FACTBOX: Milestones in short-selling history

(Reuters) - "He who sells what isn't his'n, must buy it back or go to pris'n." - Daniel Drew, 1797-1879, American financier

Short sellers are often criticized for exaggerating movements in share prices, distracting management, and profiting from misfortune. Even Napoleon reportedly once called short sellers "enemies of the state." Indeed, short sellers have come in for criticism any time there has been market turbulence.

But short selling also has its defenders, including such financiers as Seth Klarman and Warren Buffett, who say it adds liquidity to the market and serves as a counterweight to Wall Street bullishness.

The following lists key moments in short selling history:

1609 - The Dutch East India Co protests to the Amsterdam Exchange after short sellers make enormous profits on its stock. That leads to the first ever regulations on shorting in the following year

1733 - Britain bans naked short-selling

1917 - The New York Stock Exchange implements restrictions on shorting and requires a list by noon every day of speculators

1929 - Short sellers among those blamed for Wall Street crash

1932 - U.S. President Herbert Hoover condemns short selling for speculative profit on the New York Stock Exchange

1938 - The U.S. Securities Exchange Commission seeks to restrict short selling by only allowing it when a stock's price is rising, the "uptick rule," which is repealed in 2007

1940 - The Investment Company Act is passed and restricts mutual funds from short selling

1949 - Alfred Winslow Jones, a financial journalist, creates the first modern hedge fund by forming an unregulated fund that buys stocks while shorting others to hedge some of the market risk, and thus was born the "hedge fund"

1987 - Congress investigates short selling following market crash

1997 - Malaysia charges Credit Lyonnais with short selling following the collapse of the country's currency and stock market

2001 - Wall Street firms ask short sellers not to try to profit from falling shares following the September 11 attacks.

2001 - Within two weeks of the September 11 attacks, financial regulators investigate whether groups linked to Osama bin Laden tried to profit by shorting the shares of an insurance company exposed to claims from the destruction