Wachtell Lipton Client Memo Urges SEC to Target Rumor-Mongers
New York’s Wachtell, Lipton, Rosen & Katz sent a call to arms this week to clients. In the memo, the M&A powerhouse urges U.S. securities regulators to be more aggressive in attacking rumor-mongers and in policing other industry abuses.
The memo calls for a 45-day study by the Securities and Exchange Commission to report on the extent to which “abusive and manipulative short-selling and spreading of false rumors is taking place,” Dow Jones reports.
Anticipating that the SEC will find abuses, Wachtell Lipton’s July 14 memo (PDF) then recommends that the SEC adopt appropriate rules and seek enforcement actions against wrongdoers.
Dow Jones reports that Wachtell Lipton’s client memo comes on the heels of an unusual Sunday announcement that the SEC plans to examine controls at brokerage firms, mutual funds, money management companies and hedge funds that are meant to prevent the deliberate spreading of false rumors to manipulate stock prices.
“While this is an important first step, the SEC needs to undertake additional bold measures to constrain abusive short-selling and rumor-mongering,” Dow Jones quotes from the memo, which was signed by Edward Herlihy, who co-chairs the firm’s executive committee, and Theodore Levine, who is listed on the firm’s site as counsel.
Related memo and coverage:
It’s Time for the SEC to Constrain Abusive Short Selling (PDF) (Wachtell, Lipton)
SEC told to act on short-sellers (Financial Times)
Updated at 5:12 p.m. to include copies of the client memos.
