Jeweler Zale, Car-Dealer AutoNation Seek Aid As Financial Cos

By Rob Curran

The number of stocks protected under the Securities and Exchange Commission's financial-stock short-sale ban is now about 970, as the New York Stock Exchange added another seven candidates including jeweler Zale Corp. (ZLC) and car-dealer AutoNation Inc. (AN).

The rule, issued on Sept. 19 to help stabilize shares of banks, lenders and brokerages, now encompasses a range of other businesses with sometimes tenuous links to finance. For fiscal year 2008, the "All Other" part of Zale's business, which includes its insurance unit, accounted for less than 1% of its overall revenue.

Last weekend, the SEC furnished exchanges with a set of criteria for additions to the original list of 799 companies, namely that a company is or owns a bank, savings association, insurance company, or various other entities. With that, the SEC passed the responsibility for additions to the exchanges. The Nasdaq selected 66 companies at its discretion; the NYSE called for applications from eligible companies.

The NYSE and the Nasdaq, for their part, insist that all companies added to the list fit the "strict" criteria. A rule cordoning off a hard-to-define part of the market, the "financial" sector, appears to have left room for loopholes.

Zale's financial unit markets insurance to holders of its store credit card, and contributed $12.4 million to overall revenue of $2.14 billion for the fiscal year ended July 31.

Similarly, finance and insurance made up about $281 million, or roughly 3.6%, of AutoNation's first-half revenue of $7.91 billion.

These companies join International Business Machines Corp. (IBM), which qualified thanks to a finance unit that contributed 4% of its second-quarter revenue; driller Atlas Energy Resources LLC (ATN), on the strength of a broker dealer that raises a minority of the money needed for its drilling operations; and drug-plan manager Express Scripts Inc. (ESRX), which described its insurance operations as "minute."

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