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CCH Issues New Briefing – Market Crisis Focus on Short Selling: SEC Adopts Rule to Curb Abusive Practices
(RIVERWOODS, ILL., September 23, 2008) – In efforts to protect investors and assure fair and orderly securities markets, the SEC this week adopted a package of extraordinary emergency measures. These include an order strengthening investor protections against naked short selling, including rules requiring a hard T+3 close-out, eliminating the options market maker exception of Regulation SHO, and targeting fraud in short selling transactions. The SEC also announced emergency plans for a rule to ensure public disclosure of short selling positions of hedge funds and other institutional money managers. The U.K. Financial Services Authority, acting in concert with the SEC, adopted rules requiring both the disclosure of short positions on a daily basis in respect of financial institutions and prohibiting any active increase in a net short position in a financial stock by whatever instrument.
In another emergency order, the SEC eased restrictions on the ability of securities issuers to repurchase their securities in order to give them flexibility to buy back their securities and restore liquidity to the markets. Importantly, building on an earlier emergency order enhancing protections against short selling in the securities of primary dealers, the Commission prohibited short selling in the securities of 799 financial companies, effectively calling a time-out to aggressive short selling in financial institution stocks because of the essential link between their stock price and confidence in the institution.
Following the lead of the SEC and the UK Financial Services Authority, and in an effort to prevent regulatory arbitrage, securities regulators around the world have acted to ban forms of short selling as the crisis in the financial markets spreads globally. Countries which have now followed the SEC in banning or limiting short selling are, among others, Australia, Germany and Canada (Ontario), and other regulators are assessing their responses.
CCH Principal Securities Law Analyst Jim Hamilton, JD has authored a new Briefing on these regulatory events: Market Crisis Focus on Short Selling: SEC Adopts Rule to Curb Abusive Practices. CCH is part of Wolters Kluwer Law & Business, a leading provider of research information and software solutions in key specialty areas for legal and business professionals.
Hamilton is a prolific blogger on current issues in the securities field. Jim Hamilton’s World of Securities Regulation can be found at http://jimhamiltonblog.blogspot.com/.
Hamilton has written and spoken extensively on federal securities law and has been cited as an authority by a federal court. His analysis of the Sarbanes-Oxley Act, the Sarbanes-Oxley Manual: A Handbook for the Act and SEC Rules, is considered a definitive explanation of the Act. In addition to his many books and articles, Hamilton serves as a leading contributor to the industry-standard publication, the CCH Federal Securities Law Reporter.
About Wolters Kluwer Law & Business
Wolters Kluwer Law & Business is a leading provider of research products and software solutions in key specialty areas for legal and business professionals, as well as casebooks and study aids for law students. Its major product lines include Aspen Publishers, CCH, Kluwer Law International and Loislaw. Its markets include law firms, law schools, corporate counsel and professionals requiring legal and compliance information. Wolters Kluwer Law & Business, a unit of Wolters Kluwer, is based in New York City and Riverwoods, Ill.
Wolters Kluwer is a leading global information services and publishing company. The company provides products and services globally for professionals in the health, tax, accounting, corporate, financial services, legal, and regulatory sectors. Wolters Kluwer has annual revenues (2007) of €3.4 billion ($4.8 billion), maintains operations in over 33 countries across Europe, North America, and Asia Pacific and employs approximately 19,500 people worldwide. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. For more information, visit www.wolterskluwer.com.
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