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ARTICLE · 23 OCTOBER 2008

SEC And FSA Announce New Laws In Relation To Short Selling

Minter Ellison
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The Financial Services Authority (FSA) and Securities Exchange Commission (SEC) have taken strong action to curtail abusive short selling in an effort to stabilise the financial markets. Below is a summary of the current action taken by the FSA and SEC.

AustraliaFinance and Banking
Richard Batten
Richard Batten

The Financial Services Authority (FSA) and Securities Exchange Commission (SEC) have taken strong action to curtail abusive short selling in an effort to stabilise the financial markets. Below is a summary of the current action taken by the FSA and SEC. Further action from both regulators is expected.

SEC Announcement

On 17 September 2008, the SEC issued an emergency order adopting a new temporary rule imposing restrictions designed to curb naked short selling and the resulting delivery failures and a new anti-fraud rule applicable to short sellers who fail to deliver securities by the delivery date (Short Selling Emergency order).

The Short Selling Emergency Order, which applies to all transactions in equity securities effected, cleared or settled by or through any US registered broker-dealers or clearing agencies, took effect on 18 September 2008 and expires, unless extended, on 1 October 2008. It does not apply to transactions effected on non-US markets that

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