Curbing Enthusiasm on Short Sales

On Wednesday, February 24, 2010, the SEC narrowly approved curbs on short selling, addressing what some consider to be one of the major contributing factors of the 2008 financial crisis.  The new rule is a modification of the “Uptick Rule,” which was designed to be a preventative measure against downward spiraling stock valuations in turbulent markets.  However, the rule was eliminated in 2007 because of its lack of efficacy.
The new rule will operate much like a circuit breaker, taking effect once the price of a stock has declined by 10 percent in a given day. Once triggered, short sales will no longer be permitted at or below the National Best Bid or Offer for the remainder of the day and the following trading day.
The modified uptick rule will take effect in approximately 60 days, but stock exchanges have up to six months after that time period to implement the new rule.
Highly debated since the 2008 financial crisis, short sales have been one of the most controversial issues facing the SEC.  Opponents of such regulation have pointed out that financial stock valuations tumbled even after regulators imposed a short-term ban on short selling late in 2008.  Others have voiced strong disappointment that the modified uptick rule did not go far enough to protect investors.  One thing is for sure – this is not the last we’ll hear on short sales.



NASDAQ’s News Notification Rule

It seemed a little confusing at first glance.  But the second time around, it’s clear that not much has changed with NASDAQ’s recently issued updated news reporting notification rule, and most NASDAQ-traded companies likely already comply.
In a nutshell, it states that NASDAQ-listed companies must submit material news announcements to the NASDAQ MarketWatch Department prior to 6:50 a.m. ET when the public release of the material news is made outside of NASDAQ market hours—7 a.m. ET to 8 p.m. ET.
There is no change to the notification requirements of least 10 minutes prior to public release of material news disclosures made public during NASDAQ market hours.  Such notifications must be made through the electronic disclosure submission system available at, except in emergency situations.
In simpler terms, if you plan to issue a news release between 7 a.m. and 8 p.m. ET, you must provide at least 10-minutes advance notice; if you plan to issue a news release after 8 p.m. but before 7 a.m. ET, you need to provide notice no later than 6:50 a.m. ET, which is 10 minutes before the market opens. If you plan to issue a news release on a weekend or market holiday, you need to let NASDAQ know no later than 6:50 a.m. of the next market day.
And as a friendly reminder, if an 8K is the only form of disclosure—which we rarely recommend—the same NASDAQ notification rules apply.
NASDAQ said the rule change, which went effective February 19, removes a burden on listed-companies, while continuing to enable NASDAQ to conduct timely reviews of company disclosures and make materiality assessments for possible trading halts.


Roger Pondel,