The Securities Industry Association has filed a lawsuit in federal court charging that a Utah law requiring fund firms to disclose when they “fail to deliver” securities issued by Utah companies usurps federal regulatory authority. Signed into law May by Gov. Jon Huntsman, the legislation reportedly is the result of the efforts of Overstock.com, which has said it had been victimized by short-sellers bent on driving down its stock prices. “On this issue, federal law could not be more explicit,” says SIA President Marc Lackritz. “The states are explicitly prohibited from establishing operational or recording-keeping requirements that are different from the requirements of the Securities and Exchange Act.” Lackritz added, “If each state is granted the authority to set its own rules, the resulting labyrinth of regulation would choke our financial markets.”
