Title

SEC Adopts Final Short Sale Rules
Client Memorandum

Created date

10/21/2008

On October 14, 2008, the U.S. Securities and Exchange Commission (“SEC”) published final rules under the Securities Exchange Act of 1934 (“Exchange Act”) (i) adopting temporary Rule 204T, which contains a firm delivery requirement for long and short sales, (ii) eliminating the options market maker exception (the “Options Market Maker Exception”) from the close-out requirement of Rule 203(b)(3) of Regulation SHO, and (iii) adopting the “naked” short selling anti-fraud rule, Rule 10b-21.1 These rules are effective as of October 17, 2008. Rule 204T will expire on July 31, 2009, but the other rules are permanent. The adopting releases for these rules provide significant new interpretive guidance concerning short sales and related matters.