• SEC Prohibits Short Sales by Persons Who Will Receive Shares in a Public Offering
  • July 9, 2007
  • Law Firm: Winston & Strawn LLP - Chicago Office
  • At an open meeting on Wednesday, June 20, 2007, the Securities and Exchange Commission ("SEC") voted unanimously to revise Rule 105 of Regulation M. Rule 105 currently prohibits covering a short sale with securities received in a public offering if the short sale occurred during a restricted period that generally begins five business days before the pricing of the offering and ends with the pricing. Current Rule 105 does not prohibit short sales of securities subject to a public offering; it simply prohibits covering them with offered stock. Thus, the rule does not unduly restrict short selling or hamper the resulting price discovery.