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SEC Adopts New Short Selling Rules

October 16, 2008


On Oct. 14, 2008, the Securities and Exchange Commission (“SEC” or “Commission”) issued a trio of rule-making releases: (1) adopting, as a final rule, antifraud Rule 10b-21, which is aimed at short sellers who deceive broker-dealers, participants in registered clearing agencies or purchasers about their intention or ability to deliver the securities at settlement and then fail to deliver; (2) adopting, as final amendments to Regulation SHO, the elimination of the options market maker exemption to the close out requirements of Regulation SHO; and (3) adopting temporary Rule 204T and thereby extending the broker-dealer hard T+3 delivery requirements and immediate close-out requirements imposed by the SEC’s Sept. 17th Emergency Order until July 31, 2009.