The SEC said it took the action after the enactment of a $US700 billion ($904 billion) financial rescue package aimed at stabilising fragile markets.
On September 19, the SEC said it took the action in concert with its British counterpart, the Financial Services Authority, which announced a wider ban on short sales.
The move covered 799 financial institutions and was made "to protect the integrity and quality of the securities market and strengthen investor confidence'' amid turmoil on world financial markets.
In addition to moves in Britain, Ireland and Switzerland took similar actions.
Short selling occurs when investors sell stock they do not yet own in order to profit later from an anticipated fall in prices - often contributing to the price fall.
Some analysts argue that short-selling can be used to manipulate share prices and add to pressure on fragile companies. Others say it is a legitimate tool that helps markets function.
The Managed Funds Association, which represents alternative investment groups, said last month that the "hastily developed rules will not solve the challenges rippling through the financial sector of the economy, but they could inflict long-term damage on the markets by reducing liquidity and may well further market instability."
Real Estate Outlook: Impacts of Bailout
Real Estate Outlook: Rates Lower and Mortgage Applications Increase
Short-selling ban to shield market
