Shine a light on short sales and stock lending: that’s the advice to the SEC from NIRI president and CEO Jeff Morgan in a public comment letter filed with the agency.
Morgan urges the regulator to require ‘the same level of disclosure from all institutional investors (investment funds, hedge funds, activists, and so on) maintaining short equity positions as are required of the funds that maintain long equity positions.’
Morgan was writing on behalf of NIRI in response to an SEC request for public comments on revising short-sale reporting requirements. The Dodd-Frank financial reforms mandated that the SEC conduct a study of the issue.
As part of the submission, Morgan summarizes a survey of 244 NIRI members’ attitudes toward short sale reporting, which NIRI has released to members. Among the survey findings, Morgan reports that:
– 96 percent of respondents say new public short sale position reporting by all investors is needed
– 59 percent say public reporting of share lending for short sales is needed
– 89 percent believe greater transparency ‘would help to deter short sale abuses or assist in additional appropriate actions to prevent them.’
‘We have spoken to the SEC regarding the survey with an excellent dialogue,’ Morgan tells IR magazine in an email.
In the letter, Morgan also urges the SEC to require greater frequency in reporting both long and short positions. The quarterly 13F filings reporting institutional positions should be monthly, he says, ‘similar to what now occurs with retail investors – receiving investment reports from their broker on a monthly basis within 10 days of the end of the month.’
Also, 13D filings – required when an investor crosses a 5 percent ownership threshold – should be filed within five days, rather than the current 10-day requirement, Morgan adds.
Click here to read the full NIRI comment letter.
