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ARTICLE · 04 AUGUST 2008

SEC Issues Emergency Order On Short-Selling

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On July 15, 2008, the Securities and Exchange Commission (the "SEC") issued an emergency order restricting the use of "naked" short sales in the securities of nineteen major financial institutions.

United StatesCorporate/Commercial Law
Proskauer'S Corporate Practice Group
Proskauer'S Corporate Practice Group
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On July 15, 2008, the Securities and Exchange Commission (the "SEC") issued an emergency order restricting the use of "naked" short sales in the securities of nineteen major financial institutions. The SEC's order came in the wake of increased disclosure requirements implemented by the Financial Services Authority in England (the "FSA"). The FSA mandated that any trader short-selling 0.25% or more of a company's securities during a rights issuance disclose its position to the public.

While the new English regulations primarily affect the transparency of financial activities, the SEC's emergency order impacts the actual mechanics of short-selling. The order states in relevant part:

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