright ban on short selling. But it takes a second read to realize this. The tone is one of complete agreement with recent European actions. And although they do not call on US regulators do to the same, they cite the turmoil currently gripping the US as a basis for an urgent need for regulatory action.
The memo may not come as a surprise to some market observers. Wachtell Lipton is the inventor of the poison pill. They represent incumbent management at firms subject to takeovers and the advances of activist investors. Consistent with this, their memo quickly refers the reader to other reforms that would advantage their clients.
The danger is that this slippery type of client advocacy, coming from a reputable firm, adds to the chorus of uninformed voices calling for draconian actions that will harm markets, not help them.