SEC Issues New Rules to Combat Naked Short Selling Abuses
18 September 2008
Mayer Brown Article
18 September 2008 - On September 17th, the Securities and Exchange Commission (SEC) issued an emergency order (Emergency Order) under Section 12(k)(2) of the Securities Exchange Act of 1934 (Exchange Act) adopting three new rules designed to combat “naked” short selling (i.e., a short sale where seller does not actually borrow the stock and fails to deliver it in time for settlement). These rules apply to the equity securities of all public companies and were effective at 12:01 a.m. ET on Thursday, September 18, 2008.