A lot was said this past week in regard to the SEC attack on rumor mongering and willful misrepresentation of facts for the benefit of naked short sellers. One point that I'd like to make perfectly clear is this: The SEC's indicated desire to quash the spreading of false negative information by, and for the benefit of, manipulative short sellers, is nothing even remotely akin to a First Amendment issue. The First Amendment does not give protection to slanderers, liars, and sabotage artists. I'd also like to make clear my opinion that honest short selling is a positive, healthy, and necessary practice. I believe it helps to define and benchmark real value within the markets.

The Los Angels Times reported that SEC Chairman Christopher Cox may have his hands full in the wake of a measure that protects nearly two dozen large financial firms from naked short selling. The measure requires "anyone effecting a short sale in these securities (to) arrange beforehand to borrow the securities and deliver them at settlement." It's a rule that is long over due for enforcement and that shall most probably, at least temporarily, lay to rest some serious market abuses.

While calling Arthur Levitt's tenure as chairman of the Securities & Exchange Commission ineffective would be an understatement, he could, and still can, be relied upon to say the right thing. Now that the SEC finally has the quorum necessary to take action on a variety of issues, they should take Levitt's advice about proxy access changes.

Earlier this year the SEC made it impossible for shareholders to change the way directors are elected -- one of the most anti-investor events in recent history -- and it's time for that to change. Levitt writes in The Wall Street Journal that "While not a panacea, giving shareholders a bigger voice in the companies they own would go a long way in helping to restore trust."

Exactly. Some critics of strong corporate governance say that the SEC shouldn't meddle in these affairs. I basically agree: but the problem is that the SEC has meddled, making it impossible for shareholders to take control of their own companies when necessary.

Bloomberg News reports that Securities and Exchange Commission (SEC) Chair Christopher Cox made a speech about requiring investment banks to disclose their capital and liquidity. (I was interviewed this morning on Marketplace radio about it.) He thinks this requirement somehow would have prevented the meltdown of The Bear Stearns Companies (NYSE: BSC).

There is less here than meets the eye. Cox said, "One of the lessons learned from the Bear Stearns experience is that in a crisis of confidence, there is great need for reliable, current information about capital and liquidity." He said that data on capital and liquidity will be required this year "in terms that the market can readily understand and digest."

This is Washington and there is a power grab going on. In March, Treasury Secretary Hank Paulson announced a financial regulation overhaul plan which defanged the SEC. And the SEC is now trying to present itself as relevant so it can continue to exist. The SEC already gets real-time liquidity and capital information without giving it to the public.

When things are going well, the government seems to leave well enough alone. But, after credit ratings operations like S&P and Fitch missed the mark badly on their analysis of subprime financial instruments, the SEC may want a hand in how the firms function.

As the heart program being reviewed by the SEC is a plan to grade past ratings from the credit agencies to see whether they were accurate. Call it a report card. According to The Wall Street Journal (subscription required), SEC Chairman Christopher Cox said the potential rules "would require credit-rating agencies to make disclosures surrounding past ratings in a format that would improve the comparability of track records and promote competitive assessments of the accuracy of past ratings."

Getting all of the data about how the companies grade securities and comparing past ratings to how securities actually performed is an excellent idea. It is not unlike looking at how a securities analyst has done with his or her ratings of stocks.

The problem with the credit ratings agency program now is that it has no basis in accountability. Changing that is the key to improvement.

Douglas A. McIntyre is an editor at 247wallst.com.

SEC Chairman Christopher Cox thinks that the internet should be a great place for investors to have access to broader information about the companies they're considering investing in than ever before.

According to The Wall Street Journal (subscription required): "Mr. Cox also is expected to put up for final vote Wednesday a proposed rule that would enable companies to create online shareholder forums where investors and management could exchange thoughts, establishing a kind of chat room to improve communication. Opposing that model is the AARP, the lobby group for adults 50 and older, which said its studies show that doing so would result in fewer of its members participating in shareholder elections."

Huh? Why would being allowed to interact with management online make people less likely to vote in corporate elections? Isn't that kind of like saying the YouTube presidential debates would reduce voter turnout?

An online forum for shareholders and managers is a fabulous idea. One of the biggest corporate governance concerns in America is that executives are isolated from the owners of their companies. With notable exceptions, it's hard for investors to get the ear of a corporate executive to ask questions or provide ideas for boosting shareholder value.

Online forums would be a way to facilitate that, and it's something that should be cheered.

The timing did seem good. Angelo R. Mozilo, CEO of Countrywide Financial (NYSE: CFC) did sell a lot of stock before the sub-prime mess hit.

Now, The New York Times writes, in "an Oct. 8 letter to the S.E.C. chairman, Christopher Cox, the state treasurer of North Carolina" is questioning the timing of some of Mozilo's sales. "After starting a plan in October 2006, Mr. Mozilo twice raised the number of shares that could be sold: once in December 2006, when Countrywide stock was $40.50, and again in February, when it hit a high of $45.03."

Since Countrywide now trades well below $20, a lot of investors may think that the company's CEO and founder made a killing. He did. That does not mean that he planned it that way. Much of his automatic stock sales program was in place well before the current mortgage market debacle set in.

The acceleration in the selling, however, looks bad, and in this era of tight SEC oversight, looking bad can be bad enough.

Douglas A. McIntyre is a partner at 24/7 Wall St.