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SEC Proposes "Naked" Short Selling Anti-Fraud Rule
Topics in Legal News |
2008/03/26 09:15
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On March 17, 2008 the Securities and Exchange Commission (SEC or Commission)
issued a release proposing a new anti-fraud rule under the Securities Exchange Act of
1934, as amended (Exchange Act), which addresses “naked” short selling, which the
SEC has generally defined as “selling short without having stock available for delivery
and intentionally failing to deliver stock within the standard three-day settlement
cycle.”
Specifically, proposed Rule 10b-21 is intended to target: (i) short sellers who
deceive certain persons, such as their broker-dealers, about the source of borrowable
shares, to circumvent the Regulation SHO “locate” requirement; and (ii) long sellers
who misrepresent to their broker-dealers that they own the shares being sold, also to
circumvent Regulation SHO, as well as certain other rules.
The deadline for submitting comments on proposed Rule 10b-21 is May 20, 2008. |
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Investment Fraud Litigation |
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Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws. Securities Arbitration. Generally speaking, securities fraud consists of deceptive practices in the stock and commodity markets, and occurs when investors are enticed to part with their money based on untrue statements.
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