"I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets," Cox told the Senate Banking Committee in prepared testimony. The debt insurance is known as credit default swaps.

Cox said such regulation should be part of a regulatory overhaul of nation's financial system, something Congress is not likely to tackle until next year.

Prices for this insurance soared in the aftermath of the Lehman Brothers' bankruptcy and pushed American International Group, a major insurer of this kind of corporate debt, into peril. The Federal Reserve last week provided a $85 billion emergency loan to AIG, which was on the brink of bankruptcy, saying the company's failure would have wreaked havoc on the economy.

The soaring prices of the debt insurance indicated that investors were getting even more afraid of taking risk.

The federal government, trying to boost investor confidence in the face of a market crisis, took the unprecedented step Friday of temporarily banning a practice of betting against financial stocks.

The move by the Securities and Exchange Commission will temporarily ban what is called short selling of 799 financial stocks. The rule took effect immediately Friday and extends through 11:59 p.m. EDT on Oct. 2.

Short selling involves borrowing a company's shares, selling them, and pocketing the difference when the stock falls. It is a legitimate method of trading -- it can make markets more efficient and bring in more capital -- but the government argues that it has widened the scope of the recent financial crisis and contributed to the collapsing values of investment and commercial bank stocks in particular.

The SEC also eased restrictions on the ability of companies to buy back their own shares, also through Oct. 2, a move aimed at helping restore liquidity to the distressed and volatile market.

The turmoil has swallowed some of the most storied names on Wall Street. Three of its five major investment banks -- Bear Stearns, Lehman Brothers and Merrill Lynch -- have either gone out of business or been driven into the arms of another bank.

In its announcement, the SEC said it was acting in concert with the U.K. Financial Services Authority, which announced a similar ban there Thursday. Some British politicians claim short-selling was partly responsible for HBOS PLC's abrupt takeover by banking rival Lloyds TSB PLC on Thursday.

The SEC said it hoped its move would protect the integrity of the securities markets and boost investor confidence. The agency said it wanted a time out on aggressive, "unbridled" short-selling in financial stocks, and said it would consider measures to address short-selling in other publicly traded companies.

The Dow Jones industrial average fell more than 180 points, well off the drop of nearly 350 points seen in the early going.

Stocks posted big losses in markets across much of the globe as investors absorbed bankruptcy plans at Lehman and Merrill Lynch's forced sale to Bank of America for $50 billion in stock. And perhaps most ominously, American International Group Inc. is asking the Federal Reserve for emergency funding. The world's largest insurance company plans to announce a major restructuring Monday.

The swift developments are the biggest yet in the 14-month-old credit crises that stems from now toxic subprime mortgage debt.

Investors are worried that trouble at AIG and the bankruptcy filing by Lehman, felled by $60 billion in bad debt and a dearth of investor confidence, will touch off another series of troubles for banks and financial institutions that may be forced to further write down the value of their own debt assets. Wall Street had been hopeful six months ago that the collapse of Bear Stearns would mark the darkest day of the credit crisis.

But AIG's troubles a week after its stock dropped 45 percent are worrisome for some investors because of the company's enormous balance sheet and the risks that troubles with that companies finances could spill over to the companies with which it does business. AIG, one of the 30 stocks that make up the Dow industrials, fell $5.37, or 44 percent, to $6.76 Monday as investors worried that it would be the subject of downgrades from credit ratings agencies.

Jeffrey Mortimer, chief investment officer at Charles Schwab Investment Management in San Francisco, said stocks' losses aren't steeper because the market expected Lehman would find a buyer or declare bankruptcy.

The group said Monday it intends to ask a judge in Collin County, Texas, to postpone the shareholder meeting EDS has scheduled for July 31, when investors are scheduled to vote on whether to approve HP's takeover of the Dallas-based company. A hearing is set for Thursday on the group's request.

The group believes that the EDS board agreed to sell the company for too little money.

HP is offering $25 per share for EDS, a nearly 33 percent premium over where EDS stock stood before the proposed acquisition was announced in May. Including debt held by EDS, HP values the acquisition at $13.9 billion.

U.S. securities regulators subpoenaed firms including Deutsche Bank, Goldman Sachs and Merrill Lynch as it probes suspected manipulation of Lehman Brothers and Bear Stearns shares, Bloomberg said, citing two people familiar with the matter.

The U.S. Securities and Exchange Commission is seeking trading records and e-mails, one of the people told the news service.

The SEC has sent subpoenas to more than 50 hedge-fund advisers, seeking trading and communications data related to short-selling and options trading in Bear Stearns or Lehman Brothers, The Wall Street Journal said on Tuesday, citing a person familiar with the matter.

Rumours have been blamed for the collapse of investment bank Bear Stearns and for the significant slide in Lehman shares this month.

With financial stocks dropping dramatically over the year, lawmakers have been calling on the SEC to investigate whether short sellers and speculators are behind the move.

Over the weekend, the SEC announced plans to crack down on false rumours and said it was examining whether broker dealers and investment advisers had controls in place to prevent market manipulation.

The Atlanta office of the Securities and Exchange Commission has filed a lawsuit against wireless software company Mobile Ready Entertainment Corp. and its former CEOs, alleging they ran a "micro-cap pump-and-dump" scheme using false press releases.

The suit claims Michael H. Magolnick and Craig A. Mora sent 16 separate press releases with false revenue projections, made-up contracts for future business and fake new profitable business relationships to boost the price of Alpharetta, Ga.-based Mobile Ready's stock.

In one example from January 2007, a press release from the company claimed the launch of a new text messaging service that would let Mobile Ready business clients market directly to mobile phones through text messaging.

"Mobile Ready subsidiary, Complete Identity has already been working closely with companies in the Direct Selling Association" and "company executives are confident that the industry relationship will yield several million dollars in new business," the release said.

Mobile Ready's (Pink Sheets: MRDY) stock trading volume jumped 300 percent the day after the release, giving Mora and Magolnick a better market in which to sell their restricted shares, the SEC said. But the SEC argues the defendants knew the company had no relationship with the Direct Selling Association and no reason to claim several million collars in new business.

In another release in February 2007, the company said it was projecting $10.1 million in revenue for 2007 and $14.8 million in 2008. The day after that release, the company's stock trading volume skyrocketed 550 percent, while the stock's value rose 57 percent to 11 cents a share.

The suit alleges that as the price of the stock increased following the fraudulent releases, Magolnick and Mora obtained bogus Rule 144 Opinion letters and improperly sold Mobile Ready shares for their personal gain.

Between April and July 2007, Magolnick sold about 2.1 million shares for $69,949. In the same period, Mora sold about 2.2 million shares for $72,589.

Magolnick was co-CEO of the company from December 2006 until his resignation in December 2007. Mora was co-CEO with Magolnick, but is now the company's chairman and CEO.

The SEC complaint wants antifraud injunctions against Mobile Ready, Magolnick and Mora, and registration injunctions, disgorgement, prejudgment interest, and O&D and penny-stock bars against Magolnick and Mora.

The Atlanta-based company did not admit any wrongdoing in settling the suit filed in U.S. District Court in Atlanta, according to the agreement dated June 26 and entered July 3.

The court has preliminarily approved the settlement and scheduled a settlement fairness hearing for Oct. 20.

The lead plaintiffs in the suit were the Carpenters Health & Welfare Fund of Philadelphia & Vicinity and Local 144 Nursing Home Pension Fund, now called 1199 SEIU Greater New York Pension Fund.

The class represented by the plaintiffs included all persons who bought Coca-Cola stock between Oct. 21, 1999 and March 6, 2000.