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Strategies & Market Trends : Tell it to John Reed Stark of the SEC
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To: Don Pueblo who wrote (9)3/7/2000 1:03:00 AM
From: Wayners  Read Replies (2) of 17
 
Dear Mr. Scoyoc:

Thank you for your recent e-mail to the SEC. In your e-mail you ask if
it is permissible to short IPO shares.

Under section 11(d)(1) of the Securities & Exchange Act of 1934, it
is unlawful for any member of the underwriting syndicate or
underwriting group (including brokers) to extend credit in regard to
initial public offering shares for the first thirty days following
the offering date. This prohibition does not apply once the thirty
day period has expired. Additionally, if the broker is not a member
of the underwriting syndicate or underwriting group, they may not be
bound by the prohibition. Short selling a stock, by its nature, is
an extension of credit and, if done by a member of the underwriting
syndicate or underwriting group, falls under the 11(d)(1)
prohibition.

I have attached rule 11(d)(1) for your convenience.

Thank you for the opportunity to assist you.

Steven Priddle
Attorney
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