SEC Extends Ban on Short Selling Rulings

The SEC has extended the four short selling emergency orders issued on the 17 and 18 of September 2008, which were due to expire this week. The SEC's statement announced that the ban would be extended to allow time for the completion of work on the anticipated financial rescue legislation.

The shorting ban extensions are as follows;

• The temporary ban on short selling in financial companies will now expire at 11:59pm EDT on the third business day after the enactment of the rescue legislation; or at 11:59pm EDT on October 17, 2008, whichever comes first.
• The temporary requirement that certain institutional investment managers report their short sales of certain publicly traded securities to the SEC has been extended until 11:59pm on October 17, 2008. However, alongside this extension the SEC announced that it intends to adopt an interim final rule which will see this order continue in effect uninterrupted beyond that date.
• The order easing the restrictions on the ability of securities issuers to repurchase their securities has been extended until 11:59pm on October 17, 2008.
• The ban on naked short selling and the penalties against it are to remain effective until 11:59pm on October 17 2008. The SEC has also announced its intention to adopt an interim final rule so that the naked short selling restrictions will continue in effect uninterrupted after the expiration of the order.

Please click here to view the announcement by the SEC.

Firms that are affected by these rules may need to take specific advice from their US lawyers.

3rd October 2008