By Cydney Posner

This morning, the SEC voted to adopt amendments to Rules 201 and 200(g) of Reg SHO relating to short sale restrictions. The amendments would impose an alternative uptick rule to restrict short selling, using a circuit breaker approach when there is significant downward pressure on a company's shares. The rule would be triggered when the shares of the particular stock drop 10% or more in one day from the prior day's close. Once the circuit breaker is activated, short sales would be permitted for the rest of the day and the entire following day only if above the then-current national best bid for the stock. Predictably (it's getting to be just like Congress), Commissioners Casey and Paredes voted against the proposal as costly and largely without benefit (i.e., insufficient empirical data showing that short selling affects volatility or that the rule would improve investor confidence).

The SEC also voted to publish a statement regarding its continued support for a single set of high-quality, globally accepted accounting standards and its ongoing consideration of incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. issuers. (There may have been some doubt about acceptance of IFRS since Chair Schapiro seemed, at least initially, to question the advisability). The target date for a decision is still 2011 (with actual implementation, if adopted, several years after that), and the staff has developed a work plan to meet that target date.

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