MFA and CPIC issue joint statement of concern of SEC rulemaking processes as short selling restrictions are extended

SEC Chairman Christopher Cox may have spent last week reasserting his authority in the larger financial markets by urging Congress to give the SEC the power to supervise investment banks if a firm is in danger of collapsing (previous coveage: here), however this week by extending the emergency order on short selling until 11:59 pm August 12, 2008, Mr. Cox made his authority in the equity markets quite clear.

In response to the restricted short selling extension, the Managed Funds Association (MFA) and the Coalition of Private Investment Companies (CPIC) (which had previously sent a joint statement to Chairman Cox regarding the initial temporary action), joined forces once again to voice concerns about the temporary rule. In particular is their expression of concern for the process which was used to implement the temporary order. “We prefer to see a process for rule making, including time for market participants to contribute and comment in a manner similar to the adoption of Regulation SHO, which was subject to extensive notice and comment,” MFA President and CEO Richard Baker stated.

While there are certainly situations which require regulatory agencies to step in with temporary rules, the intentions Cox has stated since the regulation was imposed, to further expand the short selling regulation beyond the 19 protected financial institutions and into the entire market (previous coverage: here) are the source of much concern in the industry. CPIC Chairman James S. Chanos addressed this stating “We continue to believe that markets are best served when there is a level playing field between buyers and sellers, which in turn produces prices that have the greatest integ......................

Source:
MFA and CPIC issue joint statement of concern of SEC | Chairman Cox

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