Court Strikes Down SEC Short Sale Disclosure Rules

On August 25, 2025, the U.S. Court of Appeals for the Fifth Circuit vacated and remanded the Securities and Exchange Commission’s recently adopted short sale and securities lending disclosure rules, holding that the Commission failed to adequately consider the cumulative economic impact of the rules when adopted concurrently. As a result, these rules are not currently in effect, and the SEC must reconsider them in light of the court’s decision.

By way of background, Rule 13f-2 and new Form SHO became effective on January 2, 2024, and were originally scheduled to require monthly short sale reporting beginning in 2025; however, on February 7, 2025, the SEC granted a 12-month temporary exemption postponing the compliance date until January 2, 2026, with the first Form SHO filings due by February 17, 2026. The court’s decision now suspends that compliance trajectory, and no new reporting obligations are currently in force. Given the current political climate and a more business-friendly SEC leadership, we anticipate that any revised rulemaking will likely be narrower in scope, more attuned to cost-benefit considerations, and subject to further industry input. We will monitor developments closely and prepare for potential alternative disclosure obligations once the SEC re-proposes the rules.