c The Associated Press
NEW YORK (AP) -- The Securities and Exchange Commission is
scaling back 40-year-old rules aimed at preventing manipulation of
securities offerings, a move long sought by Wall Street.
The changes adopted Wednesday exempt people involved in public
offerings of big, actively traded stocks from several
anti-manipulation rules. About 1,900 U.S. stocks and several
foreign issues fall under the category.
The rules are meant to prevent traders from artificially
inflating a company's stock price prior to the offering, thus
making extra money.
But since it has become harder to corner the market in a big
stock such as IBM or AT&T without arousing suspicion from analysts
or other investors, the SEC felt it could narrow its focus to
smaller stocks.
``Essentially, we've been requiring all offering participants to
wear the same suit for the past 40 years.'' SEC Chairman Arthur
Levitt Jr. said in a statement.
``Because this `one size fits all' uniform is too restrictive
for some, for years we have been coping by letting out seams and
sewing on patches.''
For stocks that remain subject to the anti-manipulation rules,
the SEC will shorten the time period during which participants in
an offering are barred from trading in that stock.
Wall Street firms also will no longer be temporarily barred from
ordinary activities such as sending out research reports.
In addition, Nasdaq market makers, who create liquidity in a
stock by buying and selling for their own accounts, will be able to
trade in stocks even when their firm is involved in the offering,
so long as they don't direct the trading.
(What does "direct the trading" mean? Thanks...)
The streamlined rules were praised by the Securities Industry
Association, Wall Street's biggest trade organization.
``This will strengthen liquidity by making it possible for
market-makers to stay in the market in circumstances where today
they might have to withdraw,'' SIA lead attorney Stuart Kaswell
said. He added that many SIA members have urged the SEC for several
years to modernize its rules regarding trading during securities
offerings.
The rule changes will take effect in a little more than two
months.
|
