Updated UK Rules on Short Positions in Certain Derivatives

In June of this year, the UK Financial Services Authority (FSA) amended its Code of Market Conduct to require holders to disclose short positions of 0.25% or more of an issuer’s share capital where the issuer’s securities are listed on an exchange (except AIM) and where the issuer is undertaking a rights issue. In addition, in July, the FSA released the result of a study on current disclosure of derivative holdings, concluding that certain derivative long positions must be reported at a 3% holding. Final rules are expected early in 2009.

A few highlights on the UK rules:

-- 3% holdings in voting rights must be disclosed;

-- transactions in securities, where the issuer is under a takeover offer, by any person who holds gross long derivatives on 1% of those securities must be disclosed;

-- open net short positions of 0.25% or more of a listed company (excluding AIM-listed companies) which is undertaking a rights issue must be disclosed.

New SEC Interpretive Release on Website Disclosure

On August 1, 2008 the U.S. Securities and Exchange Commission released intepretive guidance regarding website disclosures by public companies. Among others, the new release attempts to deal with some of the issues concerning applicability of Regulation FD, some securities fraud and liability issues, enhance the way public companies can communicate with investors via features such as RSS feeds, blogs and discussion forums. However, in well-established SEC tradition, the interpretation leaves numerous matters into a sort of securities law gray area. For example, it is unclear how the selective disclosure requirements of Regulation FD will be enforced, or how the proxy solicitation rules would apply in the context of online disclosure. If anything, the interpretation leaves room for even further interpretation and clarification and I seriously doubt that it will open the gates to diversified online public disclosure by U.S. issuers. If anything, I expect public companies to continue to operate within their current websites' status quo.

If you crave some dense reading into the more obscure SEC disclosure and Exchange Act compliance rules, you may visit:

http://www.sec.gov/rules/interp/2008/34-58288.pdf