U.S. securities regulators need to be more aggressive in attacking manipulative rumor-mongering and short selling abuses, a prominent New York law firm said Monday.

In a memo to clients, Wachtell, Lipton, Rosen & Katz urged the Securities and Exchange Commission to conduct a 45-day study of the extent to which "abusive and manipulative short-selling and spreading of false rumors is taking place," and to issue a public report on its findings.

The law firm also called for the SEC to adopt rules as appropriate in response to its findings, and to bring enforcement actions against wrongdoers, coordinating efforts with criminal prosecutors where necessary.

Wachtell, Lipton's call to arms came one day after an unusual Sunday announcement from the SEC that it plans to begin immediate examinations into controls at brokerage firms, mutual funds, money management companies and hedge funds to prevent the deliberate spreading of false rumors to manipulate stock prices.

The SEC's examination into industry practices came after a rocky week of trading and concerns about the outlook for federal housing-finance giants Fannie Mae (FNM) and Freddie Mac (FRE) and for commercial and investment banks, including Lehman Brothers Inc. (LEH).

"While this is an important first step, the SEC needs to undertake additional bold measures to constrain abusive short-selling and rumor-mongering," according to the memo, signed by Wachtell, Lipton partners Edward Herlihy and Theodore Levine. The two recently urged the SEC to bring back restrictions on short sales when stock prices are declining, recommending a return to so-called "tick test" that forbade short sales when markets are ticking down.

SEC spokesman John Nester declined to comment.

Wachtell, Lipton is a leading advisor in corporate mergers, including the acquisition of Bear Stearns Cos. by JPMorgan Chase & Co. (JPM). Some former Bear executives have blamed the firm's collapse on market manipulation by short sellers and JPMorgan Chase Chief Executive Jamie Dimon recently said that the SEC should investigate whether Bear was brought down by a smear campaign.

Short sellers sell borrow shares in hopes of replacing them later at a lower price, profiting when the stock declines. While the practice is legal, critics say regulators have been ineffective in curbing abusive, manipulative short selling.

A three-judge panel of the 4th U.S. Circuit Court of Appeals said Monday that Steven Hatfill was a public figure and had to prove actual malice to win his libel lawsuit. The court said Hatfill failed to meet that burden.

Five people were killed and 17 sickened in the anthrax attacks. Then-Attorney General John Ashcroft publicly identified Hatfill as a "person of interest" in the investigation.

Columnist Nicholas Kristof criticized the FBI's investigation as lackadaisical and initially referred to Hatfill as "Mr. Z." Kristof identified Hatfill by name only after Hatfill held a news conference to denounce rumors.

Marine Cpl. John Wimunc was charged Monday with murder — as well as first-degree arson and conspiracy to commit arson — in the death of 2nd Lt. Holley Wimunc of Iowa.

Her body was found Sunday, three days after a suspicious fire at her Fayetteville apartment.

Authorities also charged Lance Cpl. Kyle Alden with first-degree arson, conspiracy to commit arson and accessory after the fact to first-degree murder. Both Marines were assigned to Camp Lejeune.

The Europa Press news agency said the prosecutors office at the court announced it was backing a case petition brought last month by Brussels-based rights organization Equipo Nizkor on behalf of victims' relatives.

The suspects are John Demjanjuk — an 88-year-old retired auto worker in Ohio — Anton Tittjung, Josias Kumpf and Johann Leprich.

Equipo Nizkor has said the U.S. has been trying for years to deport all four for lying about their Nazi pasts on their immigration papers, but that no country had been willing to take them.

The prosecutors' petition is a nonbinding recommendation. The court's judges will now decide whether to accept the case for study and consider filing charges. A decision could take months.

In a soft voice, she pleaded guilty to one count each of conspiracy, access device fraud, bank fraud and money laundering and two counts of aggravated identity theft. Robreno has scheduled sentencing for Oct. 17.

Kirsch has been in custody for more than a week since deciding to skip house arrest in favor of jail in anticipation of a prison sentence.

Her attorney, Ronald Greenblatt, has said that Kirsch faces a mandatory sentence of at least two years in prison. Kirsch has captivated an international audience since photos of her - looking well-endowed and flirtatious and sometimes in a bikini - circulated on the Internet after her arrest.

Kirsch and her one-time boyfriend, Edward K. Anderton, a University of Pennsylvania graduate, are accused of stealing identification of friends, co-workers and neighbors to get fake ID used to finance a lavish lifestyle. They are accused of stealing more than $116,000 from their victims. Anderton pleaded guilty and is scheduled to be sentenced in September.