The Freedom of Information Act: A Crack in the Confidentiality of Disclosed Short Sale Data?

The SEC’s temporary rule requiring certain institutional investment managers to file weekly reports disclosing their short sales and short positions has raised concern among affected parties, especially hedge funds, that public disclosure of this information may undermine trading strategies.  Hedge funds have taken some comfort in a move by the SEC to limit the rule so that disclosure only goes to the agency, and not to the public.  But there may be an exception to the no-public-disclosure rule that can undermine managers’ confidence in the confidentiality of disclosed short information: requests under the Freedom of Information Act.  We explain the application of the Freedom of Information Act in the short sale reporting context.

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