A three judge panel of the U.S. Court of Appeals for the Fifth Circuit recently remanded two rules adopted by the SEC in 2023 for further consideration – Rule 13f‑2 (the short sale rule) and Rule 10c1‑a (the securities lending rule), stating that the agency did not properly consider the cumulative economic impact of the two rules.[1]  The court, however, made a point to emphasize the limited nature of its holding and rejected the other arguments raised by the petitioners against the adoption of Rule 10c‑1a, the adoption of Rule 13f‑2, and the reporting approaches under the two rules, including arguments based on the Commission’s statutory authority for adopting the securities lending rule and the extraterritorial application of the short sale rule.[2]  On September 5, 2025 , the SEC Chairman issued a statement that he has asked the agency’s staff to evaluate the rules in light of the Court’s opinion, including “potential changes to the rules and adjustments to the related compliance dates.”  The statement is available here:  SEC.gov | Statement Regarding Rule 10c1‑a and Rule 13f‑2 and Related Form SHO.

As described in our previous Alert, Rule 13f‑2 was originally adopted in October 2023 and requires certain institutional investment managers to report short sale data to the SEC on a confidential basis, which the agency would subsequently publish in aggregated form.  New Rule 10c‑1a (also discussed in a previous Alert) requires the reporting of certain securities lending transactions to a registered national securities association.[3]

The SEC had previously extended the reporting deadlines under both rules.  The first reporting deadline for reporting short position information on Form SHO confidentially with the SEC pursuant to Rule 13f-2, covering the January 2026 reporting period, is currently February 14, 2026.  The deadline for reporting on securities lending transactions is currently September 28, 2026.  FINRA would begin its public dissemination of covered securities loan information on March 29, 2027.

Although these rules were proposed and adopted under the prior Commission, we expect that the current Commission will make a thorough review of the rules, but almost certainly will keep them with certain modifications, unless Congress revises the statutory basis for one or both of the rules.  Some of these changes may include limiting their scope and extending the deadlines for reporting, as well as potentially extending the time between the end of a reporting period and the deadline for filing the relevant report with the SEC.  Chairman Atkins is focused on carefully tailoring regulation and balancing associated economic burdens to the problems sought to be addressed.

The SEC might also respond by vacating the current rules and re‑proposing alternatives along with the requested support on economic burden.  We expect that the SEC will respond to the Court relatively quickly or further extend the deadlines for compliance given the impending deadlines and need for firms to prepare in advance of those deadlines.

_________________

[1] National Association of Private Fund Managers v. SEC, No. 23‑60626 (5th Cir. Aug. 25, 2025).

[2] In rejecting this argument, the court stated that “the proposed version of the Rule only aimed to apply to “equity securities consistent with the Commission’s [existing] short sale regulations (i.e., Regulation SHO[]),” which do not reach securities traded outside of the United States.”

[3] Certain material terms of securities lending transactions relating to “reportable securities” are required to be reported to a registered national securities association (“RNSA”) by the end of the day on which the loan is agreed or modified.  The RNSA is required to make the information – other than that deemed confidential as defined below – public on the morning of the next business day.  FINRA is the only RNSA.

Posted in Derivatives, Private Funds
Tags: Derivatives, FINRA, Private Funds, SEC
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Louis Rambo Louis Rambo

Louis Rambo is a partner in the Corporate Department and a member of the Capital Markets Group. He focuses his practice on counseling public companies and their boards of directors on corporate governance, capital markets transactions, mergers and acquisitions, securities regulation, disclosure and…

Louis Rambo is a partner in the Corporate Department and a member of the Capital Markets Group. He focuses his practice on counseling public companies and their boards of directors on corporate governance, capital markets transactions, mergers and acquisitions, securities regulation, disclosure and shareholder activism. Drawing on his previous tenure with the Securities and Exchange Commission in the Division of Corporation Finance, Louis partners with clients on capital raising, including underwritten equity transactions, at-the-market offerings and high-yield and investment grade debt offerings, as well as on structuring M&A transactions, spin-offs, tender offers and going private transactions. He advises public companies on developing governance and disclosure matters, including director independence, compensation, insider trading issues, shareholder proposals and stockholder meetings, and advises on shareholder activism and takeover defense.

Louis also regularly advises hedge funds, private equity funds, family offices, private companies and other financial institutions on a wide range of transactional and securities regulatory compliance matters, including capital raising, PIPEs and secondary transactions, novel and complex beneficial ownership issues arising under the federal securities laws, derivative transactions, insider trading issues and policies and compliance programs.

Louis previously served as an attorney with the SEC in the Division of Corporation Finance. While at the SEC, Louis worked on a number of transactional and securities compliance matters.

Read more about Louis Rambo
Show more Show less
Photo of Frank Zarb Frank Zarb

Frank Zarb is a partner in our Corporate Department and a member of the Capital Markets Group, where he concentrates his practice on equity finance and a wide range of regulatory matters under U.S. federal securities laws.

He counsels public and private companies…

Frank Zarb is a partner in our Corporate Department and a member of the Capital Markets Group, where he concentrates his practice on equity finance and a wide range of regulatory matters under U.S. federal securities laws.

He counsels public and private companies, hedge funds and family offices, and market intermediaries and other financial institutions on a wide range of transactional and securities regulatory compliance matters including:

  • Equity investments and dispositions in public and private companies
  • Public company registration, disclosures and preparation of periodic reports
  • Tender offers, equity lines, proxy contests, SPACs, and other highly regulated transactions
  • Regulation M, Regulation SHO, Forms 13F and 13H, insider trading and other trading issues
  • Corporate governance and stock exchange listing standards
  • Federal and state proxy requirements as well as shareholder proposals and communications
  • Regulation of financial intermediaries, including trading of public and private equity, and complex and novel trading structures
  • Advocating with the SEC on behalf of a market intermediary related to back-office processing matters.

Frank’s practice is both domestic and international, beginning with his experience in senior positions with the Securities and Exchange Commission. As a member of the staff of the SEC’s Office of International Corporate Finance, Frank advised U.S. companies seeking to do business in the EU, Asia and the Middle East, as well as companies from those regions doing business in the U.S., or otherwise seeking to comply with the U.S. securities laws.  In the Office of Chief Counsel, he focused on federal proxy rules, and supervised a team of staff members that provided guidance in the course of proxy season.

Prior to joining the Firm, Frank was deputy general counsel/chief securities counsel for Bristol Myers Squibb Co. in a new position required by the SEC. Prior to joining Bristol-Myers, Frank was a corporate partner with Morgan, Lewis & Brockius.

Social Responsibility

Frank is a Trustee of the Gerald R. Ford Presidential Foundation, and he provides significant pro bono assistance to non-profit social service institutions in the Washington, D.C. area.

Read more about Frank Zarb
Show more Show less
Photo of Elanit Snow Elanit Snow

Elanit Snow is a senior counsel in the Corporate Department and a member of the Finance Group.

Elanit represents financial institutions, hedge funds, private equity funds and multinational corporations on complex over-the-counter derivatives and other synthetic financing transactions and secondary market and distressed…

Elanit Snow is a senior counsel in the Corporate Department and a member of the Finance Group.

Elanit represents financial institutions, hedge funds, private equity funds and multinational corporations on complex over-the-counter derivatives and other synthetic financing transactions and secondary market and distressed debt trading. She represents clients in structuring and negotiating ISDA, MRA, GMRA, MSFTA, clearing, prime brokerage and other related documentation. Elanit advises clients on structuring bespoke transactions to gain synthetic leverage or to hedge exposure to key market risks. Elanit also advises clients on the legal, compliance and regulatory requirements of the Dodd-Frank Act applicable to derivatives transactions.

Elanit represents both buyers and sellers on a diverse range of transactions involving syndicated loans, bankruptcy claims and other distressed and illiquid assets.

Read more about Elanit Snow
Show more Show less
Related Posts
SEC Releases Unsurprising But Ambitious Spring 2025 Regulatory Agenda
September 5, 2025
CFTC Clarifies that FX Window Forwards are Not “Swaps”
April 15, 2025
SEC Adopts Treasury Clearing Rules
January 3, 2024