Alerts

SEC Issues Emergency Order Restricting Short Selling

July 16, 2008

On Tuesday July 15, 2008, the Securities and Exchange Commission (the “Commission”) issued an emergency order (the “Order”) requiring traders to borrow or arrange to borrow stock before shorting the securities of 19 specified financial services companies. The Order supplants existing “locate” requirements that currently require only that a short-seller receive reasonable assurances that stock will be available to cover an open short at the time of delivery. The new “pre-borrow” requirement reduces the amount of short selling possible in these securities, as shorting in any issuer will be limited by the amount of long inventory available to borrow.