The SEC’s new rule: Don’t ‘short’ anymore, don’t tell

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The Securities and Exchange Commission on Sunday clarified its new temporary rule requiring big investors to report their short positions in stocks.

You can read the details here, but the bottom line is that the rule seems less punitive than some investors had feared.

For starters, the short-sale information won’t be made public when it’s filed with the SEC. The agency will wait for two weeks after it receives the data to make it available (on the EDGAR website) for all to see.

What’s more, investors will only have to disclose short positions they take beginning on Monday (Sept. 22). They won’t have to report previously held positions.

So if you don’t short anymore (bet on falling stocks), you won’t have to file anything with the SEC. Sounds like a great way to reduce the selling pressure on stock prices, albeit artificially.

The SEC disclosure rule targets only the biggest investors -- those managing $100 million or more. And the agency isn’t interested in their short bets unless they’re substantial: The rule exempts money managers from reporting any short position that amounts to less than 0.25% of a company’s outstanding shares, or is worth less than $1 million.

The first short-sale disclosure forms will be due to the SEC on Sept. 29 for short sales effected this week. The public will see those first reports on Oct. 13.

By then, the SEC disclosure rule could be history: It’s set to expire on Oct. 2. The SEC says it could extend the rule, but that it won’t be in effect beyond Oct. 22 in any case.

The disclosure rule, first reported on Wednesday, is separate from the SEC’s decision on Friday to ban shorting altogether in 799 financial stocks.

So we’ll never find out which big investors were heavily shorting financial issues in recent weeks, leading up to the government’s seizing of Fannie Mae and Freddie Mac, the collapse of Lehman Bros. Holdings Inc. and the near-collapse of American International Group.

Isn’t that all we really wanted to know?