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House passes securities transparency measure aimed at 'naked short' selling, 65-1
Summary
The House approved Senate Bill 3,004 to require broker-dealers to disclose certain failures to settle in 'threshold' securities and to create penalties and public disclosure rules intended to increase transparency for Utah-domiciled companies.
The Utah House passed Senate Bill 3,004 (Securities Amendments) by a vote of 65 yes to 1 no after floor debate about naked short selling and the statute's scope. Sponsor Representative Dougal described the bill as a transparency measure to protect Utah companies and shareholders from settlement failures that can depress stock prices.
Representative Dougal said the bill "requires a broker dealer to notify the division of the failure to settle certain security transactions" and that the measure targets practices tied to repeated failure-to-deliver events in threshold securities. The floor exchange clarified the bill's trigger: once a security reaches the regulatory "threshold" definition (five consecutive settlement days with aggregate fails to deliver above enumerated levels), the bill requires reporting within 24 hours after that threshold is met.
Several members recounted harms from market manipulation and supported the bill as a way to shed light on activity the federal government and self-regulatory organizations have not fully policed. Representative Farr declared a conflict of interest as a registered securities representative but said he would support the bill, calling the practice "devious" and harmful to retirees and companies. The bill provides avenues for disclosure, administrative rulemaking by the relevant division, and civil remedies for affected Utah-domiciled companies.
SB3004 passed the House 65-1 and will be forwarded to the Senate as amended.
