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On Wednesday, the Securities and Exchange Commission announced that it had "voted unanimously to request public comment on the treatment of asset-backed issuers as well as real estate investment trusts (REITs) and other mortgage-related pools under the Investment Company Act." If you thought owners or potential owners of these REITs would be grateful for the prospect of additional SEC protection, well, you'd be wrong. Shares of REITs declined in response to the news, as a dispatch by Dow Jones Newswires reported:

Real estate stocks focused on mortgage-backed securities tumbled Thursday, a day after the Securities and Exchange Commission launched a review that could subject these companies to tighter regulation....Among the biggest stock losers this session include Annaly Capital Management (NYSE:NLY), which traded down 3.59% at $17.48, and CYS Investments, down 5% at $12.68. Hatteras Financial Corp. (NYSE:HTS) dropped 3.55% to $26.61.

It's something to think about that these companies are worth less if they are more closely regulated than if they are more lightly regulated. Ideally, one would want regulation that adds value to investments rather than destroys it.

Thanks to reader-participant-community member-watchdog-content co-creator E. for sending the tip.

Source: REITs And The Cost of Regulation