MFA files reply brief in response to newly adopted SEC rules regarding securities lending and short sale transactions

MFA, along with the National Association of Private Fund Managers and the Alternative Investment Management Association, submitted a reply brief in their challenge of the SEC’s recently adopted reporting rules for securities lending and short sale transactions in the U.S. Court of Appeals for the Fifth Circuit.  

The brief highlights crucial details: 

  • Both rules are invalid when considered together because the SEC:
    • Failed to consider or justify its contradictory approaches to disclosure of the same market activity  
    • Never assessed the cumulative economic impact of the two inter-related rules
  • The Securities Lending Rule is invalid because:
    • The rule is contrary to law and the SEC’s own prior views  
    • The SEC deprived the public of a meaningful opportunity to comment on material changes to the rule
  • The Short Sale Rule is invalid because:
    • The SEC never meaningfully evaluated why it could not modify the FINRA reporting regime for short sales  
    • The SEC’s concession on the extraterritoriality of the short sale rule raises more questions than answers