May 5 (Bloomberg) -- Mutual funds, traders and even companies that blame short-sellers for driving down share prices oppose bringing back the so-called uptick rule, which may deter U.S. regulators from resurrecting the provision.

Fidelity Investments opposes all five rules the Securities and Exchange Commission proposed last month to regulate short- selling, including a return of the uptick measure, senior vice president Brian Conroy said at a public meeting in Washington today. Executives from companies including General Electric Co. said they prefer an alternative to the uptick.

The SEC is weighing options to dictate when traders can bet shares will fall after lawmakers said short-sellers attacked banks reeling amid the worst financial crisis since the Great Depression. SEC Chairman Mary Schapiro said any new rules will uphold the benefits of short-selling while restricting market abuses.

“We know that the practice of short-selling evokes strong opinions from both its supporters and detractors,” Schapiro said at today’s meeting. “I’ve made it a priority to evaluate the issue of short-selling regulation and ensure that any further policies in this area are the results of a deliberate and thoughtful process.”

All short sales, in which traders borrow stock and then sell it, are bets that a stock will fall. Investors aim to profit by repurchasing the shares at a lower price, returning the borrowed stock to brokers and pocketing the difference.

An SEC proposal that resembles the uptick rule would bar bearish bets until a stock sells for a price that is at least one penny higher than the preceding trade. The SEC scrapped the almost 70-year-old uptick provision in July 2007 after studies determined it wasn’t relevant in markets dominated by fast-paced electronic trading.

Bid Test

GE Vice President Michael McAlevey said the Fairfield, Connecticut-based company prefers an alternative that would allow short sales only at prices exceeding the best bid. A bid represents the price investors are willing to pay for a stock.

Financial Industry Regulatory Authority Chief Executive Officer Richard Ketchum urged the SEC to impose a so-called circuit breaker if it approves any rules restricting short- selling. The SEC proposed three rules based on circuit breakers, which either prohibit bearish bets or limit them after a stock has fallen a certain amount.

Washington-based Finra, which gets its funding from Wall Street securities firms and is overseen by the SEC, regulates more than 5,000 U.S. brokerage firms.

To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.

Last Updated: May 5, 2009 13:25 EDT