Don’t Get Caught Short By Rule 105

Law360, New York (October 10, 2013, 2:59 PM EDT) -- As the U.S. equity markets reach post-crisis heights, hedge fund managers with contrarian views have ample opportunity to express their conviction by taking short positions in stocks they consider overvalued. At the same time, however, the recent rebound in equity capital-raising may expose short-selling managers to risk under Rule 105, the U.S. Securities and Exchange Commission’s tool to deter manipulative shorting related to public stock offerings. This risk is more than theoretical.

The SEC’s Division of Enforcement appears to be actively seeking information from fund managers...
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