What should regulated persons make of a federal agency describing a binding regulation as an “interim final temporary rule”? That’s the self-titling the Securities and Exchange Commission gives to two (here and here) of its latest in a series of controversial regulations concerning short selling of securities (selling securities one doesn’t own at a current price to be delivered in the future after buying them at an expected lower price).
The strange nomenclature may be due to difficulties the SEC has faced trying to create a sensible policy on short selling as it struggles with a role to play in addressing the credit crisis. It settled on restricting short selling in the name of trying to prop up prices of equity securities. It adopted emergency measures, and amended and expanded these then allowed them to lapse and is now reviving its effort to play a role. Everything it has done has been subject to criticism and second-guessing, with some evidence indicating that its efforts have exacerbated equity market performance rather than helped.
The SEC now adopts these two “interim final temporary rules,” trying to micro-regulate short selling with greater precision. Separately, it also adopted more traditional forms of regulation more in keeping with its longstanding regulatory philosophy, establishing anti-fraud principles.