SEC extends short-sale disclosure order
WASHINGTON (Reuters) - Big investors will be required to disclose their short positions to the U.S. Securities and Exchange Commission under an interim final rule issued by the SEC on Wednesday night.
The commission said short-sale reports provide it with important information about sizes and changes of short sales.
Short-sellers borrow stock they expect will fall in price in the hope of repaying the loans for less and pocketing the difference as profit.
Big investors will be required to disclose their short positions to the U.S. Securities and Exchange Commission under an interim final rule issued by the SEC on Wednesday night.
The SEC rule extends a temporary short sale disclosure rule until August1, 2009 to give the agency time to solicit public comment and fine tune details such as whether to publicly reveal the short positions.
The SEC started collecting data on the number and value of stocks shorted by managers who invest more than $100 million under an emergency order issued mid September.
The emergency rules, which also included a ban on short selling in more than 950 companies, were issued to help restore equilibrium to markets rocked by fears of a complete financial meltdown. The short sale ban expired earlier in October.
Short-sellers borrow stock they expect will fall in price in the hope of repaying the loans for less and pocketing the difference. They have been blamed by corporate executives for driving down the price of their companies' stock.
On Wednesday the SEC said the short sale reports will supply the agency with important information about the size and change in short sales in particular companies by particular investors.
"We are concerned by sudden and excessive fluctuation of securities prices and disruptions in the fair and orderly functioning of the securities markets," the SEC said.
The SEC said it was also concerned about possible unnecessary or artificial price movements that may be based on unfounded rumors and may be exacerbated by short selling.
Under the emergency order issued in September, money managers were required to list their largest intraday short positions and when they held them, and also disclose their short positions at the end of the day.
The SEC modified the order so that investors will no longer be required to disclose the value of the securities sold short, the largest the largest intraday short position and the time of day of the largest intraday short positions.
"We understand that some of this information has been difficult for filers to obtain," the SEC said.
Big investors will be required to file the disclosure form with the SEC at the end of the calendar week instead of the first business day of the calendar week to give them more time to gather and verify information and file the forms.
(Editing by Carol Bishopric)
