Crisis Scorecard for Hedge Fund Compliance

Although the rules may have changed between the time of this writing and the time you read it 20 minutes later, we thought it would be useful to post a list of new rules and regulations hedge fund compliance professionals will need to manage going forward. 

1. Ban on Short Selling: Lists of banned stocks for shorting are maintained by individual US exchanges, so for starters check the NYSE and NASDAQ sites for their lists, which may be updated daily. For NASDAQ, the link is  http://www.nasdaqtrader.com/TraderNews.aspx?id=RA2008-021, for NYSE, the link is http://www.nyse.com/about/listed/1222078675703.html?sa_campaign=/internal_ads/ticker/0922200.

2. Reporting of Short Positions: For 13f reporters only, a weekly Form SH must be filed on EDGAR to report new short positions added during the prior week.  The information is kept non-public for 2 weeks if you so request on the form.

3. Responding to the SEC Sweep: Your firm may be asked to respond to an SEC sweep examination, which is being very broadly conducted across firms that were players in the financial services markets and credit derivatives.  This sweep is one step up in seriousness from a “regular” sweep, because an “oath”, or sworn statement, is required of respondents.

Also note that various other countries have instituted new rules of their own regarding short selling (both bans and reporting), so if you have involvement with overseas securities, check country by country.  Good luck!