Wall Street firms that operate in Utah are hopping mad at a bill approved by the state Legislature that would fine firms for short-selling. The Associated Press reports that the bill – according to some, spurred by Overstock.com, which claims it has been a victim of short-selling –could drive brokerages out of the state. Under the legislation, brokers-dealers would have to notify the Utah Division of Securities of short sales that fail to settle within 24 hours, and would be slapped with a minimum fine of $10,000 for having too many trades in any given company after five days.
“There’s blood in the water,” Howard Headlee, president of the Utah Bankers Association, told the AP, noting that some brokerages were “talking about not doing business” in the otherwise business-friendly state. Overstock was overjoyed by the bill’s passage, with CEO Patrick Byrne telling the AP, “This is the single best thing Utah could do to attract entrepreneurs.” Meanwhile, Tony Taggert of Morgan Stanley, which has nearly 5,000 Discover Card employees in Utah, said the Securities Industry Association threatened to sue if Gov. Jon Huntsman signs the bill into law.