Investment Management and Financial Markets Group
October 21, 2008
SEC Extends Short Sale Disclosure Order
“[C]oncerned by sudden and excessive fluctuation of securities prices,” the Securities and Exchange
Commission (SEC) adopted an interim final temporary rule requiring certain institutional investment
managers to file information on Form SH concerning their short sales and positions of section 13(f)
securities, other than options. All filed forms will be nonpublic. The announcement of the rule extends
the effect of the orders first issued on September 18, September 21 and October 2, with several
modifications. The extension will be effective until August 1, 2009. The SEC invited comments on the
new rule due December 16, 2008.
Investment Managers Subject to the Reporting Requirements
The rule requires the filing of Form SH by those investment managers that: (1) as of the end of the
most recent calendar quarter, filed, or were required to file, a Form 13F; and (2) during a Sunday to
Saturday calendar week effected a short sale in a section 13(f) security other than options. The rule
release explains that the SEC is “applying the rule only to Form 13F filers because they exercise
discretion over large accounts that have significant potential to affect the markets.”
Modifications to the Reporting Requirements
The requirements in the new rule mirror the previous emergency order requirements with the following
modifications.
•
Filing deadline: To provide filers with additional time to gather and verify the necessary
information, beginning on October 18, 2008, the Form SH weekly filing deadline will be the last
business day of the calendar week following a week in which short sales are effected instead of
the first business day as required by the emergency orders.
•
Disclosure: Because the SEC recognizes that some of the information to be disclosed under
the previous emergency orders has been difficult for filers to obtain, Form SH filers will no
longer be required to disclose: (i) the value of the securities sold short, (ii) the largest intraday
short position, and (iii) the time of day of the largest intraday short positions. The new form will
require investment managers to disclose the following:
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Date,
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Central Index Key of the filer,
-
Name of the issuer,
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CUSIP of the issuer,
CHICAGO ● SAN DIEGO● WASHINGTON
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Short position at the start of the day,
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Number of securities sold short on that day, and
-
Short position at the end of the day.
•
Period covered by the disclosure obligation: Form SH filers will be required to report all
short positions, including short positions effected prior to September 22, 2008.
•
Threshold: The threshold for reporting short sales or positions will be raised from a fair market
value of $1 million to a fair market value of $10 million.
•
Format: To facilitate the review of the filed data by the SEC staff, filers are required to submit
an XML tagged data file to the SEC providing the requested information. However, for Form SH
reports on October 24 or October 31, investment managers may file in the same manner as
required in the previous emergency orders.
Exceptions to the Reporting Requirements
An investment manager may exclude a short position in any Section 13(f) security effected before
September 22 if: (1) the short position in the security constituted less than 0.25 of 1% of that class of
the issuer's securities outstanding (as reported on the issuer's most recent annual, quarterly or current
report filed with the SEC, unless the investment manager knows or has reason to believe that
information is not accurate); and (2) the fair market value of the short position in the security was less
than $1 million. In addition, for those short positions executed before September 22, the investment
manager may file Form SH in the same manner as required in the previous emergency orders.
For further information, please contact Cheryl Allaire 858-509-7424, Cameron Avery 312-807-4302,
Kevin Bettsteller 312-807-4442, Paul Dykstra 312-781-6029, David Glatz 312-807-4295, Alan Goldberg 312-807-4227,
Mark Greer 312-807-4393, Elizabeth Hudson 312-807-4376, Stevens Kelly 312-807-4240, Molly Moynihan 202-955-7027,
Anna Paglia 312-781-7163, Joanne Phillips 202-955-6824, Paulita Pike 312-781-6027, Eric Purple 202-955-7081, Bruce
Rosenblum 202-955-7087, Donald Weiss 312-807-4303, Gwendolyn Williamson 202-955-7059, or Stacy Winick 202-955-7040
of Bell, Boyd & Lloyd’s Investment Management and Financial Markets Group or visit our Web site at www.bellboyd.com.
This publication has been prepared by the Investment Management and Financial Markets Group of Bell, Boyd & Lloyd LLP
for clients and friends of the firm and is for information only. It is not a substitute for legal advice or individual analysis of a
particular legal matter. Readers should not act without seeking professional legal counsel. Transmission and receipt of this
publication does not create an attorney-client relationship.
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