[dudeinjapan]

Playing devil's advocate, it's possible that the lawyer/clearing bank/regulator gave the instruction to cutoff all trading in the name, and cutting off only buys was the lesser of bad options. (Had they also cutoff selling, it would have been even worse!)

Reading the SEC's letter (in the OP), you can clearly see the SEC wants everyone to sell out of their position and make this whole thing go away. RH no doubt has an army of lawyers and compliance people whose entire jobs/careers is to predict what the regulator wants and proactively be their lapdog. (The regulators meanwhile are completely free to be Monday-morning quarterbacks and retroactively assess fines to anyone, despite providing no concrete guidance of what to do in an unprecedented situation like this one.)