Three hedge fund associations sued the U.S. Securities and Exchange Commission (SEC) on Tuesday in a bid to vacate two new rules aimed at boosting transparency of short-selling, or trades that earn investors a profit if a stock price falls, Reuters reported. In October, the SEC issued the rules aimed at boosting transparency of short selling and securities lending, two connected activities. The groups say the SEC took conflicting stances with the rules, in one case allowing for transaction reports to be aggregated in order to protect investors' positions, yet at the same time requiring other transaction reports to disclosed individually. The case, filed in the 5th U.S. Circuit Court of Appeals, is the second brought by the hedge fund groups against the SEC in recent months. Wall Street has been fighting a raft of new financial regulations in court. In their suit, the groups argue the SEC did not take into account the interconnected nature of the two rules and adopted contradictory approaches, adding as such the rules will harm investors. They also added the rules violate the Administrative Procedure Act, which requires agencies to justify their rules and consider feedback.
