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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (67130)	7/31/2006 9:43:21 AM
From: shades	Respond to of 110194

Wall Street Group Sues Over Utah Short-Selling Law . By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The trade group for Wall Street filed a lawsuit in federal court on Friday to overturn a new Utah law that lets local companies collect fees from brokerage firms that fail to disclose when they can't deliver securities to customers. The Securities Industry Association said it is suing on the grounds that the law illegally usurps powers that belong to federal regulators. The trade group is seeking a temporary restraining order and has asked a judge to prohibit application of the law. "On this issue, federal law could not be more explicit: the states are expressly prohibited from establishing operational or record-keeping requirements that are different from the requirements of the Securities Exchange Act," Mark Lackritz, president of SIA, said in a statement on Friday. Utah Gov. Jon Huntsman Jr. signed the law in May. The legislation was widely believed to have been crafted by retailer Overstock.com Inc. (OSTK) Chief Executive Patrick Byrne, who has long accused short sellers of driving down his company's stock price by selling shares they don't own and don't expect to borrow. Byrne couldn't immediately be reached for comment. "We stand by our law and feel it addresses a real issue," said Michael Mower, a spokesman for Gov. Huntsman. "It has shined a very bright light on the pressing concern of naked short selling." Short selling is the legal practice of selling borrowed shares in a bet that stock prices will fall. When stock prices decline, traders may buy back the borrowed shares at lower prices, pocketing the difference. Problems occur with "naked" short selling, when the seller doesn't borrow or replace shares sold short. The Securities and Exchange Commission in 2004 adopted rules aimed at cracking down on naked short selling. But regulators later concluded that the rules had loopholes, and in mid-July the SEC proposed closing the gaps. John Nester, an SEC spokesman, said that the agency had no plans to file its own lawsuit. He didn't rule out that the SEC would filed an "amicus brief" to back up the arguments outlined in the SIA's lawsuit. He said only that no decision had been made. -By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; siobhan.hughes@dowjones.com (Jed Horowitz, Carol Remond and Judith Burns of Dow Jones Newswires contributed to this report.) (END) Dow Jones Newswires July 31, 2006 07:33 ET (11:33 GMT)