July 28, 2009

SEC takes action to protect against abusive short sales

Yesterday, the Securities and Exchange Commission announced that it would rein in abusive short sales and increase the availability of more short sale information to the public.

Now rendered permanent, Rule 204 requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale. This new rule was preceded by Rule 204T, which the SEC enacted in 2008 to reduce the potential for abusive "naked" short selling in the securities market. The temporary rule would have expired on July 31. 

Read more about the SEC's "naked" short selling anti-fraud rules in a previous Financial Bulletin.

For more information
For more information about the Financial Services practice at Grant Thornton LLP, contact Cynthia Keveney, Financial Services national marketing director, at 212.624.5495, e-mail Cynthia.Keveney@gt.com or visit www.GrantThornton.com.