The Managed Funds Association (MFA) has urged the US Securities and Exchange Commission to revise rules that restrict hedge funds from participating in public offerings after shorting the same stock, arguing the current approach sidelines managers unnecessarily.
In a letter to the SEC, the MFA called for the “restricted period” to begin only once an offering is formally announced, rather than covering trades made beforehand. The group also highlighted ambiguity around the exact timing of deal pricing, which it says further complicates compliance and keeps funds out of offerings.
The SEC rule was originally designed to prevent manipulative short selling that could depress offering prices, but the MFA said enforcement has become “draconian.” The request comes as the SEC reviews a broader set of rules on short selling, stock lending and private fund disclosures, including Form PF.
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