Cox to hedge funds: Reveal short positions

Hedge funds and other large investors would have to disclose their short positions under an emergency rule asked for by Securities and Exchange Commission Chairman Christopher Cox.
SEP 18, 2008
Hedge funds and other large investors would have to disclose their short positions under an emergency rule asked for by Securities and Exchange Commission Chairman Christopher Cox. His action, which was announced Wednesday evening, comes after the SEC issued a new rule imposing tighter restrictions on “naked” short selling. Under the new interim rule, which took effect today, short sellers and their broker-dealers must deliver securities by the settlement date of a transaction for all publicly traded companies. The rule Mr. Cox asked for last night would require managers with more than $100 million invested in securities to begin public reporting of their daily short positions. The managers currently report their long positions to the SEC. That would “ensure transparency in short selling,” Mr. Cox said in a statement. The SEC’s Division of Enforcement will also expand investigations by taking additional enforcement measures against market manipulation. The division will obtain disclosure from hedge funds and other institutional traders of their past trading positions in specific securities. Those institutions will be required immediately to secure their past trading positions in specific securities, “The enforcement division has been investigating and will continue to investigate any suggestion of manipulative trading,” enforcement division director Linda Chatman Thomsen said in a statement. “We are committed to using every weapon in our arsenal to combat market manipulation that threatens investors and capital markets.”

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