SEC May Require Disclosure of Hedge Funds’ Short-Sale Positions 
By Jesse Westbrook, in Bloomberg.com.
Excerpt: "Hedge funds and investors managing more than $100 million in securities would be “required to promptly begin public reporting of their daily short positions,” Chairman Christopher Cox said in a statement late yesterday. The agency will obtain “disclosure from significant hedge funds” regarding “past trading positions in specific securities,” Cox said.
Lawmakers including U.S. Senate Banking Committee Chairman Christopher Dodd and executives such as Morgan Stanley Chief Executive Officer John Mack say short sellers may have contributed to the market crisis by spreading false information and using abusive tactics to attack companies. Hedge funds argue that poor business strategies are to blame, not short sellers.
“A lot of hedge funds don’t like being forced to disclose their long portfolios, so they’re really not going to like this,” said Sean O’Malley, a former SEC lawyer and now a partner at Goodwin Procter LLP in New York. “There is going to be some push back from hedge funds, but they may not get any sympathy in the current market environment.”
The five SEC commissioners must approve the rule, which would be adopted on an emergency basis, for it to become binding. Hedge funds, which are private pools of capital whose managers participate substantially from any profits on invested money, prefer to keep their positions secret to prevent other traders from stealing their strategies…
Tougher Rules 
The SEC earlier yesterday stiffened rules against so-called naked shorting by adopting two regulations that pressure traders and brokers to actually deliver borrowed shares to buyers. A third rule makes it a securities fraud when sellers deceive brokers about delivering borrowed shares to buyers.
The SEC is targeting naked selling, in which traders never borrow shares from their brokers, amid concern investors are using such abusive tactics to flood markets with sell orders and drive down stock prices…
Morgan Stanley
“There is no rational basis for the movements in our stock,” wrote Mack, who added that he contacted Cox and Treasury Secretary Henry Paulson. “We’re in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down.”…
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