SEC Looking for Short Sale Comments

By Lisa Valentine

The Securities and Exchange Commission has set September 29 as the date for its roundtable on securities lending and short sales. Panelists have not yet been named. (The original date set by the SEC was September 30.)

Although the SEC acted quickly to impose limits on short sales in April when it became clearer that short sales had at least some impact on the nosedive of the stock prices of banking and other financial firms, the agency has been mum about future restrictions on short sales.

It’s pretty unlikely that the SEC will dispose of short sales altogether, but it is clear that the agency is paying attention to short sales. Back in August, the SEC announced that it was seeking comment on the alternative uptick rule that would allow short selling only at an increment above the national best bid. (Comments are due September 21.) According to a statement by the SEC, the alternative uptick rule may be “more effective and easier to implement than previously proposed price test restrictions currently under consideration.”

Also back in August, the SEC flexed its enforcement muscle regarding short selling when it charged Hazan Capital Management and TJM Proprietary trading with Regulation SHO violations. Reg SHO, which was set to expire on July 31 but was made permanent by the SEC, states that broker-dealers must locate borrowable shares prior to short selling and to deliver those shares by a specified date.