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Senate moves to repeal special‑session securities law to avoid lawsuit, passes SB277
Summary
Senate Bill 277 would repeal a special‑session statute on illegal naked short selling after legal advice suggested the state would lose on federal preemption grounds; sponsor said repeal would likely end a lawsuit and preserve state options for future defensible legislation. The Senate passed the measure and sent it to the House.
The Utah Senate on Feb. 23 advanced and passed Senate Bill 277, a repeal of a special‑session securities enforcement law enacted earlier to address illegal naked short selling.
Sponsor Senator Bramble told colleagues the special‑session law prompted litigation brought by securities industry interests and that legal counsel, the attorney general and outside advisers warned the state would likely lose a preemption challenge in federal court. "Should this bill pass and repeal the law that we enacted in the special session, they'll drop their lawsuit," Bramble said, adding that repeal would preserve the state's ability to revisit the issue next session if the federal Securities and Exchange Commission did not act.
Under suspension of the rules the Senate took final passage; the roll call showed the bill passed and was referred to the House.
Why it matters: the measure removes an enforcement tool that the sponsor and counsel judged legally vulnerable but intends to preserve the state's leverage in working with federal authorities and possible future legislation.
Next step: the bill is sent to the House for its consideration.
