UTAH PASSES LANDMARK LEGISLATION!!! A GREAT DAY!!!
Huntsman signs bill to curb 'naked short selling'
By Bob Mims
The Salt Lake Tribune
sltrib.com
Despite a smattering of late-developing opposition, Gov. Jon Huntsman Jr. on Friday signed into law a bill designed to crack down on so-called "naked short selling."
SB3004, which overwhelmingly passed the Legislature during Wednesday's special session, targets stockbrokers, dealers and investment consultants who engage in alleged naked shorting - an illegal practice in which shares supposedly on loan are sold but not delivered.
The resulting "failures to deliver," in market parlance, can result in bogus trading volume that in turn pushes down prices for a company's legitimate shares. The new law, which goes into effect July 1, will require sellers involved in such transactions to report to the Utah Division of Securities and reveal the identities of all parties, including dates, locations and prices involved in the sales.
The statute provides for daily fines ranging from $10,000 to the sum of the sales prices for all transactions deemed to be bogus. Companies victimized by the naked shorting, if operating in Utah, can also sue for damages.
Huntsman spokesman Mike Mower confirmed Huntsman had signed the bill, determining it was "good for business in Utah, especially its small- and mid-cap companies."
The governor made the decision to stay with his support for the measure - first proposed during the general session that ended in March, and then reintroduced for the special session - despite some concerns expressed by brokers and others.
Some of those calls were fielded by Francine Giani, director of the Department of Commerce.
"It all came after the fact, really," she said. "This is exactly the same bill that came up in the general session, and there was no opposition then; neither was there during the special session. But certainly, we'll have a discussion with [opponents] and go from there."
There had been published reports indicating that brokerages and the Utah Bankers Association had sought veto of the bill. However, several brokerages contacted Friday by The Salt Lake Tribune either declined comment, or fell short of calling for the bill's reversal.
Mark Lake, a spokesman for Morgan Stanley, said his brokerage had prematurely been linked to declared foes of the bill. "We have not taken a stand, and we have no further comment at this time," he said.
Anne Crowley of Fidelity Investments said her company's position, too, had been overstated.
"Fidelity has a number of concerns about the ramifications of this legislation," she stated. "We are in the process of evaluating the bill further and will soon address our concerns with the appropriate government officials. Beyond that, we will have no further comment at this time."
UBA President Howard Headlee denied reports he felt indicated that his organization had come out against the bill, though he said he had heard some concerns expressed in the brokerage community.
"But we have no interest in this bill, no dog in this fight, as they say," he added. "The banking industry is not against it. I'm not against it. This is not a banking issue."
The bill was backed by Overstock.com, a Salt Lake City online closeout retailer whose chairman and CEO, Patrick Byrne, is an outspoken foe of naked shorting.
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