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Short sales: New rules and recent enforcement actions

Perrie M. Weiner (Chair of Securities Litigation Group, Piper Rudnick LLP, Los Angeles, CA, USA; Perrie.Weiner@piperrudnick.com)
Edward Totino (Of Counsel, Securities Litigation Group, Piper Rudnick LLP, Los Angeles, CA, USA; Edward.Totino@piperrudnick.com)
Robert D. Weber (Of Counsel, Securities Litigation Group, Piper Rudnick LLP, Los Angeles, CA, USA; Robert.Weber@piperrudnick.com)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 1 July 2004

Abstract

Over the past few years, regulators, issuers, investors, and other market participants have expressed increasing concerns regarding the real or perceived effects of short selling. For example, thinly‐capitalized issuers whose shares trade on the over‐the‐counter market often blame short sellers for declines in the prices of their stocks. Recently, these issuers’ ire has focused on so‐called “naked short sellers,” i.e. short sellers who do not locate or borrow shares before selling. Likewise, other market participants have expressed apprehension about conduct involving short sales that may be viewed as disruptive or manipulative. The Securities and Exchange Commission (SEC) and the self‐regulatory organizations (SROs) have addressed these concerns both by promulgating new regulations governing short sales and by pursing enforcement actions. This article summarizes the new short sales rules contained in Regulation SHO and the amendments to Regulation M, and discusses recent enforcement actions pertaining to short sales.

Keywords

Citation

Weiner, P.M., Totino, E. and Weber, R.D. (2004), "Short sales: New rules and recent enforcement actions", Journal of Investment Compliance, Vol. 5 No. 3, pp. 9-14. https://doi.org/10.1108/15285810410636541

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited