SEC considering disclosure rules for big short-sellers


NEW YORK -- The Securities and Exchange Commission is thinking about stripping big short-sellers of their anonymity.

Sometime this summer, commission officials say, the SEC will seek public comment on a proposal that would force investors to disclose when they have a short position of 5 percent or more of any company's stock. The plan would work like the SEC's 13d filings, in which investors must disclose when they own 5 percent or more of a company's stock.

Short-sellers, who bet that a stock will decline, borrow shares and immediately sell them. They eventually have to purchase the stock to return to the lender, but they profit if the company's stock price has fallen in the meantime.

Because short-sellers don't own a company's shares, they haven't had to make 13d filings and disclose big positions. Many companies, particularly smaller ones traded on the over-the-counter market, complain bitterly that short-sellers gang up on their stocks to force their prices down.

A group representing those companies, the Association of Publicly Traded Companies, asked the SEC in 1989 to force short-sellers to disclose their positions. When that effort fell on deaf ears, the group sought legislative relief, but a bill introduced in Congress last year went nowhere.

It is unclear whether the SEC wishes to do more than issue a request for comment. The SEC has been studying the issue for more than a year.

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