The SEC Delays Implementation Deadline of Controversial Short Selling Disclosure Rule Once Again

On December 4th, the U.S. Securities and Exchange Commission (SEC) delayed—for the second time—the deadline for its highly anticipated short selling and related stock loan disclosure rule. Under the SEC’s guidance, large investment management firms (including hedge funds) now have until January 2, 2028, to comply with short selling reporting requirements. Disclosure obligations for stock loan transactions are pushed back to September 28, 2028. The SEC stated the temporary exemptions are “in the public interest and consistent with investor protection goals.” In October 2023, the agency rolled out new rules: eligible asset managers must report short positions monthly, while pension funds, banks, and institutional share-lenders must submit reports the next trading day. In August, the U.S. Fifth Circuit Court of Appeals ruled the SEC failed to properly assess the rule’s economic impact and ordered the agency to reevaluate. SEC’s sole Democratic commissioner Allison Herren Lee criticized the move: “We’re using compliance date extensions as a fig leaf to cover a new trend—constantly twisting rules until they break, eroding the foundations of the rule of law.” (Source: Golden Finance)