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September 19, 2008

Details on the SEC's New No-Shorting Rule

I've been scanning the SEC's just-released rule banning shorting of financial stocks. According to the SEC, a staggering 779 stocks are covered by the order, which goes into effect immediately. The SIC codes covered are 6000, 6011, 6020-22, 6025, 6030, 6035-36, 6111, 6140, 6144, 6200, 6210-11, 6231, 6282, 6305, 6310-11, 6320-21, 6324, 6330-31, 6350-51, 6360-61, 6712, and 6719. I'm sorting through the list of companies now.

At the same time, the SEC is instituting a new institutional disclosure form for weekly short sale activity in non-financial stocks. Starting now, the form must be completed on a weekly basis (!) in any week when a fund manager initiates, adds to, reduces, or closes out a short position. The rule comes into effect on September 28, 2008, and expires on October 2nd, unless extended by the SEC (which I'm assuming it will be).

What a mess.

More here.

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[Update] A few quick nuggets from perusing the list:

• Some SEC dyslexic likely meant MPB, which is Mid Penn Bancorp, and they blocked shorting of MBP instead, which is Metabolic Pharmaceuticals.
• Lehman is on the list, which is hugely reassuring given its current bankruptcy status.
• The SEC is blocking shorting of NAHC, which is Nigerian Aviation Holding Company. Damn Nigerians. It's not enough they have all the best scams; they get shorts blocked too.
• Silver State Bancorp is on the list. Recall, it's a failed bank already seized by the FDIC.

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