This article was originally published 25 September, 2008

On September 21, 2008, the SEC issued an Amended Emergency Order relating to certain institutional investment managers ("Manager" or "Managers") relating to their obligation to report their short sales of certain publicly traded securities on Form SH (the "Amended Order"). The original Emergency Order with respect to Form SH was issued on September 18, 2008 (the "Order"). The SEC has now released guidance ("FAQs") relating to such disclosure of short sales on Form SH. The FAQs provide important interpretive guidance related to Form SH, including helping to clarify a number of areas in the Order and Amended Order where there was a high degree of uncertainty. The first Form SH is required to be filed on Monday, September 29, 2008, reflecting short sales effected in "Section 13(f) Securities," i.e., those securities listed on the Official List of Section 13(f) Securities published by the Commission, other than those Section 13(f) securities that are options.

Pre-Existing Short Positions Not Required To Be Disclosed

The SEC has clarified that the disclosure requirement only applies to short sales effected after 12:01 a.m. EDT on September 22, 2008, and that any short positions established prior to such date ("Pre-Existing Short Positions") are not required to be reported under any of the columns on Form SH. Transactions effected after the effective date of the Order to close-out Pre-Existing Short Positions also should not be reported, although transactions effected to close-out short sales effected after 12:01 a.m. on September 22, 2008 must be accounted for in the Form SH. Specifically, close-outs of such short sales must be disclosed in the calculation of the End of Day Short Position disclosed in Column 6. Pre-Existing Short Positions should not be included for purposes of determining whether the "de minimis" exclusion applies.

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