SEC Releases Emergency Orders to Halt Short Selling of Financial Stocks and Report Short Selling of Section 13(f) Securities

September 19, 2008

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Breaking News – The SEC has implemented two emergency orders regarding the practice of short selling. You can read the SEC press release announcing the orders by clicking here. The first order takes effect immediately and is intended to halt short selling of 799 financial stocks. According to the press release, “This decisive SEC action calls a time-out to aggressive short selling in financial institution stocks, because of the essential link between their stock price and confidence in the institution.” The moratorium on short selling financial stocks will expire at 11:59 p.m. EST on October 2, 2008, unless extended.

The second order has an immediate and direct impact on Form 13F filers. It becomes effective this Monday, September 22, 2008. The order temporarily requires every institutional investment manager that filed, or was required to file, Form 13F for the calendar quarter ended June 30, 2008 to file a report disclosing the number and value of securities sold short for each section 13(f) security. This information must be reported on the new Form SH. All section 13(f) securities sold short must be reported on Form SH. The new form must be filed through EDGAR. Reports must be filed on the first business day of every calendar week immediately following a week in which the institutional investment manager affected short sales. Therefore, the first reports must be filed on Monday, September 29, 2008. This order is also set to expire on October 2, 2008 unless extended.

RIA Compliance Consultants, Inc. provides Form SH consulting services on an hourly-fee basis. Please contact Jarrod James, Senior Compliance Consultant, if your firm needs help understanding the Form SH requirements, needs help preparing the Form SH, or requires assistance to submit Form SH.

Posted by Bryan Hill
Labels: Form 13F, SEC