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Short-Selling and Securities-Lending Rules Meet Legal Resistance

July 12, 2024 | 1 minutes reading time | By John Hintze

The SEC says it is fulfilling Dodd-Frank transparency mandates. Alternative fund groups allege that they are flawed and arbitrary.

Pressing ahead with rulemakings rooted in the post-financial crisis Dodd-Frank Act, the Securities and Exchange Commission on a single day last October approved separate sets of requirements for short selling and securities lending.

One of them, Rule 13f-2, requires investment managers to report to the regulator equities short-position and activity data in order to “promote greater transparency about short selling both to regulators and the public,” as SEC Chair Gary Gensler put it. The compliance deadline is January 2, 2025.

By a year later, transparency would be enhanced on the securities lending side through Rule 10c-1a. Certain confidential information is to be reported to a registered national securities association (RNSA) for oversight purposes and for public release of aggregated data.

There may, however, be a snag.In March, the National Association of Private Fund Managers (NAPFM), Alternative Investment Management Association (AIMA) and Managed Funds Association (MFA) filed a lawsuit seeking to vacate the rules. They argued that each is “invalid in its own right,” with further complaints including that the public was...

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Topics: Regulation & Compliance

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