SEC Makes Naked Short-Selling Rule Permanent

Law360, New York (July 27, 2009, 6:49 PM EDT) -- An emergency rule aimed at curbing abusive short-selling is now permanent, the U.S. Securities and Exchange Commission announced Monday.

The new rule, Rule 204, requires short-sellers to deliver securities at settlement or three days after the sale transaction date.

If the short-seller fails to deliver, any broker-dealer acting on his behalf will be barred from making further short-sales in the same security unless the shares are not only located but also pre-borrowed. Rule 204 will go into effect on July 31, when the temporary rule was...
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