| 22 September 2009

Crack Barron's reporter Theresa Carey uncovered a unique phenomenon in the online broker space: killing shorts.

Carey was first alerted to the case by a reader in Houston who tried to short TD Ameritrade (AMTD) stock in his TD Ameritrade account. His order actually squeaked through the system, but was later closed out by an employee. The message he should have received when trying to place the order: "Short sell orders for AMTD are not accepted."

Thanks to Carey's inquisitive nature the firm later rescinded the policy, claiming it was a 10-year-old rule who's time has come.

Other public online brokers allow clients to short their stock, Carey noted, including Charles Schwab (SCHW), Interactive Brokers (IBKR) and optionsXpress (oxps). But one stand-out remains, and it's a troubled firm at that: E*TRADE Financial (ETFC).

We recently reported E*TRADE's tough run of luck, including an order from the OTS to shore up it's bank unit and eight consecutive quarters of reported losses all while searching for a new CEO. So it should be no surprise to find out that a no-short policy is in place with the firm.

But that doesn't mean it's right and we doubt the move has much impact on the stock anyway, given the average trading volume. E*TRADE account holders, send us your verification. We'd love to know exactly what they say when you try to short their stock.