Client Alert
| March 2, 2010
SEC Adopts New Rule Imposing Limited Price Restrictions on Short Selling
On February 24, 2010, the Securities and Exchange Commission (the “SEC”) adopted a new rule which, under certain circumstances, places restrictions on the price at which a short sale of security can be consummated. The new rule, which the SEC is calling the “alternative uptick rule,” will amend Regulation SHO, in part by eliminating what is currently Rule 201 of Regulation SHO. Once it takes effect, the alternative uptick rule will impose certain restrictions on the price at which a security can be sold short when the price of the security declines by at least 10 percent in one day. The details of the alternative uptick rule will be described further in this Alert, but a short history of the SEC’s regulation of short selling provides context for the SEC’s new alternative uptick rule.
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