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House floor debates fate of state securities law on 'naked short selling' as sponsor urges repeal
Summary
Lawmakers debated Senate Bill 277 and whether to refer it to the Rules Committee or repeal an existing state law that the sponsor says is likely preempted by federal securities law; members split between urgency and calls for more process and an SEC briefing.
SALT LAKE CITY — Lawmakers on the House floor debated Senate Bill 277, a securities law measure tied to concerns about so-called "naked short selling," as the bill’s sponsor urged colleagues to repeal a previously enacted state law rather than defend it in court.
Representative Urquhart, the bill’s sponsor, told colleagues the state last year passed a law aimed at addressing manipulative short-selling practices but that the statute is now in litigation and likely preempted by federal law. "We have a law that probably will not withstand judicial scrutiny because of federal preemption," Urquhart said, arguing repeal would avoid exposing the state to a harmful injunction and preserve the Legislature’s long-term authority.
The debate centered on two competing approaches: send SB 277 to the Rules Committee for further study and stakeholder input, or move forward now. Representative Hughes moved that SB 277 be referred to the Rules Committee, saying the bill had been rushed into a special session and that "serious deliberation needs to occur in this interim," including hearings that could include the SEC. Hughes argued the process would allow the Legislature to gather more information and bring affected parties into the discussion.
Urquhart opposed referral and reiterated his repeal proposal, saying the governor’s general counsel and the attorney general had advised lawmakers that the state’s chances of prevailing in litigation were "extremely low." "If that were to happen, that could limit our ability as a legislative body to go back and deal with this in a comprehensive way," Urquhart said.
Other members voiced mixed views. Representative Sumption said he was "torn," noting the issue is national in scope and suggesting the House could hold interim hearings and invite the SEC's leadership to testify. Representative McKiff warned legislators they were "in trouble if we don't" act, urging passage. Representative Dukal, who said he carried the bill during a special session, opposed returning it to committee and urged colleagues to support passage. Representative Noelle said she was concerned the body might be acting hastily again and asked whether repeal would have adverse impacts on private individuals or companies; Urquhart replied that the current law is enjoined and that repeal would not, in his view, cause economic harm.
The House previously "uncircled" SB 277 to bring it to the floor; that procedural motion passed. The House also received communications from the Senate transmitting several measures for the House's consideration, including House Bill 194 and a joint resolution supporting the Governor's Child and Family Cabinet Council.
No final roll-call decision on Hughes’s motion to refer SB 277 to the Rules Committee was recorded in the provided transcript; debate continued with members weighing the legal risk of defending the statute against the need for fuller review and stakeholder input.
