Ipreo in the News
07 Oct 08
SEC under fire for shorting 'about-face'
There, is a lot for an IRO to like in the SEC's series of emergency orders aimed at addressing rampant short selling in the markets, but critics still want more action.
NIRI issued a statement today criticizing the SEC for keeping details of institutional investors' short-selling positions non-public. President and CEO Jeffrey Morgan says in the release that NIRI also wants to see the uptick rule reinstated or at least the implementation of 'circuit breakers' to halt intra-day short selling during market declines.
On the first point, the SEC had promised public release of the contents of Form SH (a new form for institutional investors also filing Form 13F) within two weeks of filing, but rescinded its promise last Wednesday, citing concern that such disclosure would give rise to copycat short selling. The move disappointed issuers, who are extremely interested in the details of short sales in their stock, says Morgan.
Chris Taylor, head of global IR at the market intelligence firm Ipreo, says his clients are making this same complaint. 'Not only are we hearing disappointment that short positions will not make it to the public domain, but clients were also taken by surprise by the SEC's about-face on the matter,' he says. 'They are concerned that once the dust settles, the issue will be pushed to the back burner and the opportunity to get a systemic solution to identifying short sellers will be lost.'
Morgan's message, which he says was developed in consultation with the NIRI board, staff and members, goes on to argue for a reporting regime that promotes more timely and frequent long position reporting, as well as full and fair short position disclosure.
For their part, public companies are required to disclose 'extremely detailed information on a regular and as-needed basis in the case of 8Ks and certain stock exchange rules,' while institutional investors face much less rigor, Morgan adds in an email. 'It is not at all uncommon for an IR professional to have absolutely no way of verifying whether a money manager sitting across the table is currently, or ever was, an investor in his or her company.'
While IROs are stuck with this situation now, there should be opportunity for influence. An SEC spokesman noted that the decision rescinding public disclosure of short sales announced last Wednesday pertains only to the emergency order expiring on October 17.
In the same press release, the SEC says: 'The commission intends that the order will continue in effect beyond that date without interruption in the form of an interim final rule. The commission will seek comments on all aspects of the anticipated rulemaking. Disclosure under the emergency order will be made only to the SEC.'
Anna Snider
